The Travel Hacking Question That Haunts Us All: Should I Redeem Points or Pay Cash?

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redeem points or pay cash

Deciding When to Redeem Points or Pay Cash

One of the hardest decisions sometimes in this hobby is deciding whether to redeem points or pay cash for certain flights or hotel stays. There are the no-brainer choices, like redeeming points for high-end hotels that would otherwise cost a fortune in cash. There are also times where paying cash is the clear move, when a flight is dirt cheap and you’re not using a dynamically-priced currency (and even sometimes when you are).

So many more redemption choices fall in the middle, which means you need to be adept at making this decision. The alternative is getting stuck in “analysis paralysis” which is something no one enjoys. Better to settle on a value for your points and stick to it.

So…how does one decide whether to redeem points or pay cash? Let’s jump into how I typically make a decision.

How I Decide Whether to Redeem Points or Pay Cash

I think it’s important to have a conservative “floor” of value that I like to get out of my points. This isn’t the average value I get from my award redemptions. This also might not be the value at which I’d buy point. Instead, it is the minimum value that I am willing to take for spending my points or miles.

I don’t have these tabulated (I actually probably should do this), but I do have some values that I stick to with certain currencies. For example:

  • Hyatt – 1.5 cents per point
  • IHG – 0.6 cents per point
  • Hilton – 0.45 cents per point
  • Marriott – 0.7 cents per point
  • United – 1.5 cents per mile
  • Delta – 1.3 cents per mile
  • Alaska – 2.0 cents per mile
  • Turkish – 2.0 cents per mile (although I’d love to always get 9.5 cents)
  • LifeMiles – 1.7 cents per mile

These may or may not be the same as the value other people or websites place on miles. Here at Miles to Memories, we have our own tabulation of the average value of miles and points. They are also not the average value I get for my miles. For example, my Lifetime Turkish airlines redemptions and Avianca LifeMiles redemptions certainly exceed 3.0 cents per mile. But this does not mean I’m unwilling to take 2.0 cents per mile or 1.8 cents per mile, respectively.

Check out the lists from a few of the best points and miles blogs to help gauge what value you should be able to get from your points. I then recommend setting a “floor” value on your miles and points that is near this level, or just under. If you have the ability to often get high value out of your miles, your value could also be higher.

redeem points or pay cash

Can I Spend the Cash?

This is the second question that has to be asked. In some cases, spending cash is out of the question. This is where I am willing to compromise on the value I’m getting for my miles or points. I’m far less willing to do this with hotels, as I’d rather book a Rodeway Inn for $89 than take just 1.1 cents per Hyatt point. I like nice hotels, but I’m also not super picky. Cheap cash options often appeal to me.

Flights can be a different story. Fortunately, I’ve been able to get great value out of my miles for the most part. But if it came down to it, spending $400 per person for two tickets versus 35,000 miles per person for the same tickets…I’d lean toward burning the miles (and then crying internally). But it’s the more prudent choice. Often, shelling out $100s for flight is out of the question for me. That’s not to say that I don’t spend cash on travel. It just better be predominantly for food and activities.

Ask yourself: “would I use cash?” If the answer is clearly no, then burn the points or miles, even if the value isn’t what you’d like it to be.

A recipe for deciding whether to redeem points or pay cash:
  • Research points value and settle on a minimum you’re willing to take for each currency
  • Decide how much cash you’re willing to spend for a given redemption. If you tend to spend more on travel, your “floor” for your points might be higher.
  • Stick to your values and only deviate if you would not normally use cash. Don’t get stuck in analysis paralysis.

There is one more thing you may want to consider:

Take Earning Into Consideration

Some people have the ability to earn a lot of points, whether this is through their own spending compared to the amount of travel they do, or through business spending. If you’re flush with points, I wouldn’t get super hung up on the value you’re getting for them. Get the best you can (more than their cash value, of course, if they are bank points), but don’t sweat it. I would be more concerned about locking in the stay or flight that I really want over saving 10,000 miles.

This has not really been the case for me. Most of my points are still earned through credit card welcome offers. However, I have been able to buy and resell items to earn some extra miles and points, and this has augmented my earning.

If you’re “buying” points in any way, you’ll want to consider the value you’re paying for what you’re getting. If you’re going through this trouble, I think you’d better be getting 2-3x in return on your “investment”.

I’m still not great about being willing to redeem points when the value isn’t great. Case in point: I was recently waffling on whether to redeem some IHG points versus pay cash. The stay was right at the value I like to get for them, so not a “great” redemption. Ultimately, I decided to redeem points, as I had about 400,000 of them at the time. Don’t hoard your miles and points, either.

Final Thoughts

Deciding whether to redeem points or pay cash is a critical decision when it comes to award travel. I’ve been learning not to sweat it as much and to try to be more consistent with the value I place on my miles and points and by being firm about whether I can or want to spend cash for a particular redemption. Find the minimum value you are willing to take for your miles and points and then stick to it. If a redemption is over this threshold, burn ’em. Don’t get caught up with everything being a great redemption.

Ian Snyder
After igniting his passion for award travel while planning his honeymoon, Ian now enjoys using points and miles to see the world with his wife and three internationally adopted kiddos. He loves dissecting loyalty programs to find maximum value. His goal is to demonstrate that extraordinary travel is possible for the ordinary family.

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12 COMMENTS

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12 COMMENTS

  1. Love the article. Thanks for putting in the time. For me, redemptions are all about the destination. I’m more concerned with using points when it’s possible for me to do so with school/work schedules, etc. if I get great value, that’s a bonus.

  2. Good article – My analysis is very similar. I have my own value (very close to yours) and when I’m planning a trip I look at cost in $ vs points/miles. If I’m getting value I use the points/miles per my valuation I use them and if not I pay cash. Couple of things that likely make my situation unique and may not apply to many others:

    – First of all I have the capability to pay cash, regardless of the cost, so don’t get into the trap of not getting value because I don’t want to spend cash (or can’t afford to)
    – I am retired so all my travel is leisure and I have a lot of flexibility on when and where I go so I am rarely locked into a specific date or even location so I can adjust to get lower reward levels
    – I am lifetime DL and AA elite so don’t have to chase miles. Also, lifetime Titanium w Marriott and Diamond Hilton (credit card and spend – well over 20 years Diamond but not close to the 2 million points for lifetime status) along with top level or 2nd w practically every other hotel chain.
    – When looking at hotels I typically open the Marriott, Hilton, IHG, etc websites to see what is available in the area. I have many points with Marriott and Hilton and less w IHG and others but like to compare options. I also will gladly stay at a Hampton Inn/Fairfield Inn/Holiday Inn Express instead of higher cost, full service hotels since most of my travel is on my own (when my wife goes I definitely upgrade the hotel). Also, I look at local public transportation (if I don’t have a car) and have no problem staying farther away from a city center if I can easily get around.

    • If you’re traveling a lot and willing to shell out cash, then I would certainly be targeting high value for my points.

  3. Also need to consider if paying cash will help you attain an elite status level that you want.

    In regards to tracking redemption values I never compare the advance purchase rates to the points spend as I would never book those rates since they are usually use it or lose it. But I do compare my redemption to discounted rates with reasonable cancel terms like an AAA or AARP as I would actually book those rates if paying cash.

    • The elite status angle is a good point that I didn’t touch on. I also agree on the advance purchase rates. I always compare to the flexible member rates.

  4. Another thing to take into account is that paying with points gets you a much more generous cancellation policy on United and Southwest.

  5. Just one caveat: don’t calculate cpp on a cash rate you are unwilling to pay. 70k one way Cathay F vs $14k cash doesn’t mean you are getting 20cpp if you would never pay cash for it. Of course still points are the way to go, it’s an easy decision, but the 20cpp is meaningless. So with hotels, best to compare cash price you would actually be willing to pay, or cash price of best alternative, vs. the points price.

    • I disagree as I have heard that argument many times. For me, the cost is the cost and it has no bearing on whether I would be willing to pay $14k or not. I search for the lowest price point of my flight/hotel, then do the math.

    • I get this, although I try to split the difference. I try to find the most reasonable comparison (even if it is a different itinerary/carrier) and use that as the baseline for determining cpm/cpp. For super aspirational trips, you’re correct that cpm is “meaningless” if you would never pay it. But…it is usually really good in these cases.

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