The Secret to Squeezing the Most Value From Travel Rewards Points
To use points or not to use points: It’s a question many holders of travel rewards credit cards face when booking flights.
New research from NerdWallet reveals guidelines that can help you decide whether to pay for a flight with cash or use points you’ve earned through airline loyalty programs.
The financial website examined how to get the most out of such points for its 2017 Travel Credit Card Study by booking sample summer-vacation flights for 20 popular routes on the four largest U.S. airlines.
NerdWallet found that the value of travel points varies depending on when and how you fly. For example, for round-trip domestic flights this summer, the average value of a point includes the following:
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Economy class flights during off-peak period: Average point value is 1.08 cents
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Economy class, peak: 1.03 cents
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Business or first class, off-peak: 0.86 cents
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Business or first class, peak: 0.83 cents
So what does this mean for travelers? According to NerdWallet credit card expert Sean McQuay:
“As a simple rule of thumb, if the value of each point is less than 1 cent, use cash and keep your points for a higher-value opportunity.”
To determine the value of a point, divide the price of a ticket by the number of points required for the trip. For the most accurate point value, first subtract a special tax on airline tickets often referred to as the “9/11 security fee” from the ticket price. According to NerdWallet, the tax is included in cash prices but must be paid separately if you use points.
For example, if a flight costs either $300 cash or 25,000 points plus $11.20 in security fees, the value of each point is 1.16 cents. McQuay describes that as “a pretty good deal.”
If you prefer not to do math for your summer vacation, follow these guidelines based on NerdWallet’s findings:
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For domestic flights, fly economy class and use points.
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For short flights in business class, pay cash.
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For one-way tickets, especially on international trips, use points.
For more rewards credit card tips, check out “5 Tips for Collecting Valuable Reward Points — and Spending Them.”
For help finding a new or better credit card, visit the Money Talks News Solutions Center, where you can search credit cards based on rewards as well as rates.
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This article was originally published on MoneyTalksNews.com as 'The Secret to Squeezing the Most Value From Travel Rewards Points'.