What Are Points & Miles Worth
Rewards credit cards advertise how many points you can earn from spending and sign-up bonuses, but it’s not always clear how much value you can get from those points. After all, a card with a high rewards earning value doesn’t necessarily have a good redemption value. The best rewards credit cards for you earn well for your typical spending and have good redemption values for rewards you can use. When you choose a credit card, find out how much you can get from its rewards program by researching both its earning and redemption values.
Earning Points With Credit Cards
When you make a purchase with a rewards credit card, you’ll earn cash back, miles or points, which can be valuable for cardholders. U.S. News’ 2018 travel rewards credit card survey found that 53 percent of respondents earned more than $300 in rewards value within the last year. About a fifth of respondents earned $1,501 or more.
Credit card issuers offer rewards to encourage people to use credit cards instead of other forms of payment. Rewards give an incentive for consumers to open and use credit card accounts.
Some rewards cards offer a flat rate for earnings, which earns 2 miles per dollar on all purchases. Others earn bonus rewards for certain spending categories., which earns three points per dollar on travel, two points per dollar on dining out and entertainment, and one point per dollar on all other purchases.
When you sign up for a rewards credit card, the issuer should explain how many points or miles or how much cash back you can earn. For example, you might earn a 50,000-point sign-up bonus when you enroll in a new credit card and meet the minimum spending requirement. But what is the value of those 50,000 points?
How Much Is a Point Worth?
Generally, points are worth about 1 cent each, but that’s not always the case. For some issuers, the value of points depends on your choice of redemption, which typically includes travel, cash back, gift cards or merchandise. For example, 10,000 points may be worth $100 when spent on gift cards but only $60 as a statement credit.
Travel rewards redeem at a rate of 1 cent per point or higher with almost all issuers. Some travel credit cards offer a good redemption value for travel but a lower redemption value for other options. Points redeemed for cash back, gift cards and merchandise may trade in at a lower rate, depending on the issuer. For example, these credit cards offer higher or lower values depending on the redemption option.
|Credit card||Best redemption option||Worst redemption option|
|The Platinum Card from American Express||Travel, gift cards, point of sale or charity donations: 1 cent||Entertainment: 0.5 cent|
|Bank of America Travel Rewards credit card||Travel: 1 cent||Cash back: 0.6 cent|
|Chase Sapphire Preferred Card||Travel: 1.25 cents||Shopping or merchandise in the Chase Pay app: 0.8 cent|
|PNC points Visa Credit Card||Gift cards or statement credit: 0.2 cents||Merchandise: 0.18 cents|
|Wells Fargo Visa Signature Card||Travel: 1.5 cents||Cash back: 1 cent|
How Much Are Loyalty Program Miles Worth?
Issuer rewards points are similar to loyalty program points and miles, but not the same. Miles are often associated with an airline’s frequent flyer program and can be earned with airline co-branded credit cards and by flying with the airline. Hotels and cruise lines also have loyalty programs. You can earn points by booking getaways with them and by using their co-branded credit cards.
Like issuer points, miles and loyalty program points are usually worth around 1 cent each, but unlike most points, miles may not have a set value. The value of your loyalty rewards can fluctuate depending on the flight, class, when you book your travel and other factors.
U.S. News approximated the redemption values for several major travel loyalty programs. After identifying purchases that were representative of how different consumers might use a travel loyalty program, U.S. News researched the dollar cost and the points or miles cost of available travel redemptions, excluding taxes and fees. Then, comparing these prices, U.S. News calculated the dollar value per point or mile for each program.
The point or miles value is based on the reward-to-dollar ratio on:
- Airlines: Four economy, two first-class and two business-class round-trip flights.
- Hotels: Five four-star hotel stays in major metropolitan areas and three two-star hotel stays in small cities.
- Cruises: A seven-night cruise, a four-night cruise and an 11-night cruise.
- Train: A cross-country, interstate and intrastate trip.
|Airline loyalty program||Value per mile|
|Aeromexico Club Premier||1.18 cents|
|Alaska Airlines Mileage Plan||1.46 cents|
|Allegiant Air myAllegiant||1 cent|
|American Airlines AAdvantage||2.58 cents|
|British Airways Executive Club||2.51 cents|
|Delta Air Lines SkyMiles||1.21 cents|
|Frontier Airlines myFrontier||0.96 cent|
|Hawaiian Airlines HawaiianMiles||1.71 cents|
|JetBlue Airways TrueBlue||1.22 cents|
|Southwest Airlines Rapid Rewards||1.37 cents|
|Spirit Airlines Free Spirit||1.27 cents|
|United Airlines MileagePlus||1.69 cents|
|Virgin Atlantic Flying Club||5.29 cents|
|Hotel loyalty program||Value per point|
|Hilton Honors||0.42 cent|
|Marriott Rewards||0.65 cent|
|World of Hyatt||1.99 cents|
|Wyndham Rewards||0.96 cent|
|Train or cruise loyalty program||Value per point|
|Amtrak Guest Rewards||1.65 cents|
|Carnival Cruise Line FunPoints||1 cent|
|Celebrity Cruises MyCruise Rewards Program||0.67 cent|
|Holland America Line Mariner Society||1 cent|
|Norwegian Cruise Line Latitudes Rewards||0.45 cent|
|Princess Cruises Rewards||1 cent|
|Royal Caribbean MyCruise Rewards Program||0.5 cent|
Choosing a Credit Card With Good Redemption Value
A credit card’s redemption rate is just part of its overall redemption value. You should consider factors including redemption options, card costs and points transfer potential.
When you choose a rewards credit card, focus on the value of redemptions you can use. Cash back or statement credits may not offer the best redemption value for your card but could be more useful to you than other options., cash back redeems for half of the value of travel or gift cards, but it could be a better choice if help paying bills is more important to you than travel or gift cards.
When calculating the earning and redemption value of a credit card, factor in the cost of card ownership. Annual fees, interest and other costs can reduce or negate the value of your rewards.
Transfer Points Value
Some credit card rewards programs allow you to transfer points to another program, usually a frequent traveler program. For example, Chase Ultimate Rewards credit cards transfer points to several airline and hotel travel partners at a 1-to-1 value. You might want to transfer points to a frequent flyer program if you need more miles to purchase a flight or want to take advantage of a better redemption value.
Some traveler loyalty programs may offer a better redemption value, which could make them a good choice for transferring your points. For example, if you redeem 30,000 Chase Sapphire Preferred Card rewards for travel with a value of 1.25 cents per point, they’ll be worth $375. But if you transfer them to Southwest Airlines Rapid Rewards, which has a point valuation of 1.37 cents, they’ll be worth $411.
With some programs, you can get additional points when you transfer them. Most of the American Express Membership Rewards travel partners have a 1-to-1 transfer value, but 1,000 Membership Rewards points are worth 2,000 as Hilton Honors points or 1,600 as Aeromexico Premier Points. However, you should consider the redemption value offered by the loyalty program before transferring.
Are Points Valuable For You?
Earning rewards can make financial sense, but it isn’t a good choice for every consumer. If you plan to carry a balance, have trouble making payments on time or find it difficult to manage credit cards, rewards cards aren’t worth it.
Maximizing the value of rewards credit cards can require some juggling. Although a single rewards credit card can earn well and be managed easily, you can earn more with multiple credit cards. But you’ll have to meet sign-up bonus requirements and pay your balances in full each month to get the full value of your rewards.
Managing multiple cards means staying on top of minimum spending requirements and payment due dates, which may be more work than you’re willing to commit to earning rewards. Minimum spending requirements may be beyond your usual spending habits, and it’s not a good idea to charge more than you would normally spend on a credit card just to earn rewards.
Some issuers won’t approve you for a new credit card if you’ve opened several credit cards within the past year or two. Or they’ll only allow you to earn the sign-up bonus on a particular card once in a lifetime. These policies can limit your ability to earn sign-up bonuses.
Ideally, you should find a rewards credit card that both earns and redeems at a high rate for what you plan to spend your money on. Pay close attention to card costs and what you need to do to maximize points earning and redemption to get the full value from each rewards credit card.