Are Credit Card Points & Miles Still Worth it in 2025?

00:00:00.400 | every time you hear about another airline award chart disappearing or hotel program devaluation

00:00:06.400 | you might wonder is the points game even worth it anymore so today i'm going to break down exactly

00:00:11.920 | why i still believe we are living in the golden age of credit card points and miles i'm going to

00:00:17.200 | walk through the different types of points and how to calculate what they're really worth including

00:00:21.840 | the biggest mistakes that most people make when doing that math we'll look at where the value is

00:00:26.880 | what to avoid and whether you'd actually be better off earning cash back and for some of you i think

00:00:32.240 | you might be whether you're just getting started or deep in this game this is everything you need to

00:00:37.440 | know to fine-tune how you're playing the points game and whether it's actually going to be worth it for

00:00:42.320 | you i'm chris hutchins and if you enjoy this episode and want to keep upgrading your life money and travel

00:00:48.080 | click follow or subscribe so whenever i talk about points i hear some people ask is it even worth

00:00:54.960 | playing this game given all the times we keep hearing about devaluations and they're not wrong

00:01:00.320 | right i feel like most of the news we hear is oh this hotel chain moved their categories up this

00:01:05.840 | airline devalued their points it's not always the case sometimes you see jetblue just recently added

00:01:11.760 | condor as a way to redeem your points and they recently added japan airline so jetblue points might

00:01:16.640 | be more valuable and mesa which is a new homeowner's card added some transfer partners like sas which is a

00:01:24.000 | airline that we couldn't transfer to from any other currency so things do sometimes sound like they're

00:01:29.040 | getting better but most of the news is that points are getting devalued however i want to go back in

00:01:35.360 | time to explain why i still think that we're in the golden age of points and miles and i look back at

00:01:41.520 | this card that used to be kind of one of the greatest cards the starwood amex card it was the favorite of

00:01:48.000 | most management consultants and people who traveled and it was an amazing card at the time and it earned

00:01:54.400 | one starwood point i believe it had a 25 or 30 000 point welcome bonus when it happened and the really

00:02:01.440 | cool thing about this card was you could earn starwood points but starwood points could transfer to airline

00:02:07.360 | miles and you could transfer 20 000 points to 25 000 airline miles because they added a bonus every 20 000

00:02:14.240 | points you transferred so if you did it at those intervals it was effectively a 1.25x on everything

00:02:20.480 | card it was amazing now we have 2x on everything cards so you can earn points way faster now i looked

00:02:27.920 | back at the original chase sapphire preferred launch it didn't even have 2x categories other than booking in

00:02:34.080 | the chase travel portal a couple years later in 2011 they added 2x on travel and then the next year they

00:02:40.160 | added 2x on dining it was revolutionary oh my gosh you could earn 2x on travel and dining it was amazing

00:02:46.720 | now we have cards that earn 5x on flights 4x on hotels 4x on dining things have just gotten so much

00:02:54.320 | better in the last 15 to 20 years when it comes to how much you can earn but also if you want to look

00:02:59.840 | back at what signup bonuses were i looked back and in the early 2000s people wrote articles about 10 20 30 40

00:03:07.280 | 000 point welcome bonuses that was news i've had multiple 200 000 point signup bonuses and some even

00:03:15.440 | greater than that it's not even crazy to pass up a hundred thousand point signup bonus right now because

00:03:21.680 | they seem to happen so frequently when 10 15 years ago they were unheard of so are miles and points worth

00:03:28.560 | less now than they were 10 years ago they absolutely are but can you earn them at a way faster rate also yes

00:03:36.160 | in fact i would wager to say that the average dollar value of a welcome bonus the effective value and the

00:03:43.280 | effective return on your spend in terms of what are you getting in terms of points back relative to their

00:03:48.960 | value i think both of those have gone up in the past 20 years and it's why i still think that this

00:03:54.240 | is the golden age of credit card points and miles and what you can earn and so i am really excited to be

00:04:00.960 | diving into the actual value of those points because i think that there's a lot of value to be had here

00:04:06.000 | but it's important to know that not all points are the same so as i run through this episode i'm going

00:04:11.840 | to highlight the four different types of points so we know what we're talking about the first two are

00:04:16.640 | probably the ones almost everyone's familiar with airline and hotel points now one thing to keep in mind

00:04:22.240 | airline and hotel points usually aren't very portable hotel points you can usually transfer to other

00:04:27.360 | people but airline points i don't think you can in any program some of them do have points pooling so

00:04:32.800 | you can kind of book together with a friend and combine those points but most of them do let you

00:04:37.840 | book flights for other people so yes you might not be able to transfer your united or delta points to

00:04:43.440 | your family members or friends but you could book travel for them so keep that in mind they're not as

00:04:48.240 | portable now the third type of point is transferable points and these are my favorite these are the

00:04:53.360 | points you get from city capital one amex chase built wells fargo mesa brax us bank supposedly later

00:05:00.000 | this year tbd how valuable that will be and the reason i love them is because you just get so many

00:05:05.040 | options you can transfer those points to airlines and hotel groups you can use them in their travel portal

00:05:11.600 | effectively more like cashback some of those programs let you just take it as a statement credit

00:05:16.560 | and so there's just so much more flexibility with transferable points that i value them much higher

00:05:22.320 | than airline and hotel points it's a little bit strange because at the end of the day i usually use

00:05:26.800 | them to transfer to airline and hotel groups so you would argue why would they be worth more if i valued

00:05:32.880 | a hyatt point at 1.7 cents and i use my chase points for hyatt points by transferring how could my chase

00:05:39.440 | points be worth more but you could also ask me would i pay more for a point that could be an airline

00:05:45.520 | point at 10 different airlines or five different hotel groups than i would for an individual airline

00:05:50.480 | or hotel group and the answer is yes because you don't know where that availability is going to be

00:05:55.440 | the trip you want to take to europe or the trip you want to take to asia might be on one carrier that

00:06:01.600 | if you only accumulated delta miles you might never be able to book so having transferable points i think is

00:06:06.800 | way more valuable but also they have transfer bonuses so i went back and i looked historically

00:06:13.040 | on average amex wins here with 17 transfer bonuses a year on average and i'm looking at kind of year to

00:06:19.840 | date 2025 and 2024 and what that means is 17 different times throughout the year amex would give you anywhere

00:06:25.760 | from probably 10 to 30 percent more points when you move them to another airline or hotel group sometimes

00:06:32.160 | for hotel groups actually that amount was as much as 50 or even 100 transfer bonuses but for the most part

00:06:38.720 | with the airline groups that bonus is right around 24 to 27 percent i actually ran all the numbers for

00:06:44.960 | all of them historically so on airlines 21 to 27 percent on hotels 29 to 65 percent with one exception and

00:06:52.880 | that's built now built has had less transfer bonuses over the last few years in total since the beginning of

00:06:58.640 | 2024 it's been 14 but if you have built status those transfer bonuses which always occur on the first of

00:07:06.560 | the month end up being as high as 100 or i think in some cases 175 percent on hotels that means that if

00:07:14.720 | you transfer a hundred thousand points to air canada aero plan there have been days where if you had the

00:07:20.720 | highest built status you would have 200 000 aero plan points so one of the reasons i think built points

00:07:25.920 | are worth more than all other points is that they've had these really lucrative transfer bonuses and even

00:07:31.360 | if you had the lowest tier of status within built it might only be 125 percent bonus or a 25 bonus where

00:07:38.400 | you'd get 125 of the points but that's still a meaningfully great bonus obviously if you can spend

00:07:44.400 | your way to platinum status and you get 100 transfer bonus that's even better so those transfer bonuses

00:07:50.160 | also give a little bit of a boost to the value of those transferable points so i love transferable

00:07:55.680 | points they're my favorite they're the things i'll talk about the most and then the last type of points

00:07:59.520 | is what i'll call fake points and they're with programs that might call what you earn points so in

00:08:05.040 | the case of bank of america you earn points but you can't really use those points for anything other than

00:08:09.920 | either booking travel or cashing out as a statement credit or just depositing into a bank account so if

00:08:16.000 | you can't transfer those points to airlines and if you can't use those points in an airline or hotel

00:08:20.080 | program i'm going to call them fake points i'm not even going to talk about them today i want to be

00:08:23.920 | clear that some programs call what you earn points even though you can't really do anything with them

00:08:28.480 | other than what you could do if they were also earned as cashback so that's the different types of

00:08:33.600 | points why is it important to know what they're worth why are we doing this episode today

00:08:38.400 | and i think there's really two reasons one is so you can compare points amongst themselves

00:08:43.520 | that might help you decide which card to open you might see a hundred thousand point sign up bonus for

00:08:48.240 | one card and a two hundred thousand point sign up bonus for another card but in the case of hotel

00:08:53.120 | points if those were hilton choice or ihg points you might not want two hundred thousand of them if you

00:08:59.200 | could otherwise have a hundred thousand transferable points and so it's helpful to compare the value of

00:09:03.520 | points to know which cards to open or which cards to use right some cards especially hotel cards might

00:09:10.080 | look like they earn a ton oh i can get 3x on everything with a hilton card but if those hilton

00:09:14.880 | points are only worth half a cent i'd much rather be earning 2x capital one points with a venture card

00:09:20.400 | because i think that's a better earning rate so that's something to keep in mind and then also i think the most important

00:09:25.360 | most important thing is to decide if this whole game makes sense if we compare earning points to earning

00:09:31.920 | cash back and by the way when i say points some programs call them miles we're going to bucket all

00:09:36.560 | of those in the same bucket if you compare them to earning cash back you can know if you're actually

00:09:41.920 | getting the value so if your points are worth two cents and you have a card that earns 2x points on

00:09:46.800 | everything then you're effectively earning four percent so if your best cash back alternative is

00:09:51.520 | a two percent card or even a three percent card you'd be way better off with points but if you go

00:09:55.840 | through the exercise we'll go through today and you decide that your points are really only worth one

00:09:59.920 | cent and you have a three percent cash back card well that 2x card is effectively earning you two percent

00:10:05.760 | and a three percent cash back card is earning you three percent you would be way better off earning

00:10:09.760 | cash back and paying to book all of your travel that said if you're comparing your points to your cash

00:10:14.640 | back and it's to tie or it's even close i'd always give the edge to cash back because you're not locked

00:10:20.000 | into anything right if you earn points and you decide later oh i'm not sure i do value them as

00:10:24.080 | much as i thought well you have them they're pretty hard to convert to cash in any way that's at least

00:10:29.200 | legal or by the terms and conditions of most of the programs but with cash back it's cash you can invest

00:10:34.720 | it you can earn a return on it you can do all kinds of things so if it's tie if it's close i would always

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00:13:22.960 | certain states price is subject to underwriting and health questions okay so what are these points worth i'm

00:13:28.400 | going to throw a lot at you in this episode and i'm going to do my best to recap and summarize things

00:13:33.120 | as we go and end with really strong takeaways so that everything makes sense and so here's how we're

00:13:38.160 | going to walk through this episode i'll start with some reasonable floor value for points so you understand

00:13:42.640 | kind of what's the base then we'll look at what most of the experts in this field say how do they value

00:13:47.600 | points but then we're actually going to dig into the data itself to see how that might change things and

00:13:52.560 | it's actually really interesting now i think we have access to data that can give us a better

00:13:56.640 | understanding of the value of points and who might get more or less value than other people

00:14:00.560 | then i'm going to talk about how you kind of need to personalize all this to your particular situation

00:14:05.520 | i'll talk about how to do that and what kinds of things might change those values and then we'll look

00:14:10.080 | at why there might need to be a ceiling or a cap on the value we give points because you can buy these

00:14:14.960 | points and so if the alternative of accumulating them is accumulating cash back and then buying them

00:14:21.280 | really we could set a ceiling on their value as to what we could buy them for i'll share where i net

00:14:26.000 | out on points and what i think the values are and finally i'm going to walk through all of my learnings

00:14:30.880 | looking at the best cashback cards and the best points cards to see if there's actually an easier

00:14:35.600 | way to approach this question and i think there might be so like i said we'll start with what are the

00:14:41.360 | floor value of these points if they're transferable points one of the great reasons that i love

00:14:46.720 | transferable points especially for people who are new to this is that you can often use transferable

00:14:51.600 | points in the travel portal of the program so if you log into amx you can go book flights or hotels

00:14:58.000 | with amx travel now you might only get one cent per point and you might by the end of this episode

00:15:02.560 | think that's not a lot but when you compare cashback cards to points cards if you guarantee yourself at

00:15:08.480 | least getting one cent on the points card it's an amazing hedge for not being able to get all the value

00:15:14.800 | you think booking flights and booking travel some of these programs even let you take statement credits

00:15:20.080 | so if you're able to take a statement credit for one cent then the floor value of points really should

00:15:25.200 | be somewhere around one cent because if you could book flights any flight you want in the portal or

00:15:30.240 | hotels or you could take a statement credit that one cent value is kind of the floor now if you have

00:15:35.440 | airline and hotel points you usually don't have as many options of how you cash them out however most

00:15:41.840 | airlines and hotels have two tiers of pricing they have their what i'll call saver pricing or

00:15:47.440 | standard award pricing which is where you really get outsized value but a lot of programs now have

00:15:52.480 | moved to this dynamic version of pricing where take united american alaska delta southwest there is some

00:15:59.120 | value where you can book any flight and that value tends to be around at least one cent so if you just

00:16:05.360 | need to book a flight on united and there's no saver availability there's no special deals you can still book

00:16:10.000 | that flight with your united miles and you'll usually get at least a cent of value so for me i think the

00:16:15.040 | floor value for transferable points for airline miles is usually around one cent for hotels it's a little

00:16:20.960 | tricky for reasons i'll explain but their values kind of widely change depending on the program and some

00:16:26.880 | of them don't have the ability to use them as easily if there aren't those standard awards i've often looked at the

00:16:32.480 | hilton calendar and seen oh this night it's 120 000 points and this next night it's 975 000 points so it

00:16:40.480 | can be a little crazy looking at that so i don't have a perfect floor for hotel points but i'm not sure we

00:16:45.280 | need one i just thought that was a good place to start now the easiest place to say how much are my

00:16:49.760 | points worth is to just look at what most of the experts are saying and you can decide whether you want

00:16:54.560 | to trust their valuations so i'm pulling up this article from the points guy every month they update

00:16:59.920 | it we're looking at their august 2025 valuations and they say hey what are credit card points and miles

00:17:05.040 | worth amex membership rewards two cents capital one 1.85 cents then they go down and say what are airline

00:17:11.520 | points of miles worth and they go through every airline and they give a value like delta sky miles 1.2

00:17:17.120 | cents they actually clarify that they recently increased this you go down in jet blue 1.45 cents and you can go

00:17:22.720 | down and see what they value these points are there are a few different people that do it a blog i really

00:17:27.760 | like one mile at a time does it as well i think they're a little bit more conservative with their point

00:17:32.560 | values and so here i'm seeing all the transferable points from them are 1.7 cents most of the airlines

00:17:39.200 | they value at 1.1 to it looks like about 1.5 cents and then on the hotels it's kind of across the board mostly

00:17:45.840 | because hyatt points and accord points are more valuable than all the others so if you look at all hotel

00:17:51.920 | points excluding those it's almost always in the 0.3 to 0.7 cents but hyatt points here are one and a

00:17:57.600 | half cents and accor points are actually at two cents but the devaluation of the us dollar has actually

00:18:03.280 | made them a little more valuable because accor points are fixed at two euro cents which is now worth about

00:18:09.200 | i think about 2.3 cents so you could look at the experts and just say what do they think now one of the

00:18:14.320 | things that's tricky about doing this is that most of these experts are basing it on the type of value that

00:18:21.280 | they think their readers and they themselves can get so if i look at the points guy valuation they're

00:18:26.400 | putting built points at 2.2 cents that is true if you take advantage of these transfer bonuses and you

00:18:32.880 | know what you're doing and you book flights in the way that a lot of these readers and a lot of the

00:18:37.280 | people writing these posts do frequent miler which is another blog that i love has a different approach

00:18:43.520 | they do what's called reasonable redemption values and they say they're looking at midpoint values that

00:18:48.240 | they think are reasonably easy to achieve so this is another approach and if you're not an expert in

00:18:54.000 | the industry and you don't know what you're doing yet this might be a better place to start they're

00:18:58.480 | going to value most transferable points at 1.3 to 1.55 cents lower than the other two by a pretty big

00:19:04.960 | margin but because they're saying this is what it's going to be worth if we make it easy if you want to

00:19:09.840 | get advanced obviously those can go up and so their reasonable redemption values i think are lower than the

00:19:14.480 | value i might get from points they bring an approach that i think is super helpful especially for people

00:19:19.440 | early in this but at the end of the day i prefer looking at the data and we have a few excellent

00:19:25.120 | sources for this so on the flight side there is a tool called points path and i don't have the data

00:19:31.440 | pulled up but just so people who aren't familiar if you're watching on video which by the way i think

00:19:36.480 | this episode and the previous episode will now be on video not just on youtube but on spotify i'm looking at

00:19:41.920 | google flights and what points path does when you search for google flights is they just go out and

00:19:46.480 | look at the points needed from that program and compare it so i'm looking here and it says oh from

00:19:51.520 | san francisco to jfk there's a jet blue flight it's 31 400 points plus 11 or 462 dollars now every time

00:20:00.160 | they do that math they save that data point and they have tons and tons of data now you can't access the

00:20:06.160 | data directly on your own but if you do go to the frequent miler website they've started using that

00:20:11.680 | data and they've reported on it and they've shared a bunch of it back so as an example if we look at

00:20:16.080 | some of this points path data i'm looking here for air canada they report a average value and a median

00:20:21.760 | value and so they're actually quite different and that's because a lot of the flights on the high end

00:20:26.080 | skew this data sometimes you'll find a last minute flight that might be a thousand dollars and it's a

00:20:29.920 | great deal with points but that doesn't mean that's the value you should expect and so there's

00:20:34.080 | medium values average values but the interesting thing is that they break out economy versus business

00:20:39.680 | and then they also break out domestic versus international now another source for this data

00:20:43.920 | which does a similar breakout is award wallet and award wallet is a tool that you can link a lot of

00:20:48.000 | your airline hotel and bank programs to they track the balances of all those programs i will say

00:20:53.600 | it's not quite as simple as it sounds the refreshing often needs you to have a browser extension installed

00:20:59.440 | or sync your email but for every one of their members that books a flight they see that in their

00:21:03.200 | email they go into a search using i think skyscanner and kiwi to find the cheapest tickets that meet a

00:21:09.600 | criteria that they've set which is same class of service same calendar day and no more than 20 percent

00:21:16.240 | longer in terms of travel time so they're going to go price these itineraries and then compare

00:21:20.160 | them to the number of points that the individual award wallet member used so if you look at the

00:21:25.440 | points path data it's based on all the flights out there whether someone actually ever booked it or not

00:21:30.240 | so it includes really bad redemptions that people might never do if you look at the award wallet data

00:21:35.200 | it's only the redemptions that people do and so you'll see that their average values are a lot higher

00:21:40.320 | so for example air canada aeroplan points the average value someone has gotten from award wallet is 1.85

00:21:47.520 | cents whereas the medium combined value of aeroplan points from points path is 1.18 cents so that's a

00:21:53.600 | pretty wide difference but i think where it gets more interesting is if you start to look at the value

00:21:59.600 | for domestic versus international economy versus business class so if i look at this for air canada

00:22:06.160 | for a domestic u.s flight and keep in mind for people thinking well air canada is not in the u.s

00:22:10.880 | this is people using the air canada program to book domestic u.s flights most likely those flights

00:22:17.200 | are on united so the median value for an economy domestic ticket is 1.2 cents whereas the median

00:22:23.120 | value for a domestic business ticket is 2.1 cents similarly on international the median value for an

00:22:29.520 | economy ticket is 1.08 cents and the median value for business is 1.53 cents and the median value for first

00:22:36.080 | class is 2.26 cents those averages are even higher so the average value of an international first class

00:22:42.160 | ticket is 3.67 cents now this is the points path data this is just all the flights that are seen

00:22:47.840 | if you actually look at what people are booking at least people who use award wallet i'll take air canada

00:22:52.800 | again but then i'll talk a little bit about alaska because it's just clear to see why alaska points are

00:22:57.200 | so valuable the average point value for a regional economy flight is 1.21 cents and then for a regional

00:23:03.920 | first class it goes up to 2.56 cents and then if you look at long haul business or first class 2.63 cents

00:23:11.200 | so the big takeaway here is that if you're using your miles for short domestic economy flights

00:23:16.640 | you're going to get less value for per mile than you are using your miles for long haul first or business

00:23:23.920 | class tickets now if you're doing international or you're doing business class domestic those are

00:23:29.040 | still more elevated values than domestic economy but the biggest bang for your buck is on long haul

00:23:34.560 | business this is probably not a surprise to most people listening if you scroll through all of the

00:23:39.280 | award wallet long haul business class valuations for different programs it's like 4.17 cents 2.39 cents 3.19

00:23:48.320 | 3.92 3.28 almost all of them are one and a half to as high as 5.86 cents that's really high i'm not

00:23:57.760 | suggesting that everyone should value their points at 3 to 5 cents i'm just saying if you're using your

00:24:03.680 | points for international business class that's effectively what that value has been shown to be

00:24:09.520 | so if i'm looking at united i'm seeing united's points path data says that the medium value of economy

00:24:15.200 | is 1.09 cents but the median value of business class is 1.46 cents and these are tons of data

00:24:20.880 | points the total number of data points for united that this data is based off is 4.8 million flights

00:24:27.280 | so there's a lot of stuff going on here but there are two big takeaways for me so one is that huge

00:24:31.520 | difference you get between domestic and international economy versus business the other big takeaway is that

00:24:37.440 | some programs have a really wide band of potential point values and others don't at all and that's really

00:24:43.280 | notable when you're comparing the award wallet values to the points path values if you figure points path

00:24:49.280 | is everything award wallet is what the experts get and you compare those two you look at something like

00:24:55.200 | alaska where the experts are getting 2.12 cents and the kind of general data is getting 1.46 cents

00:25:02.960 | now these are just averages this is not looking at business or economy i took the average numbers

00:25:07.120 | but then you go down and you look at jet blue and you say wow all jet blue flights the average value is

00:25:13.280 | 1.21 cents the experts the people using award wallet the people like me the average value they're getting

00:25:18.880 | from jet blue is 1.24 cents and that's because there are a handful of airlines delta southwest jet blue

00:25:25.280 | where it's just really hard to get outsized value now in the case of jet blue and southwest they're

00:25:30.320 | mostly a fixed value point it does change dynamically a little bit but i haven't heard of a lot of

00:25:36.160 | situations where someone booking a flight on jet blue or on southwest or usually on delta has gotten

00:25:42.320 | two three four five cents with jet blue adding a few transfer partners internationally maybe that's possible

00:25:48.160 | every now and then you might be wildly lucky and get an international partner booking from delta in

00:25:54.000 | business class that's greater than that but looking at delta here the average value that a award wallet

00:26:00.480 | user is getting is 1.34 cents so yes that's more than the 1.14 cents that most people are getting on

00:26:07.440 | points path which is just all the flights but honestly that value might come from the fact that i would

00:26:13.760 | guess most award wallet members have a delta american express card which gets you a 15 discount on your

00:26:19.440 | delta bookings and that might make up for that delta so when you look at the flight data the big takeaway

00:26:25.440 | is business class and international flights are going to get you more value and certain programs like

00:26:31.200 | delta jet blue southwest are going to get you less value or at least less upside in value they might get

00:26:37.920 | you more consistent value but on the upside it's not going to be there and honestly if my choice was only

00:26:43.440 | earning points in those programs or cash back i'd probably go for cash back the reason i like points

00:26:48.640 | is because of the outsized value i can get from all those other programs on the hotel side award wallet

00:26:54.160 | does actually do the same thing for hotels so we can get the data that they show for hotels there isn't

00:26:59.840 | the same breakout of what do you get from international versus domestic suites versus not so they just have

00:27:06.800 | their average value this episode is brought to you by masterclass if i'm trying to rewrite something or do

00:27:13.200 | some research ai tools have been great but when i'm really trying to learn something meaningful in

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00:28:29.920 | you by built nobody wants to pay rent but if you have to why not get rewarded for it and built does

00:28:36.560 | exactly that they have totally changed the game by rewarding their members with valuable points and

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00:29:33.840 | the next tool i want to introduce is called gondola and they have amazing data for hotels and they do

00:29:38.560 | that because they have this website that allows you to search and compare cash and points booking rates for

00:29:43.200 | hotels the site's totally free to use they even track your points on hotel side but they also let

00:29:48.560 | you complete the points bookings on their site which is really cool so instead of using an award search

00:29:53.920 | tool finding a hotel booking and then going to the hotel website to book it you could do it all on their

00:29:58.480 | site so definitely check that out there is a referral link if you use someone's referral you get a free

00:30:03.600 | 50 after your first booking mine is at all the hacks dot com slash gondola so if you're going to sign up

00:30:08.400 | definitely use someone's referral code and every time they see a hotel they cache all of the data and

00:30:13.200 | they store it and then they let people like me analyze that data and share it with you guys and if i have

00:30:18.640 | one qualm with the site it's that sometimes on the search results page they will show cash data and then

00:30:23.840 | when you actually click into the hotel they live refresh it and that points booking might not still be

00:30:28.720 | available or the rate might have changed doesn't happen all the time but i understand why they do

00:30:32.960 | it because it's just too many things to refresh at once so it's a quicker site than some other ones

00:30:37.840 | because it's getting you all that data right out front but you need to click into the individual hotel

00:30:42.800 | to refresh the data to make sure that rates there but when it comes to looking at the redemption values

00:30:47.760 | they have a tool that they've given me to look at so i can see what is the distribution of redemption

00:30:53.040 | values for hyatt and so here i'm seeing on hyatt 730 000 different options across 1700 properties

00:30:59.680 | 23 brands and they show you the distribution the percentile distribution and they say median value of

00:31:05.280 | hyatt points is 1.65 cents per point now this is why i love hyatt points they're so much more valuable

00:31:11.120 | than all other hotel points and they transfer one-to-one from chase it's awesome they also say at the 75th

00:31:16.560 | percentile you get 2.15 cents per point and at the 90th percentile it's 2.81 cents per point they let

00:31:23.680 | you go further and say hey because most points bookings are refundable what if we only compare

00:31:28.320 | to refundable rates and then because one of the hyatt chains mr and mrs smith is just a fixed rate

00:31:36.080 | redemption there's not a lot of outsized value you can say hey show me only hyatt excluding mr and mrs smith

00:31:42.800 | now the medium value goes up to 1.89 cents per point when you're looking at refundable bookings

00:31:47.840 | that aren't mr and mrs smith the 75th percentile goes up to 2.46 cents per point and the 90th percentile

00:31:54.560 | goes up to 3.25 cents per point tldr hyatt points are worth a lot relative to airline points they're

00:32:00.320 | kind of comparable or even better the tricky thing with hotels is that hotel points are across the board

00:32:06.640 | if i look quickly at award wallet and the value that most of their members have gotten choice points

00:32:13.040 | hilton points at about 0.6 cents ihg 0.68 marriott 0.93 so they're kind of around all across the board

00:32:22.000 | if i look at the data from gondola i think the interesting thing is you can see a couple takeaways

00:32:28.800 | one if i look at hilton the median value is 0.39 cents however the 75th percentile goes up to 0.46

00:32:36.960 | and the 90th percentile goes up to 0.57 so if you cherry pick the best redemptions you can get more

00:32:42.720 | value i think we all know that if you compare it to refundable rates the values go up a little bit but

00:32:48.080 | you know maybe 10 percent ish but if you look at particular properties and chains you see more

00:32:54.320 | value so with hilton at the 75th percentile points are worth 0.46 cents but if you look at the conrad

00:33:00.160 | it's 0.56 cents if you look at lxr it's 0.88 cents and if you look at the waldorf it's 0.65 cents so you

00:33:06.480 | don't need to remember all these numbers so i'm sorry for throwing them all at you but the takeaway

00:33:10.560 | is at certain chains within the hotel groups you can get more value this is similar to the airline

00:33:16.080 | example of getting more value from business class if you're booking luxury chains like conrad

00:33:20.480 | waldorf park hyatt st regis ritz carlton kimpton six senses in those respective chains you find that

00:33:28.400 | the value of those points are worth more so i think the big two takeaways here from looking at the data

00:33:33.040 | they apply to hotels and airlines the more premium booking you're doing whether it's premium properties

00:33:38.080 | premium cabins you get more value and if you compare what the experts are getting from their points

00:33:44.160 | to what the data shows the average price per point is it's just significantly higher i'll use hilton

00:33:51.040 | as a great example the median value for all bookings from the gondola data is 0.39 cents

00:33:57.280 | but if you look at what award wallet users are getting at hilton it's 0.59 cents now those point

00:34:03.440 | values may seem smaller but keep in mind that earning 0.59 cents instead of 0.39 cents is 50 percent more value

00:34:10.720 | so again the more you understand how to do this the more you're picking the best redemptions and not

00:34:15.440 | picking the worst ones the more value you're going to get now if you hear me talking about hotel points

00:34:19.600 | and you think wow if they're worth so much less than airline points or transferable points why would i want

00:34:24.160 | them keep in mind two things one oftentimes when you're using a credit card or staying at a hotel you're

00:34:29.760 | just earning way more points with top tier status at hilton and the top to your credit card i think

00:34:34.880 | you're earning 34 hilton points per dollar also keep in mind that if you're transferring those points

00:34:40.560 | from bank programs the transfer ratios are often not just one to one so if you go from amex to hilton

00:34:46.640 | you're going one amex point to two hilton points if you're going from city to choice privileges you're going

00:34:52.640 | one to two and so it's not always just a straight one to one transfer that said sometimes it is and

00:34:59.360 | that's why i never use those points as transfer partners from those programs so if you're transferring

00:35:04.080 | from chase to marriott you're getting one to one and those merit points are worth a lot less than

00:35:08.800 | airline points which is why i'm never doing those transfers so keep that in mind so now that we've

00:35:13.280 | looked at what experts say we've looked at what the data says i'm just going to do a quick kind of min

00:35:17.520 | max on the values here if i look at airlines and i look at the points path data i look at all the

00:35:22.640 | experts the minimum value that anyone assigns to airline points is 1.1 cents and the maximum is 1.55

00:35:30.320 | now award wallet members might be earning a lot more than that but valuation wise that's kind of the

00:35:37.040 | range 1.1 to 1.55 cents if you're using premium cabins if you're doing what award wallet users say

00:35:43.360 | then i think it's a little bit different award wallet the minimum is 1.24 and the

00:35:47.360 | maximum is 3.65 cents so that's something to keep in mind as well on the hotel side generally all of

00:35:55.040 | those hotel points except for hyatt are in the 0.5 to 0.75 range and then hyatt is in the 1.5 to 1.7 range

00:36:03.920 | there are other hotel chains preferred leading hotels of the world a core at windham i did not include

00:36:10.000 | those in this analysis most of them are a bit more fixed rate values so it's not as interesting to think

00:36:17.200 | about their value and they have a limited number of places you can transfer to but just having

00:36:21.600 | valuations from data or experts is not really enough because if you're not staying in those luxury hotels

00:36:27.440 | or flying premium cabins then the values you get might be totally different so the real best answer

00:36:32.640 | here is to look at your own personal value and on a walk through how to calculate that unfortunately you

00:36:38.240 | probably don't have a history of every redemption you've done and what the going rates were at the time

00:36:44.240 | in the past so it's a little bit hard to go back in time but the next time you're planning a trip i'd

00:36:49.200 | encourage you to go through this process so you can get a sense and if you want right now you could

00:36:53.280 | even go and plan a hypothetical trip just to see what kind of values you're getting but as i did this

00:36:59.520 | i realized there's some things that i think most people out there are missing so let's start with just

00:37:04.640 | a simple example there's a 150 flight it costs 10 000 points and you might say great if i were to book

00:37:10.640 | that i would get 1.5 cents per point so my point should be worth 1.5 cents right it's not that easy

00:37:17.280 | so first off there are taxes and fees domestically those taxes and fees are usually five dollars and

00:37:22.720 | sixty cents so it's a little bit negligible so in that previous example i would just subtract 5.60

00:37:28.480 | from the cost of the flight which would make the cents per point 1.44 cents per point however

00:37:34.160 | internationally especially on premium cabins those taxes and fees could be 50 and they could be a

00:37:38.960 | thousand dollars so i think of this just like an equation you've got the price of the flight equals

00:37:44.400 | the number of points plus the taxes and fees subtract the taxes and fees from both divide and you get

00:37:50.640 | the answer to what is the cents per point however you can't always compare the exact flight you're

00:37:55.200 | taking for a few reasons let's say you're flying from la to new york and the cheapest points ticket is on

00:37:59.920 | delta but when you look at the cash prices united's flight is half the price if you were booking with

00:38:05.200 | dollars you weren't going to book that delta flight for 2x the price so i think you need to use a

00:38:11.040 | reasonable alternative as to whatever you would book with cash and then maybe you need to adjust it for

00:38:18.400 | some premium cabin for example we might book a flight to europe using 50 000 air france points that

00:38:25.280 | otherwise was three thousand dollars in business class but would we really pay three thousand dollars

00:38:29.920 | to fly in business class if you wouldn't then i'm not sure that cent per point value makes sense because

00:38:35.360 | if you are using it to compare to earning cash back it'll put the favor in the points every time but

00:38:41.120 | if you wouldn't actually pay for that flight then it's not necessarily a fair comparison but also don't

00:38:46.480 | just use the economy flight prices because you're getting a way better experience so i'd say look at

00:38:51.280 | the price of flights and come up with a what is the amount of money i would have spent on this trip and

00:38:56.880 | compare the number of miles to that and if you are doing this looking at one-way flights keep in mind that

00:39:03.360 | in some geographies one-way flights are wildly inflated in price if you're booking them with cash so i've

00:39:10.320 | often looked to europe and found that a three thousand dollar round trip flight to europe might

00:39:15.600 | be twenty three hundred dollars each way but only three thousand booked as a round trip so when i'm

00:39:20.720 | really trying to be honest with myself and say what are my points worth on this trip i'll look at the

00:39:25.440 | round trip flight compared to the round trip points and i'll look at it on flights that i would have

00:39:30.000 | reasonably taken not just the flights that i booked with points often you can get really expensive flights

00:39:35.920 | with your points but there's another flight that wasn't as expensive that you would have been totally

00:39:39.760 | happy taking if you were paying for it yourself a couple other things to keep in mind if you need to

00:39:44.240 | buy positioning flights let's say you found a great award but it's from la to paris and you live in san

00:39:50.960 | francisco we need to factor in the fact that you might have to buy that other flight to get down to la

00:39:56.240 | but the biggest thing that i see no one doing on the internet when they compare what is the cents per

00:40:01.040 | point i'm getting on my trips is when you book a paid flight and this includes flights if you book

00:40:06.640 | them in a travel portal you earn points on those flights now depending on what status you have or

00:40:12.480 | what program it's in the number of points varies but for most of the u.s domestic airlines it's anywhere

00:40:18.160 | from 5 to 11 points per dollar and you earn credit card points when you book a cash booking whereas on an

00:40:24.480 | award booking you're only earning credit card points on those taxes and fees so if you stack those two

00:40:29.200 | things up that could be somewhere between five to fifteen percent you also don't always earn the

00:40:35.360 | elite qualifying points that you need on an airline to get status on your award flights and so that has

00:40:41.440 | to have some value too i went through the math i think that value is roughly around five percent if you

00:40:47.840 | really care about status on that airline if the only flight you're taking is delta and you never fly delta

00:40:52.880 | the fact that you're going to earn a marginal amount of elite qualifying miles or medallion qualifying

00:40:57.600 | dollars in delta's case is negligible so you shouldn't include it so depending on whether you care about

00:41:02.800 | earning status on the airline i think that the value of all of the points and status you're going to

00:41:08.240 | earn including your credit card on a paid flight is between 10 and 20 percent which is a meaningful

00:41:14.800 | change it definitely does make the math hard and so my quick rule of thumb is when i'm looking at a flight

00:41:22.000 | i'm booking with points i compare it to the most reasonable alternative that i would have booked as part of a

00:41:26.640 | round trip and i subtract the taxes and fees or any positioning flight and if i don't have status on

00:41:33.360 | that airline or care about status on that airline i knock off 10 percent and if i really value the

00:41:38.000 | status and i have a high level of status with that airline depending on that status level i'll knock off

00:41:43.280 | 15 to 20 percent so that means that 150 flight that was 10 000 miles could actually end up being closer

00:41:49.920 | to 1.2 cents per point instead of 1.5 cents per point most the time that bloggers share their cents

00:41:55.280 | per point including me i am guilty of this they don't factor in all this data and so i think the points

00:42:01.280 | path data above the valuation from experts above it's probably not using this data either so you could

00:42:07.040 | probably make a case that point values across the board are inflated by 10 to 20 percent that said there is

00:42:14.000 | one bonus for points bookings and that is they are often way more flexible back when we were looking

00:42:19.520 | at hotels when you found that you compared it to refundable rates you found that the hotel value

00:42:25.040 | per point went up well that's because most points bookings on the hotel side and on the flight side can be

00:42:30.880 | canceled for a full refund now that's not true across the board so definitely i'll link to an article in

00:42:35.840 | the show notes from frequent miler that is all about the award cancellation policies per airline

00:42:41.280 | because they're not all free but for american delta alaska and united and alaska by the way partner

00:42:48.400 | bookings do have a fee but that gets waived with their new summit card those cancellations are free

00:42:53.840 | and so there's some value there now if it's an airline you fly a ton and you cancel their flight you

00:42:58.480 | will get a credit on that airline and if you fly them a ton that might be really easy to use but if you're

00:43:03.680 | booking a flight to europe which we've done a few times and you have to cancel it and you had done

00:43:08.080 | that as a paid booking on let's call it luftanza well now you might be stuck with thousands of dollars

00:43:13.440 | in luftanza credit that i can guarantee you will be way way harder to use than if you just got your miles

00:43:19.200 | refunded so it's up to you to decide what value that refundability has in my mind anytime i was making

00:43:27.200 | a cash booking if they were to offer me a 10 premium to make that fare refundable i'd probably always

00:43:33.600 | take it so yes you could argue points prices are all maybe inflated 10 to 20 percent if you value

00:43:39.360 | flexibility maybe they're all deflated 10 so maybe it all breaks even there's a lot of ways to look at

00:43:44.880 | this if you just want to do it on easy mode i would say the easiest thing to do is subtract the taxes and

00:43:50.480 | fees of a comparable flight and discount 10 and know that going forward when i talk about cents per point

00:43:56.560 | on future trips i'm going to try to do a better job of calculating this that's a little bit more of a fair

00:44:02.160 | comparison so that it gives you a better idea of what points are actually worth but two big caveats

00:44:07.440 | here one just because you got a good redemption once doesn't mean you're going to get it every time

00:44:12.160 | just because you see a blogger promote hey this time i got 10 cents per point well that's because

00:44:17.360 | it's a great article title that's because people get excited to read it sometimes i use my delta miles

00:44:22.080 | and i might only get 1.3 cents per point that's not a fun thing to talk about so it might not make

00:44:26.800 | headlines but it is true so over time i think as you use your points and your miles and you start to

00:44:33.200 | look at the value you're getting you'll have a better barometer for what what your value is if you don't

00:44:38.320 | have that data yet maybe starting with something like the frequent miler reasonable redemption values

00:44:42.960 | is better because it's a little easier guide if you're a pro you probably already have a good sense

00:44:47.920 | of what the value is this episode is brought to you by delete me if you prefer not to have your

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00:46:20.800 | number two while it's super helpful to know how much value you get from your points if you're using that

00:46:26.080 | value to compare whether points are better than cashback it's really important to recognize that

00:46:30.800 | sometimes you can buy those points with cashback you've earned so i want to walk through that and

00:46:35.760 | why that might put a ceiling on the value of points you have so first i'm going to use an example and in

00:46:40.640 | my last episode i talked about getting a 1500 room at the waldorf historian costa rica for 120 000 hilton

00:46:47.280 | points so if we take a hundred fifteen hundred dollars divided by 120 000 we get 1.25 cents per

00:46:53.280 | point now let's be aggressive with our cashback strategy let's say i have the robin hood gold card

00:46:58.320 | earning three percent back now to get enough cash back to pay for that fifteen hundred dollar room

00:47:03.200 | i need to spend fifty thousand dollars on that card now most hilton cards out there earn at least

00:47:08.960 | 3x on all your spend so if that fifty thousand dollars weren't in any category bonus i would

00:47:14.320 | earn 150 000 hilton points so that means that i'd have 30 000 hilton points left so clearly the hilton

00:47:21.840 | card would be a better deal right well maybe not first as i just talked about earlier that fifteen

00:47:26.880 | hundred dollars stay is likely to earn a lot of hilton points even with the basic card between that card

00:47:32.320 | and silver status you're actually going to earn 19 points per dollar so on that stay you would earn

00:47:37.680 | 28 500 points even more if you had diamond status so now it's almost break even right put fifty

00:47:42.880 | thousand dollars on a hilton card get 150 000 hilton points spend 120 000 on the room have 30 000 hilton

00:47:49.040 | points left or put fifty thousand dollars on a robin hood card get three percent back which is fifteen

00:47:54.400 | hundred dollars spend that fifteen hundred dollars on the room but also get 28 500 hilton points so we're

00:48:01.040 | within 1500 hilton points of these being almost identical but neither of those are the best case

00:48:06.560 | scenario because you could actually use that robin hood card earn your fifteen hundred dollars of cash

00:48:11.360 | back but then just buy those hilton points and hilton points go on sale all the time for as low as half a

00:48:17.520 | cent so let's say you took that fifteen hundred dollars you spent six hundred dollars to buy the points you

00:48:22.800 | need you would have nine hundred dollars left so comparing those three outcomes that's a way better

00:48:28.640 | outcome but if you want to do it apples to apples because it's hard to compare having cash back left

00:48:33.840 | over when the other two scenarios didn't have cash let's say you just spend the whole fifteen hundred

00:48:38.560 | dollars on hilton points you'd end up with three hundred thousand hilton points you'd book your hundred

00:48:43.520 | twenty thousand point room and instead of having thirty or twenty eight thousand hilton points in the other

00:48:48.400 | scenarios you'd now have a hundred and eighty thousand points left over so in that comparison

00:48:53.840 | you would have been much much better off with a cash back card using hilton points that you bought

00:48:59.280 | to book the room so the price at which you buy those hilton points for kind of creates an effective ceiling

00:49:05.520 | so as much as you could say that because you got a fifteen hundred dollar room for 120 000 you

00:49:10.560 | effectively made your hilton points worth 1.25 cents that is true you did get a ton of value from hilton

00:49:16.080 | points but if you're comparing that 1.25 cents to what you would earn on a cash back card i don't

00:49:20.880 | think it's a fair comparison because you could have bought those hilton points for half a cent so we

00:49:24.960 | need to look at the data on what buying points is worth to set a ceiling on what our points are worth

00:49:31.280 | and by the way in that previous example that doesn't mean i'm moving to team cash back it just means that

00:49:35.600 | if your only two options are the robin hood card and the hilton card you might not want to use the

00:49:39.280 | hilton card for your everyday spending so let's quickly run through what the data says about buying

00:49:43.520 | points so we can figure out what to do with that data so on the hotel side when hotel points are

00:49:48.320 | not on sale excluding hyatt they typically cost one to 1.25 cents which is about one and a half to

00:49:54.960 | 2x the valuation that most people give them it's pretty awful i would not buy hotel points if they're

00:49:59.520 | not on sale that said hilton ihg and choice points are always on sale so you're okay they go on sale seven

00:50:05.360 | to ten times a year so i think it's easy to put a ceiling on hilton and ihg points at a half a cent and on

00:50:10.960 | choice at about 0.62 cents marriott and hyatt are on sale a little bit less but when they do go on

00:50:16.640 | sale their sales last as long as two months but their sales prices aren't quite as close to the

00:50:21.920 | value most people get them for so if you're going to use them marriott points are often on sale for 0.89

00:50:29.120 | cents and hyatt points are often on sale for 2.8 cents so you could use those ceilings if you want i don't

00:50:35.600 | think it'll be that valuable but i feel like it's important to talk about airline point values are a

00:50:40.080 | little bit easier because they're all a little bit more clumped together to recap on the public valuation

00:50:45.120 | side they range from 1.1 to 1.55 cents but the amount to buy them is all over the board when they're not

00:50:50.800 | on sale the cheapest airline point you can buy is at 2.3 cents all the way up to 3.8 cents again like

00:50:57.280 | hotels if points aren't on sale don't buy them when they are on sale they're anywhere from 1.25 to 1.88

00:51:04.240 | cents except delta which looks like never go on sale so i'm never buying points whether it's airline or

00:51:10.480 | hotel points if i don't have a redemption in mind and i know how i'm going to use them but the challenge

00:51:15.680 | here and why i don't know if it's fair to use the exact sale prices as ceilings for airline miles

00:51:23.120 | is that they're not on sale nearly as often as hotel points the only exception here is avianca life miles

00:51:28.240 | they went on sale 17 times last year i thought about throwing the dates into chat chapt and if i did i

00:51:34.160 | probably would have gotten an answer that they were on sale like 340 of 365 days so i would put a ceiling

00:51:40.480 | on avianca points at 1.3 cents because they're almost always on sale but their program has a lot of

00:51:45.280 | quirks and i don't think it's a program that someone new to this game should be using and

00:51:50.080 | honestly i still have a bunch of points there that i haven't used because of all the nuances of the

00:51:54.080 | program that said on any given day at least five or six airlines probably have their points on sale

00:52:00.640 | somewhere in that 1.2 to 1.88 cents value that i mentioned so i think it would probably be fair to

00:52:07.680 | put a cap on the value you give your points and miles at two cents per point so i guess the takeaway

00:52:12.960 | here is that if you're looking at your data and you're ending up with point values that are higher

00:52:19.120 | than some of these sale values then i would encourage you to bring that number down because

00:52:23.760 | it's not necessarily a fair comparison it's absolutely fair to say you got that much value from those

00:52:28.400 | points but if you're trying to compare whether you should be earning cash back or not i would cap your

00:52:33.520 | airline points at two cents and i would cap your hotel points at 0.5 to 0.62 for most programs 0.9 ish for

00:52:43.040 | marriott and probably around 2.08 for hyatt so my summary is that i'm not buying points unless i need

00:52:49.600 | them and i know the program really well and i know how i'm going to use them but i would apply these caps

00:52:54.320 | if i'm doing any calculations as it applies to comparing airline and hotel credit cards to cash

00:53:01.680 | back cards right obviously it's totally true that you could get two cents of value from your hilton

00:53:05.920 | points but if you want to compare your hilton card to an equivalent cash back card i would cap the value

00:53:10.720 | of those hilton points at half a cent same for ihg choice again 0.62 marriott 0.89 hyatt 2.08 on the airline

00:53:19.120 | side if it's avianca cap it at 1.3 cents for all other airlines i would probably cap it at 2 cents

00:53:25.360 | just because there are a lot of options but they're not consistent so you probably couldn't come down

00:53:30.720 | much lower than that now you'll notice all those values we talked about were for airline and hotel

00:53:34.960 | programs yet i'm constantly talking about how much i love earning transferable points and most of the

00:53:39.920 | cards i'm spending most of my dollars on are for transferable points because you don't need to commit

00:53:44.400 | to one program so like i said before if you find a flight on lufthansa you could just transfer points

00:53:50.640 | to a star alliance airline and assuming that availability is there you could book it whereas

00:53:54.560 | if you're accruing delta or american miles you'd be out of luck so how do we think about valuing those

00:53:58.560 | transferable points i think at a minimum they have to be worth the average of all the programs you could

00:54:02.960 | transfer them to but i'm not transferring them to places with terrible value so you could probably make

00:54:07.920 | the case that they should be valued at the maximum value of all the airlines and hotels you could transfer

00:54:12.640 | them to that wouldn't necessarily account for the fact that there are transfer bonuses and you get

00:54:16.880 | value from flexibility so this is a tough one the points guy errs on the higher side valuing chase amex

00:54:22.320 | built at two cents per point or more one mile at a time just gives them all 1.7 cents per point

00:54:27.680 | and frequent miler has them all around 1.5 cents per point keep in mind they're doing these reasonable

00:54:32.720 | redemption values so they're not trying to target the max value you can get for me i'm almost always

00:54:38.240 | getting at least one and a half cent per point often it's two cents per point or more i recognize

00:54:43.280 | i could buy those points so i can't go above that level so i probably lean towards something around

00:54:48.640 | the one mile at a time perspective of saying i'm going to value all my transferable points at 1.7 cents

00:54:54.240 | per point now again if you're new to this game if you're flying mostly economy if you're flying mostly

00:54:59.440 | domestically maybe you're not getting 1.7 cents per point and that's totally fine right the game is not to

00:55:05.280 | try to get the most value because if you have to take trips you don't otherwise want to take to get

00:55:09.680 | the most value that doesn't make sense the point of all this is to make sure you're maximizing what

00:55:14.720 | you earn when you're spending money on a regular basis but one other important consideration here

00:55:20.320 | is really about your own psychology you might realize that points allow you to take a trip that

00:55:25.520 | you wouldn't have otherwise taken in the same way that paying down the principle of your mortgage

00:55:29.280 | forces you to save earning points instead of cash back might force you to travel if you had that

00:55:34.640 | cash back you might not have made the decision to spend your money on travel but with points you

00:55:39.760 | really have to travel to get your value out of them which might be a good thing on the flip side the

00:55:44.560 | overhead of booking a trip with points can be a lot especially if you're new to this it might limit

00:55:49.120 | where you can go or the dates you travel and the best deals might put you in a situation where they're

00:55:54.480 | driving the trip instead of where you want to go now i think as you learn this game more you can get

00:55:59.360 | past that but it's definitely a consideration and i would bump up or down my point value depending on

00:56:04.800 | how strongly i felt about either of these for me i love the former i love that it forces us to take trips

00:56:10.080 | i do hate that the process is harder right if i were just sitting here with no points at all and

00:56:16.880 | we wanted to take a trip i would just find the best deal but i would probably game that out as well

00:56:21.280 | trying to figure out well what if i fly here and then change planes and go here or book two separate

00:56:25.280 | flights so that overhead would probably exist for my personality anywhere but it's just something to

00:56:30.160 | consider and i think for a lot of people might give a slight edge to points so with all that taken into

00:56:35.840 | account i think the real benefit of having a good framework for valuing points is not just to know how

00:56:40.480 | much value we're getting it's to give us a good comparison of whether earning points make sense over

00:56:46.800 | earning cash back unfortunately i will save you a lot of work here because i took a lot of time

00:56:52.160 | digging through my credit card optimizer tool which i built to really help you compare what value you get

00:56:57.840 | out of all of the different cards you could spend on but one of the inputs for that tool is what is the

00:57:02.880 | value of your points so hopefully this episode will help you drive that number if you want to play with

00:57:08.000 | that tool go to all the hacks.com card tool and you can buy it there or it's free for all the hacks

00:57:13.600 | members which you can learn more about at all the hacks.com join so my goal was actually to run through

00:57:18.960 | all the different spending categories and all the different credit cards out there to compare the

00:57:22.640 | best cashback rates to the best points earning rates because at the end of the day if the place

00:57:27.120 | you spend the most money on gives you an option of a forex points card or a two percent cash back card

00:57:32.640 | well then as long as your points are worth half a cent or more then it's a clear decision to go for

00:57:37.280 | points and so for this episode i ran through all the cards i had but i did not include the earnings on

00:57:43.760 | cards where they were capped at less than ten thousand dollars of spend a year so there are lots of cards

00:57:49.440 | that might give you five or six percent on the first hundred or five hundred dollars a month or a

00:57:53.600 | quarter i excluded all of those cards because i just don't think it's a fair comparison and it just makes

00:57:59.200 | the math really messy so as i ran through this data i looked at kind of two versions one is assume you have

00:58:04.800 | all the best cards in all the categories so on the cashback side that means you have the verizon card

00:58:10.000 | the gemini card the altitude connect on points it means you have cards like the amex business gold card

00:58:16.240 | or the chase inc cash card that's version one version two was i assumed you had a more limited

00:58:22.000 | set of cards and it might be one or two cash back cards for catch-alls it might be on points common

00:58:28.560 | cards like amex gold chase reserve city premier autograph journey and when i ran through it the results

00:58:35.040 | were surprisingly the same for both of those sets for many categories gas grocery flights hotels dining

00:58:42.880 | entertainment the points card matched or beat the cash back rate meaning that if you would get three

00:58:49.920 | percent cash back you would also get three or more x points on those purchases and so for most of these

00:58:55.280 | categories it makes more sense to go for points if you want to get the maximum value now obviously

00:59:00.880 | if you're working on a welcome bonus whether it's a cash back or point welcome bonus then none of this

00:59:05.040 | matters because the earnings of most welcome bonuses take for example a hundred thousand points for six

00:59:09.600 | thousand dollars of spend you're going to get a better return on that welcome bonus spending than

00:59:14.640 | you will with any cash back or any points card in almost any category so if you're working on welcome

00:59:20.080 | bonuses keep going but let's ignore that for a moment and look at the four categories where things were a

00:59:26.240 | little interesting so the first one is non-flight and hotel travel now the big change here is that the chase

00:59:32.640 | sapphire reserve used to give 3x travel now it gives 4x on flights and hotels but 1x on all other travel

00:59:38.960 | there is actually no points card that earns more than 3x points on travel but the altitude connect

00:59:46.160 | card from us bank actually does earn four percent on all travel and if you have a bank of america premium

00:59:53.360 | rewards or premium rewards elite card and you have a hundred thousand dollars in a bank of america or merrill lynch

00:59:59.280 | account you actually earn 3.5 on all travel as well so if the best you can do on non-hotel and flight

01:00:07.840 | travel is 3x points and the best you could do on cashback is four percent then you really need those

01:00:13.760 | points to be worth more than about 1.33 cents for that trade-off to make sense and on that point side to

01:00:20.160 | get that 3x points the only cards still doing that are the autograph card from wells fargo and the amex green

01:00:26.000 | card which i know are not the most popular cards so i would say if you spend a lot of money on non-flight

01:00:32.160 | non-hotel travel it might be worth digging into this a little bit more and you might find that a cashback

01:00:38.000 | card like the altitude connect is the better card for you next category is amazon this one's really easy

01:00:43.440 | there's nothing in the points world that i think comes close to earning five percent back on the prime

01:00:47.280 | visa if you spend a lot on amazon you probably want that card i do not earn points on amazon purchases

01:00:52.960 | next category is a small one for i think most of us which is streaming but that altitude connect

01:00:58.000 | card i mentioned before you get four percent back on streaming the best points cards that i found earn

01:01:03.120 | 3x points so i don't think most people are spending enough on streaming for this to matter but if for

01:01:08.160 | some reason you're spending a ridiculous amount of money on streaming you know depending on how you

01:01:12.640 | value your points it might not make sense to be earning points on streaming but the big one here

01:01:18.240 | is the everything else category it includes all the spending at places that you aren't getting bonuses

01:01:23.680 | on dining on gas on groceries on travel and this one is really dependent on which cashback card you

01:01:31.840 | have on the point side there's a bunch of options to get 2x points venture venture x from capital one

01:01:38.160 | if you have the city strata premier or elite you can get the city double cash there are a bunch of options

01:01:43.520 | for getting 2x points on everything and on the cashback side there are a lot of options for

01:01:47.520 | getting 2 cash back and if that's your only option on cash back then again it's a relative do you value

01:01:53.360 | points more than one cent if so points wins if not then it doesn't make sense however there are cashback

01:01:59.040 | cards that earn more than two percent cash back and that's where this gets interesting so the first one

01:02:04.160 | which was a lot more compelling earlier this year was the us bank smartly card now if you have the us bank

01:02:09.520 | smartly card after it got nerfed this year and you factor in all these new limits what you need the fact

01:02:15.600 | that in order to get beyond two percent you have to hold cash in an account that earns almost nothing

01:02:20.320 | i don't think you can make a strong case for this card being any more than a two and a half percent

01:02:24.960 | cashback card and even that feels like a little bit of a stretch because you still have to keep ten

01:02:29.360 | thousand dollars in an account earning nothing but let's say that's your primary checking account

01:02:33.520 | and you already leave that there we'll call this a two and a half percent cash back card well to use

01:02:38.560 | a 2x points card like the venture venture x cards over a two and a half percent cash back card you

01:02:43.920 | really need to make sure your point value is above 1.25 cents that's above the floor value so that means

01:02:49.360 | you need to be comfortable transferring to airlines and hotel groups and booking flights and so at that

01:02:54.800 | point i could say it really depends on you but it's starting to make a case for cash back if you're

01:03:00.320 | not that experienced or you're not interested in some of the premium travel options that get higher

01:03:05.520 | value from your points next up is the bank of america setup where you can put a hundred thousand

01:03:09.920 | dollars in bank of america or merrill lynch and when you do it at merrill lynch it can be stocks so it

01:03:15.120 | doesn't need to be something that's making you lose interest putting it in an account that earns nothing

01:03:20.160 | with that card you'd be getting 2.625 on everything you spend on and so comparing that to a 2x points card

01:03:26.400 | means you need your points to be worth 1.33 cents or more so as that number creeps up you have to ask

01:03:31.600 | yourself am i really getting enough value for my points to justify getting 2x points versus 2.625

01:03:38.720 | cash back if you're not in a situation that you could put a hundred thousand dollars of cash or stocks at

01:03:43.440 | a merrill or bank of america account then it's not an option then finally if you have the robin hood card

01:03:48.000 | you could be getting three percent cash back on everything so in that case you'd need your points to be worth

01:03:52.880 | more than one and a half cents and i would argue that if you're not experienced in this game or using

01:03:58.400 | premium travel now that you factor in some of the things i've realized like earning points on cash

01:04:03.520 | bookings i think it's a hard case to make that you're going to consistently earn more than one and

01:04:09.040 | a half cents on your points obviously if you're working on a welcome bonus it's a no-brainer to spend

01:04:14.240 | the money on a points card but if you have no welcome bonus and you're debating between a three

01:04:18.160 | percent cash back card and a 2x points card i don't know it's a tricky comparison especially

01:04:22.880 | factoring in that that cash back can go straight into a bank account that you can hopefully earn

01:04:28.240 | four percent back right now in today's environment versus those points are going to sit maybe in a

01:04:33.360 | transferable points balance but they're not growing over time i thought long and hard about this one for

01:04:37.520 | myself because i actually think that i could make the case to switch to a card earning three percent cash

01:04:43.840 | cash back however the robin hood card doesn't consider taxes or business type transactions

01:04:50.000 | eligible for cash back and if you look at all the spending that we do that is not in all the categories

01:04:56.560 | that bonus like dining and groceries and travel and then you remove taxes and business transactions

01:05:02.160 | there's not a lot left so yes i could open that card and i could be getting slightly more value for all

01:05:08.480 | those everything else purchases however we don't have a lot of purchases in that category so if you're

01:05:13.760 | doing a ton of spend in the everything else category maybe you're spending a lot on home

01:05:19.200 | renovations buying furniture in that case i'd actually consider you to go look at the mesa rewards

01:05:24.880 | card because that card gets 3x on home improvement stores and furniture and home decoration so that one

01:05:32.560 | actually in that example i'm wrong go look at allthehacks.com/mesa in the other categories i'm not

01:05:39.280 | sure what it might be maybe you're buying a lot of stationery maybe you're spending a lot on ebay

01:05:44.640 | just things that don't bonus that maybe aren't considered business type transactions it might make

01:05:50.480 | sense to look at a cashback card if you value your points anywhere close to or below one and a half cents a

01:05:56.240 | point so to recap for almost all purchases with most cards if you value your points over one cent then cashback won't be worth it

01:06:04.560 | however if you spend a lot on amazon i'd get the prime visa if you spend a lot on non-flight hotel

01:06:09.360 | and travel or streaming and you value your points right around 1.2 1.3 cents i would take a look at

01:06:14.960 | that altitude connect card and then for all the other spending that's not bonused on any cards it really

01:06:20.960 | comes down to which cashback card you have and whether you value your points at more than the

01:06:26.800 | cashback rate of that card divided by two since there are a lot of 2x points cards so if it's two

01:06:32.480 | and a half percent cash back then you need to be valuing your points at more than 1.25 cents

01:06:36.960 | now for me i said i value my points at 1.7 cents at least the transferable ones so the only place the

01:06:43.360 | math gets close is on that everything else category and if there was a card that was an uncapped three percent

01:06:48.960 | on all my spending i would consider switching my cash back to those purchases if a card comes back

01:06:54.800 | that's four percent on everything with no caps and no restrictions i would move all my everything else

01:06:59.200 | spending there unfortunately almost all my everything else spending is in categories that that robin hood

01:07:05.200 | card excludes and there's not really another option that's uncapped right now but i'll keep my eyes out

01:07:11.600 | it feels unlikely anyone that does it ends up changing it the coinbase card came out and it seemed like it was

01:07:17.360 | going to be uncapped four percent now it's capped so i am pessimistic that one of these cards will come

01:07:22.480 | out but if they do i will gladly switch my everything spending to team cashback and of course if you're

01:07:27.760 | working on in welcome bonus that's always going to be the better return on your spend so to do the final

01:07:32.640 | recap transferable points probably have a floor value that's at least one cent and airline points might be

01:07:39.200 | similar hotel points all have different values but for the most part excluding hyatt i'd say they at least

01:07:45.280 | have a floor of half a cent when you look at the data you'll see that if you're booking more premium

01:07:49.680 | flights or hotels your points are going to have more value but you need to adjust all that data for

01:07:54.240 | your own trips that you actually take to look at what kind of value you're able to get and unfortunately

01:07:58.800 | there's no one right answer it's all very personal but you also need to factor in some of the things

01:08:03.520 | that i think this industry as a whole leaves out which is that booking flights and hotels with cash often

01:08:10.640 | earns a lot more points and status and points on the credit card spend to book them then i think is

01:08:17.360 | getting factored in here at a range of about 10 to 20 percent so make sure you include that if that's

01:08:22.400 | important to you and if you value the fact that points force you to travel give the value of your

01:08:28.000 | points a bump if you value that points bookings are easily refundable then give that value a bump if

01:08:33.920 | you hate the overhead of booking travel with points and you are very unflexible and you just want to be able

01:08:39.280 | to book whatever flight you want maybe bring the value of points down a bit but not lower than that

01:08:44.480 | one cent value because you could still go book that flight in a travel portal on whatever flight you want

01:08:49.520 | with almost every transferable currency after looking at all the cards you could likely use for spending

01:08:54.480 | i think it's really easy to make a case for points for everything as long as you value your points at more

01:08:59.760 | than one cent and if you've made it this far you probably do with the exception of the categories i

01:09:04.880 | mentioned which is amazon non-flight and hotel travel streaming and that everything else category

01:09:11.760 | which really just needs to be compared to whatever the best cashback card you have would be earning

01:09:16.800 | finally i'm going to push you all to test your convictions in whatever value you think you've come

01:09:22.240 | to for your points using something i learned from greg at the frequent miler he encourages you to think

01:09:28.160 | about what you would really pay for these points so if you came to the end of this episode and said i

01:09:33.120 | think my points are worth one and a half cents and someone actually offered to sell you points in

01:09:38.560 | whatever transferable currency or airline you want would you really pay one and a half cents for them

01:09:43.840 | would you really buy another hundred thousand million chase points alaska points for one and a half cents

01:09:50.480 | if that's the value prescribed and if not if you really wouldn't buy them at that price i'd encourage

01:09:55.600 | you to think about maybe lowering that valuation okay i know we packed a lot into this episode so if you have any

01:10:01.120 | thoughts questions reactions that came from it please send them to podcast at all the hacks dot com

01:10:07.520 | or go to all the hacks dot com slash ama and submit them as a question i can tackle in an upcoming

01:10:13.520 | ask me anything episode thank you so much for listening i will see you next week

Are Credit Card Points & Miles Still Worth it in 2025?

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