Points vs Cash vs Free Night Certificate: How To Decide Which to Use | Military Money Manual Podcast Episode 20

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Once you've accumuluated a lot of points, it can be tough to decide if it's a good deal to use points for a purchase or not. Jamie and Spencer break down the math of valuing points.

Just take the cash value of the flight or hotel you are trying to book, divide by the number of points required, and multiply by 100 to get the cents per point valuation.

So if the hotel is $100 and costs 20,000 points to book, that's $100 / 20,000 = .005 x 100 = .5 cents per point. If this was a Hyatt booking, that would be a bad redemption because Hyatt points are usually valued at 2 cents each.

If this was a Hilton booking, it might be worth it, since Hilton points are usually valued around .5 cents each.

We also discuss when it makes sense to use a free night certificate.

The new book is getting great reviews and is available right now at https://militarymoneymanual.com/book/ This is a short, practical guide to financial freedom. Most people are reporting reading it in an afternoon or on a short flight.

I very internationally kept it short and to the point so I don't waste your time.

Military Money Manual Podcast Episode 20 Links

Military Money Manual Podcast Episode 20 Transcript

[00:00:00] Spencer: Welcome to the Military Money Manual podcast.

Hello, and welcome to another holiday edition of the Military Money Manual podcast. Like we talked about last week, we're doing some shorter episodes to spend more time with our family in the holiday season. 

So in this episode, we're going to be talking about how to compare Whether you should use points, a free night award, like from Hilton, the Hilton Aspire card, or if you should pay cash for a room, a hotel booking or an airfare.

[00:00:36] Jamie: Yeah it's tough. And it's something that we always debate back and forth every time. Before we start though, I just want to give a quick shout out to one of our listeners, Orlando, who reached out on Instagram, listening from Hawaii. Enlisted aircraft mechanic in the Air Force. And thanks Orlando and everyone for being part of the Military Money Manual community and for the feedback you guys are sending on both the podcast and the book.

Remember, if you have any questions or feedback, you can comment on the blog, info@militarymoneymanual.com. And of course you can find the book and order that at militarymoneymanual.com/book.

[00:01:09] Spencer: We're also on Instagram instagram.com/MilitaryMoneyManual, and you can find us there. We're almost up to 200 subscribers or followers, whatever they're called.

But, hey, thank you. We really appreciate it. And we release lots of content on there, whether it's the podcast, the website, or special deals on the book as well. The Military Money Manual, which is coming to Amazon pretty soon. So check it out. Leave me a review if you liked it and don't leave me a review if you didn't.

[00:01:39] Jamie: So Spencer, when we're looking at what to do with either airfare or hotel reservation is primarily what we're talking about whether to use cash, a free night award or points, there's a number of things that might change your situation. If you're on a tighter budget, you're still getting out of debt.

It might be harder for you to use cash, or if you're trying to accumulate points, because you have a really cool trip to Bora Bora or whatever coming up, then you may want to use cash to save your points, something like that. So there's always going to be unique situations for each person, but in general, what kind of, how do we talk about valuing points?

Like how do we say an Amex point is X valuable?

[00:02:14] Spencer: So the place that I start when valuing points is I think about the different tiers of points. So you have the most flexible points, which are your chase ultimate rewards, your Amex membership rewards, Citi thankyou points, Capital One miles.

Those are super flexible because you can transfer them to travel partners. For instance, the Amex membership rewards and the Chase Sapphire reserve are usually the highest value in my head. And if I'm not getting at least two cents per point, if I see that I'm getting a valuation of 2 cents per point, then I'm going to seriously consider without even like double checking anything else, just using the points and that would be, so for instance, a little bit of math in public here, but if it's $1,000 airfare and I can transfer, Amex points to Singapore airlines, let's say, and then book it for 50,000 miles, then 50,000 times two, that's 100,000, move the decimal point. That's a thousand dollars. So that's getting two cents of value right there. So if I, all of a sudden that booking, I can make it for 30,000 points and now I'm getting 3.3 cents per Amex points almost immediately.

I'm just going to make that booking now because, yeah, because someone might have screwed up when they were pricing it. And, they have computers and stuff working out all these different bookings. And, on Amex points, the highest valuation I ever got was moving 240,000 Amex points to all Nippon Airways, ANA.

And I booked round trip, first class tickets from Honolulu to Tokyo for me and my wife, $27,000 tickets for 240,000 points. So I got 11 cents per point right there, which is ridiculous. That's nine times what a standard redemption would be.

[00:03:55] Jamie: And that's unheard of, but yeah, those opportunities are out there.

[00:04:00] Spencer: Exactly. And then, when you think about Hilton or Marriott points, hotel points are the lower tier in my mind. Marriott points are still a little bit flexible because you can transfer them to some travel partners, but they made that not three to one. Yeah. Yeah. Yeah. It's not as good of a deal as it used to be.

And then you have the airline miles at the bottom. They seem to be for whatever reason, like the least worthwhile.

[00:04:21] Jamie: Yep. So the way we do that math, when you say, $27,000 ticket, which I would assume you're probably not going to pay cash for, or 240,000 Amex points is you can just simply take, if you're a history major or not good at math, like me, let me walk you through it.

Take the dollar amount divided by the number of points, and then you have to move the decimal around if you can't visualize that. That's so 27,000 divided by 240 and you get 11 cents per point. Let me apply that to a Hilton. So let's say I look up, I want to spend a night in Charleston, South Carolina at a nice hotel.

It's going to cost $750 a night or 80,000 Hilton honors points. So I do 750, the dollar amount divided by the number of points, 750 divided by 80,000, and I get 0.9 cents per point. Is that a good redemption option, Spencer?

[00:05:07] Spencer: I would say it probably is. First of all, I don't know where you're staying for $750 a night in Charleston.

I just made up a city. I should fix my blueprint. That's a really nice, yeah, that's a really nice redemption, or a really nice hotel in Charleston. But so typically, and when you think about the value of points, you can go to the points guy, you can go to upgraded points.

There's a bunch of websites out there. If you just Google, value of, and then put in your. Whatever thing you're trying to do, you'll get a range, but typically, Hilton 0. 5 cents maybe Marriott, maybe just a little bit more like 0. 7 cents, somewhere in that range.

But I use that as a jumping off point. And then if I see it again, if I see a really good redemption, so if that's 750, and you can start doing quick math in your head too. So if that was a 75,000 redemption or 75,000 point redemption, then, you're getting a penny per point.

And then you can very quickly just be like, Oh yeah, I want to do that because normally with Hilton, you're only going to get half a cent per point. And again, that description that you gave there, Jamie was really good, just take the dollar amount divided by the number of points required and then multiply it times a hundred.

If you want to know how many cents per point, or if you just, once you've been in the matrix long enough, you just, you stop seeing the ones and zeros, and you just you just know that 0.009 is 0.9 cents per point and the, like you said, the Hilton being worth 0.5 cents, if I saw redemption at that.

Then that's pretty good.

[00:06:33] Jamie: Yep. One of the great things about Hilton just to stay on this example for a second is if you use Hilton for points or a free night certificate, they do not charge you the taxes or the reward the taxes or the resort fees when you're redeeming points or a free night reward.

So that could save you easily upwards of 50 a night as well. So don't forget to take things like that into consideration when you're looking. One other example I have is, in the past I used a United flight, I transferred Chase Ultimate Rewards points to Singapore airline, Chris flyer points and booked United from Newark to Honolulu.

and that was only 34,000 Amex points. I'm sorry. It was, I think it was Amex actually. Yeah. 34,000 Amex points per person compared to 60,000 Chase or 110,000 points in a, I forget which one now I'm mixing myself up, but in the other travel portal. Yeah. So there's a lot of options there, especially when you transfer an international partner, that's where you can really make big bang for the buck like your ANA ticket you have.

[00:07:33] Spencer: Yep. And I think the other, another example that I think you used recently was like booking a Ritz Carlton, Atlanta. So the cash rate was $260 a night. If you went through Amex, it was 31,000 points. That's 0.8 cents per point. It's not great for Amex when, sometimes you can get 2 cents per point chase.

You could book it. Basically one to one, so a penny per point. And then on the Bonvoy, it was 50,000 points, which was 0. 4 cents per point. So if you're right, if you're good there yeah. You're not really, you're between a rock and a hard place at that point. And the cash rate is probably going to be your best option unless you have a ton of Bonvoy points, you just want to burn them.

So that's the other thing too, you have to remember yes, these points are a currency. Like they do have monetary value because you can exchange them for a good or service. 

[00:08:29] Jamie: So keep an eye on if you have an annual award night and it's coming up on expiration, just make sure you might accept a slightly, not a less optimal, less than optimal redemption on a free night award. If it's coming up on expiration and you're not going to be able to travel for sure before it expires.

So there's always going to be other caveats, but those are some examples of how to compare your options. And whether you're looking at points or free night award or paying cash, all great options, we hope that you're taking advantage of travel hacking benefits. And your free credit cards that you and your spouse get with your annual fee waived under MLA and taking advantage of enjoying life, living life, and working towards financial independence and freedom in your life.

[00:09:12] Spencer: I hope you enjoyed this short episode of the Military Money Manual podcast. If you want to learn more about travel hacking and how to value the points that you're accumulating when you open up these annual fee waived cards for US military service members and their spouses, check out my course. The Ultimate Military Credit Cards course. It's militarymoneymanual.com/UMC3. We'll see you again next week. Happy holidays from the Military Money Manual.

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