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Best way to figure out points to cash ratio

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Best way to figure out points to cash ratio

I'm trying to figure out what cards I should be using for their rewards and some of them are on a point based rewards system compared to the percentage rewards system. The point rewards system I find rather confusing and have kinda strayed away from it since it usually comes I feel with restrictions on what you can do with the points.

 

Also I keep trying to figure out what the equivelant of points to cash rewards similar to how if you spend $1 and get 3% cash back = $0.03 cents that's easy i'm trying to do the same with points. Say you spend $1 and get 3 points does that = $0.03 cents or less. Then I would use the percentage rewards card instead.

 

Anyone have a good system or know of a website that has some kind of input where you can see how much it should equal cash wise from points.

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Valued Contributor

Re: Best way to figure out points to cash ratio

If you're trying to figure out a cash equivalent valuation for points, you're better off just focusing on cash back and disregarding points.  The big popular points currencies (Amex MR, Chase UR, Citi TY, etc.) only get the best value when used towards aspirational travel, and typically have very disappointing cash value.

 

ThePointsGuy.com (TPG) is probably the best known source for points valuations, but his numbers are dependent on what he is able to redeem his points for and what works for him, being a single guy in NYC.  It's very subjective, and your mileage may vary.

 

For my part, I'm pretty invested in the Amex MR system, and to me those points are worth a minimum of 1.2 cents per point, though I can often get 2.0 cents or more in value depending on how I use them.  They're only worth 0.6 cents when used for statement credit (cash equivalent), which to me is less than they are worth.

 

I also have lots of Citi TY points, but for the most part those are from signup bonuses and they're about to be devalued, so I'm not as keen on earning those, though I still do sometimes when it makes sense (e.g. 10 points for transactions less than $5 on the Rewards+ card, 3x at gas stations on the Premier, or 2x on misc. spend where Amex is not accepted).  I can combine those points with my Amex points if I choose to transfer to Virgin or FlyingBlue, and they're also still worth 1.25 cents on the portal (for now).

 

When choosing between points or cash back, factors include what immediate travel plans I have (if any), what my liquidity situation looks like, whether I'm working on minimum spend towards a bonus, and whether Amex is accepted.

 

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Super Contributor

Re: Best way to figure out points to cash ratio


@MrDisco99 wrote:

If you're trying to figure out a cash equivalent valuation for points, you're better off just focusing on cash back and disregarding points.  The big popular points currencies (Amex MR, Chase UR, Citi TY, etc.) only get the best value when used towards aspirational travel, and typically have very disappointing cash value.

 

ThePointsGuy.com (TPG) is probably the best known source for points valuations, but his numbers are dependent on what he is able to redeem his points for and what works for him, being a single guy in NYC.  It's very subjective, and your mileage may vary.

 

For my part, I'm pretty invested in the Amex MR system, and to me those points are worth a minimum of 1.2 cents per point, though I can often get 2.0 cents or more in value depending on how I use them.  They're only worth 0.6 cents when used for statement credit (cash equivalent), which to me is less than they are worth.

 

I also have lots of Citi TY points, but for the most part those are from signup bonuses and they're about to be devalued, so I'm not as keen on earning those, though I still do sometimes when it makes sense (e.g. 10 points for transactions less than $5 on the Rewards+ card, 3x at gas stations on the Premier, or 2x on misc. spend where Amex is not accepted).  I can combine those points with my Amex points if I choose to transfer to Virgin or FlyingBlue, and they're also still worth 1.25 cents on the portal (for now).

 

When choosing between points or cash back, factors include what immediate travel plans I have (if any), what my liquidity situation looks like, whether I'm working on minimum spend towards a bonus, and whether Amex is accepted.

 


TPG is a good source of news about bonuses and how to book, but keep in mind it's part of a marketing company with thousands of employees. It's not a handful of bloggers just sharing their unbiased thoughts for fun. They want people to apply through provided links.

 

Copy-pasting from an old post...

Here is how I calculate point value:

1. What do I want to do?

2. What does it cost in cash? Call this "A".

3. What do reasonable alternatives cost? Sometimes location is very important, or a hotel may have some special significance. Generally speaking, a Howard Johnson is not a reasonable alternative to a Hyatt. However, I'm somewhat flexible about what time of day I will fly, my airline, or which of the many airports in the Los Angeles area I will use. Call my cheapest reasonable alternative "B".

4. What would I ultimately be willing to pay for this trip? Call this "C". In some cases, C will be higher than A and B (like visiting a dying relative), and in other cases it will be lower (pure recreation somewhere very expensive).

5. Take the lowest of (A, B, C). Call this "D".

6. What is the award price of my original plan or reasonable alternatives? Call this "E".

 

D/E = point value

 

And perhaps make some little adjustment for time spent searching for the award.

 

I prefer to use a lot of points at a great point valuation over using just a few points at an amazing valuation. If two options both have a cash component, though (like transfer fees or airline taxes), then I subtract the cash component from both the cash-only and award options.

 

It's hard to be precise with miles once you add in things like lounge access or upgrades - things that are nice but for which you might not necessarily have paid the extra cash price.

 

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Re: Best way to figure out points to cash ratio

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Re: Best way to figure out points to cash ratio


@wasCB14 wrote:

@MrDisco99 wrote:

If you're trying to figure out a cash equivalent valuation for points, you're better off just focusing on cash back and disregarding points.  The big popular points currencies (Amex MR, Chase UR, Citi TY, etc.) only get the best value when used towards aspirational travel, and typically have very disappointing cash value.

 

ThePointsGuy.com (TPG) is probably the best known source for points valuations, but his numbers are dependent on what he is able to redeem his points for and what works for him, being a single guy in NYC.  It's very subjective, and your mileage may vary.

 

For my part, I'm pretty invested in the Amex MR system, and to me those points are worth a minimum of 1.2 cents per point, though I can often get 2.0 cents or more in value depending on how I use them.  They're only worth 0.6 cents when used for statement credit (cash equivalent), which to me is less than they are worth.

 

I also have lots of Citi TY points, but for the most part those are from signup bonuses and they're about to be devalued, so I'm not as keen on earning those, though I still do sometimes when it makes sense (e.g. 10 points for transactions less than $5 on the Rewards+ card, 3x at gas stations on the Premier, or 2x on misc. spend where Amex is not accepted).  I can combine those points with my Amex points if I choose to transfer to Virgin or FlyingBlue, and they're also still worth 1.25 cents on the portal (for now).

 

When choosing between points or cash back, factors include what immediate travel plans I have (if any), what my liquidity situation looks like, whether I'm working on minimum spend towards a bonus, and whether Amex is accepted.

 


TPG is a good source of news about bonuses and how to book, but keep in mind it's part of a marketing company with thousands of employees. It's not a handful of bloggers just sharing their unbiased thoughts for fun. They want people to apply through provided links.

 

Copy-pasting from an old post...

Here is how I calculate point value:

1. What do I want to do?

2. What does it cost in cash? Call this "A".

3. What do reasonable alternatives cost? Sometimes location is very important, or a hotel may have some special significance. Generally speaking, a Howard Johnson is not a reasonable alternative to a Hyatt. However, I'm somewhat flexible about what time of day I will fly, my airline, or which of the many airports in the Los Angeles area I will use. Call my cheapest reasonable alternative "B".

4. What would I ultimately be willing to pay for this trip? Call this "C". In some cases, C will be higher than A and B (like visiting a dying relative), and in other cases it will be lower (pure recreation somewhere very expensive).

5. Take the lowest of (A, B, C). Call this "D".

6. What is the award price of my original plan or reasonable alternatives? Call this "E".

 

D/E = point value

 

And perhaps make some little adjustment for time spent searching for the award.

 

I prefer to use a lot of points at a great point valuation over using just a few points at an amazing valuation. If two options both have a cash component, though (like transfer fees or airline taxes), then I subtract the cash component from both the cash-only and award options.

 

It's hard to be precise with miles once you add in things like lounge access or upgrades - things that are nice but for which you might not necessarily have paid the extra cash price.

 


This is a reasonable approach at the time your trip is being booked, and for the more experienced, can be used to determine whether to use points or not   (e.g. if the cpp comes out to be 1.1, and you feel that points "should" be more valuable, you go with cash).    But to some extent you want to know before this, should I put this expensive purchase on card A and get X points (or card B and get Y points in a different currency etc) or use card C for Z% cashback.

 

I think this is somewhat the purpose of things like TPGs mile valuation, so you get a default value without knowing how you are going to redeem, but that is also the weakness, if your preferred redemptions are completely different than theirs, the relative values can also be very different.

Message 5 of 6
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Valued Contributor

Re: Best way to figure out points to cash ratio

Many of us don't want "aspirational travel."  We just want "regular travel" that gets us from point A to point B.  We'd rather spread our points across two or more economy fares than use them up on one premium fare.

 

Before the COVID-19 crisis, I was flying to Europe twice a year, always in economy, never in first or business class.  What I found was that the cash price of a round-trip economy ticket fluctuated around $900 depending on the time of year, and the cost in miles was 60,000 on United and less on American if I flew during the shoulder seasons.  Since I live in a United hub, I use United as my baseline.  If 60,000 miles can get me a $900 fare, then each mile is worth $0.015.  Coincidentally, that's also the value a Chase Ultimate Rewards point has when used for an award ticket through the Chase travel portal.  So, as far as I am concerned, a United mile is worth $0.015, and a Chase point is worth $0.015 when used for United airfare.  If the cash price drops much below $900, then I pay cash instead of using points and miles.  

 

You can do similar analysis using Amex Membership Rewards points and Delta SkyMiles, but it will be more complicated because Delta has gone all-in on variable pricing of awards.

 

The value of a Chase point or an Amex point will be different if used for hotels than for airfare.  I personally have found airfare to always be the best redemption, so I just pay cash for my hotels and save my points and miles for airfare.  And don't get me started on the value of hotel points, as they vary widely from hotel brand to hotel brand.  This doesn't affect me, because most of my hotel stays are in Europe at locally owned hotels that don't participate in the points programs of the big hotel brands.

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