I’ve booked several trips recently, as the latter half of this year has become a busy travel period for me. Even though I had a good balance of points available on my travel credit cards, I was paying for domestic flights with cash.
It may not seem logical. Usually, it’s a good idea to use your travel points when possible to save yourself money. But there are also times when it pays to be more selective in how you redeem your rewards. This is why I was saving my own.
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Average value on a reward airline ticket
The reason I don’t use my credit card points for domestic flights is down to value, or in this case, lack of value.
Before booking travel with points or miles, it is wise to calculate how much value you get. To do this, divide the cash price of the purchase by the price in rewards. For example, if a $300 airline ticket costs 30,000 miles, you will get a value of $0.01 per mile.
Lately, most reward tickets I’ve found on domestic flights offer about $0.01 per mile in value. This is on the low side, because I usually want to get at least $0.015 or $0.02 with my travel rewards. Even when there is a better value available, it is not always a file Better deal After taking into account the prices of other airlines.
For example, I was looking for a flight to New York, and I found one with a layover that I could book for either 60,000 miles or $920. That’s a value of about $0.015 per mile, which is reasonable. But then I saw that another airline was offering a non-stop flight for $619. If I could book a flight that much, I wouldn’t spend 60,000 miles.
Saving points for better chances
So why wouldn’t I want to spend 60,000 miles to effectively save $619? While it’s always nice to save money while traveling, I knew I could get a lot more value if I used these rewards for something different.
Most of the travel points I earn are transferable. It’s part of major credit card reward programs, such as Chase Ultimate Rewards and American Express Membership Rewards. With these types of points, you can transfer them to a number of different airline and hotel partners. This gives you a lot of options, and the value you get will depend entirely on what you book.
Take those points that I didn’t use on the trip. Instead, I decided to use it to book a Hyatt where the room costs $909 per night for 29,000 points. That’s more than $0.03 per point in value terms–much more than I would have gotten with any of the flights I’ve been looking at.
Decide when to redeem your travel rewards
I understand that you probably don’t want to constantly second-guess yourself before redeeming points from your credit cards. And as long as you’re saving money with them, it’s really hard to go wrong.
However, when the value of your travel rewards depends on how you use them, there are a few things I would suggest trying and getting the best deal.
First, learn about the different ways you can use your rewards. Whether it’s American Express Membership Rewards points, United Miles, or another currency, get an idea of the redemption options and their respective values.
Also, take your future travel plans into account when deciding when to use your rewards. As a general rule, you can save more money when you use rewards for more expensive travel purchases. For example, a reward ticket on an international flight is usually a better way to maximize your miles than a reward ticket on a domestic flight.
If you’re planning any big trips, consider sticking to travel points for areas that can go further. In my case, this meant paying some domestic flights out of my pocket and saving my points for more expensive expenses, such as a hotel in New York and international airfare.
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