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I want to focus on a topic that seems to come up a lot during my credit card consultations. It’s the issue of point valuations. I often get questions like, “how much are Amex points worth?”, and “how do I know if I’m getting a good earning and redemption rate?” In this post and video, I want to focus on some points and miles basics. For those of you experienced in this hobby, this might seem like basic information. Though I’m hoping you can help share your tips and knowledge with others who are new to the hobby. Everyone can benefit from hearing other personal experiences of calculating and maximizing the value of points and miles currencies.

To best explain point values, I decided to break down the topic into three parts:

  1. Assessing the value of your point currency
  2. Understanding how point values relate to earning rates
  3. Measuring the value of a booking

1. Assessing the value of your points currency

Easiest way to assess the value of a point

Point values are important to understand when you’re collecting or building a collection of cards. The easiest way to get a baseline on how much a points currency is worth is to look at The Points Guy’s monthly valuation. The Points Guy releases a list every month and shares his team’s valuation of every major travel points and miles currency. They compare the previous month’s value to the current month and note any changes in the valuation.

The Points Guy's monthly point valuations
The Points Guy publishes a monthly valuation of all the major points and miles currencies

I’ve heard many people criticize The Points Guy for their calculations. However, I think it’s a great starting point (pun intended!). Obviously, your experience or situation may be different. For example, a lot of people get the most value per point when redeeming for business or first class redemptions. Though for others (including myself), the focus is to squeeze more travel through economy class redemptions. This means that the target value per point will likely be lower than someone who travels in business or first class.

Chase Sapphire Reserve credit card
The Chase Sapphire Reserve increases the redemption rate to 1.5 cents

For example, The Points Guy values Chase Ultimate Rewards points at two cents per point. I personally value Chase Ultimate Rewards points at a more conservative 1.5 cents per point. Since I have a Chase Sapphire Reserve, I’m able to get a 1.5 cents per point redemption rate on the Chase Travel Portal. I strive to get the best redemption value that I can, but I’m willing to redeem at a minimum of 1.5 cents per point.

Emotional value of points

While measuring the value of points is a quantitative exercise, there’s also a qualitative or emotional component that factors into the value. For example, The Points Guy values American Express Membership Rewards points at two cents per point. Though if I were given the choice between 50,000 Membership Rewards or Ultimate Rewards points (both valued the same by The Points Guy) I would choose the Ultimate Rewards points. My choice is strictly an emotional bias. I feel like Chase UR points are easier to redeem, with multiple high-rate redemptions for airlines and hotels. You might feel differently, which is completely valid. Though for my travel style and personal experience, Chase points are more valuable to me. Though this bias might not be captured by looking strictly at the numbers.

Chase Sapphire Reserve & American Express Gold Card on top of a Bellroy Card Pocket wallet
While I like Amex Membership Rewards points, Chase Ultimate Rewards still hold a special place in my heart

The same holds true for hotel and airline points. Assuming that I could get a hotel or airline point at the same value as a Chase Ultimate Rewards point, I would opt for the Chase point. This is because I perceive value in having extra flexibility when redeeming the points. Again, this might not be factored into the actual numerical value, but it’s something that I consider.

Applying point values to welcome offers

American Express Hilton Honors Ascend credit card
Learn more about American Express cards

Understanding how much a point is worth also helps to understand the value of a welcome offer. For example, as of March 2019, the American Express Hilton Ascend card offers a welcome offer of 125,000 Hilton Honors points for spending $2,000 within the first three months of account opening. If you factor that Hilton points are worth 0.6 cents per point, then the offer is worth $750.

Chase Sapphire Preferred credit card
Learn more about Chase cards

Another popular card is the Chase Sapphire Preferred. As of March 2019, it’s offering a welcome offer of 50,000 Ultimate Rewards points after spending $4,000 within the first three months of account opening. If we go with The Points Guy valuation of two cents per point, you’re looking at $1,000 worth of travel. If you use a more conservative 1.25 cents per points, then you’re looking at $625. I think that this is a more realistic value for the average traveler.

2. Understanding how point values relate to earning rates

Now that we understand how much a points currency is worth, you can now measure how much a card earns. The way I calculate the adjusted earning rate is by multiplying the card’s earning rate with the points value. This gives me the adjusted rate.

Chase Freedom Unlimited Adjusted Earning Rate Calculation
While the Chase Freedom Unlimited has a 1.5X or 1.5% earning rate, it’s adjusted rate is 2.25x or 2.25% (for me)
Chase Freedom Unlimited credit card

A great example of how earning rates might be affected by the points value is the Chase Freedom Unlimited. I’ve talked to folks who have asked me why I use the Freedom Unlimited for the bulk of my non-bonus spend when I could be getting 2% cash back with the Citi Double Cash. Even though the card earns 1.5X or 1.5% on all purchases, it’s actually earns at a rate of 2.25% since I value Chase Ultimate Rewards points at 1.5 cents. If I used The Points Guy’s valuation of two cents per point, I would be looking at a 3% return. Despite having an earning rate of 1.5X or 1.5%, the card has an adjusted earning rate of 2.25% when I factor my value for Ultimate Rewards points.

Example: Chase Sapphire Reserve/Preferred vs World of Hyatt

Adjusted earning rate calculations when using World of Hyatt, Sapphire Reserve, Sapphire Preferred when paying for Hyatt purchases
In the case of Hyatt purchases, it makes sense to use the World of Hyatt card to get the maximum value per point
Chase World of Hyatt credit card
The Chase World of Hyatt card earns more points than other Chase cards when used at Hyatt hotels

Suppose you have the Chase Sapphire Reserve or Sapphire Preferred card and the World of Hyatt card, and you stay at a Hyatt hotel, which card should you use? If we break down the points, we can see that the World of Hyatt card has a 4X bonus on purchases at Hyatt hotels. The Sapphire Reserve and Preferred card have 3X or 2X bonuses on travel purchases. If each Hyatt point is worth 1.7 cents (according to The Points Guy), then you’re earning about 6.8 cents by using your World of Hyatt card. If we use The Points Guy’s value for Chase Ultimate Rewards points, you’ll see that it still makes more sense to use the World of Hyatt card since it earns more at Hyatt hotels and resorts.

Delta Amex vs Amex charge cards

American Express Gold Card
The Amex Gold Card can be a better way to earn points toward Delta, especially if you spend a lot on dining out and groceries. Learn more about American Express cards.

This can also work the other way. For example, a friend of mine was interested in earning Delta points. While getting a Delta-branded card from American Express is an obvious choice, I suggested that he also get an American Express Membership Rewards card. Cards like the Amex Gold could help him earn points due to the bonus structure. For example, since he spends a lot on dining and groceries, he could earn a lot more Membership Rewards points. These points can then be transferred over to Delta. Even with a transfer fee, he would likely earn more points and value with an American Express card than a Delta card when it comes to his everyday spend.

I know there are other variables that have to be weighed and considered, like qualifying miles and other card perks. However, don’t assume that the branded credit card is always the best card for earning a specific points currency.

3. Measuring the value of a booking

Now that we know how to measure the adjusted earning rate of a card by factoring in the value of the points currency, you might be asking, “how do I know how much value I am getting in my redemption?”

Formula for calculating the per point value of an award booking

Formula for calculating value of an award booking
This formula can help you determine how much value you’re getting from your award booking

To calculate the value of a booking, I divide the cash value of the booking by the equivalent number of points needed. This gives me the per point value. Knowing this information can help inform whether I want to transfer the points to a travel partner or book through a travel portal.

Example: Hyatt Place Moab booking

For example, we recently booked a five-night stay at the Hyatt Place Moab in Utah since we’ll be exploring some of the national parks in September. If I booked the five-night stay using cash, it would cost over $1,400 to stay at the hotel. However, it costs 8,000 points to stay per night. So at 40,000 points total, I’m getting a per point value of 3.6 cents per point!

Hyatt Place Moab award booking value per point redeemed
We were able to get 3.6 cents per point on our award booking at the Hyatt Place Moab

You can use the same method for any type of booking where you can compare both the cash and points cost. We previously did a post/video on when to use the Chase Travel Portal and why it’s sometimes a better deal than transferring points to a travel partner. I basically used the same method to calculate whether I am getting at least 1.5 cents per point. If not, it makes more sense for me to use the Chase Travel Portal to book the hotel or flight. This is due to the fact that I can redeem Chase points at 1.5 cents since I have the Sapphire Reserve card.

What if I don’t want to deal with the hassle of calculating point values?

via GIPHY

You might be saying, “All this math is making my head spin. Isn’t there an easier way for people who don’t want to spend time figuring out all this stuff?” The answer is yes! There are several flat-rate travel rewards cards out there that will earn 2% back for travel expenses. Since these cards typically redeem at one cent per point, you only have to think about the front part of the equation. These cards can be a great way to earn and redeem points towards travel without the hassle of trying to figure out best redemption rates.

Example: Barclaycard Arrival Plus

Barclaycard Arrival+ credit card

An example of such a card is the Barclaycard Arrival Plus. As of March 2019, there is a limited time welcome offer for 70,000 bonus miles after spending $5,000 on purchases in the first 90 days of account opening. The offer is worth $700 since each Barclaycard Arrival mile (which is not really a mile, but instead a point), is worth one cent per point. The card earns two points per dollar, so it’s essentially a 2% cashback card that you can apply toward travel expenses. It does have an annual fee of $89, but it waived the first year.

Example: Capital One Venture Rewards

Capital One Venture Rewards credit card

Another example of a flat-rate travel rewards card is the Capital One Venture Rewards. As of March 2019, the card has a welcome offer of 50,000 miles after spending $3,000 on purchases within the first 90 days of account opening. Like the Barclaycard Arrival Plus, the card redeems “miles” as one cent per point, so the welcome offer is worth $500. The card offers credit toward Global Entry/TSA Precheck and offers the ability to transfer miles to several airlines. It has an annual fee of $95, which is waived in the first year. Learn more about Capital One cards.

These cards are great for those who want a simple way to earn and redeem points. While you can usually squeeze more value from a flexible points program like Chase Ultimate Rewards or American Express Membership Rewards, they do require more time and effort to research redemption rates. Even if you’re heavily invested in a flexible points program, it’s often worthwhile to have a flat-rate card to cover miscellaneous travel expenses.

What do you think about point values? I’d love to hear how much you think your favorite points currency is worth.

If you’re interested in applying for a new credit card, we encourage you to compare credit card offers. We do get a commission if you use our link. It doesn’t cost you anything extra, but it helps us to continue building content for our site and channel.

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