Why Are Some Points Worth More Than Others?

At GigaPoints, we assign a dollar value—or more accurately, a cent value—to the miles and points that each loyalty program issues. That let us compare bonuses, reward rates, and much more across different credit card programs. Is it better to get a sign-up bonus of 50,000 Chase Ultimate Rewards points or 80,000 Hilton Rewards points? Our algorithm can tell you, based on the dollar values of those bonuses.

But how do we figure out those values? What makes one kind of point or mile more valuable than another? Here are some of the factors that go into our calculations.

Intrinsic Value: What can you get for your points? 

We start by looking at what a given point can buy, and what that product is worth. Sometimes that’s pretty simple. Many airline loyalty programs let you trade in points for a fixed (or roughly fixed) value. For example, Southwest lets you use your Rapid Rewards points for just about 1.5 cents per point. So a $150 ticket would require about 10,000 points. You may be able to use points for other things too, but at lower value. That makes a valuation pretty easy.

But a lot of programs—including some of the most rewarding—use reward charts. So a hotel company’s most luxurious rooms cost 30,000 points per night, or a one-way business class flight between Europe and North America costs 70,000 miles. For instance, at the Park Hyatt Sydney, a five-star hotel overlooking Sydney Harbor, rooms might generally sell for $1,100 a night. If a room costs 30,000 miles in points, that makes each point worth 4 cents each ($1,200 / 30,000 = $0.04).

We use these redemption rates to come up with an intrinsic value for each loyalty point. But the intrinsic value is just one factor, because getting 4 cents a point (a really great value, incidentally) is pretty meaningless if you’re never actually able to book that room. Which leads us to…

Availability: Can you actually use your points? 

This mainly comes into play with hotel and airline points. The “list” price for a business-class flight to Europe may only be 70,000 points—but what if that’s only valid for mid-week flights to Kazakhstan in February? Or maybe the airline has a couple of seats available at that price and makes every other award ticket twice as expensive.

Some travel reward programs have blackout dates. And a number of hotel programs claim not to have blackout dates—but will let properties ban members from paying for rooms with points during certain seasons, or opt out altogether.

Limited availability can not only be frustrating—we think it makes points less desirable. So our algorithm factors that into our valuations.

Transferability: Can you move points around? 

At GigaPoints, we’re big on “transferable” points, because they offer a lot of flexibility. You’re not trapped in just one company’s program, stuck with whatever changes they decide to make—you can shop around for the best deals and availability.

For example, you can move your Chase Ultimate Rewards into dozens of other reward programs, including United MileagePlus, World of Hyatt, and British Airways Avios. If Delta is charging 45,000 miles for a flight, you might be able to transfer your American Express points to JetBlue and book a similar flight for 25,000 miles.

With transferable points you’re less likely to end up with little piles of useless points or find yourself frustratingly short of the miles you need to book a flight. You keep your points in your main account and dole them out as needed. You can even top off accounts. Want to buy a United flight that costs 25,000 points but only have 22,000 in your MileagePlus account? Just transfer 3,000 points over and you’re set.

Our valuations favor transferrable programs, in the same way we give more weight to programs with a lot of availability.

Variety of Redemption Methods: How many kinds of things can you get with points? 

When evaluating a program, GigaPoints also looks at the different ways you can use its points. Most airline and hotel programs let you use points not just for flights and nights, but magazine subscriptions, merchandise, gift cards, and more. Those options—which transferrable programs have, too—are almost always a bad deal. Cashing in 200,000 American miles for a flat-screen TV might be fine if you’re truly never going to use those points, but it’s unlikely to realize the best value.

On the other hand, some programs offer some valuable redemption options that really add value. Chase Ultimate Rewards lets you convert points into cash at any time at a 1 point per 1 cent ratio, just as good as many cash-back cards. You can also book travel through the Ultimate Rewards portal at up to 1.5 cents per point, depending on which card you have.

We think having more options is a good thing, though we also consider how much value you can get for those additional options when valuing points. 

Benchmarks: What do other people say? 

Finally, while we use all of these factors to calculate the value of each program, we also compare our valuations to other sites’. Sometimes those valuations will be very similar; other times we’ll come up with very different numbers. In most situations, we try to be more conservative than other sites, to make sure we’re reflecting reality for our users—not just the best-case scenario.