The Fundamental Question
Every redemption comes down to this: Are my points getting me more value than I'd get from cash back or other uses?
If you can get 1 cent per point as cash back, then using 50,000 points for a $300 flight (0.6 cpp) is actually losing value. You'd be better off taking $500 cash back.
The Cents Per Point Calculation
Formula: Cash price ÷ Points required × 100 = Cents per point
Good Value
$900 flight ÷ 45,000 miles = 2.0 cpp
✓ Worth using points
Borderline
$300 flight ÷ 25,000 miles = 1.2 cpp
~ Depends on your alternatives
Poor Value
$150 hotel ÷ 30,000 points = 0.5 cpp
✗ Pay cash instead
Value Benchmarks
These are general guidelines—your personal threshold depends on how you value your points:
- Below 1 cpp: Almost always better to pay cash
- 1-1.5 cpp: Acceptable if you have plenty of points
- 1.5-2 cpp: Good value for most programs
- 2+ cpp: Great redemption, use points
- 3+ cpp: Excellent value, definitely use points
Factors Beyond Pure Math
Would You Pay Cash for This?
Business class to Europe might calculate to 3 cpp—great value! But if you'd never pay $5,000 cash for that ticket, the "value" is theoretical. Using 60,000 points for a $600 economy ticket you'd actually buy might be smarter.
Point Earning Potential
Cash bookings often earn points and elite credits. Award bookings usually don't. If you're close to status, paying cash might be worth more.
Flexibility Needs
Cash tickets often have more change/cancel flexibility than awards. For uncertain travel, cash might reduce risk.
Your Points Balance
Sitting on 500,000 points? A 1.3 cpp redemption is fine—use them! Only have 50,000? Maybe save for that 3 cpp opportunity.
Ask yourself: "Would I rather have this flight/hotel, or [X amount] in cash?" If 50,000 points gets you a $700 flight, would you rather have that flight or $500 cash (at 1 cpp cash-out)? Your answer reveals your true valuation.
When Points Usually Win
- Premium cabin international flights
- Expensive hotels during peak dates
- Last-minute bookings where cash prices spike
- Aspirational trips you wouldn't pay cash for
When Cash Usually Wins
- Budget domestic flights ($100-200)
- Cheap hotels under $100/night
- When you need elite credits for status
- When points price is inflated (dynamic pricing gone wrong)
Key Takeaways
- Always calculate cents per point before redeeming
- Below 1 cpp is usually poor value—pay cash
- Consider whether you'd actually pay the cash price
- Factor in earning potential and flexibility needs
- Points are meant to be used—don't hoard forever chasing perfect value