In an earlier article, I talked about how to calculate the intrinsic value of your points. One of the questions I often get is – are all points equal?
The simple answer is – no.
Explanation
Each individual points program has a slightly different base value for a point.
This value is usually based on the redemption value of a point. I.e. how many points it takes to receive something of roughly equal value is what defines their value.
Just because one program may have points that are worth, for example, 1 penny; doesn’t mean others work the same way. That being said, a lot of airline points do have a value of around 1 penny/1 cent or thereabouts.
Why the value is important
Knowing the value of your points is important. If you do not understand their value, it’s much easier to waste them.
Once you know the value, you can get an idea of how to leverage that value to the maximum. This is why I often say that reward flights & upgrades are often fantastic value. Usually in this situation, you’re trading a reasonable amount of points for something of high value.
When you collect points, your goal should always be to get at least their base value if not more.
So if you’re spending British Airways Avios, your goal should be to get more than 1.1 pence of value per point. The way you stretch that value is by finding situations where the cash equivalent of whatever you are purchasing is more than the cost of the points purchase.
Bottom line
Knowing the value of your points is the first step to not wasting them.
Once you know their value, make sure you stay above their base value when spending. Try to increase your leverage by finding deals where you get a lot of value.
If you’re unsure of your valuations or want advice on a specific situation – just get in touch.
