Credit card rewards can provide an excellent way to get value back whenever you use your card. But not all credit card points are created equal, and you may be earning less than you think.
If you’re wondering, “How many credit card points equal a dollar?” the answer is “it depends." Here’s what you need to know about valuating credit card rewards — and how you can be sure to get the most out of your credit card rewards.
What are credit card points?
Credit card points are a form of rewards currency you receive when you use a rewards credit card. Those rewards are often called “points,” but they can come in the form of points, miles, or cash back.
Cashback rewards are relatively straightforward. If you earn 2% back on every purchase you make and spend $100, you get $2 worth of cash back. Points and miles, however, can get a little more complicated.
Before we dig into that, though, it’s important to note that the terms “points” and “miles” are often used interchangeably. While miles have historically been associated with frequent-flyer programs, there are some airline rewards programs, including JetBlue TrueBlue and Southwest Rapid Rewards, that use points instead. And while points are usually associated with general travel rewards, some credit cards refer to their rewards currency as miles.
Regardless of whether you’re earning points or miles, remember that each rewards program has a different way of valuing its currency. So, if you’re trying to figure out how many credit card points equal a dollar, it may take some time and research based on which cards you’re comparing.
How to calculate the value of credit card points
Because rewards points and miles can vary in value based on the program issuing them and how you use them, there’s no easy way of saying how many credit card points equal a dollar. But there’s a way you can calculate the value when you’re trying to determine if you’re getting a good deal by redeeming your points or miles — and we’ll show you how to do it.
Let’s say you’re trying to use your rewards to book a plane ticket and you can use 100,000 points or pay a cash price of $1,000. In this scenario, your points are worth one cent apiece. You get that value by dividing the cash price by the number of points required to book:
$1,000 / 100,000 points = $.01 per point
Some credit card points have varying values
Many general travel rewards credit cards offer a flat value per point, so you always know how much value you get based on your rewards balance. If one of these cards had a set value of $.01 per point, then you could confidently say that 100 points equal a dollar because you know each point has a set value of one cent when redeemed for travel.
While it would be simple and straightforward if all credit card points were worth one cent apiece, some rewards programs assign different values to their points or miles based on how you use them. There are three ways they do this:
Different rates for different categories
Redeeming for travel is usually the best way to get the most value out of your points or miles. But many general travel credit cards also allow you to use your rewards to get cash back, buy gift cards, purchase merchandise, and more. While these extra redemption options give you more flexibility, you may get a lower value per point if you use them.
With the American Express Membership Rewards, for instance, you’ll get up to one cent per point if you redeem your rewards for travel but only 0.6 cents per point if you use them for a statement credit against past purchases.
Dynamic pricing structures
With airline and hotel rewards programs, you’ll often see a dynamic pricing structure. So, for example, redeeming your hotel points for a four-night stay in December could give you a different value per point than the same stay at the same hotel in May of the following year.
While that can make it difficult to know whether you’re getting a good value for your rewards, thankfully there are experts who have done the research on what these credit card points are worth on average. And once you know that average value, it just goes back to doing the math.
So, say you have airline miles that are worth 1.4 cents apiece on average, according to the general consensus. To determine if the redemption you’re considering is a good value, you simply divide the cash price by the number of miles needed to find out if you’re getting less, more, or average value for that rewards program.
For example, let’s say you find a round-trip flight that costs $500 or 50,000 miles. If you divide $500 by 50,000, you get just one cent per mile, which is a below-average value. But you’re flexible, so you find another flight that departs a week later and costs $600 or 35,000 miles. Not only would this redemption save you 15,000 miles, but it would also give you an above-average 1.7 cents per mile ($600 / 35,000 = $.017).
Some travel rewards programs allow you to transfer your hard-earned points or miles to other travel programs. With Chase Ultimate Rewards, for example, you can transfer your points to nine airlines and three hotel brands at a 1:1 ratio — meaning one Chase Ultimate Rewards point is equal to one airline or one hotel brand point. So, you don’t lose anything by transferring.
But that 1:1 value isn’t always the case with transfers. And depending on the value you can get per point or mile from one of these transfer partners, your rewards earned with the original program can technically be worth more or less.
For example, if you have the Chase Sapphire Preferred, your points are worth 1.25 cents apiece if you use them to book travel through Chase. But one of Chase’s transfer partners, World of Hyatt, gives you 1.6 cents per point on average. So if you need to book a hotel stay and there are Hyatt properties in your destination city, it might make sense to transfer your points to World of Hyatt instead of booking directly through Chase.
Other things to consider when valuing credit card points
So now we know that credit card point valuations can vary based on the rewards program you have and how you redeem your rewards. But there are also a couple other things to think about if you’re looking to apply for a rewards credit card.
Look at both the earning and redemption rates
Because some programs value their points differently, you need to look at both the earning and redemption rates to get what’s called an “effective rewards rate” for a credit card.
For example, let’s compare two hotel credit cards with wildly different rewards and redemption rates: the Hilton Honors American Express Surpass® Card and the World of Hyatt Credit Card. While the former’s rewards rates are much higher, they don’t actually give you more total value because Hilton points are worth much less when translated into the real world.
This chart breaks it all down:
|Hilton Honors American Express Surpass Card||World of Hyatt Credit Card|
|Average value per point||0.5 cents||1.5 cents|
|Welcome Bonus||Actual bonus||Bonus value||Actual bonus||Bonus value|
|Earn 130,000 Hilton Honors Bonus Points after spending $2,000 on purchases in the first 3 months||$650||Earn up to 60,000 points: 30,000 points after spending $3,000 on purchases within the first 3 months, plus an additional 30,000 points by earning 2 bonus points per $1 spent on purchases that earn 1 bonus point, up to $15,000 spent in the first 6 months||$750|
|Rewards rates||Card’s rate||Effective rate||Card’s rate||Effective rate|
12X points when spending directly with an eligible Hilton hotel or resort; 6X points on purchases at U.S. restaurants, U.S. supermarkets, and U.S. gas stations; and 3X points on all other eligible purchases
6% on eligible purchases with Hilton hotels and resorts
3% at U.S. restaurants, U.S. supermarkets, and U.S. gas stations
1.5% on everything else
9X points per $1 spent at Hyatt hotels; 2X points per $1 spent on eligible travel, dining, and health purchases; and 1 point per $1 spent on everything else
||6% on purchases at Hyatt hotels
3.5% at restaurants; on airline tickets purchased directly from the airline; on local transit and commuting; and on fitness club and gym memberships
1.5% on everything else
Some cards offer different redemption rates
Some travel credit cards come with a perk that gives you more value with travel redemptions than if you were to have another card in the same family. For example, you can redeem rewards earned with the Chase Freedom for travel through Chase. But if you have the Chase Sapphire Preferred, your points will be worth 25% more on the same redemption, and the Chase Sapphire Reserve would give you 50% more value.
This kind of setup isn’t common. But if you want to rack up rewards with a specific rewards program, compare the different cards available and choose the one that will give you the best redemption value.
What’s better: Points or cash back?
If you have a travel credit card, you’ll virtually always get more value redeeming your points or miles for travel than for cash back. But if you’re looking to open a new credit card and trying to decide whether you should pick a travel or cashback card, that can be a little more complicated.
In general, cashback credit cards offer lower sign-up bonuses than travel cards, but they also usually don’t charge annual fees. If you don’t spend a lot, don’t travel often, and are generally fee-averse, a cashback credit card may be best for you.
But if you can get enough value from a travel card to make up for its annual fee (or pick a travel card with no annual fee) and want to focus your rewards-earning power on travel-related redemptions, a travel credit card may provide you with more total value.
In general, it’s important to look at your spending habits and choose the card that will give you the most value based on the sign-up bonus and ongoing rewards rates.
Maximize the value of your points by watching out for costs
Annual fees aren’t inherently bad, and some cards provide benefits that more than make up for the cost. As you’re considering different cards, do the math to make sure the net benefit you get from the card is positive. And if you can get more net value from a no-annual-fee card based on your spending and travel habits, go that route.
Also have a plan to pay your balance in full each month. Interest charges get assessed only if you carry a balance from month to month, and they can eat into the value you gain from your card’s rewards program. To maximize your rewards, spend only what you can afford to pay off each month.
A special note on transfer partners
To keep this discussion simple, we didn’t go into depth with transfer partners. But it’s important to know you may be able to squeeze more value out of your credit card points by transferring them to a partner airline or hotel program. Transfer partners also give you more flexibility by automatically giving you more options for how to use your points.
But while some rewards programs let you transfer at a 1:1 ratio, others may have less favorable ratios. So, as you’re comparing the value of your rewards points now versus the value you’ll get if you transfer them, take those ratios into account.
A good way to determine whether transferring is a good idea is to go through the booking process through both programs. For example, consider the following scenario:
- Chase Ultimate Rewards requires 55,000 points to book a particular hotel stay.
- You double check on World of Hyatt and see you can get the same hotel stay with 30,000 Hyatt points.
- You know you can transfer your Chase points to World of Hyatt at a 1:1 ratio.
- You transfer your points to Hyatt because you’re a pro and you just saved yourself 25,000 points.
Level up your points game with multiple cards
If you feel like you’re understanding the value of points and miles and want to start finding ways to maximize your rewards, you can level up your game by having multiple travel rewards credit cards.
More specifically, you can get more value by choosing cards with varying purposes and different bonus rewards categories. With an airline card, hotel card, and a general travel card, for instance, you can utilize each to maximize your value when booking your flight, hotel stay, and car rental.
And by picking the best travel credit cards or rewards cards with different bonus categories, you can mix and match your cards when you’re making purchases to ensure you’re always getting the most value out of each transaction.
If you’re thinking about getting more than one credit card, though, make sure you continue to practice responsible credit card behaviors. Keep track of your accounts to ensure you don’t spend more than you have, and either set reminders to pay your bills on time or set them up on automatic payments.
Managing multiple cards can take some extra work, but the value you get in return can be worth it.