What Determines The Value Of Transferrable Points Currencies?

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On Sunday I wrote a post about the best credit cards to use for airfare purchases. Reader 31583 left the following comment on the post:

Could you please explain why do you think that MR points worth 1.8 cents each? I guess you can’t. Anyway it looks like Citi Prestige Card wins. 3 points / dollar and up to 1.6 cents redemption value compared to Amex’s 1 cent is awesome. Nice post except you’re clearly promoting Amex despite it’s only comparable to the Chase Sapphire Preferred® Card.

This month I’ll be sharing my updated valuation of miles & points, though in the meantime I think the above is a question which is worth addressing. In the post about which credit card to use for airfare purchases, I explained that I value American Express Membership Rewards and Chase Ultimate Rewards points at 1.8 cents each, while I value Citi ThankYou points at 1.6 cents each. How do I come up with those valuations, in general?

Transferrable points are valuable due to their flexibility

Valuing points is somewhat of an arbitrary exercise, since everyone wants them for different reason and gets different value out of them. The way I see it, there are a few things factoring into the value of transferrable points, though:

  • The value of the points for the programs to which you can transfer points (in other words, the value of Chase Ultimate Rewards points would be based on the value of points in Hyatt Gold Passport, Korean Air SkyPass, Singapore KrisFlyer, etc.)
  • Some premium for the flexibility of the points, since you’re not tied into one specific program; in other words, if you valued the above individual points currencies at 1.5 cents each, it wouldn’t be unreasonable to value the transferrable points currency at slightly more, to account for the flexibility
  • What options there are to redeem points as cash, either towards the cost of an airline ticket, travel package, merchandise, etc.

Citi ThankYou points are best for “cash” redemptions

I recently wrote a post about redeeming transferrable points currencies towards the cost of paid airline tickets. As I explained in the post, of the above three transferrable points currencies, Citi ThankYou points are absolutely the most valuable for non-mileage transfers.

That’s because Citi ThankYou points earned through the Citi Prestige Card can be redeemed for 1.6 cents each towards the cost of a paid ticket on American or US Airways (keep in mind you can combine ThankYou points, so you can potentially redeem other ThankYou points — like those earned through the Citi ThankYou® Premier Card — at that rate as well).

Citi-Prestige-Points

But I do still value ThankYou points less than Membership Rewards or Ultimate Rewards points. Why?

The number of useful transferrable partners matters

The reason I value Membership Rewards and Ultimate Rewards points more than Citi ThankYou points is simply because I think they have a wider variety of useful airline transfer partners.

Membership Rewards partners with Air Canada Aeroplan, ANA Mileage Club, Delta SkyMiles, Singapore KrisFlyer, etc., all of which are programs offering good redemption opportunities.

American Express Membership Rewards transfer partners

AeroMexico Club PremierBritish Airways Executive ClubFrontier EarlyReturnsVirgin America EleVAte
Air Canada AeroplanCathay Pacific Asia MilesHawaiian Airlines HawaiianMilesVirgin Atlantic Flying Club
AirFrance/KLM Flying BlueDelta SkyMilesIberia Plus
Alitalia MilleMigliaEl Al MatmidJetBlue TrueBlue
ANA Mileage ClubEtihad GuestSingapore Airlines KrisFlyer

Meanwhile Ultimate Rewards partners with Hyatt Gold Passport, Korean Air SkyPass, Singapore KrisFlyer, United MileagePlus, etc.

Chase Ultimate Rewards transfer partners

Air France KLM Flying BlueIHG Rewards ClubSingapore KrisFlyerUnited MileagePlus
British Airways Executive ClubKorean Air SkyPassSouthwest Airlines Rapid RewardsVirgin Atlantic Flying Club
Hyatt Gold PassportMarriott RewardsThe Ritz-Carlton Rewards

As far as I’m concerned, the single most useful Citi airline transfer partner is Singapore KrisFlyer. Aside from that there are certainly some programs with niche redemptions to be had, but across the board there simply don’t stack up, in my opinion.

Citi ThankYou transfer partners

Air France/KLM | Flying BlueGaruda Indonesia | Frequent FlyerQantas | Frequent FlyerTurkish Airways | Miles & Smiles
Cathay Pacific | Asia MilesJet Airways | JetPrivilegeQatar Airways | Privilege ClubVirgin Atlantic | Flying Club
EVA Air | Infinity MileageLandsJetBlue | TrueBlueSingapore Airlines | KrisFlyerHilton | HHonors
Etihad | Etihad GuestMalaysia Airlines | EnrichThai Airways | Royal Orchid Plus

In the context of Ultimate Rewards, say I value Hyatt Gold Passport, Korean Air SkyPass, and Singapore KrisFlyer miles at ~1.6 cents each. I wouldn’t be opposed to valuing Ultimate Rewards points at 1.8 cents each, since they deserve some premium for not being tied to any specific currency.

My valuation of individual mileage currencies accounts to some degree for the holding costs, which is less of a factor when you have multiple (almost) equally useful currencies you can transfer points to.

In the case of Citi ThankYou points, I value them at ~1.6 cents each precisely because they only have one airline transfer partner that I consider most useful, and then the great option of redeeming the points for 1.6 cents each towards the cost of a ticket on American or US Airways. But not everyone is an American flyer, and therefore may not value that redemption as much.

LAXLHR-4

Bottom line

As I’ve always said, valuing points is a highly subjective exercise. There’s no right answer, and it all comes down to your individual redemption patterns.

Will Membership Rewards points only be worth a penny each to some people, since that’s what you can redeem them for towards the cost of a paid airline ticket? Absolutely. But for me transferrable points currencies are most valuable for aspirational redemptions through mileage transfers, and not as cash towards the cost of a ticket.

So 31583‘s conclusion is perfectly reasonable, in my opinion, aside from thinking that I’m unfairly promoting American Express over Chase and Citi (I love all three).

Where do you stand on the value of transferrable points currencies? Am I off base for the method by which I’m assessing their value?

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Comments

  1. My sense is that *if* you can get Flying Blue’s award booking website to work — and that’s a huge if, and requires a lot of luck — Flying Blue is actually a terrific ThankYou redemption option for domestic travel on Delta. It’s possible to get from JFK to Honolulu for either 25K or 30K points in economy. That is a steal, if you ask me. The problem is that Flying Blue’s website is garbage. I’m sure it’s a topic for another post, but if someone could share the best way to navigate Flying Blue, it could be a great option for redeeming ThankYou points.

  2. I’m never sure how to value my points. At this point in my life, I have other priorities than paying cash for a business class ticket. But I want to use my points to fly business class.

    So should I value my points thinking that if I were to fly to Tokyo, I would pay 1,000 $ for an economy ticket and I must then value the 150,000 miles for a biz ticket based on the economy price, or should I value them somewhere in between the business class price and the economy price since I somewhat give some value to a biz class seat…?

  3. @Marc: Definitely not! What Ben (and I) wanted to say is that the value of a point currency depends on the way you intend to use it! If you want to offset an a ticket purchase made with your credit card then typically your points worth between 1 and 1.6 cents each. However, if your travel date is flexible and you have earned your points with a card that earns you transferable points (Amex Rewards Points, Citi Thank You points, Chase Ultimate Rewards points) then a lot less point is enough to get an award ticket. You may have to pay fuel surcharges though.

    This is the reason why I’ve said that sometimes you get as high as a 10% return. For example you’ve spent $40,000 with a Citi Prestige card and you’ve earned 80,000 points this card earns as much as 3 points per dollar (it’s based on categories) and then you can transfer this 80k points to your preferred airline partner and you can get an award seat for “free” with your points. Once you got your award ticket, find out the actual ticket price with that airline for the same flight. Compare it with your $40,000 spend and you will see that you got a return between 3% and 10%.

  4. @31583: I understand your logic, but since I would not be willing to pay out of pocket for a ticket in business class, is it fair to value the points at the actual ticket price? Sure, for X number of points I boughts a ticket that would’ve cost thousands of dollars. But since I would not have paid that in the first place (would only have paid for economy), I’m not sure if it’s the right thing to value points at face value of the ticket for which we redeemed the points.

    But hey, that’s why valuating points is so subjective!

  5. @Dave, there are always pros and cons to everything. Personally, I like Flying blue’s website. Yes there are times the prices it gives you are just ‘odd’ or do not make sense, but it can work on your favor depending the route. 😉 As for redemptions on Delta in Y, yes I think it’s a good value! I found a few dates from JFK to Honolulu for only 15k FB miles and $7 in taxes/fees!
    @Lucky, I agree with you on the way you value transferable currencies. For me, they’re all valuable but their value, to me, has slightly changed over time. A few years ago, when SQ KrisFlyer was only transferable from MR and SPG points, I valued MR quite highly. Now that SQ KrisFlyer points can be transferred from Citi and Chase as well, I’ve slightly devalued my MR points. To each his own.

  6. when it comes to transferable currencies i am surprised no one ever talks about transferring Citi TY points to Qatar to use on their own flights… JFK-DOH-NBO on one of the nicer biz class products for 85k points one way is quite decent.

  7. @Marc @31583 I understand what both of you are saying. I value mine at premium cabin cost because the flights I use them on are long, very long. Quite frankly I am at the point in my life that I will not long trips economy. It’s business class or travel someplace closer to home.

  8. @Joey — Thanks! What I was referring to is that more often than not, when I get to the final page of an award booking on Flying Blue’s website, I get an error message saying that an error has occurred and to try again later. I have played around with the website a lot, and I’d say, conservatively, that error message comes up 60-70% of the time. So, it’s not so much that I don’t like the website or that I find the prices “odd.” My problem with the website is that it just doesn’t work properly half the time. That and the fact that U.S.-based customer service is so terrible.

    Am I just doing something wrong?

  9. @Marc I think you have a really good point. I’m currently at a point where I wouldn’t pay the big price increase to jump from economy to business with cash, so valuing it against the economy ticket makes some sense. That being said, it’s a significantly better experience and for most people there is certainly some major value to that (even if its only 10-30% of what the upgrade cost would be). Let’s say a long-haul business ticket costs $1000 more than economy in cash. I probably wouldn’t pay that, but I might pay $200 if they were bidding for last minute upgrades, so in that situation I would compare redeeming that in points to the cost of economy + $200. Clearly its subjective but I think for most people there has to be some value above economy, even if its nowhere near the full upgrade price.

  10. @ Dave – ouch! That makes me worried about transferring points over to FB when seeing availability 🙁

  11. The bigger question to me isn’t the relative values of the points but rather—and from the title and opening of 31583’s question I thought this would be the question that would be answered—is how you come up with the actual 1.6, 1.8, 1.4, 2.2 etc. cents. Obviously once you’ve set one or two valuations the other should easily fall into place by dint of their utility. But the the first few seem quite arbitrary.

  12. Hi, Lucky, I’m glad your recent gastrointestinal problems turned out not to be life threatening!
    My question concerns “exact name” requirements to transfer points. I’ve been inconsistent over the years, sometimes using only my middle name (since that is what I “go by”), sometimes using first and middle, sometimes (when a site permits it) first initial, middle name, etc. Now that I’m in the hobby and want to transfer points, I’ve gotten conflicting advice from representatives of airlines and flexible currencies. One told me first, middle, and last must match exactly. On said only first and last matter and middle name or initial is irrelevant. Another told me if I try to transfer from SPG to AA and the names don’t match exactly, I’ll LOSE my points rather than have the transfer rejected. I know I have a lot of work to “clean up” all this, but I’d like to know just how much work by getting a definitive answer regarding 1) whether only first and last names really matter and 2) whether I risk losing points if I transfer to an inexact name match. Thank you in advance for your wise counsel! Alison

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