How Much Are My Points Worth? | Understanding Earning & Redemption Values


Hey, Happy Mardi Gras everyone! Hope you
all are having a great week. It’s Ernest from Trip Astute. In this video, we’re
focusing on point valuations and why it’s important to understand how much
your points are worth when evaluating and using credit cards for travel. (light chiming music) First off, I want to thank Jorge for sending over some Mardi Gras supplies from New
Orleans. I really appreciate the love. Also, I want to give a shout-out to
Masoom for suggesting that I explore this topic. Today, I want to focus on the
topic that seems to come up a lot during my credit card consultations. It’s the
issue of point valuations. I often get the question, “how do I know how much a
point is worth?” and “how do I know if I’m getting a good earning and redemption
rate? So in this video, I want to take a step back and focus on some points and
miles basics when it comes to understanding your point values. For
those of you who’ve been doing this for a while, this might seem like basic
information. But I’m hoping that you all can share your tips and knowledge with
others who are new to the hobby and who can benefit from your experience. Before
we jump in, if you’re new here, welcome to our channel. Trip Astute is a travel
channel that is focused on sharing ways to make travel easier, affordable, and
more enjoyable. Traveling can be stressful and expensive, so we’re looking
for ways to help you maximize your experience through travel tips, points and
miles, and innovative gear. If that sounds interesting to you,
please consider subscribing. A few weeks ago in my AwardWallet video, I mentioned
how we can be confusing that a 1.5 percent card could earn me more points
or value than a two percent card. Since it’s also a recurring theme in a lot
of my consultations, I figured I’d break down the topic of measuring points value
into three parts. Number 1: Assessing the value of your
points currency. Number 2: Understanding how it relates to your cards earning
rate. And number 3: Determining the actual redemption rate for bookings. So let’s
start with assessing the value of your points currency. Point values are
important to understand when you’re collecting or investing efforts into
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 does a great job of
breaking down his team’s perceived value for each point currency. They usually
show the previous months value and compares it to
the current month, and notes the reason why there might be a change in valuation,
I’ve heard people criticize The Points Guy for their valuations, but I think it’s a
good 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. For a lot of people,
including myself, the focus is trying to squeeze more travel through economy
class redemptions, which means that the target value per point is probably going
to be lower than someone who travels in business or first-class. So if that’s you,
you might be getting slightly less value than what The Points Guy lists. For
example, The Points Guy values Chase Ultimate Rewards points at two cents per
point. When I tend to measure the value, I usually use 1.5 cents per
point since it’s a bit more conservative and it’s the least amount that I would
redeem, since I can get that rate on the Chase Travel Portal with the Sapphire
Reserve. Obviously, I always like to get the best redemption value that I can get,
but I’m willing to redeem my points at a minimum of 1.5 cents per
point. Also, while measuring the value of points is a quantitative judgment,
there’s also a qualitative or emotional component that factors into the value.
For example, The Points Guy also 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, which are both valued the
same by The Points Guy, I would choose the Ultimate Rewards points, only because
I feel like I have more options to redeem the points. You might feel
completely different about it, which is totally valid. Though for my travel
style, I value Chase points more, which means
that it’s a more valuable currency to me, which might not be captured by looking
solely at the numbers. The same holds true for hotel and airline points.
Assuming I could get a hotel or airline point at the same value as I could get a
Chase Ultimate Rewards point, I would opt for the Chase point. This is because there is
value to me in having that extra flexibility to use the points in
different ways. Again, that might not be factored into the actual numerical value,
but it’s something that I consider. Understanding how much a point is worth
also plays into understanding the value of a welcome offer. For example, as of
March 2019, the American Express Hilton Aspire card offers a welcome offer of 150,000 Hilton Honors points for spending
$4000 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 $900. Another popular card is the Chase
Sapphire Preferred. Also, as of March 2019, it’s offering a welcome offer of 50,000
Ultimate Rewards points after spending $4000 within the first three
months of account opening. If we go with The Points Guy’s valuation of two cents
per point, you’re looking at $1000 worth of travel. If you use a
more conservative 1.25 cents per point, then you’re looking at
$625, which I would argue is probably more
realistic for the average traveler. So now that we understand how much a points
currency is worth, you can now understand how much a card actually earns. A common
example of how earning rates might be affected by the points value is the
Chase Freedom Unlimited. I’ve talked to a few folks who have asked me why I use
the Freedom Unlimited for a lot of my non bonus spend when I could be getting
2% cash back with a Citi Double Cash or another card. My response is that even
though the card earns 1.5 X or 1.5% on all purchases, it’s actually earning a
rate of 2.25% since I value Chase Ultimate Rewards points at 1.5
cents. Again if I use The Points Guy’s valuation of two cents per point, I would
be looking at a 3% return. So even though the card has an earning
rate of 1.5 X or 1.5%, it has an adjusted to earning rate of 2.25%
when I factor my value for the points currency. The way I calculate the
adjusted earning rate is by multiplying the cards earning rate with the points value.
This gives me the adjusted rate. So, here’s another example. Suppose you have
the Chase Sapphire Reserve or 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 Hyatt card has a 4 X bonus on purchases at all Hyatt Hotels, while
the Sapphire Reserve and Preferred card have a 3 X or 2 X bonus on travel
purchases. If each Hyatt point is worth 1.7 cents according to The Points Guy, then you’re earning about 6.8
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. 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 not a bad
idea, I suggested that it might be better for him to get an American Express
Membership Rewards card like the Gold card that could earn points at an
increased rate. For example, since my friend spends a lot on dining and
groceries, he could earn a lot more Membership Reward points which could
then be transferred over to Delta. Even with a transfer fee, he would likely be
able to get more points with an American Express charge card then a Delta card
when it comes to his daily spend. I know that there are other variables that have
to be weighed and considered like qualifying miles and other card perks. But for
simplicity sake, don’t assume that branded credit cards are always the best
card for earning that specific points currency. Now that we know how to measure
the adjusted earning rate of a card by factoring the value of the points
currency, how do I know how much value I’m getting in my redemption or 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 points to a
travel partner or book through a travel portal. 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 book the five-night stay using cash, it
would cost me over $1400 to stay at the hotel. However, it
only costs 8000 points to stay per night, so at 40,000 points
total, I’m getting a per point value of 3.6 cents per point, which is
great. You can use the same method for any type of booking where you can
compare both the cash and points cost. In fact, we did a video a while back on
when to use to Chase Travel Portal and why it’s sometimes a better deal than
transferring points to a travel partner. In that video, I basically used the same
method to calculate whether I’m 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, since I can redeem Chase points at 1.5 cents because I have the Sapphire Reserve card. Definitely check
out the video for more information on the process. Now, if you’re watching this
video and 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 all this stuff out?” The answer
is yes. There are a lot of flat rate travel reward cards out there that will
give you a flat 2% back towards your travel expenses. Since these cards
typically redeem at one cent per point, you only have to think about the front part
of the equation. And actually, for most of these cards, you don’t have to think
about it at all since they earn a flat rate. These cards can be a great way to earn
and redeem points toward travel without the hassle of trying to figure out best
redemption rates. 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 points
after spending $5000 on purchases in the first 90 days. This
offer is worth about $700 since each Barclaycard Arrival
mile, which is not really a mile but really a point, is worth one cent per
point. The card earns two points per dollar, so it’s essentially a 2% cash
back card that you can apply toward travel expenses. It does have an annual fee of
$89 but it’s waived the first year. These types of 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’s Ultimate Rewards or American
Express’ Membership Rewards, they do require a lot more time and effort to
research redemption rates. In fact, even if you’re heavily invested in a program,
it’s often worthwhile to have one of these flat rate cards to cover
miscellaneous travel expenses. What do you all think about point values? I’d
love to hear how much you think your favorite points currency is worth. Please
share your thoughts and any additional tips in the comment section below. If
you’re interested in applying for a new credit card, we would love it if you used
our link in the video description or on our website. It’s an easy way to support
our channel, especially if you found our content to be valuable and helpful. Also,
if you need any help with determining what your next card should be, sign up
for our free card consultation service. You’ll basically fill out a
questionnaire and schedule a 15-minute video or audio call with me to review
your recommendation. If you enjoyed this video and found it useful, please give us
a thumbs up and consider sharing the video
others. It really helps with growing our channel and our community. Until next
time, travel safe and travel smart.

22 thoughts on “How Much Are My Points Worth? | Understanding Earning & Redemption Values

  • Ernest as always a very classy and concise presentation of information on an interesting topic. My love … and continue the journey.

  • Thank you for making this video. Many other you tubers mostly talk about earning the points but there’s a whole separate strategy in redeeming them. This video helps break it down.

  • Yes, but this points are worth only in the scope of traveling. What if you want just plain cash back. Then I think a 2% back card would be more ideal right. Good video! always very informative.

  • Thanks for the shoutout Ernest. I really appreciate it.

    My favorite points currency is Ultimate Rewards. I value them at around 2 cpp, but I am willing to redeem them for 1.5 cpp in certain scenarios.

  • You can also use the Chase Travel Portal to book activities for 1.25 cents per point. I used the Chase Travel Portal to book snorkeling in Iceland which was an amazing experience. That would have cost around $200 alone so that helped me save some money on that trip. American Express Points are much more valuable when you have the Charles Schwab American Express Platinum card in your wallet along with the Gold card. With the Schwab Platinum Amex card, you can cash out at 1.25 cents per point which I had to do to cover the difference of my flight to Punta Cana since I was limited to 8 gift cards for American Airlines. Still have 151,000 Amex points after that!!! Chase Sapphire Points Rock to as I have about 100,000 of those

  • Awesome video! You did a great job of clearly explaining how to determine the value of a booking. I do this everytime I'm looking for flights and hotels

  • Many thanks for covering this simple yet at times confusing topic. I’ve often gotten ahead of myself and forgotten which way was up, and felt the answer was right in front of me. Should I use transfer partners, UR portal, or just cash?

    Maybe one extension of this topic could be the more common ways folks redeem points. Air fare, hotel, car rental, etc. …and which brands of those tend to have best conversion rates. I’ve often heard great things about Hyatt’s straight forward system, and that was your example too.

    One item to remember, points could be best value for a hotel standard tariff rate, but a discount rate (AAA, member of their loyalty program, pay in advance, etc..) can get the rate down to where paying it outright is the best option.

    Some folks might simply want to use their points to get them redeemed. I get it.

    For a new topic, how about ways to use points for ski trips, resorts, which brands are on property/slope side or in town? Plenty of videos on beaches already. Just a thought.

    Great job. Well done!

  • Excellent presentation. Yes, sometimes the math begins to feel like it's heating up some brain circuits but that's okay, especially since it is, after all, a nutritionally dense video, topic wise!

  • The points guy is wrong which is why what you said in the video. chase points are bonus on dining out and travel other category's are 1 point since both cards have annual fees and are not flat rate cards even if you transfer your points I like your answer better than his 1.50 sounds correct?

    since I only have 2 travel cards My venture1 I value at 1 cent per point since I won't be booking any flights with any of the transfer partners. mine is 1 cent per point. I like your answer on the Chase Sapphire the one that I renamed the regular I like 1.5 Trip astute when you factored in the 1.50 you took consideration that it has a 95.00 annual fee? or the 1.5 you didn't calculate the 95.00 annual fee?

  • If you had 2 slots left before hitting Chase 5/24 what's cards would you get. I'm considering the Freedom Unlimited and a hotel card (leaning towards Hyatt as I continue researching). I got the CSP that I'll upgrade to CSR after the first year or if my traveling frequency changes. I already earn Southwest Comp. Pass for the rest of this year until the end of 2020. I'll be getting some biz cards but I was to maximize my last couple of slot. Any feedback is appreciated!

  • For me united airlines points I value them a lot higher if used them during holiday season..for example flying to New Zealand 🇳🇿 during Christmas flight from LAX to Auckland are about $1300 and it’s only use 40000 points

  • I’m with you bud, I’m all about UR and going the efficiency route with SW and Hyatt. More trips! That’s an awesome Hyatt redemption!

  • Thank so much for sharing.
    Our family is motivated to earn Qantas Frequent Flyer points. We can share them amongst the family so we all help each other out.
    We receive points through Qantas linked credit cards, Woolworths Reward points and Qantas Wellness, an app that encourages regular walking, running and good sleep habits.
    So far, within our family, we have been upgraded to first class six times. Hopefully again in 3 weeks when we’re off to Europe.
    To apply for upgrades from Melbourne to London return we need 302,000 points. I have 326,000 currently.
    Cheers and look forward to more of your vids.

  • I think that all this stuff with points is just for you American. Here in Europe (or at least in Italy) a credit card is just that and you only get very little point award programs (13.000 Point for 15€ Amazon coupon or so).

    Or does someone know about more international cards that would work for me too?

  • Hey!
    I got the saphire preferred after calling Chase.
    Is $23,600 starting approved credit line for saphire preferred good or okay?

  • Points Guys valuation are super suspect in my opinion.  He doesn't release his methodology and every situation is different.  It makes sense to value UR points at 1.5cpp if you have a Sapphire – as that should be the baseline.

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