One piece of feedback I regularly get from readers is that while I write a lot about the earning side of miles and points, they'd like to hear more about the redemption side. To be sure, I've written about how I booked vacations to Prague and Philadelphia, and commented on specific things like the weirdness of Alaska Airlines' long-haul first class cabins.
But frankly, while I do more leisure travel than most people I know, or most people my age, it mostly follows a familiar pattern: visiting friends and family or taking a long weekend to visit a new or beloved city.
And when booking those trips, I mostly follow a few simple steps:
- Look at my points balances;
- Check award availability;
- Book an award ticket, if available;
- Book award nights, if available;
- Charge everything else to my Barclaycard Arrival.
You might ask where point valuations come into play in this system, and the answer is they don't. That's because as I never cease to remind people, by the time you're making reservations, it's too late to change the number or type of points you have. Only once you know how you in fact use your miles and points can you know what they're worth – that is to say, how much money they save you.
I took an award trip to New York City last weekend that illustrates this point nicely.
Getting there: low-level Delta award ticket
My partner and I were able to book two low-level award tickets leaving Thursday evening on a non-stop and returning Sunday morning with a connection in Detroit. We booked the trip less than two weeks before departure, when tickets were pricing out at about $460 each.
Total cost: 25,000 Delta Skymiles, $10. Total value: $460. Value per point: 1.84 cents.
In fact, the exact itinerary we booked would have cost $651, but there's no way we would have paid that much, so the lowest available fare for those dates is a better point of comparison.
Whether you're earning 1.4 Skymiles per dollar, 1.5 Skymiles per dollar, or generating boundless Skymiles with the Suntrust Delta Skymiles Check Card, 1.84 cent-per-Skymile redemptions will make that spend competitive with either a 2% or 2.22% cash back card. Of course, at high levels of spend the Delta Platinum and Reserve American Express cards have other benefits, as well.
Staying there: Hilton Points and Money award
We spent our first night in Manhattan at the Millenium Hilton on a Points and Money award, paying $118.25 and 32,000 HHonors points. For all three nights, the best alternative rate I was able to find was $206 after tax at the Ludlow Hotel.
The Millenium Hilton was a terrific property, and was the first Hilton property I've stayed at that allowed us to take the complimentary Gold Elite continental breakfast by room service. Lots of digital ink has been spilled over taking the Andaz Wall Street's Diamond breakfast benefit by room service, but I hadn't realized that benefit was offered by some Hiltons as well. This was my first time ever ordering room service, and I thought it was a very nice touch.
Total cost: 32,000 Hilton HHonors points, $118.25. Total value: $206. Value per point: 0.27 cents.
While 0.27 cents is well over my money cost of acquisition (0.13 cents), it's well below my opportunity cost of acquisition, since rather than earning 6 HHonors points per dollar (1.62% cash back) with my American Express Surpass card at bonused merchants, I could be earning 2% or 2.22% cash back at the same merchants.
The crucial point here is that this wasn't a "bad" redemption just because in retrospect the spend used to generate the necessary points could have been used more profitably on another credit card. That ship already sailed.
What it does mean is that before I earn any additional HHonors points, I need to take a hard look at my upcoming travel plans and decide whether those plans are better financed with cash back or HHonors points. Having done so, I know I have some 0.45-0.5 cent redemptions coming up, so I'll happily continue to use my Surpass card at bonused merchants.
Staying there: Club Carlson last-night-free award
For our last two nights, I redeemed 50,000 Club Carlson Gold Points for two nights at the Radisson Martinique on Broadway.
Total cost: 50,000 Gold Points. Total value: $412. Value per point: 0.82 cents.
Redemptions like this one are why I argued Club Carlson points can sometimes be worth as much as a penny each. Since my US Bank Club Carlson Business Rewards card earns 5 Gold Points per dollar spent everywhere, the dollars spent on the card in order to make this award redemption earned about 4.1% cash back. Since I have other high-value award redemptions coming up soon, I know I'm on the right track continuing to manufacture spend on that card.
The only value that miles and points could possibly have is the value you get for the redemptions you make. By looking at your past and future award redemptions (and the cost of your paid travel) you can determine which cards deliver outsized returns over a 2% or 2.22% cash back card.