One of the reasons people struggle with spending their points is because they do not understand their actual value. So in this article, I’ll talk about calculating the value of your points and how this can help you in choosing the best travel options.
Every loyalty scheme works differently. So I will focus on the three core points that are popular on this blog.
They are British Airways Avios, Virgin Atlantic Points and American Express Points.
- British Airways Avios – 1.1 pence
- Virgin Atlantic Points – 1.2 pence
- American Express Membership Points – 1.4 pence
100,000 British Airways Avios = £1100 of value
100,000 Virgin Atlantic Points = £1200 of value
100,000 American Express Points = £1400 of value
It’s all in the spend
Most of the value you can extract from your points is when you come to spend them. You should be aiming to get a higher value per point than the baseline values listed above.
What do I mean by this?
Well, if an Avios point is worth 1.1pence and you spend 100,000 Avios on a reward flight, this brings your spend to £1100. Bear in mind, that almost all reward flights have additional taxes and fees (more on that here). So to calculate your total for how much you’re actually spending, the formula is as follows:
Points for reward flight x baseline value + taxes & fees = how much you actually paid.
Let’s say you want to fly to New York in Upper Class on Virgin Atlantic.
To fly off-peak, it will cost 95,000 points + taxes & fees.
Taxes and fees right now are high, so let’s say the taxes & fees come to £750.
The total cost of this example flight would be 95,000 x 0.012 + 750 = £1890.
Compare with the cash option
Using the above example, it only makes sense to use the points if the cash equivalent ticket is MORE than £1890.
If there’s a huge sale on and the cash flight is £1500, you’d be paying £390 more by using your points than buying the cash flight.
This works in the inverse too. Imagine the cash flight is £4000. Now points are extremely attractive because the intrinsic value is more than half of that of the cash flight. Nice deal!
Compare how much the cash flight costs vs the points flight.
If the value doesn’t make sense, then don’t waste your points on that option. Keep them for a time when you can squeeze out the most value from them.