Redeem points or pay cash?

At a glance#

The decision in two numbers#

Every redemption reduces to two numbers. The first is the price you would have paid without points. The second is the price of the same booking in points, plus the cash co-payment. Together they produce the value per point, and whether that value clears your own benchmark is the whole decision.

The calculation itself sits in what points are worth. It is simple, and it makes every generic valuation table unnecessary. The benchmark is personal and belongs on paper before the search starts. A redemption that clears it is worth making. One that misses it is a cash booking in disguise, paid for with a currency that could have bought more elsewhere.

Points or cash is therefore no matter of belief. It is a calculation with two numbers and a personal yardstick, and once it is set up, every later decision takes minutes.

Why the comparison price is your own#

Three quantities determine the answer: the comparison price, your own benchmark, and the side effects of the booking. The first two are numbers, the third is a list.

The real alternative#

The comparison is with the booking that would otherwise have happened, never with the most expensive offer on the screen. A traveller who would have flown economy compares with economy. A traveller who would not have made the trip at all has no comparison price.

The real alternative settles most arguments about spectacular values. A value based on a price nobody would have paid is no saving, however good it looks.

Many calculations also leave out the earning. An award booking forgoes the credit a cash ticket would have produced, and that forgone credit belongs in the same sum. Anyone chasing a tier notices it at once, because two award flights a year can cost the qualification even though they looked cheap on paper. The answer therefore depends on the year as well: with a status goal cash wins more often, without one points do.

Your own benchmark#

A benchmark is a number fixed in advance. It separates good redemptions from bad ones without relitigating every booking.

A useful floor is the price at which the programme sells points. Redeeming below it means the points could have been bought more cheaply, as buying points shows, and anything clearly above it is a good redemption. Upwards the benchmark is open. Someone who redeems rarely can demand more, while someone who travels constantly does fine with middling values.

The benchmark may change, but never during a booking. Lowering it afterwards to justify a redemption amounts to abolishing it. Writing the number down matters more than its exact level, because a benchmark held in the head drifts with every tempting offer, while one on paper stays where it was put.

One question tests the comparison price: would you make this booking at this price if you had no points? If the answer is no, the comparison price is a different one.

What else goes on the scale#

A cash ticket earns miles and qualifying credit; an award booking usually does not. In a year with a tier in sight, that difference gets priced in, and in case of doubt the cash fare wins while the points wait for a year without a status goal.

Flexibility sits on the other side. Award bookings can often be reversed for a fee, while cheap cash fares refund nothing, so a traveller who has to stay flexible is often better served by points. The booking class matters here too. An award booking sits in its own class, and that class decides whether a later change is possible and what it costs.

Travel time is the third weight. An award routing with long detours costs hours, and hours are scarcer than points.

Worked example: one trip, two routes#

The same connection can be booked with cash or with points, in economy on a cheap fare or in a premium cabin. Cash price and award price are both known, and the co-payment differs.

The pattern repeats across almost every programme: the more expensive the cabin, the more likely a redemption pays. The co-payment tips individual cases, because high surcharges in premium cabins can push the value per point low enough that cash wins again.

In economy on the cheap fare, the points replace little money, and the earning lost on the cash ticket weighs relatively heavily. In the premium cabin the points replace a large cash price, and the same lost earning shrinks to a footnote.

The earning can be quantified as well. Knowing how many points a cash ticket produces lets you add them to the cash side, which makes the comparison fairer.

Availability comes on top. An award booking exists only where a seat has been released, and on popular dates that is the real hurdle, as how award availability works describes. Two bookings at the same cash price can also carry different award prices, so comparing two dates is worth it before deciding anything. Where two programmes are available, run both, since the same flight costs different numbers of points in each.

When cash is the better answer#

Cash wins in several common situations.

On cheap fares. The value per point then sits below almost anybody’s benchmark.

With status goals. A cash ticket counts towards qualification; an award booking does not.

With scarce availability. When only poor connections are open as awards, the redemption buys a worse trip.

With a high co-payment. Where taxes and surcharges make up a large share of the cash price, little advantage survives.

On short routes with baggage fees. The cash price looks low at first and stops looking low once a bag is added, which flips the calculation the other way.

The same arithmetic applies to points plus cash bookings, and points plus cash shows how it looks in detail.

With a small balance the question is simpler than it looks. Without enough for a sensible redemption, pay cash, keep collecting, and the decision comes up again later, once the balance covers a booking that matters.

When it is not worth redeeming#

Redeeming does not pay in these situations:

• At a low value per point. Below your benchmark you are redeeming what you could have bought more cheaply.
• Without a comparison price. If the trip would not have happened, no value is created.
• On trips with a status goal. The missing credit costs elsewhere.
• With high surcharges. The co-payment eats the advantage.
• When the search takes hours. Spending an afternoon to find a mediocre redemption means the value has already gone into time.
• With fixed group sizes. When only part of a group can travel on awards, the organisational problem consumes any arithmetic advantage.

The reverse case exists too. When cash is short and the trip should happen, a poor value beats a cancelled trip.

As a working rule, cash is the default and a redemption is the exception that pays. Treating it the other way round means redeeming below your benchmark too often. When in doubt, choose cash: a balance survives and can be used later, while a redemption is final.

How the decision runs#

Note the cash price of the booking that would otherwise have happened. Establish the award price including the co-payment. Divide, compare the value per point with your benchmark, and redeem above it or pay cash below it. The effort is two numbers from the booking engine and one division, and the same inputs produce the same decision twice in a row, which is what separates a rule from a hunch. Fixing the cash price before looking at award prices also keeps a spectacular award price from shaping what the alternative supposedly was.

Transferable points add a further choice, between the bank’s travel portal and a transfer, and the two produce different values per point. Dynamic programmes behave differently again. Their award prices follow the cash price, so a cheap cash fare usually means a cheap award too, and the value per point barely moves either way.

The method applies to any currency, including hotel points and bank points in a travel portal. For hotels the cash price of a night is easy to establish, and the calculation works identically with nights instead of flights.

What else shapes the decision#

The balance itself carries a risk. Devaluations raise award prices for everything still in the account, as what happens in a devaluation describes, so a large balance without a plan loses value over time, and a good redemption today beats a perfect one in three years.

Groups need a separate check. Travelling with several people means confirming that enough award seats exist for everybody, because redeeming for two out of four travellers creates two bookings and a new problem, since the half of the party paying cash can end up on a different flight.

In most cases the two answers sit close together, and then the benchmark decides. No rule fits everybody, but the method does: the numbers differ from one traveller to the next, and the route to them stays the same.

Writing down the value per point achieved on every redemption turns an abstract benchmark into a personal record. After five bookings the list shows where a realistic benchmark sits, and after a handful more the question tends to answer itself before the calculation is finished.

The most common mistakes#

• Comparing with the most expensive offer. The comparison price is what you would have paid, and that is usually much less.
• Ignoring the co-payment. Taxes and surcharges come off the saving and belong in the value per point.
• Forgetting the earning. The credit a cash ticket would have produced counts on the cash side.
• Deciding without a benchmark. A floor set in advance, and kept, stops every booking from turning into a debate.
• Redeeming on bargains. Cheap fares are the ones to pay in cash.
• Waiting for the perfect redemption. A good redemption today beats a perfect one someday, because a balance waiting for perfection is exposed to every devaluation in the meantime.

Related topics#

• What points are actually worth
• Buying points
• When is collecting points not worth the effort?
• How award availability works
• What happens in a devaluation
• Points plus cash