Our latest take on the dollar value of points

How and why to value your frequent flyer and credit card points

GUIDE: Earning Points
DIFFICULTY: Intermediate
TIME TO READ: 8 minutes
POSTED: October 24, 2018
UPDATED: November 13, 2018
LOYALTY PROGRAMS: Relevant to Multiple Programs
STATUS: Last updated with points values in October 2018

Knowing your rough value of a point is an important step in your points-thinking when it comes to thinking about earning and using points systematically and rationally.

We’ve updated our values for recent and upcoming changes to frequent flyer and credit card rewards programs, including Velocity, Asia Miles and Westpac Altitude Rewards.

Why consider the value of points?

Rather than seeing them as being ‘free’ and using them any time an opportunity comes up, knowing what you think they are worth allows you to make more informed decisions about the costs you are willing to incur to earn them in the first place.

There are a number of different methods out there for valuing your points but this is how I think about the subject, and how I currently value the major points currencies out there.

Straight to it

Here are my earn and redemption value thresholds—the maximum at which I’d likely pay to accrue miles, and the minimum at which I would consider redeeming them.

Frequent flyer program currencyMy max earn thresholdMy redemption targetChange since last updateRationale for change
Qantas Points1.4c2c
Velocity Points1.2c1.9c↓ 0.1cIntroduction of a Carrier Charge on all Virgin Australia and some Delta redemptions

Devaluation of transfer rate to KrisFlyer
KrisFlyer miles1.8c2.1c
Asia Miles1.7c1.9c↓ 0.1cContinued tightening of award availability
Etihad Guest miles1.2c1.6c

Flexible points currencyMy max earn thresholdChange since last updateRationale for change
American Express Membership Rewards
Ascent & Ascent Premium1.9c
Gateway1.5c
David Jones1.0c
Amplify Rewards0.9c
ANZ Rewards0.75c
Citi Rewards
Prestige0.65c
Signature0.6c
CommBank Awards
Diamond & Platinum0.75c
Gold0.6c
Diners Rewards0.8c
flybuys0.5c
NAB Rewards0.6c
Westpac Altitude Rewards0.65c↓ 0.1cDevaluation of transfer rates to Velocity, KrisFlyer, Asia Miles and Enrich next month
Hotel programs
Hilton Honors0.5c
Marriott Rewards1.2c


A more comprehensive explanation

Why care about point values?

If you are looking for a place to start (or to point someone else) to get on the road for earning more points from your day-to-day spend, check out the Earning Points email course here →.

I feel this is important—knowing your own value of a point allows you to make more informed decisions around earning and using points.

This lays the groundwork for you to assess all the different offers that are out there on a far more accurate basis, whether from credit card bonuses or points earned from ongoing spend.

I think understanding this stuff will help you earn and manage your points more effectively in the long run. Knowing how you value your points will greatly help you to assess different deals, products or services that can earn you points for their real value to you.

The two kinds of points values

There are two valuations I use consistently.

First, there is the approximate cost per point at which I am willing to use cash to earn some points, either by paying a surcharge with my credit card, or by factoring in bonus points earned on a purchase as a discount on the cost—we’ll call this the ‘earn cost’.

Secondly, there’s the ‘redemption target’, the value per point at which you say, ‘yes, this makes sense to redeem my points for this trip’.

To simplify as much as possible: your redemption value should be more than your earn cost.

Why? Otherwise, you are overvaluing your points and spending more to acquire points than you value them at when you come to use them.

Settling on values: what I think different points are worth

I personally try to set my earn cost threshold and stick to it but I consider my redemption values to be flexible given other factors, such as those I outlined before.

Some people like to go a step further and articulate a final, single-point value which sits around the upper bound at which they like to earn points, and a lower bound at which they tend to redeem them.

This can be useful but I personally do not like using this technique as I think there are too many other non-cost factors in making points redemptions, such as which airline has seats for the route you want to travel on, which offers you more readily available upgrades for your points, or which you actually prefer to travel with.

If you have a perchant for Emirates First Class, then you may value your Qantas Points more highly than other travellers do

The rough values I place on my points

Note that it is hard to compare the per-point rate above between all of these programs as their transfer rates to airline programs are not the same, and neither are their points per $ earn rates on their cards.

These values are my take and, of course, your values may well be different due to your own personal preferences on how you are prepared to earn points and how you like to redeem them.

For values of some of the other currencies globally, check out the values given by popular US blogs The Points Guy, and One Mile At A Time—note, they are given in US cents.

We also have a transfer calculator that helps you work out how many points in one program can be transferred to others—useful for comparing bank rewards programs. Check out the transfer calculator here →.

Methodology: considering your earn cost

We are constantly being presented with opportunities to earn more points, whether that is by switching our allegiance to a different retailer, paying a credit card surcharge instead of paying cash, or by buying a product or membership where a points bonus was used as a marketing tactic.

Our collective real-world behaviour gives an indication of what we are prepared to pay (or forgo) to earn points.

Some examples might help illustrate this:

  • A typical cashback card may offer a 0.5-1% (or 0.5-1c per $) return on all spend
  • American Express offers cashback straight to your account for using points of 0.7c per Membership Rewards point, or a purchase through Amex Travel for 1c per point

For anyone choosing points rewards over these hard cash benefits, we are all immediately valuing points at around 1–1.5c at the lower end—and I think this is a fair range for the lowest possible value of airline points.

Correlate that to the thinking around redemption value (which I’ll come to in a bit) and that tells you should almost never redeem your points for less than around 1.5c per point, otherwise, you are shelling out too much for them in the first place.

What does this mean in real life?

Well, so we are not seduced into handing over our cash without thinking about the decision in enough detail, if you have an idea of the cent per point (or CPP) cost to earn those extra or bonus points, you can quickly articulate to yourself exactly how much those points are costing you.

For example, if a retailer adds a surcharge for either or both of American Express or Visa/MasterCard payments, you need to be able to quickly figure out whether that surcharge is worth paying to decide whether it is still worth using your card while you’re at the point of purchase.

With the thinking above, we are looking at credit card surcharges of up to around 1.5% being reasonable to bear to earn more Qantas or Velocity points (when earned on a 1 point per $ basis).

Alternatively, if there is a points bonus on offer—say 10,000 points for a cost of $100—then you can decide whether to take it up or not. I would take 10,000 points at a rate of $100, as that is a cost per point of 1c.

Remember this is our lower bound—points can be worth much more when you come to use them.

Considering redemption values

This is where personal opinion and subjectivity around the value of points comes in—as in, how we would be prepared to use points gives some variability in their personal value to each of us.

Your redemption value can be approximately calculated by considering your own hard preference for using points instead of cash. There are plenty of methods out there for doing this but my preferred tactic is to consider one or several real-world examples of trading off points versus cash and seeing what cent per-point value that turns out for you.

Example 1: a domestic Qantas Business Class redemption

Say I want to travel to Perth from Sydney in a few weeks’ time. The outbound flight I can fly during daylight hours, but due to prior commitments, I have to fly on a redeye back to the East Coast.

Paid Economy fares are up at the $350 mark, while Business Class is at least $1,750 in either direction. For travel on Qantas, I would have to redeem 18,000 Qantas Points + $32 in Economy, or 36,000 points + $32 for a Business Class fare.

I really want to travel Business Class for the return flight—so much so that I would consider paying around $750 cash to get a good night’s sleep but not the full price. Less the $32 in taxes, that means I would be valuing my 36,000 points at a value of 1.99 cents per point.

Qantas A330 Business Class flying between the East and West Coasts

The value of the redemption compared to the actual cash price is another indicator of the value of the redemption—compared to the $1,750 fare, I would be getting 4.77c per point in value.

But as I explained, I wasn’t actually prepared to pay $1,750 for that overnight flight, so 4.77c per point is not a true indicator of my redemption value—1.99c per point is. That’s above my 1.5c per-point earn cost, so I’m happy with making that redemption.

For the outbound, I’m OK with flying in Economy, and to get there I have to pay at least $350, otherwise, I can’t take the trip. So the redemption value can be calculated as $350 less the $32 in taxes I’d have to pay on a points redemption vs 18,000 points – giving a redemption value of 1.77c.

This is creeping closer to my break-even point of 1.5c. At this point though, maths and rationality would dictate that I should still make the redemption.

However, in reality, my willingness to redeem at this rate is impacted by other factors outside of this valuation, such as how many more points I have in my account, what I would like to use them for—perhaps saving them up for a different trip—and whether I want to earn points and Status Credits with the flight as well. Given that, I would probably purchase the ticket and not use my points.

Example 2: an international Singapore Business Class redemption

Singapore Airlines KrisFlyer miles are some of the most valuable airline points we have readily available in Australia. Redemption availability is generally good, their inflight product is great and their pricing is competitive.

Here is an example redemption: a return Business Class flight to Europe, from Sydney. Long-haul redemptions on Singapore Airlines, to say, London, Amsterdam, Paris or Frankfurt are some of the best-value uses of KrisFlyer miles from Australia.

Singapore Airlines A350 Business Class

A Sydney/Melbourne/Brisbane – London redemption would usually cost 105,000 KrisFlyer miles one-way + ~$100 in taxes—that pretty great value. Qantas would have you pay 128,000 Qantas Points for the same trip on Qantas/Emirates flights.

Onto redemption values. I personally would be happy with an out-of-pocket cost of up to, say, $2,000 for this Business Class flight to Europe. Beyond this, and I would start questioning either my desire to fly in Business or my need for the trip.

That means I am valuing those 105,000 KrisFlyer miles at $2,000 minus $100 for the taxes, or $1,900, which gives a cents per point redemption value of 1.8 cents. At a cash cost of around $3,500, I would be getting a strong cent-per-point value of 3.2 cents.

You can get outsized value from tickets that would be very expensive to book with cash. For example, Bevan got a very high 7.5 cent-per-point value from using 280,000 Qantas Points for a round-the-world Business Class redemption rather than forking out $21,000 in cash.

The cents-per-point math

For both the earn cost and redemption values, we are working in cents per point. These are pretty simple equations, which look like this:

CPP for earn cost = $ cost of points in cents / number of points

To factor in taxes on a redemption, use this:

CPP for redemption value = ($ value you assign in cents – $ taxes with redemption in cents) / number of points

Making the calculations easier

I have built a couple of calculators on the site that help with running some of these numbers.

The first is a simple points vs value calculator—take one example like the Perth one above, or an upgrade, and compare points vs cash.

The second is a more methodical way to generate an average redemption value—taking three examples you input, you’ll get an average cent per-point value back.

Use these to help get a feel of your own personal redemption values using some real-world examples. Neither factor in taxes, you’ll have to add those into your numbers yourself.

What about credit card/flexible points currencies?

Flexible points currencies like American Express Membership Rewards are inherently harder to value given the large range of transfer partners but this absolutely makes them more valuable than their transfer partners too, given their additional flexibility and general lack of expiry.

As such, I would be willing to pay more—a higher cent per-point earn cost—to acquire flexible program points than a specific frequent flyer program’s points, and logic would dictate they are generally worth at least as much as the highest-valued frequent flyer transfer partner.

However, setting a personal redemption value is not so easy to calculate due to the wide range of redemptions available from flexible points currencies.

Summing up

  • Earn cost per point sets a maximum threshold at which you can acquire
  • Understanding your earn cost per point gives you an indication of whether a specific deal to earn more points is worth taking up—or not
  • Redemption cost per point gives you an indication of your value of points when you come to redeem
  • Working through some real-world values of redemption costs informs your thinking on how and when you are willing to redeem your points

Finally, do not get too hung up on all of this. It is a methodology—one of many—and not an exact science but getting your head around it ‘levels you up’ to the thinking and understanding of those running the programs and putting out offers for us to take up.

Our latest take on the dollar value of points was last modified: November 13th, 2018 by Matt Moffitt