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I would value MR points at 1 cpp. I was able twice to redeem them for that rate. Once transferring to British Airways when they had the 30 percent bonus and booking a hotel. I think I got maybe 1.2 cpp though. But that is only because they had the bonus. The other time I bought a Home Depot gift card at 1 cpp. Bought a washer and dryer. A lot of the gift cards dont' even give you 1cpp though. Thank You points are so much better. As you can book airfare and hotel directly at 1.25 cpp and points are easier to accumulate on the Premier.
@wasCB14 wrote:
@Anonymous wrote:
I really don’t agree with your statement. I’ve seen other people make that argument and it makes no sense to me. Part of having cards that earn miles/points is to allow you to travel to places and in a manner that you might not otherwise do without the cards. If I fly first class to Australia and using your example get a $10k round trip ticket for 100k miles, the redemption rate is 10 cents per mile regardless of whether I would or could pay for the flight in cash. It’s no different than using miles to fly from NY to Chicago in domestic economy to visit an old friend on a trip that you wouldn’t make without having the miles for an award ticket. The redemption rate of say $.015 is still that value. Redemption values are not dependent on having the ability to make the same travel without miles/points. It’s purely determined by dividing the cost of the flight by the miles needed and nothing more.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 know there are many steps to this and it may require rereading, but I am trying to spell out my exact approach.
This is a great post. I would never pay for first class or business. I would maybe pay 200 dollars extra for an international flight for business or first class. So that is what I would value it at. If a round trip business ticket is 4000 dollars and a coach ticket is 600 dollars I would value the Business ticket at 800 dollars. Every instance the coach comes out as the better deal. Also I always fly direct. So no amount of money or class upgrade is worth me having an extra flight on my journey. Unless it is not possible for me to fly directly to that location from DC, Baltimore, Philadelphia or NYC.
I'm tall and I don't like cramped seats. I know the food is better in first class, and the drink selection is nice.
But, as a non-billionaire, there's no way I will value a few hours spent sitting in a metal tube in the sky at $10k.
Now, I can imagine a flight that would be worth $10k even to me. But if I tried to have that much fun on a major airline, I'd get arrested.
@wasCB14 wrote:
LTL,
To some extent, first class seats may be a sort-of Veblen good.
I first heard that term a few weeks ago on a PBS radio show, and now it comes up in "real life" (well, internet forum!)
@longtimelurker wrote:
@wasCB14 wrote:
LTL,
To some extent, first class seats may be a sort-of Veblen good.
I first heard that term a few weeks ago on a PBS radio show, and now it comes up in "real life" (well, internet forum!)
It's Econ 101 stuff (at least in a rigorous course), but probably something easily forgotten. A search reveals it's been used here a few other times.
I mentioned it in a thread about a $32,000 handbag: https://ficoforums.myfico.com/t5/SmorgasBoard/What-happenned-to-the-world-Saw-handbag-32-000/m-p/514... ...but no one else in that thread was interested in discussing behavioral economics.
Funny, Amex cards you could argue used to be Veblen goods, purposely charging a higher AF than anyone else. You could make that argument for the Plat (except for those who would actually use all the benefits anyway) and definitely the Centurion card today.
And we've come full circle.