Are points worth what they buy or what they save?


If your employer offered to pay the next $1,100 you earn in pizza, what would you say?

Unless you work at a pizzeria and they’re offering to let you sell your pizza share or something, you’d probably be skeptical at best about choosing pizza over cold hard cash. Why? That’s a silly question, but the obvious answer is that you can’t pay the mortgage with pizza, you can’t buy clothes with pizza, etc. The pizza isn’t worth as much to you as cash. Choosing pizza over cash is obviously absurd.

Yet we choose to earn points over cash every time we take out a card that earns something other than cash back. It would only make sense to make that trade if you had a way to turn the pizza points into something more valuable to you. Thankfully, points can be turned into travel that is much more valuable…but how valuable? Do you base the value of your points on what they can buy you or what they can save you? It’s important to find a value, but how?

Valuing points based on what they can buy

On Tuesday, I wrote a post about why you’re better off using a cash back credit card and buying Hilton points with your cash than you are using a Hilton credit card on everyday purchases (See: Does it ever make sense to spend on a Hilton card?). In that post, I used the Conrad Tokyo as an example of a valuable Hilton redemption. The Conrad was charging over $1100 per night or that same room could be booked with 95,000 Hilton points.

  • Conrad Tokyo Cash Rate = $1,162
  • Conrad Tokyo Award Rate = 95,000 Hilton points
  • Value of Hilton points =  1.22c per point….?

Based on the numbers, this redemption yields 1.22 cents per Hilton point.

But I also noted that I don’t truly value a redemption that way since I’d never be willing to spend $1100 on a room for one night. While I didn’t say it in the post, I would be more likely to value my points based on the highest rate I would be willing to pay.

I was challenged in the comments on that post by a couple of readers. The basic premise of their argument was that the room sells for $1100 and I can use points to buy that $1100 item. Therefore, I’m clearly getting $1100 in value from the points. One reader challenged me by saying this: Suppose a particular Porsche sports car costs $100,000. Next suppose that I’m only willing to spend $30,000 on any car. Is the Porsche only worth $30,000? The argument here is that the value of the Porsche has nothing to do with what I’m willing to spend on a different product or my unwillingness to buy the Porsche. It’s still a $100K vehicle regardless.

And indulging that line of thinking for a moment, if I were able to use my $30K to buy something the Porsche seller really wanted and then trade that something for the Porsche, would I not tell all my friends about the amazing deal I got on a $100K Porsche? It certainly wouldn’t be known as my $30K Porsche. Is the room at the Conrad Tokyo any different? If I have points that the hotel is willing to accept in trade for their $1100 room, did I not get $1100 worth of hotel room for my points?

And so sprouts the argument: do you value your points based on what they can buy? I mean, we value our money based on what it can buy us, right? When the cost of living goes up, we want a raise in salary so we can continue to buy the same stuff. We choose to be compensated by our employers in money based on what that money can buy us. We wouldn’t accept less than enough to buy the stuff we want/need to buy. If we value our money based on what it can buy, why wouldn’t we value our points based on what they can buy?

Valuing points based on what they can save you

My argument in response was that I generally prefer to value points based on what they save me from spending. I’m no Scrooge McDuck, but I’d rather hold on to my money when I can.

In the Tokyo example, I said (in the comments) that I’d probably be willing to pay about $200 per night for my hotel. Using points saves me $200 per night — it keeps that money I’d have otherwise spent in my pocket.

Further, I wouldn’t buy the $1100 room because, like the pizza example at the top, it just isn’t more valuable to me than the money.

I’m not saving $1100 since that money never would have left my pocket in the first place. If my choice were to spend $1100 per night or not go to Tokyo, I’d be spending my nights at the Chateau Reyez. So while 95K Hilton points will get me a room that’s being offered for sale for $1100, I wouldn’t say I’m getting $1100 in value out of the points.

That should be obvious for a few reasons. First, I can’t buy $1100 worth of stuff with the room. I can’t pay the mortgage with a room at the Conrad Tokyo, I can’t use the room to buy clothes, I can’t pay the light bill with nights at the Conrad Tokyo. That room isn’t worth the same to me that $1100 is worth. And I’ll mention a big difference with the Porsche here: I can resell the Porsche at any time for some value. The room expires as soon as the reservation date passes (and that’s to say nothing of the logistics and viability of selling the room to another traveler, etc). Of course, you could make that type of argument about a room at any price point or extend it to any type of perishable food, etc. Is nothing in the world worth its price tag price? I’m not arguing that. I’m noting why the points aren’t worth $1100 to me. I’m not trading the points for the opportunity to keep $1100. I’m trading the points for the opportunity to keep $200. So is my value for 95K points $200?

Am I comparing apples to oranges?

Is the Conrad Tokyo room only worth what I’m willing to pay for a room at the Motel 6 in the suburbs? Does the fact that I’m a cheapskate affect the value of the room itself? That doesn’t seem reasonable. That was really the heart of the Porsche argument: it doesn’t seem reasonable for me to value A based on what I’m willing to pay for B.

But really, in my argument against overvaluing my points, I’m not even concerned with the argument as to how much the $1100 room is really worth — I’m not arguing that the room isn’t worth whatever the Conrad’s customers are willing to pay. I’m saying that it doesn’t make sense to me to value my points based on the fact that they can buy that room. I believe that for a few reasons:

  1. I can’t trade the points for $1100 and use that money freely. They are locked to (in this case) a very specific type of use: Hilton hotels.
  2. Using them doesn’t save me from spending $1100 cash since I wouldn’t have spent $1100 cash.
  3. There are cheaper alternatives I’m willing to accept in this room’s place. This goes along with #3. I’d be fine with a $200 per night room in Tokyo. If $200 is an acceptable alternative cost, it doesn’t make sense to be to value the points used at more than 5x that acceptable alternative.
  4. Valuing my points based on ideal redemptions ignores all of the times I redeem them sub-optimally. I don’t make a habit of suboptimal redemptions, but they are a reality of the game sometimes. Creating a habit of making myself overvalue points will lead to poor decisions in terms of earning them.

So do I value the points at exactly the money they saved me — in this case, $200 per night? I don’t necessarily think that’s a fair valuation, either. I’ve stayed at the Conrad Tokyo and I’ve stayed at $200-per-night hotels. The Conrad Tokyo is definitely much nicer. I enjoy staying in fancy hotels (and flying in first/business class, etc). That enjoyment factor is part of what makes this world of miles and points appealing. If I could book either the Motel 6 for $200 or the Conrad Tokyo for $200, I’d obviously choose the Conrad Tokyo. If the Conrad Tokyo were charging $250 per night, I’m sure I’d choose that over paying $200 for the Motel 6. Even if they were charging $300 per night, I’d probably make that choice over the $200 per night establishment. But what if they were offering me a special promo code for 50% off: would I spend $550 per night over spending $200 per nice at the Motel 6? I personally wouldn’t.

And so I don’t necessarily think we should value our points based on the direct alternative cost we would accept, I do believe in valuing my points more conservatively than the cash cost of the room when that cash cost is so far out of line with what I would ordinarily consider.

A good method for measuring your redemptions

Our Reasonable Redemption Values are based on the value you can reasonably expect to get for your points without too much effort at maximization. The hotel point values are based on data from about 14 months ago comparing redemption costs at a wide range of properties. (Airline values are explained here and here). That’s a good baseline for what you can expect.

In Stephen Pepper’s recent post about his best redemptions of 2018, he created a formula that makes a lot of sense to me:

Average nightly rate / net cost in points per night / Reasonable Redemption Value

In this way, we compare the per-cent value based on room rate to the Reasonable Redemption Value. I’d like to collect my points based on the RRV and then use them at better-than-RRV.

In the Conrad Tokyo example, it would look like this:

  • $1162 room rate / 95,000 points per night = 1.22c per point
  • 1.22 / 0.45 RRV = 2.71x Reasonable Redemption Value

In the case of the Conrad Tokyo, I’m getting well over the Reasonable Redemption Value in comparison to the cost of the room. That makes it a good Hilton redemption and that’s why I would consider using my points there. I’d rather get a good redemption in Tokyo than an average redemption in Fredericksburg, VA.

Measuring redemptions over valuing them

The more I got to thinking about the two sides of this argument, the more I realized that I prefer to measure my redemptions rather than value them. I prefer to earn points based on their Reasonable Redemption Value — that is to say that I wouldn’t use a Hilton card at 3x since the reasonable value for that is only equivalent to 1.35% back. I like to use my points at greater-than-RRV. I place greater emphasis on getting a good deal than I do on cash value.

The same goes for airline miles, etc. I’d like to redeem at better than the RRV and make sure that I’m earning at or better than the earn on a 2% or 2.5% cash back card.

But it bears repeating that I like to make sure I’m earning at or better than the return on a cash back card — and that to me is the danger in overvaluing points based on optimal redemptions. If I value the redemption side based on the cash cost of the room/flight, I might start fooling myself into accepting suboptimal value on the earn side with the justification that I’ll redeem for greater value.

If I begin valuing, as a different but related example, 1 Ultimate Rewards point more than 2 cents, it leads to trades on a small scale (accepting 1 point for this $1 purchase instead of 2.5 cents) that become big trades on a large scale (100,000 points instead of $2,500 cash). I might fool myself into thinking it doesn’t really matter whether I spend on a card that earns 1x or 1.5x since I’ll redeem 100,000 points at huge value either way. In reality, there is a large difference in opportunity cost. Check out the numbers:

  • $100,000 spent at 1x = 100,000 points
  • $100,000 spent at 2.5% cash back = $2,500
  • $66,666 spent at 1.5x = 100,000 points
  • $66,666 spent at 2.5% cash back = $1,666

The opportunity cost of choosing points over cash back drops significantly when you jump from earning 1x to 1.5x. To me, it’s important to keep that in mind. If I value my points based on redemptions, I might be tempted to say it’s OK to earn 100,000 points at 1x since I’m going to use them for a $10,000 first class flight. The reality is that by accepting that mentality, I accepted an increased opportunity cost to the tune of $834. In the end, my conservative slant on redemption valuation is in large part to protect myself (and readers) from justifying poor earning decisions.

Bottom line

This post doesn’t really answer the title question, and it shouldn’t. The way that I value my points and my use of those points won’t necessarily be the same as your value. That’s why we have the Reasonable Redemption Values — to give you a good idea of a reasonable value so that you can determine whether or not you’re getting a deal. I think that determination is one key, but it needs to come with a focus on making sure that your earnings aren’t coming at a higher opportunity cost than you’d like. Remember that you’re accepting a trade on the earn side: points for cash. Make sure that it’s buying you enough that it makes sense/cents.

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[…] I’ve previously debated the value of points, some readers have told me that we should value points based on cash rates. If you did that, […]


One useful way to capture the upper limit on the value of points is to ask what you would buy the points for or sell them for.

Figure out the dollar value at which you would be just as happy to have cash as the point and that is it’s value.

An example. You redeem 90,000 points for three nights at the park Hyatt Tokyo when cash rooms are selling for $1500. This is a very special redemption to you because of your obsession with Bill Murray and Sofia Coppola. If you want to test whether these points are really worth 5 cents a point to you ask yourself how much you would sell them for. What if I offered you $4,000 for them. Would you sell? If so, they are not worth $4500 to you.


I think the miles or points are worth the amount you would take if someone offered to take that award redemption off your hands for cash. Let’s say I book points for that $1,100 hotel room. If someone offered me $500 to take it from me (in a hypothetical situation where I would be free to make that exchange), I’d take the cash. $400? Who knows? But the hotel room is in any case not worth more than $500 to me, even if the sticker price is way higher.

This is not quite the same as saying it’s only worth what I’d be willing to pay, as some people reason. I doubt that I’d pay $300 out of pocket.


I had a similar discussion with another travel hacker comparing flights to vancouver for a vacation in the summer.

First to do this sort of comparison, you need to determine what your goals are and what you wouldve gone with origionally had you paid in cash with a competitor. Since I am a college student who is interested in maximizing my points, I dont care about getting a free meal or a big seat on my flight to vancouver. I just care about being able to get myself there and back saftely.

I checked some cheap flights to vancouver and I found a westjet red eye flight for $400 that fit my description, so that is what i wouldve been willing to have paid in cash to get there.

I also found I could take air canada there for 38K aeroplan points total. For my purposes I view booking a cheap flight on westjet and air canada an identical redemption since both meet my needs.

That means this $400 flight really means that I only value aeroplan miles at 1.05cpp since I could have booked the flight with cash with westjet for that approximate valuation.

This is why I “churn” travel rewards cards if I have a big trip coming up, but I mainly use cash back cards for my daily spend. Because of you compare a points redemption vs the cheapest hotel/flight you can find that will fit your needs, sometimes you wont even get 1cpp valuation.

Points are worth much less than peopke make it out to be.


I totally disagree with Nick on this and agree with the Porsche argument. I’ve often overheard someone say “my house is worth $xxx”‘ yet it sits on the market for a year or more. Why? No one else thinks it’s worth that much. Something, anything is only worth what someone else is willing to pay. Remember that a sale is a transaction between TWO parties. In the example of the Conrad Tokyo, clearly the Conrad thinks the value of that night is $1100 based on LOTS of real world data. Clearly other people think that as well. Just because you personally wouldn’t put cash out of your pocket doesn’t make that room worth less. IF the Conrad is willing to accept 95K points for that room, on that night means the value of those points IS worth $1100. My wife and I are at the at the stage in life where we don’t need “stuff” any more. We use our miles and points for travel experiences that we probably would do otherwise. I’m too cheap to spend $5-20K on a first or biz class international ticket and due to some minor medical issues wouldn’t fly international coach. Therefore we just wouldn’t go. At the moment, I’m sitting in the Presidential suite at the Park Hyatt Mendoza on 16K points/night. (We got an upgrade from the Governor’s suite which was the standard Premium suite upgrade for a Cat 2 Hyatt). The room sells for $1200/night. The room is 1600 SQ ft. Do the two of us need that. Of course not. Are we enjoying it after two long days of steaks and wine? Absolutely! Thank you Chase UR.


I’m glad to see that my comments the other day sparked a blog post and a lively discussion. Nick, I hope I didn’t come across as angry or argumentative. I think your view point is valid, especially if you are traveling as much with points as you would without and just making your travel more comfortable. For me, I probably travel 10x as much with points as I would without, so I feel like my points are really getting me close to the value my travel would cost and not just saving me some smaller amount. I wouldn’t be going to Europe, Asia, Australia or Africa in J and staying at Conrads. I’d be driving my car to Dallas, Nashville, St Louis and Kansas City and staying at a Holiday Inn Express.

Bob D

interesting topic on the arbitrary value of currency. So what your saying is the value of your points is whatever you want them to be. You value points one way when you earn them or buy them and then revalue them when you spend them. It’s a game there is no right answer


Strange that there are several Hilton properties in Tokyo for less than 95000 points (Hilton Narita 20.000 points for example) but you choose to stay at that hotel for 95000 but value it only $200. The value of something need to be daparate of what we are willing to pay for it. The value of the room is what it cost at that moment…now what you or I are willing to pay. Later today I am flying Korean First ATL to MLE…$12000 ticket booked with miles. I wouldn’t say that I am saving $12000 but I I wouldn’t say that I am saving $500 because $500 is what I would pay for an econo one way ticket to Mle. The value of the tickets is still $12000…since that is for what’s on sale now.


Thank You Nick for pointing that and sharing another point of view when earning and redeeming points.

I think the best way any points/miles blog can do is pointing out ALL view points and so people have depending on their goals all the info’s they need to do their math.

In my opinion:
For someone collecting points and miles, has to consider this a long run to redeem for maximum value, because it takes a while to collect enough for a useful redemption or the redemption would need to be done for something far out like 6months or a year (unless you get lucky or are flexible and not picky).

For someone who’d rather have cash or gift cards for flexibly use the rewards, it is probably better to go with cashback cards or high reward cards with 1:1 cash/GC redemption.

Hotel points are among the most worthless points/rewards out there, not just because of the valuation per point but because there are difficult to redeem. Other than getting the signup bonus, they are not really worth collecting. The only exception is for business if you stay for business somewhere the award game is much easier and different, then hotel points can be very valuable and get quite a return for your stays.

Guys/gals, what is your redemption goal? Depending on that goal you have to work your way backwards on what the easiest and best way is to achieve that.

You want to pay bills with your rewards? I’m sorry but that doesn’t sound like a reward to me, and sorry you have to resort to that and not getting enough money to make ends meet. But yeah it is an option although not the most fun.

You rather want to use the points/miles as much as possible? So instead of getting one business class ticket, get two economy class ticket? Or getting one week of hotel nights at an average hotel instead of only a couple nights at a fancy hotel. Sounds good to me. Still do the math if the deal is good and may not count on what it cost to get these points otherwise you burn through your signup bonus in no time.

You really want to tread yourself and have a special for you and possible your partner? Like a business class ticket and a really nice hotel, something you would never buy from your heard earned money. Sounds good to me. Just make sure you really get a good deal and are aware when points/miles are gone they are gone. Only way to get more is lots of spending or signup bonus and sign up bonus are getting harder to get with churning and/or have to wait longer.

In any case/goal don’t wait too long with the redemption, the next points/miles devaluation is just around the corner.

And yeah, I would rather jump on the Amazon deal where I get 0.5 cent per Hilton point than wait a million years to get a better redemption or to look for the best redemption. Would I do a trip to somewhere I didn’t really plan or like that much going there just to get the best redemption and pad and brag I redeemed points for multiple times of the average valuation? Nope. Would you guys/gals?


The value of points are what the average value they provide. Nobody is able to consistently redeem Hilton points for 1.22cpp. Yes, in certain sweet spots you can, but nobody in their right mind would value points on the very best redemption. It’s pretty clear Hilton are worth 0.4cpp on average, and anything better is a good redemption. As such, when Amazon allowed H points to be redeemed for 0.5cpp, I used 400K to buy $2000 in Amazon gcs. Could I get $2000 value from those points if used for hotel bookings? Sure, but I might not need to book a hotel for several years (while I constantly buy from Amazon).

Another thing that bloggers constantly forget is that points aren’t cash, and hence don’t require me to use after-tax dollars to get a room. So when you claim you’d only be willing to spend $200 cash a night, you need to add back your various taxes to get a pre-tax equivalent value. In my case, my effective tax rate is very close to 50%, so a $200 room really requires $300 of pre-tax income. Adding back taxes gives effective cost of that room and inherently makes points much more valuable…


The tax difference is an interesting twist.


Good point about the tax. Although technically you would need to pay taxes on points miles (I think TPG has an article about that) but so far IRS hasn’t enforced that.


No taxes on point/miles–they’re considered rebates.


unless T&E is a write off

Greg The Frequent Miler

You don’t have to pay taxes on points or cash back when the rewards are earned from credit cards. Both are considered rebates rather than taxable income.


Maybe, this article suggests otherwise, but as said hasn’t been enforced/followed up by IRS:


Yea u Right after Taxes as in cash so add like 20% or so to the the internet price .


The argument only holds if you are just comparing a $200 Motel 6 vs that same room on points. If you stay at Conrad and/or fly front of the plane to get there, you’re not just buying a bed or a seat. You’re buying the experience of that room… the details… the finishings. I stayed at the Conrad in FLL. The sconces in the bedroom gave off the most balanced warm light. and even the foldout sofa had a better mattress than anything you’ll find over where they leave the light on for ya.

It’s an intangible that makes you FEEL a certain way. That has value. That experience has a $1100 price tag on it. Would you use 95k points to have that experience? Then those points are worth $1100. It’s a fluctuating currency because that room may always be 95k points but the cash price will fluctuate. If you time the market, you can get a windfall. But the price is set by the seller based on what the market bears. If you value your points as equivalent to $200 cash, you must be talking about the Motel 6 points.

That said, I agree with you 100% on why you should use a 2% cashback rather than Hilton card. I thought that post was spot on and was a great insight making me rethink how my 2% card factors in my overall strategy. And you refuted a lot of the comments that totally missed the point. But I think you’re trying to have it both ways in this instance.


I 100% agree with you about the “intangible” factor of luxury rooms – when I can shut down a room’s entire lighting system from an iPad at a Waldorf Beverly Hills suite v trying to hunt down the bathroom light switch at a Microtel hovel there is indeed an emotional difference (as well as a logistical one). But also 100% disagree with you how to get there.

Because another intangible is the feeling of actually BUYING points off proceeds from a cashback card (rather than earning them for what I was going to do anyway) for cash and then not getting such a great value based on expectations. I assure you I will be a LOT more careful how I spend purchased points rather than bonus/spend points! And those very well may not involve the luxury experience you & I have apparently both grown to love. Luxury feels more luxurious when you know you have made a major score rather than actually paying(gasp!) for them.

Thank you for your comments – you highlighted well why luxury accommodations are even sought after – I, too, was just at that Conrad and could well identify.


That’s what’s I was afraid of staying in so many 4* orb 5* hotels for nothing I wouldn’t enjoy the 3* I pay for.


Legitimate question – do people actually seek to book a given room on a night when it would cost the most in cash, so that it’s worth more? Even if the room and the points cost are the same and there is no other reason to prefer personally one date over another?


Credit card companies are going to love you guys…till you value the points above the value of cash.


Do a report (cost ect) on the Bullet train while in Japan . Just watched the new ones on Ngeo ..Cheers


Like I said, I’m working on a thing to address this very question in a (hopefully) intuitive way.


With a family of 6, I do this sort of calculation all the time. It really does matter. Do I want to cash out or spend the 80K UR points I just got from a signup bonus? That’s $800. I value travel; it’s my hobby, so while I could use that cash for something else, I honestly spend about $5K+ a year on travel ($3K for a family trip and $2K for couples trips, including food and activities) and will likely use the bonus for travel either way. However, luxury travel is not set up for a family of 6. It costs a LOT of points, and 6 redemptions for F and J (not going to split- some of my kids have special needs, so having us all together is way more valuable than a lie flat seat) are very rare. That means coach for us. With fare sales, especially to Asia from LAX, it is often a way better deal to pay cash or book through the UR portal than to redeem through a mileage program. Same goes for lodging. I am looking more and more at Airbnb Gift Cards than I am hotel points for our family vacations. $126 for a 6 bedroom house with private pool in Orlando? That’s what we did this last November rather than using our Hyatt points for a Hyatt Place that slept 6… all in 1 room. I look at points as a way to either save off of what I already plan to do or to improve on what I plan to do with little extra cost.

Now, for couple trips, points allow me to do things that I really want to do but wouldn’t normally pay for out of pocket because the expense would be too much. My husband loves tropical fish. We have always dreamed of staying in the hotel with the underwater restaurant. After Nick’s post and learning that it was the Conrad Maldives, I had a very serious conversation with my husband about getting the Hilton Aspire cards. Before, I wasn’t sure I wanted to be saddled with 2 $450 fee cards. That’s $900/year! But because this is a dream vacation, and would otherwise be out of our budget, we plan to spend the money. Yes, it will come at an opportunity cost of about $3000, but it is something we really want to do, and we wouldn’t spend the $9000 it would cost out of pocket. So sometimes I look at points earnings as a way to get something expensive that I want and otherwise might not get at a significant discount. I think one of the things about points earning is that it doesn’t just save money or earn us money for the mundane things of life, but for those who love to travel, it allows us to dream. That’s why we call this a hobby. I love blogs like this because they push me to question my limits of what I think is possible and make what I thought was not attainable in my daily life a reality. I am glad Nick takes the time to reign us in and makes sure that we spending our time and money on things we value while also maximizing the monetary value. Thanks for teaching us to spend smarter on both the earnings AND redemption side.


Great for you and the kids u did Way better then we did. ,We had 8 total so There was Camping and There was Camping ..Nutthing like that today when we grew up .. CHEERs


Very well said. Would love to see the trip report at Maldives!


Very good read. I’ve done a lot of thinking on the subject; some thoughts:

I know I want to see some cities and some exotic destinations, but I just can’t get myself to spend the hundreds nightly or the thousands for the plane trips when there are cheaper destinations. I’m not talking about staying in the budget property vs. the luxury one across the street, as I generally stay in the cheapest highly-rated property in an area anyway. I’m talking destinations where I’m completely priced out – big cities where I can’t be bothered to drive in from the outskirts every day, like Chicago and LA; exotic destinations like the Maldives; faraway places like Australia; or generally pricey places like Switzerland or England (where activity costs limit my hotel budget further still). Since I’ll definitely want to gothere, and don’t want to wait for retirement to do so, I need a way to get myself to save up for them, preferably by locking away funds.

With cash back, the money is accessible, and both the earning and redemption rates are fixed. With points, it’s stashed away, you can find offers for earnings above your base rate (e.g. online portals, hotel promos), and the redemption rates are different for different options at different times.

I use the formula (best price for a property/flight that meets my standards/requirements)÷(points redemption for equivalent from Brand X) to get my point valuation for Brand X. If the property I’ve done the math for would earn me points, I account for that, too: if the brands are the same, the denominator becomes (points redemption + points I’m giving up); otherwise, the numerator becomes (price – estimated point value).

I’ve done the above for multiple brands in multiple potential vacations (that I’d actually take), then took the top quartile (25%) of the valuations. That’s become the value I use when deciding between a cashback-earning CC/transaction and a points-earning one, or between different brands’ shopping portals. The minimum point value to redeem is 10-20% less than that, because I feel I can be a bit more lenient with “free money.”

More math: cashback-equivalent earning rate of points Y transferred in the future to Brand X is (Y points earned / $) × (X:Y transfer ratio) × (X point value). This is an important one, as cashback earnings from e.g. Discover & Bank of America cards are sometimes better, sometimes worse than points earners like most AmEx and many Chase and Citi cards. If you don’t know what your points will be worth TO YOU, you might be over- or undervaluing them.

Final point: Public valuations and program reviews are all over the place. You have to figure out what each program is worth to you, at your spending level, with your travel preferences, and with the amount of work required to eek out maximum value. Are you at the tier that will multiply your earnings or redemptions? Do you have the card that allows transfers (looking at you, Citi)? Are your points worth more when used for your style of travel (Economy vs. Business, budget vs. luxury, etc.)?


I’m not an economist…I’m not even good with numbers. But I do remember my father telling me once that “You’re worth what someone is willing to pay you”.

[…] Reyes at the wonderful blog Frequent Miler asks, “Are points worth what they buy or what they save?” And he’s got me thinking. I currently have over a million miles and points stashed away. […]


I’d argue that I’m buying up points to redeem for something I’d never pay for. While a valuation guide might be based on what I’d actually pay MY valuation is MUCH higher than that. And while I may not redeem my points for as much value as someone else, as long as I’m redeeming for something I value yet would never buy then I come out ahead.

I just redeemed nearly 400k Hyatt points for 2 rooms for 7 nights, club lounge rooms (there were no standard rooms available). Rack rate for those rooms, when I redeemed the points, was over $17k…there’s NO WAY I book those rooms for cash. But it’ll be awesome to stay at this hotel, and I accumulate points to redeem them, so I’m more than happy with my redemption.

If I’m looking at it solely based on value I’d probably NEVER choose points.


apples to oranges…the value of points vs cash is how much cash you can get from points, (typically .01 pp)…any other valuation is subjective. I have specific uses for most points and don’t even bother looking at the ever changing cash value of the awards…the goal is to keep more money in my pocket and enhance my vacations with awards I would never pay out of pocket for….for example I live in DFW so AA or Southwest has the most choices for air awards. I like Hawaii and AA offers laydown seats on nonstop return flights so this is my best use of these points (I don’t need to know the cash value of the ticket to justify the value)…southwest with a companion pass is great for short domestic flights, and BA avios are good for domestic AA flights and I also use them for non stops when southwest’s routing takes too long. I started collecting United points years ago when they were the only points you could trade for cruises…not a great value, but we saved them for that reason. Hilton and Hyatt we used for all inclusive resorts, the old IHG certs would get us fri-sat at Palazzo in Vegas which meshed with comp offers there that for us were always sun-thurs…we now use them for a beach hotel in Fla that is as nice as their property in Grand Cayman…I have little use for Delta from DFW so I use skypesos for online auction experiences…Hawaian air points are just for inter-island flights. Other than a big pile of UR most all of our points are collect with a specific use in mind…subjectively we get the best value for our points redemptions, based on our vacation style.

Joseph N.

Wow, that was a lot or writing, but you did make some good real world examples to prove your point. I loved the pizza-paycheck analogy. Hilary over at Travelsort wrote some “How much is a mile worth?” articles a few years ago, and she came to the same conclusion you did: simply put, you cannot book a $10k suite on points and claim you “saved” $10k if you would not have spent $10k for the suite.

This is a mistake a lot of travel blogs make when they value points. The bloggers find the average room price and the average redemption cost and think they have an average value of the points. Wrong, because that includes a lot of hotel redemptions that no sane traveler would redeem points for. I value hotel points the way you did: I look at the cost of competing hotels to gauge what I would really be willing to pay, then I decide if using points is the best option.

I have normally seen this explained in economics class the other way around. The idea of negotiating a deal where I only pay $30k for a Porsche I would’ve been willing to pay much more for. In the example of the Conrad, finding a deal where I only pay $199 for a room at the Conrad I would’ve been willing to pay $299 for. We’ve all been in that situation and jumped for joy at the money we saved. Economists try to quantify the “economic worth” of that gap.

This economic value can also be expressed in labor, like your pizza-paycheck example. E.g.- Negotiating $20/hr for a job you would’ve been willing to do for $15/hr. There is a Hollywood story where Keanu Reeves negotiated a salary for the Matrix sequels that was millions above what he would’ve done them for. He then took a multimillion dollar pay cut so that money would go to the crew’s salaries.


Not a mistake. Boosting the economic return of points with inflated redemptions is a strategy for many less scrupulous blogs.


So one rule of thumb I use for flights is this. I imagine myself in a non-premium Y seat on an international flight. I determine the price for that seat. I then imagine that when I am checking in I am offered a chance to upgrade right then and there. How much would I pay to escape Y?

So for example I am planning a trip to India. Base Y fare for my dates is $1700. I’m offered a qsuites upgrade roundtrip at checkin for a total of $3,000–a bump of $1,300. Do I take it? Yes, without much question. For $2,300? Probably not. But I certainly feel comfortable valuing that seat for tracking purposes at $3,000.


I have spent $1,100/night at the Four Seasons, but only because I was able to cash in URs at a 33% premium & instead spend $737.

I earned each of those points (later cashed out) at a much greater clip than a straight 2% cash back card. And only by being in the Chase UR program using the travel portal was I able to save that much on a room at a 4S (in terms of my own point accumulations).

Incredible stay & property, YES it can be worth it!


Great for U !!
I stayed @ 4s’s in South Beach next to Fontainebleau for 5 nites for Award points by a card flip …I got a 10th fl I think by vip stuff ..James Bond would like the view much better today then Gold Finger time. .
I got a non-stop ORD>MIA for $115 !! RT with my united card .Been there 2x both free never again to much $$$$$


Will have to chk that one out, thx CD! Yes, the several hundred thousand URs earned over the years thru new Chase card sign-ups have certainly added to the luxury hotel kitty & influence that type spend for me.


This is a great question. Some of the comments are demonstrating why the points game exists even with supposedly awesome deals:

Even points enthusiasts are ON AVERAGE bad at underlying trade offs. Which enables travel/finance industries to push us to spend more than we would otherwise in return for OK discounts. But the discounts are far from “almost free!”. Same concept as coupons and sales flyers. People’s hunger for a deal that makes them feel smart plus product marketing leads them to spend more than they would otherwise, and sellers benefit by getting additional customers in addition to their full price clients for a reasonable discount.

DaveC’s comment is a perfect example. He traded $380 cash for the hotel room, but consciously or not, avoided ‘knowing’ about that cost. The travel provider and bank made him happy to pay a cost that he stated he would never pay for a room! JustSaying similarly attempts to “never use cash”, but is likely trading off a lot of cash back for points.

Even those that explicitly look at that opportunity cost are willing to be upsold. Nick thought $200 was acceptable for a Tokyo room, but is willing tacking on $50-$100 for Conrad Tokyo, which is $50-$100 extra for the industry with probably incremental cost of $20 for housekeeping and free breakfast. Yeah, Conrad’s not getting $1100, but they were probably getting $0, so they are ok with $250-$300 if the price isn’t public and transparent to avoid irritating the full price people.

And these upsells get multiplied with greater involvement with the points world. Before points, did Nick even think about going to Tokyo in business or first class, or multiple times a year to similar destinations, accepting similar upsells multiple times per trip, and spending a large amount of time planning and finding deals/offers?

I know I did since getting in. Before points, I estimate about $3.5K cash per year and very little planning time on 1 family trip and 1 vacation, obviously coach and mid-level accommodation. Now, with VERY disciplined points earning/redemption, I spend $6K cash per year and extensive tracking and research time on 1.5 family trips and 2 vacations, but with upscale travel and accommodations and more exotic locations. So I pay 71% more plus a lot of time for 75% more travel and an upgrade in comfort. But the point is I’m definitely PAYING MORE for travel, and that’s what the industry was going for, incremental spend in return for some discounts.

Those that are not quantifying these upsells or are less disciplined in their earning/redemption are probably paying 2x, 3x, who knows how many multiples over what they had in their travel budget previously. Which may or may not be ok given their other needs/wants.


Yup u got it Right .Give them some Trinkets maybe we can get Them to Spend more . Build the Brand , Expand ect. ect ..The deal is for me I get the 5* hotels for Free ($20 per like 50 nites) and gladly pay for the 3* stuff with a 20% discount of course .


I liked the idea of “earning cost” raised by RS_WI. But how do you keep track of that? Let’s say you spent 190K Hilton points for 2 nights (95K x 2). You got 150K through an Aspire sign up, you already had 20K from some previous stays, and you bought another 20K at 0.005. What was the earning cost of those 190K? I am not sure it is easy to answer.

From my perspective, while I appreciate maximizing value of points (e.g. Nick’s example with Conrad Tokyo), I would go for less than maximum redemption just to save cash. Not horrible redemption, but less than perfect. Because of our travel patterns (school-age kids, etc.), we always travel at busiest and the most expensive times. If I am to wait for a perfect redemption, I would never travel



For your example, you probably earned at 5x for the Aspire $4k min spend for 170K pts, which would have earned you $80 cash back with a 2% card. If you had 20K left over pts from previous stays, no need to buy additional pts for 2 nights at 95K each. But you did have a $450 annual fee, but with other credits a net cost of maybe $50 ($200 value from airline credit on AA gift cards ($250 sold at 80%), and $150 in food value from resort credit (60% of overpriced resort food), $40 in free breakfast for 2 days for 2 people, $10 in lounge food for the Priority Pass). So $80+$50=$130 for the 2,nights. Plus you prepaid $200 in food at the resort and lounges through the annual fee. And you had to set up a gift card selling account and sell the AA gift cards.

Is $330 and the gift card work (and additional costs to get there and other activities you may want to do) reasonable for 2 nights and some food? Your call, but its definitely possible to calculate the cost, as you can see. Not free, and that’s with a very decent sign up bonus!


Replacement cost makes most sense for people who MS.


I agree with you on all points, but I’d like to suggest that this “inflation” of your travel budget is beneficial rather than detrimental.

If you have a stable job that earns you a surplus, you experience lifestyle inflation. To some people (that like traveling), it’s an extra vacation; to others, it’s better properties or flight classes; to others, it’s both. Whatever the case, people don’t get THAT MUCH savvier over time, and so I reckon the cost of their travel goes up as the value goes up – proportionally, or very close to it. The fact that you’re spending the same amount per day and getting more value out of each day means that you are, in fact, savvier. Did they draw you into the “hobby”? Sure. Are you spending more on travel? Sure. But if you’re conscientious and financially responsible, you’ve taken that money from some other activity that you deem to be less valuable. They increased the value, and you’re forgoing something of (potentially only now-) lesser value.

As far as hobbies are concerned, most any other one would have increased in cost and decreased in returns. I doubt you’re at an “irresponsible” level with $6k spending over 3.5 weeks.

If you’re worried they’ve gotten the best of you, you can try the alternative – forgo a trip in favor of something else, or drop back down to the budget level for a trip and tack on an extra activity or two while there. Just don’t put too much blame on “them” for the fact that you no longer like the budget property as much as you once did – not only does every hobby get to the same point eventually, but our entire lifestyle has “constant improvement” at its core.

Stephen H

For me, while I’d much rather stay at a Park Hyatt vs a Hyatt House, the fact is that I (me personally, I don’t speak for anyone else) don’t value the PH at 2x + the points cost of HH. Likewise when paying cash I would generally go with the HH rather than a higher/lower end hotel. Because my hotel redemptions are essentially on par with how I would pay cash, it’s pretty straightforward in deciding whether to pay cash vs points. For flights, I am much more interested in redeeming for J/F and consequently assign a higher redemption value to them.

Some of the comments are a bit ridiculous on this topic…it’s like I’m reading a CNN political thread. Everyone redeems in their own way and if it makes the person feel like they got a good deal, they win the game.


Why not measure BOTH at the same time by building monetary costs and economic opportunity costs together.

So if 95K points gets you an $1100 room, and you earned those purely on grocery spend, you just spent $15,833. That would have earned you $395.83 via a 2.5% card.

Take that opportunity cost away from the $1100 and you are left with an economic benefit of $704.17.

That means your actual redemption would be worth 0.74cpp.

Still larger than 0.45, but now factors in your lost earnings potential.


While the economist in me definitely (normally) subscribes to and advocates for opportunity cost analyses, in the points world (where points are an entirely alternative currency) it doesn’t hold up.
It’s like comparing lemons to bananas… they’re both yellow and share that characteristic. But VERY different in every other way of comparison. And can’t really be substituted for different situations.

Also, in your example, you’ve forgotten a very key element: That the 2.5% cashback card doesn’t earn that cash back without the same costs as earning points.
So your *actual* net cash back benefit likely is $395.83 – $219 = $176.83
(showing my work– I allocate $7 for the all-in cost of grocery MS, inclusive of fees, occasional ‘deals’ that negate fees, MO fee to liquidate it, and a piddling value of time) 95000 / 6x / 506 (card value +fee) * $7 = $219.03

Anyway, even if you earned $395.83 (or $176 in actuality) in cashback, you cannot use that to book a $1100 room. Period.
Ergo, the tremendous uplift of points and MS and why we’re all in this game.

And, back to the original argument: is it really clearer to say “I could have earned this other alternative reward (but didn’t), and I’m going to compare that to the rate of the room (which I’m not paying), in order to evaluate how good it is. (subjective)” ??
If the room rate varies day to day, does that mean it is worth more or less? In your calculations, the cpp varies (for no real reason). But the cost of 95k points doesn’t vary. I believe this is more valid, since the room you’re staying in doesn’t get better / worse while you’re there.


You’d incur those costs either way — via the Hilton card or the cb card, so that’s a wash.

Of course it is important if you’re trying to view this as “profit” but since this is simply a comparison of a trade-off, it’s not really necessary to be thinking about MS costs.

I, for one, no longer MS because my time is now worth more than the few $1000 of extra profit I used to earn. But I still want to maximize my organic spend value nonetheless.

So if I’m spending money on points card X, I want to see a greater return than I would have on my cash back card (for me, the double cash). The nice thing about that is my OC is always exactly the same: 2 cents per dollar I spend.

And when you apply dollar outcomes to points via redemptions, you most definitely do have an apples to apples comparison. But as I said, I do see your point if you are thinking about this from a profit perspective.


I recently went through this exercise after I was able to get 3 first class round trip ANA tickets to Tokyo that sell for $19k each for something like 120k Virgin Atlantic miles each. If I used 19k as the value per ticket, it means Virgin points are the greatest ever invented. But realistically, we would never spend anywhere near 19k on a ticket. We have spent $3k for a first class ticket to Europe before though in actual cash. Ultimately, the points game has 2 main players. Folks who want to use points to eliminate cash outlay as much as possible and folks who want to use points to trade up to much more luxury than their travel budget could typically allow. The first group should use savings as the value of points and the second should use the value of what they buy. Were the flights to Japan in ANA first worth exactly 19k to me? I dunno, but it was certainly worth more than anything I’ve paid for before and it will incentivize me to continue to accrue miles.


Years ago I didn’t know how to use TYP for Air so I spend the card on a 5 nite Hotel stay in Vegas i wanted .I was Happy !!! Now I won’t do that .
Thanks Blogs


I completely stay away from valuing redemption on a $x.yz/pt “received” in value from a booking. It is just too variable and nebulous, and totally gets into all those self-confusing acrobatics of your article. Many others have written in the past on the same subject, and it always boils down to the same questions and arguments: would you actually pay for the (supposed) value you’re receiving? Is that a fallacy to think you got that value? So, what actual “value” did you get? Are you “maximizing” all your redemptions?

Instead, I focus solely on the *earning cost* for a potential redemption. It doesn’t matter how much a hotel room is listed for (in your example, $1100), rather it matters that it costs 95,000 Hilton points, and whatever quantitative cost is associated with earning that number of points.
For me personally, earning 95k Hilton points costs $219 (in actual dollars paid out of my pocket—the cost of points acquisition).
Am I comfortable paying $219 for the Conrad Tokyo? Yes. Hell yes.

If I weren’t comfortable with that cost, I would shop other options. Other options might mean a Hilton for 60,000 points. That costs me $138.
This makes it incredibly tangible and straightforward to compare: Is the Conrad Tokyo, at $219/night of *true actual dollar cost* worth $81/night more than Other Hilton option? If the answer is yes, then book the Conrad. If not, book the Other. It’s that simple.
This methodology is coined ‘price compression’ (by freequentflyer who is, as far as I know, the creator of that term for MS & redemptions ) and by and large is mostly in the domain of serious MS’ers. But it applies nonetheless. (links below to original articles if you’re intrigued)

The beauty of this is that it easily factors in 5th night free, or other promotions and benefit considerations.
Example: For a 5th night free, I simple take the total points cost of the whole stay, and do the math for it. For the Conrad Tokyo 4 x 95k = 5 nights. That works out to $876 cost for 5 nights. Now, that’s a mere $175 that I spent out of pocket earning that 5 night stay. I’d definitely book that! Easy math. Easy assessment. Easy decision.
I have no idea what $x/pt redemption value I’m getting. But I *know* that paying $175/night for a Conrad Tokyo stay is a great choice. ‘Nuff said.

Perks examples: Will the redemption above include free breakfast for us? 4x breakfast cost, at about $10 each (what it would cost us in normal real life), means one could very reasonably deduct that from the cost calculation (I don’t, because although I am *actually saving* that money by not having to buy breakfast outside the hotel, it is due to status, not the redemption). So I consider it saved (which I like and enjoy!) but it doesn’t affect how I view the hotel nightly rate. I track this sort of stuff into my mental and math calculations about whether or not it’s worth it to me to chase status. In this case, spending $40k on the Ascen, or paying big $AF for the Aspire).

In the example of a recent Hyatt redemption, which included parking due to my Globalist status means I *actually saved* the monetary cost of parking in downtown Chicago (~$40).
I spent $100 actually earning the points for the Hyatt stay, so that’s how much it cost me to stay there. The savings of parking there doesn’t mean I only paid $60…. It means I got $40 of savings/value out of having chased Globalist status (which on its own, had a cost to earn).

The benefit of this approach, of analyzing price compression results, is that it isn’t subjective. There’s no question about ‘hrm, what *would* I have paid for an $1100 night, when I’m not actually paying that?…’
Rather it is a totally simple question: Worth an actual cost of $219 (or $175) to stay there? Yes/No.

Price compression:


I haven’t had chance to peruse those links, but I also focus on average point acquisition cost based on comparable cash back rates in each category of spending. Of course points acquired by flying have an acquisition cost of zero. As long as my redemption value exceeds my average acquisition cost I am happy with the deal.Otherwise I pay cash. BTW,


I think this is good approach, one I have been noodling on for a bit. The only thing I’d say is that there are two prongs to the valuation based on acquisition costs approach–first, obviously, is the cost. Second, though, is the velocity of acquisition. If someone has 100K of potential MS a year from Serve, for example–and that’s it–velocity is probably a binding constraint and more important to consider than overall costs.

I’ve got an approach I’m fiddling with that I’ll end up putting up on Reddit in the next few days.


Thanks for posting all this information and the links – I think it’s a great way of look at the value of redemptions. But I can see how this works best in the MS community where you’re getting the large majority of your points through point earnings. I think the more typical miles person is going to have a lot more of their points from sign up bonuses which would drive down the price a lot. Also I’m not sure how you’d factor in annual fees and the like. Also when you mention 95k Hilton points costs you $219 to acquire does that include the opportunity costs of using a purely cash back system? Lastly, I can see how this system would be harder to discuss because different people’s method of MSing would change their redemption values significantly. Again great thoughts; I’ll take a look at the links!


Sorry, but your method is still completely subjective. Instead of asking whether the Conrad Tokyo is worth $1100 per night, you are asking whether it is worth $219/night. It is two sides to the same question. If it were not subjective, then what if it cost 285,000 points per night? Would it be worth $657? That depends entirely on your own subjective opinion of the value of the room. Conversely, although your opinion of the Conrad Tokyo at $219 is hell yes, others subjective opinion might be hell no. You haven’t taken subjectivity out of the process, you have just changed the scale of measurement.
The only way to take subjectivity out of the process is to value them at whatever the market will pay, so the full going rate. That gives a nearly completely objective value of points. That is basically what the RRV does. Different people might argue about whether the average redemption value is an accurate measure or some other redemption level makes more sense, but objective valuation has to rely on actual market values of the thing you are buying.
Personally, I would tend toward using 75th percentile redemption values, not because of subjective valuation but because of diversification. Probability suggests that in most situations, if you can choose from using 5 or 6 types of miles or hotel points, you will be able to find at least one opportunity to use your points at more than the 75th percentile value. In fact, if the relative values in any location weren’t somewhat correlated, you would pretty much always find two or three that exceeded the 75th percentile value.


You’re missing the point–the acquisition cost of the points IS objective.


No, it isn’t, because there are two parts to the points process. There is both acquisition and use of points. This approach chooses the acquisition cost versus the redemption value. That is a subjective decision. How you use them is also a subjective decision. And if you are choosing between cash back or points (which seems to be the point of this post), the acquisition cost is common to both and does not aid in the decision.


Acquisition cost absolutely is objective and can serve as a basis of comparison between options.


Just saying that it is objective does not make it so and does not mean that it is useful in making the decision between points and cash back.
Let’s try an example based on the real world. You have the opportunity to buy gift cards from a location that does not offer a bonus for any card (just to make it apples to apples). The cost is $30 for a $1000 gift card. You can get 1000 ultimate rewards points or 2% cash back (pretty easy to do both of these), so your $30 cost will get you either $20 or 1000 UR points. The cost of acquisition is $30, whichever you choose, so how is that $30 cost going to help you choose between cash back and points? You still have to decide whether 1000 UR points is worth more or less than $20 to you.
Further, lets say you were able to buy $100,000 worth of those gift cards, so the acquisition cost is $3000 and you can have either $2000 back or 100,000 UR points. Your 100,000 ultimate rewards points can buy you $1500 of travel in the ultimate rewards portal, 3 nights in the park Hyatt Paris (priced at about $2400), 20 nights in a low level Hyatt hotel (priced at $2000-$4000), 4 domestic roundtrip flights in economy (priced anywhere from $800 to maybe $2400) or pretty much 2 round trip business class flights on United (priced at about $10,000). How is knowing that the cost to acquire the points is $3000 going to tell you whether to go for $2000 cash back or the 100,000 UR points, which are worth (at retail), somewhere between $800 and $10,000? That is even before you have to decide whether the retail price is the value that you would assign to the points. Once you have subjectively decided what the appropriate redemption value is and have figured out that it is greater than the cash back value for you, only then will the acquisition value have any objective bearing on any decision that you make. You can objectively decide whether the redemption value that you have subjectively come up with is higher than the actual acquisition cost of the points and decide whether to acquire them at all. In the example, you would definitely not acquire the cash back because it costs you $3000 to get $2000. If you subjectively valued the points for anything other than the business class flights, you would not acquire the points, however, if you subjectively decided that the points were really worth $10,000, then you would gobble up those gift card as fast as you could. The only decision that the objective acquisition cost assists you in making is whether to acquire the points and the only way that the acquisition cost assists you in making that decision is by comparing it to the subjective value of redeeming them.


That’s simply false. Many redemptions have multiple possibilities. Acquisition costs can compare across these options objectively–for example, a J redemption between two city pairs on oneworld, Star Alliance, or Skyteam is basically fungible. Choosing the objectively least expensive/difficult to acquire is a rational and objective decision.


We can agree on this, at least partly. You have changed the question (you are now asking about which points to use, not cash back versus points) and I agree that if you are intent on a certain redemption, then acquisition cost can help decide which points to use.
I don’t think that it can be used exclusively, however. For example, chase UR points are relatively easy to acquire, American Airlines points are relatively difficult to acquire, however, UR points have multiple possible uses and American miles have very limited uses, so if there is a choice to be made between which one to use, I would argue that you might want to use the American miles if you find a good use for them, even if they may be more difficult/expensive to acquire. I don’t think that acquisition cost/difficulty can be used exclusively to decide which points to use and again you end up with a subjective estimate of the difficulty in redeeming them and balancing off one current redemption against other future redemptions.


Blue, you’re valuing time, logistics, and personal preference at essentially $0 when you say this. For example, given the option of redeeming for an Air India J trip, with 2 layovers in places I don’t care about, or a Q Suites flight with a single stopover including Qatar’s Doha lounge that I love, it would be irrational for me to choose the Air India redemption if it were cheaper, per my *personal* desires.

That’s like saying everyone should always drink the cheapest beer with the most alcohol, because your personal preference in taste or variable alcohol consumption doesn’t matter, you just need a pure cost vs. ABV equation.


You are absolutely correct, Farnothtrader: the 2-part process is what so many people miss. Plus, the idea of whether a particular redemption is “worth” $X over another is purely subjective. The Conrad Tokyo means little to me, and I would barely value it over a much cheaper hotel in the same area. Others would undoubtedly feel different.

There is no such thing as a purely objective value for point redemptions given the personal nature of what each possible redemption means to each person, and at any particular time.


I think all of the comments and Nick’s post illustrate that redemptions are extremely difficult to place a specific value on. One area i find the ‘what would I be willing to spend’ mental analysis works for me is assessing credit card annual fees for hotel cards that offer an annual free night. For example, with the Chase Hyatt card (old $75 annual fee version), last year I used the annual night in Seattle where nights were going for $350 cash. I would not have paid $350 for a hotel night anywhere in Seattle but definitely would have paid $100-150; so I feel the annual fee is easily justified even though I essentially prepaid Chase for the hotel with the annual fee.


My first thought (*completely* not the point):
Château Reyes sounds like an interesting place! I’ve never heard of it! But it’s got to be good if Nick is writing about it.


Since we try to use our miles for premium flights, I value airline miles at ~1.5 cents, based on price I once paid for a business class trip / average # of miles needed for another one. I like Stephen’s formula for deciding if I am getting a “good” redemption and by how much. Thus, a J/F redemption must beat 1.5 cents, and a coach redemption has to be much more (since I am getting less comfort/convenience). I’ve been thinking like this since I started points/miles.

The “redemptions are only worth what you’d pay for the flight/room” argument makes no sense in the real world. It assigns a value of exactly $0 to timing, opportunity, and of course comfort & convenience. It’s good to be conservative in valuation, it really only works as a baseline guide.


All the value methods you mention are squirrelly at best. I decide where I want to go. I look at what points I have and the best value second to where I want to stay. I attempt to never use cash and if I do I use a fourth night free. I always use the highest multiple credit card and rinse and repeat. You take the fun out of luxury travell by approaching it with your method.

Stephen H

So because he approaches points and miles differently than you, it’s wrong? I, like Nick, am frugal both with my money and my points. I’d argue that his (and my) approach is more fun. For me, points and miles is just as much about earning for cheap and finding a balance between stretching my miles (so I can go on more frequent trips) and getting a good redemption rate out of them. I also enjoy building out an awesomely complicated spreadsheet to help me with it all. You value less frequent luxury trips over less opulent/higher frequency trips.


I would have paid to stay at the Park Hyatt New York for 8 nights if I didn’t have points. The rate when I checked in had zoomed from $995 plus tax to $2195. So, are the points worth what I could have booked a paid room at the time I made the reservation? I think so. $995 plus about 20% tax or 30,000 points. I even bought non-sale points to complete the last night.

I was having a medical procedure and needed the Jacuzzi tub in the bathroom and excellent service.
I later found out I could only deduct $50/ night for medical expense accommodations so points were the best currency by far


I stay @ my hospital $70 per IF something gos wrong . Like 5 years ago I could claim a Med lost , Thanks to Obama no more and for others on my block.


This question is about class and capitalism. Most working class people attempt to buy things like travel at the cheapest possible level. Among middle class people there is a mix of people who get the most for their money and those who spend more for a seemingly better experience. Rich people usually pay more for theoretically better experience and products. Capitalism seduces people into believing they want the Tokyo Conrad rather than couchsurfing with strangers. The former is viewed by most people as more valuable. However, the latter not only meets basic needs, it also usually leads to greater cultural exchange. If capitalism marketed to people that cultural exchanges with couchsurfing were more valuable than staying at the Conrad Tokyo, I suspect most people would fall for it and pay more. What are people’s basic needs and wants and who defines them? I collect lots of points and miles and I love sharing them with people who do not have the skill or means to accumulate points; my friends and family get to travel when they otherwise would not or much more sparingly — this is very valuable to them. Capitalism markets you should splurge all of the points on yourself, get the most aspirational value possible (first class all the way). Is that a good use of points and miles? This also begs the question, why do we travel? Who gets to travel and why?


Good for you I have offered to give 6 flts away only 2 took me up on offer . On other blogs I sometimes do GIVEAWAYS (GC’s) for SW airlines .

Matty Tailwinds

It is capitalism to thank that we have the bevy of options that we do. Cheers to capitalism!


It’s capitalism that teaches me that I don’t want to sleep on a stranger’s couch with my wife and two kids in a foreign country I’ve never been to where I don’t speak the language??? Lol.


Couchsurfing is just an example to illustrate who defines value. Travel is a privilege. And your perspective on travel will mainly be determined by your class or how much money you have. Most people cannot travel because they don’t have the money. Most people cannot collect points and miles.


Vote Bernie like I did..CHEERS


Well I’m probably poorer than you but I blow my points on all the aspirational stuff, as it means more to me than not. I have a friend who purely uses cash back as travel isn’t important to him and he wants to own properties, he’ll probably end up being better off than me by a huge margin but I live thinking I’ll die with no afterlife so the experiences and fun are more important to me than playing monopoly.


Great Posts !! i used ur link to get my Hawaiian airlines cc like 2 days ago . Yes a bad value like $.81 So What works for me. ..What’s a good hotel award card for Buenos Aires , Argentina ? I”ll stay 12 nites and will get the Capital One Venture card and will use their link for 10% more off regardless.
Thank You !!!!


Good questions to ask, even if you don’t have the answers. For me, I often prefer reward stays or flights even if I can get slightly better return with a cash back card. For example, $19K spend at 5x gets 95K Hilton points, but gets $380 with a 2% card. Even though I wouldn’t spend $380 on any room, I usually choose to earn points specifically because I wouldn’t pay cash for nice hotels or flights.


Of course I understand I did pay $380. But the point is I wouldn’t pay $380 for a luxury hotel or more business/1st class flights if I had to pay cash straight out of my bank account. It’s a little bit a rational, but it has allowed me and my wife to have experiences we otherwise never would have had.

That said, I didn’t seek value by using travel portals and using credit cards with the highest multiplier what’s the point. My AMEX BBP is my go-to card for non-bonused spend as I have plenty of cards that give bonuses for most categories. The point is that I don’t have a cash-back card because my primary goal is to earn points and miles.


Your ciphering is wrong. With an Ascend card, Hilton cost 0.2cpp @ 6x. So 95K is $190 after-tax dollars. Think most anyone would consider $190 for a room at a Conrad Tokyo good value.

Biggie Fries

Yeah, but the way that you have structured this presentation, I would say that you have demonstrated precisely that you are willing to pay $380 for this particular room, since you could have pocketed $380 in cash instead.

This said, I am sympathetic with your thinking, which I think is close to mine. So let me flesh it out a bit, touching on a couple of Nick’s points. I have discovered that I enjoy hotel rooms that typically sell for $1,000 (in cash). But, like you, like Nick, I would not except under very unusual circumstances pay $1,000 in cash. In fact, I would not usually want to pay $500 for a room that sells at $500, and $380 is also a bit above my “wince” point. But…. access to points has allowed me to stay in $1,000 hotel rooms for $500 opportunity cost in credit card spend, and sometimes I am willing to do that, although the “sometimes” includes the fact that hotel stays can be most efficacious when there are multiple nights, and sign-up offers are yielding points that, when blended with the opportunity-cost-laden points-obtained-with-spend, so that the effective average opportunity-cost-per-night of the $1,000 priced hotel room may be closer to $250-$300.


That’s like taking all your cashback every month and using it to buy Williams Sonoma gift cards – forcing yourself to make a bad financial decision.

2% is really not much, by the way. Use different cards for different categories and you can earn much more. The Bank of America Cash Rewards card can be used to earn 3% on online shopping, and going through e.g. British Airways Shopping will earn 1-10 Avios/$ on top of that. If you shifted your online spending to that combination, you could be earning a lot more, and part of it would go toward a better-value rewards program (don’t forget that Hilton has its own portal as well). Likewise, the American Express EveryDay card earns 2 MR points/$ on supermarket spending, which can be redeemed for 4 Hilton Honors points. Neither of those cards has an annual fee. Splitting your earnings across different programs does mean it’ll take longer to earn enough for a redemption with any of them, which is obviously not ideal. That said, shifting ALL spending to the EveryDay would still increase your HHonors earnings – 4 HH/$ on supermarket spending + 2 HH/$ on everything else.