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Reader KJB asked a fantastic question on the “Ask Lucky” page of the blog:
Lucky, I know it’s not worth it to redeem Membership Rewards or Ultimate Rewards points at a penny a piece but do you think using them this way to cover paid stays makes it more worth it when able to combine with status/suite upgrades?
I’ve been comparing the Ritz card and Hyatt Diamond challenge as ways to upgrade paid stays if I can find affordable rates.
Just as an example I could cover 5 nights at the Ritz in Maui with 185k Ultimate Rewards in a standard room and use suite upgrades from having the card to get club level access to more than double the value of my room.
Just as a comparison it’s 240k Marriott points for the same 5 nights in a standard room. I know you value UR at nearly 4x Marriott points so 185k is still a lot.
I often read blogs about the value in high level Hyatt redemptions with Ultimate Rewards. Having limited experience in high category hotels I don’t know where to draw the line with value and points.
I know that it’s subjective but for someone who has better access to points than cash it’s starting to look attractive to consider combinations like this.
I figured I would answer it here, because I think it gets at an overall challenge that a lot of us face when it comes to redeeming our points.
Ultimately a good use of points is anything that makes you happy
Let me start by making a point that’s hopefully very obvious. As much as many of us like to make a “sport” of finding the best uses of points in terms of the cent per point “value,” at the end of the day any use of points that makes you happy is a good one.
I’d rather spend 100,000 miles to visit a sick family member in economy than to fly Singapore Suites somewhere without much purpose, assuming paying with cash wasn’t a reasonable option.
I think that’s acknowledged in the question above — yes, this is highly subjective, and at the end of the day if you can redeem your points for something memorable, whether it’s a toaster oven, One Direction concert tickets, or a Singapore Suites class award ticket, you win.
Chase Ultimate Rewards points are easy to come by… and valuable!
If you’re in the US and maximize your credit card “return,” chances are that you have a card that accrues Chase Ultimate Rewards points. I’d argue Chase has the single best personal and business credit cards out there.
For personal spend, it’s tough to beat the Chase Sapphire Preferred® Card, which offers:
- Earn 50,000 bonus points after spending $4,000 within three months, plus an additional 5,000 points when you add an authorized user and they make their first purchase in the first three months
- Earn 2X on travel and dining
- No foreign transaction fees
And for business spend, it’s tough to beat the Ink Plus® Business Credit Card which offers:
- Huge sign-up bonus of 60,000 Ultimate Rewards points after spending $5,000 within three months
- 5x points on office supply stores, and on cellular phone, landline, internet, and cable TV services
- No foreign transaction fees
So on one hand when you’re valuing your points it does make sense to keep in mind that Chase Ultimate Rewards points are fairly easy to come by compared to other points currencies.
Chase Ultimate Rewards points are incredibly flexible
Ultimate Rewards has a lot of great transfer partners. My favorites are:
- British Airways Executive Club
- Hyatt Gold Passport
- Korean Air SkyPass
- Singapore Airlines KrisFlyer
- United MileagePlus
In addition to the handful of other transfer partners they have, there’s also a “pay with points” option for Ultimate Rewards points. You can redeem each Ultimate Rewards point for 1.25 cents towards the cost of paid travel, which is what KJB is suggesting here.
So for example, if a hotel costs ~$360 per night, you can instead redeem ~29,000 Ultimate Rewards points per night for it.
I value Ultimate Rewards points at more than 1.25 cents each, so it’s not how I would choose to redeem my points, as I can get a lot more value by transferring them to the Ultimate Rewards airline and hotel partners.
How I get more value for my Ultimate Rewards points
Just to give some quick examples of other uses of Ultimate Rewards points where you’re getting (a lot) more value than 1.25 cents per point:
25,000 Hyatt Gold Passport points per night for the Park Hyatt Maldives
Opportunity cost: $312.50 worth of travel
This hotel often retails for over $1,000 per night, so is a heck of a good use of points.
80,000 Korean Air SkyPass miles for first class between the US and Asia
Opportunity cost: $1,000 worth of travel
Korean Air has a phenomenal first class product, and it’s also one of the most readily available on miles.
25,000 British Airways Avios for business class between Boston and Dublin
Opportunity cost: $312.50 worth of travel
One of the very best values on British Airways’ distance based award chart is for travel between Boston and Dublin, which is just under 3,000 miles. A one-way business class ticket on Aer Lingus costs just 25,000 Avios.
Consider the opportunity cost
So there are a couple of things that make KJB‘s situation unique:
- Marriott Rewards is also an Ultimate Rewards transfer partner, and he wouldn’t get nearly as much value by transferring directly to them. So he’s making a side-by-side comparison, and in this case, “paying with points” is the better option.
- He can actually substantially increase the value of his redemption by using upgrades, which he couldn’t do if redeeming Marriott Rewards points for the stay. So he’s getting substantially more value than 1.25 cents per point compared to other points redemption options, though not necessarily compared to paying cash (since he’d get the same benefits if instead paying cash for the stay)
So he’s redeeming his points for 1.25 cents each, but in the end getting over double the value of that — 2.5+ cents per point — based on the upgrade he can confirm into.
This isn’t a bad use of points short term
As surprised as you might be to hear this from me, given the above situation, I don’t think it’s a bad use of points. If you have better access to points than cash and this is a trip you want to take, then it sounds like you can get a lot of value out of this option.
Everyone has different short term aspirations for their points, and all things considered I’d say redeeming for a premium room at a Ritz Carlton in Hawaii is pretty damn aspirational.
It probably is worth putting some more thought into your long term credit card strategy, though. If you want to redeem points as cash towards travel, it’s really tough to beat the Barclaycard Arrival Plus™ World Elite Mastercard®, where you’re essentially earning 2.22% cashback towards travel.
If you think you’ll have similar redemptions in the future then that might be a better option for you, assuming a majority of your spend isn’t on dining and travel, where you’d be earning double Ultimate Rewards points.
What do you guys think? Is redeeming Ultimate Rewards points for the “pay with points” option a “sin,” or can it make sense under circumstances like these?