Have We Been Looking At Cash vs Points All Wrong?

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Should I Pay Cash Or Use Points

Should I Pay Cash Or Use Points

One of the great debates of the miles and points world is decided when should I pay cash or use points. It is a question we often get from members in our Facebook Group. They will say, I have a booking at this hotel and it is $200 or 15,000 points which should I use etc.? It is a question that gets asked so much we have even created point valuations guides for it.

But do those really help, or, are they more of an estimation that varies widely by person? This is a very personal question to answer which has many factors involved. Do you have a lot of cash, or, are you swimming in points? Which way you lean could change your answer to the question drastically. Have no fear though, I think I have boiled it down to a single question you need to answer that properly adjusts to each individual person.

Would You Buy The Points For This Price?

What if each time you were struggling with whether you should pay cash or use points you simply asked yourself this question, would you buy the points for this price? If the redemption gets you 1.3 cents per point for that Hyatt stay you ask yourself, would I buy Hyatt points at 1.3 cents each? If the answer is yes then pay cash, if no, then book with points. When you really think about it, anytime you pay cash for a flight or hotel you are essentially buying your points back at the rate of that particular booking.

There are factors that play into how you answer the question for sure. You may want to save your points for a more valuable redemption. Or, you may have a minimum redemption for each individual point which means you are okay “buying” them anytime the rate is lower.  You may simply book travel with points all of the time, like I used to. The good thing about asking yourself this question when you are debating a booking is that it adjusts to your particular parameters, goals and needs.

Should I Pay Cash Or Use Points

Proper Calculations Needed Of Course

It is important that you are doing the calculations properly before answering the question though.  The proper calculations are not quite as simple as taking the rate and dividing it by the points needed. I mean it can be that simple but it isn’t entirely accurate, at least not early on.

You need to be sure that you add back in the value you get from the cash booking. Add in the credit card points, the loyalty points and any promos going on at the time that you would earn. Likewise when doing an award redemption be sure to consider any taxes and fees you still need to pay as well. You could even consider things like free parking on World of Hyatt award stays for elites etc. Those things could sway the numbers quite a bit.


In this example let’s assume Hilton is running on of their double points promo and that you have Gold status from the Amex Surpass card. Let’s also assume that you pay for the stay with your card.

In this example the room costs $120 with taxes and fees or 30,000 points.  That is only $0.004 cents per point ($120 / 30,000) which is on the lower end of acceptable to most people for Hilton points. I think there would be some people that would buy Hilton points at that price and others that would think it is good enough. Pretty much right in the middle. But if you include the all of the points you would earn the numbers change a bit.

  • 10 x $120 base points = 1,200
  • 10 x $120 double points promo = 1,200
  • 8 x $120 80% bonus for Gold Status = 960
  • 12 x $120 points earned with the Surpass = 1,440
  • Total earned = 4,800
Time To Redo The Calculations

Now let’s redo the calculations.  If you add the 4,800 points you would earn to the 30,000 points needed from the stay the real cost is 34,800 points. Divide the $120 a night cost by that number and the point valuation of the booking drops to $0.00344. Does that figure change anything? Would you buy Hilton points for that price now?

As you get familiar with a program you will get an idea of where your line is.  If this room was $150 the quick math would be $0.005 a piece at the 30K a night price. When doing the full math that price point is $0.0043 each. If those numbers would have you lean towards using points then you could say on average anything at $0.005 from quick math is probably okay to go ahead to book etc. The same could be said the other way for paying cash. You will learn where your breakeven point is for yourself in each program via the quick math.

Should I Pay Cash Or Use Points

Other Considerations When Setting Your Buy vs Points Rates

There are a few other things to consider that are not really calculations but should be discussed.

Do You Need To Transfer Points In At All?

Do you already have enough points in a particular program to make the booking? Or do you need transfer from Chase Ultimate Rewards or American Express Membership Rewards to make the booking? That could change things for you depending on how you value the particular point or mile you need and the transferrable currency that it transfers from. If a transfer is needed you should base the cash vs points decision on the points you need to transfer instead of the currency they are becoming.

Consider Your Earn Vs Burn Rate Too

Are you earning way more points than you are using? Then it may make sense to lower your valuations.  If you are struggling to earn enough points for your travels then you may be more selective on your cash vs points price.

Should I Pay Cash Or Use Points – Final Thoughts

Hopefully this makes sense for some of you that struggle with the question? Does it seem easier to simply ask yourself if you would buy the points you are using if they were sold at this price? That is the way I think we should be looking at all cash bookings going forward, which I am sure many already had been doing. Just remember to factor in other things like the rate you would earn on the stay or flight. Also remember to consider the origin currency that will be used, if a transfer is needed, and what your earn vs burn rate is.  After a little while you should be able to find your breakeven point in each currency.

Mark Ostermann
Mark Ostermann
Mark Ostermann is a father, husband and miles/points fanatic. He left the corporate world after starting a family in order to be a stay at home dad. Mark is constantly looking at ways to save money and stay within budget while also taking awesome vacations with his family. When he isn't caring for his family or taking a weekend trip, Mark is working towards his goal of visiting every Major League Baseball ballpark.

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  1. I rarely use HH points unless it is for 5 nights making them more than 20% more value when I added in no daily resort fee

    I have noticed some properties changed calling it resort fees to avoid that bonus

  2. This is a great point you are making. I apply the same criticisms to plane tickets (people often forget to include the miles earned on the paid ticket when comparing it to an award).

    However, a proper analysis should also try to replace the cash rate with a subjective value. This goes back to the MtM article on elite breakfasts. There is no reason you need to value the breakfast at its sticker price. Well, the exact thing goes for hotel rooms.

    You might be lying to yourself when saying “Awesome deal, I paid just 8k points for that Hyatt which would have cost $350 for a paid night. I got a value of more than 4 cents per point!” Why? Well, typically would have never shelled out $350 for that room. Maybe you would have picked the DoubleTree with a slightly inferior location for $190. Maybe it was a non-essential trip which you would have easily pushed out by a week in order to make use of lower room rates then…

    • It wasn’t until 30+ years into the hobby that a calculated value/rate came onto my radar as something to consider. Yet today I continue to default to, and value, “is it free” over all other measures.

  3. This is another thought: use a cash rebate card for all of your purchases ( you usually get 2%), use that rebate to buy your stay/trip. That way you are flexible about properties to stay in or flights to take ( many times I have to sacrifice the convenient non stop flight for the one I can get with miles which usually adds at least one extra stop). What triggered this nihilism is current AAdvantage program shenanigans. Your hard earned miles turn into monopoly money.

    • That works well for some for sure. I average over 2% by maximizing bonus categories etc. so it wouldn’t be best for me but for anyone that wants a simple, straight forward approach I think it is a good option for sure.

  4. I love these kinds of articles. By this logic is transferring UR from a Chase CSR to Hyatt buying Hyatt points for 1.5cpp? ( since you can now pay yourself back with a CSR )

    • I think you could look at it that way. I would consider the points you would earn off the stay plus from the credit card spend as well. If you are not getting closer to 1.7 cents per point for the stay, and can easily cash out via pay yourself back, then you would be better cashing them out via PYB and paying cash for anything under that number.

      • Right. Not to mention getting to sometimes use a promo code for a super low rate. Or also using Amex FHR / Hyatt Prive if the standard rate is competitive and getting extra value. So much to consider!

  5. My biggest dilemma recently is booking rental cars with cash or points. I can get a rental car for 10 days in Hawaii for $755 cash direct through rental company vs 95,000 ultimate rewards points via Chase portal. I will get 2x for travel with Sapphire which I want to use for the rental car insurance. I just can’t bring myself to part with that many points. I’ve never seen such a contrast!

    • Yeah definitely don’t book with Ultimate Rewards. You would be better off cashing out 75,500 at 1 cent per point through Chase and then paying. If the prices were the same on the portal it should only cost 60,000 points at 1.25 cents per point. I am surprised the cost difference is so high.

  6. I have hundreds of thousands of airline miles along with half a million city Thank you points. I don’t have a need for the typs so I may cash them out for 5,000 dollars.

  7. Mark, I like that your team gets people thinking. This stuff has a lot of moving parts. If one did B instead of A, something changes with X. And, if one uses card 2 instead of card 1, something else change with X as well as Y. One of the moving parts I would add to the mix is “simplicity.” You’ve written about it before — when one is in two-player mode and player 2 is not really engaged. Sometimes the best redemption stems from simplicity — while property 2 nearby is not the best economic redemption, it is the property where player 2 wants to stay.

    • Thanks Joe and I agree, simplicity can play a role larger than any monetary value for sure. Like taking a non stop flight at a higher cost etc.

  8. Perfect guidance. Add to it my wildcard factor: How long a streak can we go without paying for a room night, even if it means accepting a lower than ideal valuation. Unfortunately, a 20+ year streak was cut short when a SUB didn’t post quickly enough to get a free room at a had-to-have location. But you get the point – not paying “ever” has some intrinsic value that the math does not compute.


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