How A lot Are Miles Price? (The Worth of Factors)

I typically get requested how a lot I worth numerous miles & factors currencies, together with these issued with bank cards, airways, and accommodations. The reality is that there’s no valuation for these currencies that everybody will agree on. That’s as a result of the worth that you simply’ll get from rewards factors will differ considerably based mostly on the way you redeem them, and that’s additionally largely based mostly in your journey targets.

Nonetheless I attempt to use my data of those applications to assign a price to every foreign money, which may fluctuate over time. Beneath I’ll share my valuations of most main miles & factors currencies, after which afterwards I’ll clarify my methodology.

Worth of financial institution & bank card factors February 2022

To me bank card factors are the gold customary of rewards currencies. They provide a ton of flexibility, since you may switch them to every kind of companions. On high of that, there are such a lot of profitable bank cards that supply beneficiant rewards buildings for incomes these factors.

Personally I all the time attempt to earn transferable factors currencies with my bank card spending. Not like different factors currencies, I worth these roughly the identical, given simply what number of companions every program has.

Beneath are my valuations of the key transferable factors currencies.

Bank card factors offer you limitless flexibility for journey

Worth of airline miles February 2022

There are many methods to earn airline miles, from truly flying, to utilizing co-branded airline bank cards. The worth of airline miles does differ considerably between applications. It’s vital to needless to say main airways have numerous companions, so the worth of those miles isn’t simply based mostly on the flexibility to redeem for journey on that specific airline, but additionally based mostly on the flexibility to redeem for journey on associate airways.

Beneath are my valuations of the key airline mileage currencies.

Redeem airline miles for top quality flights

Worth of lodge factors February 2022

Very like with airline miles, lodge factors could be earned both by staying at accommodations, or through the use of co-branded lodge bank cards. Typically lodge factors are simpler to redeem than airline miles, provided that there aren’t as many capability controls or restrictions when redeeming them. That’s one of many cause many choose to earn lodge factors fairly than airline miles.

Beneath are my valuations of the key lodge factors currencies.

Redeem lodge factors for luxurious accommodations

How one can go about valuing miles & factors

With the above out of the best way, how do I truly go about arising with a price for miles & factors? Initially, let me share that I’ve been obsessive about miles & factors for 15+ years. Holding monitor of those applications is my ardour (and my job), and I’ve additionally helped folks redeem nicely over a billion miles over time. I’d wish to suppose I’ve a little bit of expertise.

Even so, that’s to not say that it is best to worth miles & factors the identical means I do. Let me share some fundamentals on how I am going about valuing miles & factors, and everybody can determine for themselves how they need to go about it.

Miles & factors can’t be valued objectively

Miles & factors are finally a type of foreign money, so that you could be questioning why we are able to’t worth them objectively. In any case, there are alternate charges between financial currencies, though various factors impression their valuations.

There are a couple of causes miles & factors (at the least for non-revenue based mostly applications) can’t be valued objectively in a helpful means:

  • There are such a lot of alternative ways to redeem miles & factors, which provides you with vastly totally different valuations
  • There’s usually not a option to “money out” your miles & factors, and when there’s, that’s usually not essentially the most environment friendly means to make use of them
  • Everybody has totally different journey targets, and also you’ll get totally different worth relying on whether or not your precedence is taking the household to Disney World, or flying top quality to Singapore
  • Miles & factors could be devalued over time, and are usually the property of the loyalty program fairly than the member, so actually we’re simply enjoying by the applications’ video games

Let me give a concrete instance of why there’s no appropriate goal valuation of rewards factors. Let’s say you may have Capital One miles, which I worth at 1.7 cents every, and also you switch these to Air Canada Aeroplan. You can redeem 90,000 miles for a one-way ticket in Lufthansa top quality from Newark to Frankfurt.

In the meantime if paying money, that ticket would price over $12,000.

Alternatively, you can redeem 109,300 miles for a one-way ticket in Air Canada enterprise class from Fort Lauderdale to Montreal.

In the meantime if paying money, that ticket would price $1,171.

As you may see, you may redeem fewer miles for a ticket that may price greater than 10x as a lot when paying money. That is purely meant to be an instance, however hopefully at the least demonstrates the complexity of valuing these currencies.

Redeem rewards factors for Lufthansa top quality

Be conservative when valuing miles & factors

For quite a lot of causes, I attempt to be conservative on the subject of valuing miles & factors:

  • Miles & factors could be devalued by applications at any time, so it’s a must to apply some form of a reduction to them to account for that; on the whole there’s way more of a threat of devaluation for a person airline or lodge foreign money, fairly than a transferable factors foreign money
  • With most applications, you don’t truly personal your miles & factors; they belong to this system, and also you’re simply allowed to make use of them so long as you may have an account in good standing
  • Folks must be inspired to earn & burn, and creating an artificially excessive worth for factors discourages that

As you may see, I worth bank card rewards factors greater than a overwhelming majority of particular person airline currencies, though these are the most effective methods to redeem them. That’s as a result of I’m prepared to worth the factors at a premium for the added flexibility that they provide.

Redeem rewards factors for JetBlue Mint enterprise class

Valuing miles & factors is each absolute & relative

Arising with a valuation of a mile or level is each an absolute and relative train:

  • The valuation must be absolute within the sense {that a} foreign money must be valued someplace between the standard acquisition price and the standard redemption price; on the finish of the day for this reason I worth most of those currencies at someplace round one to 2 cents every
  • It’s relative as a result of the best way I provide you with differing valuations between currencies is predicated on the professionals & cons of redeeming with every program by way of redemption charges, routing guidelines, and extra
Valuing miles & factors isn’t a science

The way you’ll get essentially the most worth together with your miles & factors

Typically talking, if you wish to get essentially the most worth from miles & factors, there are two key features to that:

  • You must spend a while finding out these applications, as a result of the offers available are in some circumstances wonderful
  • Usually you’ll get essentially the most worth from factors when you’re searching for aspirational redemptions, like staying at 5 star accommodations, or reserving worldwide first & enterprise class flights, the place the money worth could be disproportionately excessive

Admittedly that’s not how everybody desires to redeem, and that’s completely high quality:

  • When you don’t have numerous factors, it’s in all probability not price investing the time to check these applications all that fastidiously
  • When you have a household with toddlers, then understandably your precedence could be touring to someplace shut by and having a room with numerous house, fairly than flying midway all over the world to remain at a 5 star lodge
Everyone seems to be searching for totally different journey experiences with miles & factors

Don’t fall for the retail price fallacy

I believe it’s vital to not get too carried away with factors valuations. For instance, above I confirmed a $12,000+ one-way top quality ticket from Newark to Frankfurt on Lufthansa that could possibly be booked with 90,000 Aeroplan factors.

Sure, on the floor I suppose you might be getting over 13 cents of worth per level. Nonetheless, don’t give attention to that an excessive amount of. For psychological accounting functions, personally I worth redemptions based mostly on how a lot I’d in any other case truly be prepared to pay for that have. I’d by no means, ever drop that form of money on a one-way top quality ticket.

So whereas on paper that could be the valuation, I all the time ask myself how a lot I’d be prepared to pay for a first-class ticket to Europe. Personally I’d estimate that I’d in all probability truly worth that flight at $1,500, by way of what I’d in any other case be prepared to pay.

I’m not seeking to get into an enormous debate right here about perceived worth fairly than retail worth, however my level is that it’s vital to contemplate how a lot you worth these premium experiences, fairly than simply how a lot they price.

Don’t make a journey simply because it could price lots when paying money, however fairly do what you need to do, and attempt to maximize worth alongside the best way. At the very least that’s my take.

How a lot would you truly pay for a first-class expertise?

Don’t worth miles & factors based mostly on one redemption

One other factor I contemplate with every factors foreign money is what number of good redemption choices there are. The extra flexibility and extra choices there are, essentially the most I worth these currencies.

For instance, I’d argue that the world’s greatest redemption possibility is thru Virgin Atlantic Flying Membership. Particularly, you may redeem 60,000 Flying Membership miles for a one-way top quality ticket on All Nippon Airways between the US and Japan, and that may price lots if paying money.

Nonetheless, as you may see above, Flying Membership miles aren’t the foreign money I worth most. Why? As a result of there aren’t many different good redemption choices. So whereas I completely like to redeem miles that means, that doesn’t go away me with an entire lot of flexibility.

I attempt to consider these candy spot redemptions whereas acknowledging that they supply restricted flexibility, particularly at a time like this, when borders are nonetheless partly closed.

Redeeming Virgin Atlantic miles for ANA top quality is an outstanding worth

Backside line

Hopefully the above is a helpful rundown of the worth of assorted bank card, airline, and lodge factors currencies. There’s no absolute proper or unsuitable option to worth factors, and it’s completely affordable in case your valuation is totally different than mine. My objective is simply to share my take, and supply a basic framework for valuing these currencies.

I’ll hold my valuations up to date over time, to mirror adjustments with these numerous factors currencies.

How do you go about valuing miles & factors, and are your valuations considerably totally different than any of mine?

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