In our last post, we began exploring the world of frequent flyer miles and other loyalty programs. Today we see that not every program is created equal. Some offer a much better value and flexibility for your miles or points than others. Since the programs are often quite different, it can be hard to determine which is best. One of the best ways to cut through the fog is by determining the actual dollar value of your points.
For example, Chase Credit Card Ultimate Rewards operates on a 100 points=$1 scale. So if you have 10,000 Ultimate Rewards points and you want to book a $100 hotel room, you can pay for it all with your points. American Express Membership Rewards is 200 points=$1, half of Chase. These straight-forward approaches make it easy to figure out how much in reward dollars you have to work with when you are looking to book a hotel or flight. Plus, these two cards and some others will allow you to combine points and cash to pay for many travel items. So if that hotel was actually $130, then you could use your points to cover $100 and just pay the $30 difference. In addition, Chase credit card customers can use 25,000 points to purchase a round-trip airline ticket valued at up to $335, which is an even greater value for the points.
Capital One, which has aggressively advertised their rewards program, operates on a tiered scale. You need 15,000 miles for travel that costs up to $150; 35,000 for travel costing $150.01-$350.00; 60,000 miles for travel costing $350.01-$600 and 100 times the travel cost for travel $600.01 and higher. So if you buy a $350 airline ticket, the value of your points is the same as Chase. But if you buy a ticket costing $350.01—just a penny above the second tier—your point value is cut in half.
Assigning dollar values to hotel points is more difficult as hotels typically have several rewards levels for their different properties rather than a point per dollar amount. Plus you cannot assume that more expensive hotels are going to require more points than less expensive ones. A night’s stay at the Hilton Arc de Triomphe Paris hotel, for example, runs about $445 per night or you can stay there for 50,000 points. The Trianon Palace Versailles, also a Hilton hotel in Paris, runs $265 per night or you can get it for the same 50,000 points. The Hilton Paris La Defense is $237 a night, close to the price of the Trianon, but you can get it for 40,000 points.
Now that you know to ask the value question on your loyalty points, we’ll discover in our next post five additional tips for getting more from loyalty rewards programs.