What Credit Card Points And Miles Are Worth

When shopping for a new credit card, you may not know which to consider at first, but look no further because we have a handy chart for all our best credit card bonuses right here convenient at your service.

However, since there are so many different credit cards to choose from, it begs the question of what do earning points mean and how much are they worth? In essence, each credit card have different and unique bonuses, some may be worth the same, some may not.

There is also a difference between points and miles and their worth. If you are interested in finding out more about how to calculate your points and miles, please read below to continue further.

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Miles vs Points

With owning a credit card, there is always two things to mainly consider: miles and points. Both of them tend to work similarly, but there is a difference: miles benefit more towards flights and co-branded Airline cards while points can be redeemed for numerous purchases such as gift cards, cash back, and travel purchases.

How you earn miles or points mostly depend on which kind of rewards card you use. Once you earn enough on each, both miles and points can be redeemed for a variety of rewards.

How To Determine Your Rewards Redemption Value

There is a simple formula to determine how much your points and miles are worth. Here is how to calculate your rewards redemption value:

Redemption Value = 100(cash price)/(reward price)

• First, use the cash price of your reward and multiply that by 100 to convert dollars into cents
• Second, divide that amount by the reward price–this is the amount of points or miles
• Third, you should get the redemption value which is shown as per point or per mile in cents

E.g: If I wanted to book a one night stay at a hotel and the cash price is $400 and the reward price (miles or points) is 80,000 points, how much would my redemption value be? The equation would be set up like this:

Redemption Value = 100(400)/(80,000)

Your cash price in cents should be 40,000 then take that and divide it by 80,000 and you should get $0.50 for your redemption value, so half. In general, a value of $0.01 per-point or per-mile is considered the average amount, if you get anything more, that is a deal and you should take advantage of it!

Some Other Factors to Consider

Along with calculating your redemption value, there are other factors that you should be aware of when determining your overall reward. These include the card costs, rewards fee, earn rate, and the potential of transferring points.

Rewards Program vs Value in Cents

Author’s Verdict

Although it might take some time to maximize your miles and points, it is well worth it when you consider all the benefits that different kinds of credit cards have to offer. If you are using your credit card properly, you will keep track of your spending and make sure to not go overboard the amount of reward offered. If you do encounter expenses, now you know how to factor them out!

To ensure that you acquire the most out of your reward points, be sure to always pay your credit card in full and on time every month and take advantage of the initial offers.