Anticipating point values

[wasCB14]

Some people have simple reward strategies. They only earn cash back, or they only earn URs. Cash back people know exactly what they are getting, and UR people may not know their future redemption values, but always know which card to use.

Others have a mix of rewards programs: cash back, transferable points, and hotel/airline-specific points. As such, if rewards are the only consideration in picking a card for a given transaction, they must make some estimate of point values and try to be fairly precise.

In making those estimates, I find myself facing a dilemma. My track record is pretty good in that I've gotten high cpp values on travel I would have paid for, anyway. My past redemptions would suggest that I can get 2 cpp for an MR or Hyatt point quite easily.

And yet I find myself a little reluctant to pass up cash back at times. I use Costco at the warehouse for 2% when I could use my Hyatt for a little more than 2%. I use Costco at all gas stations for 4% when I could probably beat 4% with my BBP. I even wonder if 5% cash cards are really worth it.

Now, convenience is a factor. If I had a Costco membership card, a separate credit card, and my DL for alcohol out, the odds are not insignificant that I'd somehow lose one. With BBP, recordkeeping is a little easier when the card doesn't have a ton of small transactions. But these factors are fairly small.

How do other people handle anticipating point values? Pick high but reasonable values and stick to them? Pick more modest values and just consider it a nice surprise when your miles go further? Other thoughts?

[Anonymous]

I dabble in 4 travel programs (Starpoints/Marriott, Skymiles, MR Points, and IHG Points) and I only have a few cashback cards (Quicksilver, Uber, and BCE) so I may not be the best example of what you're looking for but I'll let you know my method. 

I keep an Excel spreadsheet with an easy redemption value. This is the lowest cent value I know I can get out of the point/mile. For example, I know I will not get less than $0.0135 per MR point since I have the Business Plat. Some other point/mile currencies fluxuate and can be a little more difficult. For those I pick the lowest (reasonable) value that I would redeem them for. I would never redeem a Starpoint for less than $0.02, a Skymile for less than $0.012, or a IHG point for less than $0.01. You can do the same with MR points (or UR) if you have a streak of redeeming them for a certain value.

If I'm not traveling or looking to use points, I will stick to those values and use that to determine if I will use a Point or Cash Back Card. The only time I stray for that is if I have a trip coming up and I know the redemption value will be better than any cash back card (or other point cards). For example, if I'm planing to visit the Timbucktwo St. Regis Hotel (may or maynot be a real hotel) and the redemption value is $0.05, I will assign a higher amount to that currency until I have enough to book it. Then once it's booked, I'll assign Starpoints back to $0.02. I've found that to be the easiest for me. 

Once all this Marriott and SPG dust clears, I'll probably only dabble in Marriott Reward Points (or whatever they'll be called), Skymiles, and MR Points. IHG was my fall back hotel since SPG isn't everywhere, but now that they're with Marriott and there's at least 1,500 Marriott Brand Hotels on every block in every city, I should be fine forever  

[UpperNwGuy]

I have a simple strategy:

-- Earn UR points on my Sapphire Reserve card and transfer the UR points to United miles for redemption.

-- Earn United miles on my United Explorer card and redeem them for flight.

-- Earn cash back on PenFed Power Cash and Navy cashRewards cards.

I have miles/points balances in the following loyalty programs other than United, but don't use the associated credit cards:

-- American

-- Jet Blue

-- Delta

-- Lufthansa

-- Marriott

My United miles redemptions are for less than $.02 a mile because I always redeem for economy airfares to Europe.  My goal is not to achieve short-lasting luxury during an 8 hour flight but to get to Europe at least twice a year without having to purchase airfare. This plan has worked well for me for the last four years.

[MrDisco99]

I tend to focus on one currency at a time.  Like when I was meeting the bonus spend on my ED card last month, I complemented it with my PRG and EDP to maximize point earning in the process.  Since then I've switched back to Citi TYP plus cash since I have a Citi point redemption coming up that is more pressing, and I need that and cash more than I need MR points right now.

I realize I have more currencies right now than I can sustainably justify keeping.  I'd probably do better narrowing them down rather than spreading out my spend and taking longer to get to redemptions.  Not to mention the AFs for all these programs become self defeating.  I plan to do some serious spend analysis when I get my next yearly summaries and figure out what to keep and what to drop.

[redpat]

Business and personal spend is either MR or UR w/ some AA and SPG sprinkled in.  I use the point categories for the best bang for my buck all dining is on CSR, all flights are put on Amex personal plat for 5x w/ some Barclays AA for 3x and Ink+ is huge w/ 5x categories, all Marriott / SPG stays on my SPG card.

I also get a ton of points using AA dining & shopping, UR shopping and Amex offers.  We dump our amazon prime and never missed a beat w/ pricing or shipping since we are getting more value getting all our spend towards free travel and upgrade options.

Then when we are planning a vacation I take a look are all the options we have using those points and found CSR 1.50x and Amex Bus plat 35% rebate give us some great options rather than using the transfer point option.  You can travel first class (air & hotels) while having your points subsidize the extra cost vs. of going coach or staying in a reg room vs. a suite, lounge access, free breakfast and late check-outs.

I can never go back to economy/budget travel, lol!

[iced]

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@wasCB14 wrote:

How do other people handle anticipating point values? Pick high but reasonable values and stick to them? Pick more modest values and just consider it a nice surprise when your miles go further? Other thoughts?

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When it comes to earning, the short answer is I don't. I know I will get far more value out of a mile than I will via cash-back so the exact value just doesn't matter. In fact, I don't even really equate my miles with a cash value anymore. For me, the return on cash-back isn't significant enough to move any needles in my life so I'd rather have the points.

When it comes to redeeming, I'm probably in the 'high but reasonable and stick to them' bucket. I keep some minimum thresholds before I would consider redeeming points/miles. If a hotel prices out to ~$350/night or less I'll just pay cash, but if it's more I'll also check point costs to see if that's a better deal than spending cash. Similar deal with airfare: if it's going to be $2,000/person or less, I'll just pay cash; more, and I'll check point redemptions. Since most international business tickets price out considerably more than $2,000/person, I'll frequently start with miles redemptions there. With this approach, I can approach 1 cpp with hotels (but I do not earn any hotel points via CC spend so this isn't relevant) and regularly get 6-9 cpp with airfare.

Another consideration is that my CC rewards don't exist in a vacuum. That is, earning points via CC is part of a larger mileage-earning strategy where I'm also gaining miles from flying, renting cars, dining out, and a number of other things that have no dependence on which CC I use. When I redeem miles for a flight, I would estimate that less than half of those miles came from a CC.

[iced]

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@redpat wrote:

Then when we are planning a vacation I take a look are all the options we have using those points and found CSR 1.50x and Amex Bus plat 35% rebate give us some great options rather than using the transfer point option.  You can travel first class (air & hotels) while having your points subsidize the extra cost vs. of going coach or staying in a reg room vs. a suite, lounge access, free breakfast and late check-outs.

I can never go back to economy/budget travel, lol!

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I would be interested to know what you were pricing out on the Chase travel portal where you saw the 1.5x become a better deal than transferring to airline partners. It would vary on destination region, but for EU there would have to be a R/T business class ticket for $1,800 or less on the Chase portal before the 1.5x redemption exceeds the mileage redemption on an airline like United. For US-JP, that could drop to $1,650 if SQ availability is there.

[redpat]

Well I will use my ur points to book some first class domestic flights and pay for the cost of coach giving me miles for my AA flight and additional miles for plat exec that I have for this year, it will also count for this year's status which will fall to plat.

This isn't a bad way to use ur and mr points w/ Amex biz play 35% rebate.

[iced]

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@redpat wrote:
Well I will use my ur points to book some first class domestic flights and pay for the cost of coach giving me miles for my AA flight and additional miles for plat exec that I have for this year, it will also count for this year's status which will fall to plat.

This isn't a bad way to use ur and mr points w/ Amex biz play 35% rebate.

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If I understand you correctly, you're using points to subsidize the cost difference between economy and first, and in doing so you're getting the EQM/EQD multipliers for elite status associated with paid premium cabin fares. With DL and UA (I don't fly AA so can't speak for them at present) the fare difference between Y and F is usually only about $200 each way, which works out to less than 15,000 miles (which is what UA would want for the upgrade), so I agree that would be a better option than transferring points for those routes, especially since you're also reaping the EQM/EQD that you wouldn't get with an upgrade.

On higher-cost premium routes (JFK/EWR-SFO), the cost from Y to F can often exceed $1,000 each way, and there the miles upgrade route would become the "cheaper" option again, provided you can even get upgraded at all. Those usually sell out in F so there's rarely upgrade space in the first place.

[redpat]

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@iced wrote:

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@redpat wrote:
Well I will use my ur points to book some first class domestic flights and pay for the cost of coach giving me miles for my AA flight and additional miles for plat exec that I have for this year, it will also count for this year's status which will fall to plat.

This isn't a bad way to use ur and mr points w/ Amex biz play 35% rebate.

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If I understand you correctly, you're using points to subsidize the cost difference between economy and first, and in doing so you're getting the EQM/EQD multipliers for elite status associated with paid premium cabin fares. With DL and UA (I don't fly AA so can't speak for them at present) the fare difference between Y and F is usually only about $200 each way, which works out to less than 15,000 miles (which is what UA would want for the upgrade), so I agree that would be a better option than transferring points for those routes, especially since you're also reaping the EQM/EQD that you wouldn't get with an upgrade.

On higher-cost premium routes (JFK/EWR-SFO), the cost from Y to F can often exceed $1,000 each way, and there the miles upgrade route would become the "cheaper" option again, provided you can even get upgraded at all. Those usually sell out in F so there's rarely upgrade space in the first place.

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I just booked one last month I paid coach $326 giving me 8,569 miles ($779*11) 4,936 EQM and $779 EQD for my 30,200 UR points which I have a ton of anyway.  Since I have Exec plat this year why not get as many miles as I can at a reduced cost. 

Sure I could of used 51,933 ur points but I have no problem paying coach and that gives me 21,733 extra UR points for another redemption option.

Maybe not the best way to use points some may think but I happy with my redemptions.