When To Use Points and Miles Instead of Paying Cash
9 min read
Points and miles are terrific tools that can open up incredible travel opportunities. Social media is awash with content by the Average Joe who managed to take extravagant vacations with just a few credit card sign-up bonuses, along with budget travelers stretching their rewards to the max.
If you’re new to points and miles, you may be struggling to determine when using points or miles versus paying cash makes the most sense. The answer depends on a few different factors and varies for each traveler. But here are six times when you should redeem points rather than pay cash.
Best cards for earning points and miles
Chase Sapphire Preferred® Card
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Rewards
$50 annual Ultimate Rewards Hotel Credit, 5X points on travel purchased through Chase Ultimate Rewards®, 3X points on dining, 3X points on select streaming services and online grocery purchases (excluding Target, Walmart and wholesale clubs), 2X points on all other travel purchases, and 1X points on all other purchases
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Welcome bonus
Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That’s $1,000 when you redeem through Chase Ultimate Rewards®.
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Annual fee
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Intro APR
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Regular APR
20.74% – 27.74% variable on purchases and balance transfers
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Balance transfer fee
Either $5 or 5% of the amount of each transfer, whichever is greater
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Foreign transaction fee
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Credit needed
American Express® Gold Card
On the American Express secure site
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Rewards
4X Membership Rewards® points at Restaurants (plus takeout and delivery in the U.S.) and at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X), 3X points on flights booked directly with airlines or on amextravel.com, 1X points on all other purchases
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Welcome bonus
Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases within the first 6 months of card membership
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Annual fee
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Intro APR
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Regular APR
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Balance transfer fee
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Foreign transaction fee
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Credit needed
Capital One Venture Rewards Credit Card
Information about the Capital One Venture Rewards Credit Card has been collected independently by Select and has not been reviewed or provided by the issuer of the card prior to publication.
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Rewards
5 Miles per dollar on hotel and rental cars booked through Capital One Travel, 2X miles per dollar on every other purchase
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Welcome bonus
Earn 75,000 bonus miles once you spend $4,000 on purchases within 3 months from account opening
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Annual fee
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Intro APR
N/A for purchases and balance transfers
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Regular APR
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Balance transfer fee
0% at the regular transfer APR
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Foreign transaction fee
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Credit needed
Citi Premier® Card
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Rewards
3X points per $1 spent at restaurants, supermarkets, gas stations, and on hotels and air travel, 1X points on all other purchases
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Welcome bonus
60,000 bonus ThankYou® Points after you spend $4,000 in purchases within the first 3 months of account opening
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Annual fee
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Intro APR
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Regular APR
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Balance transfer fee
5% of each balance transfer, $5 minimum
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Foreign transaction fee
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Credit needed
1. When you’re booking luxury travel
Using points for luxury travel can be a great way to save money and access amazing travel experiences. With the right loyalty program, you can save on airfare, hotels, car rentals, cruises, and more. One of the best uses of points is for first-class flights and luxury resorts. An international first-class ticket can easily cost over $10,000 round-trip, while a top-tier hotel costs over $1,000 per night. Most people can’t afford these experiences, but points can make them more attainable.
Points can make expensive hotels more affordable since they can often be redeemed for free nights at high-end properties that would otherwise cost thousands of dollars per night in cash.
The Maldives is a popular (and pricey) destination where your points can go a long way. A night in a beach villa with a private pool at the Alila Kothaifaru Maldives can easily go for $1,000 or higher. Meanwhile, you can book the same room for just 30,000 Hyatt points. At 3.3 cents each, you’re getting exceptional value for your points, making this a great redemption.
Even if you can afford luxury travel, points can save you thousands of dollars that you can put toward other vacation expenses. The Maldives is notoriously expensive, with round-trip transportation between the airport and hotel often costing over $500 per person. Everything from meals to activities and spa treatments will command a premium, so using points to save on hotel and airfare can free up your budget for other experiences.
2. During peak and off-peak travel season
During peak travel seasons, such as summer and holidays, points can save you money when cash fares are sky-high. It’s important to note that many airlines now impose dynamic pricing, meaning the cash price determines the mileage fare. However, plenty of programs still publish an award chart with set pricing so you can get value out of your miles. For example, summer fares between the West Coast and Paris can go as high as $1,300. Meanwhile, Avianca Lifemiles charges just 60,000 miles round-trip for an economy-class ticket.
Off-peak travel can also be an exceptional use of miles. For example, programs like British Airways Executive Club, Iberia Plus and Virgin Atlantic Flying Club still follow award charts, with lower prices to specific regions on off-peak dates. This is a great way to stretch your miles further while saving money.
The same goes for hotel loyalty programs, which adjust pricing based on demand. World of Hyatt even publishes an award chart specifying peak and off-peak pricing, which starts at just 3,500 points per night. Despite off-peak hotel prices being lower, you can still save money by using points. For example, the Alila Manggis resort in Bali has off-peak rates in October, starting at around $150 per night (including taxes). The same room requires just 3,500 Hyatt points, getting you 4.3 cents in value per point. That’s higher than the 3.3 cents-per-point you can get in the earlier example in the Maldives.
3. When award tickets go on sale
Some loyalty programs offer the occasional sales, deeply discounting the miles needed for an award. For example, the Flying Blue program often runs Promo Rewards discounting award tickets by as much as 50%. When award tickets are this cheap, you are usually better off redeeming points than paying cash.
4. When you’re booking flights last minute
Contrary to popular belief, there are hardly ever “last minute deals” on airfare – you need to book in advance to get a good deal. Last-minute flights can be expensive, which is where points come in. Many airlines release saver-level award space (especially in premium cabins) closer to departure. So if you book a last-minute trip, you can often find good award availability and save money on expensive fares. It’s a win-win.
5. When your points are about to expire
Using points before they expire is important because it allows you to get the most value out of them. So if you know an expiration date is nearing and you have no other way to keep them active, use your points for travel so they don’t go to waste.
6. When you’re not close to meeting your status goals
When deciding between using points vs. cash, it’s important to also consider your elite status goals. Airlines don’t count award bookings towards elite status qualification. So if you’re close to reaching your goal, you might want to consider booking a cash fare instead of using miles. You can also double-dip by redeeming a flexible currency like Capital One Venture Miles. Capital One lets you book flights with your credit card, then redeem them at one cent per mile towards travel expenses. You can earn miles and elite status qualification through your chosen frequent flyer program while covering the cost of your ticket with Capital One miles.
Hotels are more flexible on this front. Choice Privileges, Hilton Honors, IHG One, Marriott Bonvoy and World of Hyatt all count award stays towards elite status. Knowing your loyalty program’s policy can help you decide whether it makes more sense to redeem points vs. cash.
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What’s the best use of points?
You’ll generally get the most value by redeeming them for premium travel: international business class, first-class flights and luxury hotels. These high-priced experiences give you the highest return on your points, especially if you’re booking with a loyalty program that publishes a set award chart. Even programs that utilize dynamic pricing can offer you tremendous value for your points when redeemed for premium travel.
That being said, the best use of points comes down to your travel needs. If you just want to save money, use your points. Don’t obsess over the cent-per-point value you’re getting or traveling to far-off destinations to keep up with the travel influencers. Redeem your points whenever it saves you money and keeps your budget on track. Points can devalue at any moment and using rather than saving them indefinitely is always the best way to go.
What’s the worst use of points?
Chase Freedom Unlimited®
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Rewards
Enjoy 5% cash back on travel purchased through Chase Ultimate Rewards®, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases
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Welcome bonus
Earn an extra 1.5% on everything you buy (on up to $20,000 spent in the first year) – worth up to $300 cash back. That’s 6.5% on travel purchased through Chase Ultimate Rewards®, 4.5% on dining and drugstores, and 3% on all other purchases.
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Annual fee
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Intro APR
0% for the first 15 months from account opening on purchases and balance transfers
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Regular APR
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Balance transfer fee
Intro fee of either $5 or 3% of the amount of each transfer, whichever is greater, on transfers made within 60 days of account opening. After that, either $5 or 5% of the amount of each transfer, whichever is greater.
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Foreign transaction fee
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Credit needed
Citi® Double Cash Card
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Rewards
2% cash back: 1% on all eligible purchases and an additional 1% after you pay your credit card bill
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Welcome bonus
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Annual fee
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Intro APR
0% for the first 18 months on balance transfers; N/A for purchases
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Regular APR
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Balance transfer fee
For balance transfers completed within 4 months of account opening, an intro balance transfer fee of 3% of each transfer ($5 minimum) applies; after that, a balance transfer fee of 5% of each transfer ($5 minimum) applies
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Foreign transaction fee
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Credit needed
How to calculate the value of your rewards
Calculating how much value you would potentially get from your points and miles is easy. Simply take the cash cost of the redemption (such as a flight or hotel stay) and divide it by how many points/miles are needed.
For example, if a flight were to cost $500 or 25,000 points, you would get two cents in value per point. The calculation is: $500 / 25,000 points = $0.02 per point.
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Bottom line
Ultimately, deciding whether to redeem points rather than pay cash for travel is a personal choice. You’ll get more value by using them for high-priced travel experiences. But if you’re a budget traveler who just wants to save a few bucks, use your points for that economy flight or low-category hotel redemption. The key is to have a use in mind before you start earning points. That way, you’re less likely to hoard points and get caught in a program devaluation. “Earn and burn” should be your mantra and by planning ahead, you can do this while still getting value from your points.
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For rates and fees of the American Express® Gold Card, click here.
Editorial Note: Opinions, analyses, reviews or recommendations expressed in this article are those of the Select editorial staff’s alone, and have not been reviewed, approved or otherwise endorsed by any third party.
