How do you calculate cents per point (cpp) on a rewards credit card?

[Anonymous]

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@Anonymous wrote:
The question I have for you travel hackers, do you calculate cpp based on the value at the airlines website, or do you go on cheap tickets and see how much an equivalent flight would cost?

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Most people are lazy and do it based on the value on the airlines website. However, you should compare to whatever service you would use and plug in those values. 

[Anonymous]

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@Anonymous wrote:

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@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

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The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

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Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

---

The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

---

Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

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I have about the same opinion as you - in the above examples I would take the AA flight to Seattle and the CX flight First class to Hong Kong no question.

But others do not share this idea. They prefer to squeeze the maximum number of trips out of their miles and really do not care about how it is that they get from A to B. And for them the calculations are different

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

---

The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

---

Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

---

I have about the same opinion as you - in the above examples I would take the AA flight to Seattle and the CX flight First class to Hong Kong no question.

But others do not share this idea. They prefer to squeeze the maximum number of trips out of their miles and really do not care about how it is that they get from A to B. And for them the calculations are different

---

Very true and I know people like that..  I'm going to have to look into the Cathway flight before the upcoming devaluation.  Really want to use my AA points for a Qantas flight but there never are any first class awards available :-/. They don't even hardly offer any AA flights to Sydney under First Class mile savers.

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

---

The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

---

Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

---

I have about the same opinion as you - in the above examples I would take the AA flight to Seattle and the CX flight First class to Hong Kong no question.

But others do not share this idea. They prefer to squeeze the maximum number of trips out of their miles and really do not care about how it is that they get from A to B. And for them the calculations are different

---

Very true and I know people like that..  I'm going to have to look into the Cathway flight before the upcoming devaluation.  Really want to use my AA points for a Qantas flight but there never are any first class awards available :-/. They don't even hardly offer any AA flights to Sydney under First Class mile savers.

---

CX is not quite as bad as Qantas in terms of availability, but it is pretty tight. It is almost impossible to find 2 seats more than 2 days in advance (their first class cabin is tiny - only 6 seats). You can find a first class seat here and there, so if you are flying solo it is totally doable a few months in advance (right now there is some availability this spring).

CX Business class however is a very different story. They release a good amount of availability, and it's by all accounts a fantastic product. It is not uncommon for people to book Business seats and then the day of, when CX dumps all the inventory in the mileage availability, bump it up to first. Although obviously by then the devaluation will have already happened. I will say though, in my opinion, even at 110K one way, it's still worth it!  

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

---

The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

---

Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

---

I have about the same opinion as you - in the above examples I would take the AA flight to Seattle and the CX flight First class to Hong Kong no question.

But others do not share this idea. They prefer to squeeze the maximum number of trips out of their miles and really do not care about how it is that they get from A to B. And for them the calculations are different

---

Very true and I know people like that..  I'm going to have to look into the Cathway flight before the upcoming devaluation.  Really want to use my AA points for a Qantas flight but there never are any first class awards available :-/. They don't even hardly offer any AA flights to Sydney under First Class mile savers.

---

CX is not quite as bad as Qantas in terms of availability, but it is pretty tight. It is almost impossible to find 2 seats more than 2 days in advance (their first class cabin is tiny - only 6 seats). You can find a first class seat here and there, so if you are flying solo it is totally doable a few months in advance (right now there is some availability this spring).

CX Business class however is a very different story. They release a good amount of availability, and it's by all accounts a fantastic product. It is not uncommon for people to book Business seats and then the day of, when CX dumps all the inventory in the mileage availability, bump it up to first. Although obviously by then the devaluation will have already happened. I will say though, in my opinion, even at 110K one way, it's still worth it!  

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Part of my problem is that I need 2 seats.  If I were fly solo I might as well not come home :-/

[Anonymous]

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@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@Anonymous wrote:

---

@PointLager wrote:
This is how I do it:

Cash price $1500

Mileage award equivalent 60,000
Award taxes $100

Value per mile:
($1500-$100)/60,000 = 2.33 cents

The above is an example for United redemption on an economy European flight

Then apply to the card in question.

For example, United club pays 1.5x per dollar spent so I am getting 3.5 cents value on the card per dollar spent.

---

The only thing to add onto this is to make sure you compare to the value for you. 

What do I mean? 

Let's say you can redeem 10K miles for a flight from Chicago to Seattle, which is a direct 4 hour flight that you can book on American airlines for 10K British airways avios. 

Ok, what is the "cash" rate that you are comparing it to? The rate of that exact flight? How about if there is a flight that you book for $150 on that route on Sprit Airways, but the AA flight is $300? Spirit is definitely a much worse flying experience, but you may not care. 

This works the other way also. Say you want to go to Hong Kong. You can redeem 67K American Airlines miles for a flight in first class on Cathay pacific. What value are you getting here? That first class seat sells for $20,000. Are you really getting 30 cents per AA mile? Likely not, because you would never pay $20,000 cash for a plane ticket. Ask yourself how much you would actually pay for that flight (which BTW is a bucket list flight that you should do!) 

Hotels are similar. OK, that Sheraton costs $300 per night and costs 10,000 SPG points. But there is a Holiday Inn next door that only costs $150 a night. Do you actually value the Sheraton stay higher? Maybe, or maybe not

---

Well I understand what you are saying I sorta have to disagree.  In your first example for me personally the value of the points only relates to the AA flight because under no circumstance would I ever fly Spirit regardless of how I was paying for the ticket.  So it has no part in me calculating point value.  In your second example I do understand  that most people would never pay the $20K for the ticket but isn't that really what rewards points are for, at least partially?  To allow you to take a flight, vacation or whatever that you might not be able to afford otherwise.   So to me it really does have a value of 30 cents per mile. 

---

I have about the same opinion as you - in the above examples I would take the AA flight to Seattle and the CX flight First class to Hong Kong no question.

But others do not share this idea. They prefer to squeeze the maximum number of trips out of their miles and really do not care about how it is that they get from A to B. And for them the calculations are different

---

Very true and I know people like that..  I'm going to have to look into the Cathway flight before the upcoming devaluation.  Really want to use my AA points for a Qantas flight but there never are any first class awards available :-/. They don't even hardly offer any AA flights to Sydney under First Class mile savers.

---

CX is not quite as bad as Qantas in terms of availability, but it is pretty tight. It is almost impossible to find 2 seats more than 2 days in advance (their first class cabin is tiny - only 6 seats). You can find a first class seat here and there, so if you are flying solo it is totally doable a few months in advance (right now there is some availability this spring).

CX Business class however is a very different story. They release a good amount of availability, and it's by all accounts a fantastic product. It is not uncommon for people to book Business seats and then the day of, when CX dumps all the inventory in the mileage availability, bump it up to first. Although obviously by then the devaluation will have already happened. I will say though, in my opinion, even at 110K one way, it's still worth it!  

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Part of my problem is that I need 2 seats.  If I were fly solo I might as well not come home :-/

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I feel you. I couldn't even make this happen for my honeymoon. What I ended up doing was booking two tickets EWR-HKG in business. It's J, but at least there is no F so you are top of the food chain. And it's possible that two F tickets will open up from JFK that day and I might splurge and bump them up, even for an extra 55K each. 

[takeshi74]

Yikes, please trim those quotes.

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@galahad15 wrote:

Thanks everyone for the helpful info!  Also as a quick follow-up: so j/c, are cpp and % values functionally equivalent, or if they do differ depending on the nature of the rewards, under what kinds of circumstances (if any) would their calculations vary?

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They're not the same. % cash back is a percentage based on spend.  CPP only considers how redemption impacts reward value and does not account for spend.  The rewards card may earn multiple points per dollar spent depending on category.  LTL already pointed this out but you really need to look at point value versus dollar spent to compare to cash back %.

In other words, to compare you want to get to "how much did I spend versus how much reward did I get back" for both items you're comparing.

Spend * reward rate = reward amount

With points/miles you have to determine the reward amount.  Once you have that you can calculate the reward rate since you know the spend.  For cash back cards the % cash back is the reward rate.

[Anonymous]

OP, as you can tell from the discussion above, there are a lot of factors that go into how you value a point. Functionally, you want to convert it to a percentage of spend. Starwood is a great example. They give 5 points per dollar, and if you only compare to their properties, the general consensus is that you get 2.5 cents per point. This translates to 12.5% back. However, if you're open to other, cheaper options, then maybe the points aren't worth quite so much. If you buy your plane tickets on Expedia, the discounts that you get there also need to be taken into account. This is what makes rewards programs much trickier to value and makes the rewards very personal.