Advertisement

SKIP ADVERTISEMENT

What Is a Reward Point Worth? It Depends

Credit...Stefania Infante

Not all points and miles in travel rewards programs are created equal, which means that getting the best deal isn’t always obvious.

A decade ago, travelers had limited options to earn miles. But the miles came with obvious — and obtainable — rewards, like free plane tickets or an upgrade to first class. Now, said Tiffany Funk, managing editor of the website One Mile at a Time, the average consumer can easily earn miles through credit cards that offer points, sign-up bonuses and point multipliers for certain purchases.

In fact, an estimated 2.75 trillion airline and credit card points are earned each year, just in the United States, according to Henry H. Harteveldt, president of the travel research company Atmosphere Research Group.

But with trillions of points chasing a finite number of awards, the free plane tickets and seat upgrades have become more elusive. The airlines, Mr. Harteveldt said, have been “devaluing their programs, diluting ‘elite’ benefits and making travel awards more expensive and more difficult to obtain.”

Hotel loyalty programs are generally more straightforward, said Nick Ewen, senior points and miles editor at the Points Guy website, though some of those programs have also raised the points needed for free rooms and other benefits, angering members.

But airline, hotel and credit cards loyalty programs have created an ever-increasing array of redemption options, including shopping, gift cards, dining, magazine subscriptions and experiences.

Still, cashing in on this pseudo-currency is complicated. Depending on what it is spent on, it may have different values. So 24,000 airline miles could buy a $350 airline ticket or a $100 Starbucks gift card.

Mr. Ewen said the redemption value of a rewards program point or mile was calculated this way: The cost of the item divided by the number of points or miles spent to redeem it. So 30,000 miles for a $300 plane ticket is a value of a penny per mile. That value can vary significantly from program to program, he said, and sometimes be worth as little as half a cent each.

Mr. Ewen said with all the choices available, “it’s important to understand if something is a great use of points, a good use of points or a bad use of points.” He generally recommends using airline points to buy airline tickets and hotel points to get hotel rooms because those usually have the best redemption value. Travelers need to look at each purchase, though, he said, to see if it’s better to use points or dollars. When evaluating hotel point redemption options, he said, guests should find out if the property’s resort fee is included, if there is a “points plus cash” option that may work well for them and if there are special offers like a fifth night free.

Shelli Stein, a travel blogger who writes for the website Point Me to the Plane, advises travelers to use their points as soon as they can. “The programs give and take all the time, and alliances come and go,” she said. It’s better to lock in a ticket or hotel room because “you don’t know how things are going to change.” The travel industry’s history of devaluing points and miles by raising thresholds for redemptions also means it’s better not to store them for too long.

The Points Guy website publishes a monthly list of valuations for airline, hotel and credit card points. “It’s our best estimate on what you can reasonably expect to get,” Mr. Ewen said.

American Express, Citi and Chase all offer credit cards where points earned can be used to buy plane tickets and other items, or be transferred to a frequent flier mileage account. Transferring the points can multiply their value significantly, Mr. Ewen said.

American Express Membership Rewards, for example, generally assigns a $1 value to 100 points for the purchase of an airline ticket. Therefore, a $300 ticket bought on the American Express Travel website would cost 30,000 Membership Rewards points. But that same ticket could perhaps be bought with 20,000 miles on the Delta Air Lines website, and if so, travelers would do better to transfer the 20,000 miles from their American Express Membership Rewards account to their Delta SkyMiles account and redeem them for the flight. Late last year, Capital One also began allowing cardholders to transfer points to airline partners.

The major credit card companies generally have partnerships with at least one airline in each major airline alliance, opening up possibilities for those willing to do some research. United Airlines, for instance, is not listed as a Citi ThankYou Points partner on the Citi website. But Avianca Airlines’ Lifemiles is. Avianca, a Colombian airline, and United are both in the Star Alliance so travelers can use Citi points, transferred to their Avianca Lifemiles rewards account, toward a United flight.

Frequent fliers who redeem their miles to buy tickets with a program’s partner airline — an airline’s partner can be outside its alliance — may even find better deals there. For example, American Airlines and British Airways are partners, so a traveler can use American Airlines miles to buy a British Airways ticket. Each airline decides how many seats to make available and at what price in miles, and fliers can sometimes find cheaper “fares” to their destination on partner airlines.

“There is an absolute wormhole that you can fall into with points and miles,” Mr. Ewen said. “There are websites and message boards on every nuance. It’s easy to get overwhelmed and give up on it.”

Ms. Stein advises consumers who are redeeming points or miles for flights to consider how important various aspects of the travel experience are to them. “Are you willing to drive to a different departure city? How important is a nonstop flight?” she asks.

Online travel advice forums light up with frustrated customers when airlines make changes without notice or changes that seem to primarily benefit the company. United Airlines recently announced that it planned to follow Delta’s lead on dynamic pricing of reward tickets, meaning that instead of offering a predictable chart detailing how much flights cost in miles, the price of each flight can fluctuate based on demand. The United website says it made the change so it can offer lower-priced seats. But many fliers contend that the real benefit is to the airline, which can significantly ratchet up the price of the most coveted award seats.

There are some services available to help consumers wade through the points morass. Adam Morvitz is the founder of Juicy Miles, a consulting company and website that compares all the available redemption options. Travelers put in the cities they want to fly between and their desired dates. The website tracks redemption prices and seat availability for 26 credit card and airline programs, showing users how many points various programs would require to purchase that ticket.

A search on the site in late April for one economy ticket from Seattle to Boston late in May showed six possibilities, including seats available for 20,000 Alaska Airlines miles or 14,500 Delta miles. The site also noted that 14,500 American Express points could be used because those could be transferred to Delta and spent there.

Juicy Miles users pay about $10 for a five-day pass to the website, which was introduced earlier this year, or about $30 for a monthly subscription. For $200, a personal consultant will review options and book the seats.

Travel companies have also recently begun offering more experiences for customers to buy with their points or miles. Some include behind-the-scenes or other special access so it’s hard to attach an exact value to them.

“Those experiences are more in the eye of the beholder,” Mr. Ewen said. A baseball fan might be willing to dip into his account to throw out a first pitch at a game. That could be more attractive to road warriors than a plane ticket or hotel stay, Mr. Ewen said.

“They travel so much, the last thing they want to do with their miles is get on another plane.”

A version of this article appears in print on  , Section B, Page 6 of the New York edition with the headline: Making Those Miles Go the Distance. Order Reprints | Today’s Paper | Subscribe

Advertisement

SKIP ADVERTISEMENT