Figure out what your points are worth before you redeem

Some card rewards are more valuable than others

Summer Hull
Personal Finance Writer
Summer Hull writes the weekly "Get to the Points" column for CreditCards.com

Get to the Points

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I talk a lot about credit card points and how they can take us around the world in ways that otherwise wouldn’t be possible on most of our budgets. However, it can be easy to miscalculate exactly what a credit card point is actually worth.

Rewards points valuation is a simple and essential question with a somewhat complicated answer that depends on a number of factors that we will sort through together. Knowing what a credit card point is worth can help you make an informed decision about which type of credit card points are best for redemption. 

Fixed-value points

Let’s start at the easiest spot, and that is assigning a value to credit card points that already have an actual fixed value. This type of point is pretty common in the credit card rewards world and can be found on rewards cards such as the Capital One Venture Rewards card, where points are worth one cent each toward travel or gift cards. That makes for simple math and simple redemptions.

On the Barclaycard Arrival Premier World Elite Mastercard, your points are also worth one cent each when redeemed toward travel. What is great about both these cards is you can book your travel however you want and then offset the charges later with points as a statement credit.

There are, though, some caveats and asterisks to consider.

For example, on the Capital One Venture card, your points are worth only half a cent each if you redeem them for cash back.

On the Barclaycard Arrival Premier World Elite Mastercard, you might get more (or less) than one cent in value if you transfer points to some airline partners such as Air France, Etihad, Qantas or KLM. The redemption rate is also just half a cent per point if you redeem for cash back or for retailer gift cards, so obviously you won’t want to do that.

So, make sure you are redeeming your fixed-value points at their maximum redemption rate, which is commonly one cent per point if you redeem the points for travel.

Flexible and transferrable credit card points

My favorite type of credit card points are the most flexible ones, since you have a plethora of ways to redeem them. Yet, while options are great for getting the maximum redemption value, it makes it much harder to put a true value on the points as they can vary widely.

Tip

Tip: If have both the Chase Sapphire Preferred and Sapphire Reserve cards, you can transfer your points from the Preferred to the Reserve and then book travel through Chase at the higher 1.5 cents per point rate.

Two popular credit cards that earn flexible and transferrable points are the Chase Sapphire Reserve and the Chase Sapphire Preferred cards. There are many ways to use the Chase Ultimate Reward points earned by these two similar cards, but two of the most profitable are to use the points by booking travel through Chase or transferring them to hotel and airline partners such as United, Hyatt, British Airways, Singapore, Marriott and more.

If you use the points to book travel through Chase Ultimate Rewards, then a point is worth 1.25 cents if you have the Sapphire Preferred card and 1.5 cents if you have the Sapphire Reserve card.

However, you can usually get more value than that from each point when you transfer to some of their travel partners.

In fact, according to The Points Guy valuation chart, these card valuations are both currently valued at 2.1 cents each, even though they are worth less if you use them to book travel directly with Chase instead of through its travel partners.

A credit card point worth what you redeem it for

For example, if you transfer your Chase Ultimate Reward points to British Airways at a 1:1 ratio and book an award ticket, it may cost you just 7,500 British Airways Avios plus $5.60 in fees to fly on an American Airlines-operated flight using the British Airways distance-based award chart instead of the typical 12,500 American Airlines award ticket.

These 7,500 points could get you from Dallas to Vail, Colorado, for example, and offer a much higher rate of return of 1.5 cents since that flight can easily cost $300 or more during ski season. If you used just 7,500 points transferred to British Airways from your Chase Ultimate Rewards portal for that flight instead of paying $300, then your redemption value is around 4 cents per point on that transaction.

To see how your Chase Ultimate Rewards points are valued on its travel partners, CreditCards.com lists them on “Why are Chase Ultimate Rewards points are so valuable.”

Whether you redeem your credit card points at a relatively poor value for cash back on cards that give greater value when redeeming for travel, or you really stretch the value of your transferrable points booking via airline and hotel programs, a credit card point is ultimately worth what you redeem it for.

There is no right or wrong way to redeem credit card points, but some redemptions will give you a greater rate of return than others.

At the end of the day, how you use your credit card points is what ultimately determines their worth.

See related: Calculate your rewards card’s value: an 8-point checklist, Chase Ultimate Rewards travel partners



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Updated: 05-23-2018