Using your points
Should you pay cash or use points?
Calculate the cash you save, then compare it with the other ways you could use those points.
By Jason Reza · Published · 2 min read
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Start with a fair comparison
Compare the same dates, room or cabin, baggage and cancellation terms. A refundable award and a restrictive cash fare do not buy the same thing.
Also price the cheaper flight or hotel you would choose if paying cash. That alternative may be a better measure of your savings than the award’s expensive published cash rate.
Calculate cents per point
Subtract the cash charges on the award booking from the comparable cash price. Divide that saving by the number of points required, then multiply by 100 to express the result in cents per point.
Hypothetical example: a flight costs $420 in cash, or 30,000 points plus $45. The points save $375. Dividing $375 by 30,000 and multiplying by 100 gives 1.25 cents per point. These numbers illustrate the calculation; they are not a live fare or a program valuation.
Check the alternative redemption
Check what those same points could do elsewhere, including any cash redemption your account offers. As an illustration, if 30,000 points could instead become $300 in cash, using them to save $375 on the flight provides $75 more value before other differences.
That does not mean you must always pick the highest number. Preserving cash for other travel expenses or choosing a simpler booking may matter more. Avoid stretching your budget to earn rewards or to make a redemption possible.
Costs the formula leaves out
Look at refund rules, change fees, extra travel time, and any rewards or benefits you would receive on the cash booking. For hotels, compare the final totals and read how the booking channel affects any loyalty benefits you care about.
If you buy additional points to complete an award, include their purchase cost. If you are evaluating whether to get or keep a card, assess its annual fee separately rather than pretending that the points have no cost to earn.
Make the booking decision
Pay cash when the points avoid little spending compared with another use you expect to make. Use points when they remove a worthwhile cost from a trip that fits your budget.
Keep the final comparison: cash paid, points spent and the terms you accepted. That is enough to judge the booking without chasing a universal cents-per-point target.
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