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How to calculate credit card point values

Maximize your point redemption by knowing how to calculate your credit card points worth

Summary

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.

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We 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 budgets. However, it can be easy to get lost on how to calculate credit card point values.

Rewards points valuation is a simple and essential question with a somewhat complicated answer that depends on a number of factors. Knowing what a credit card point is worth and how to calculate credit card rewards points can help you choose the best rewards credit card for your wallet.

Fixed-value credit card points

Let’s start at the easiest spot, and that is assigning a value to credit card points that already have a 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 Credit Card, where the base value is equivalent to 1 cent per mile. That makes for simple math and simple redemptions.

If you redeem a credit card point that’s worth 1 cent per point for cash back, then you could use a 60,000-point sign-up bonus to get $600 in cash back. However, some cards have different credit card point values for different redemption options.

With this in mind, make sure you redeem your fixed-value points at their maximum redemption rate, which is commonly one cent per point.

Flexible and transferrable credit card points

Popular types 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 among cards and rewards programs.

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 Rewards 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, Southwest, Singapore Airlines, JetBlue Airways 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 one of Chase’s travel partners.

In fact, according to The Points Guy valuation chart, these card valuations are both currently valued at 2 cents each, even though they are worth less if you use them to book travel directly with Chase instead of through its travel partners.

How to calculate credit card rewards points

If you prefer a more hands-on approach and wish to calculate your award redemption values manually like when selecting the best itinerary for your upcoming trip, The Points Guy offers a simple math equation to help guide you towards understanding how your points translate in terms of cents per mile (CPM) or cents per point (CPP).

You need to start with the cash price of your itinerary in dollars. Multiply that number by 100 to convert from dollars to cents and then divide the number of points or miles needed to book the same itinerary as an award. The result you end up with is called the redemption value and it is expressed in CPM or CPP.

For example, if you want to book a $1,200 vacation package through your issuer’s travel portal and you need 100,000 points, here’s how to calculate credit card points value:

  • $1,200(cost of vacation) x 100(cents in a dollar) = 120,000 cents
  • 120,000 cents / 100,000 points needed = 1.2 CPP

In this scenario, your points are worth 1.2 cents each, which is about average when using points or miles to book travel.

Is that ultimately a good reward value? It is up to you to decide based on what your travel goals are, but you can maximize your points redemption by calculating your redemption values upon booking your next trip.

A credit card point is worth what you redeem it for

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.

For example, those 7,500 points could get you from Dallas, Texas to Vail, Colorado, 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.

Bottom line

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 to calculate the value of credit card points is ultimately what helps you decide the best redemption method.

Editorial Disclaimer

The editorial content on this page is based solely on the objective assessment of our writers and is not driven by advertising dollars. It has not been provided or commissioned by the credit card issuers. However, we may receive compensation when you click on links to products from our partners.

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