What Are Ultimate Rewards Points Worth?

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Last week I wrote a post entitled “Best Uses Of Chase Ultimate Rewards Points,” where — as the title suggests — I shared what I considered to be the best uses of Chase Ultimate Rewards points in light of the United devaluation. I followed that up with a post entitled “Changing Credit Card Strategy Due To United Devaluation?” where — as the title suggests — I analyzed whether in practice the value of Chase’s cards that accrues Ultimate Rewards points changes.

One of my main points in the post about the best uses of Chase Ultimate Rewards points was that Hyatt’s top hotels are still 22,000 points per night, so the points currency was still extremely valuable. Now that Hyatt has devalued their chart, has that changed?

To recap, here are the major devaluations we’re seeing to the value of Ultimate Rewards points over the coming months:

  • United MileagePlus announced a huge devaluation to their program for bookings made on or after February 1, 2014, in particular for travel in premium cabins on partner airlines
  • Hyatt Gold Passport announced a devaluation for bookings made on or after January 7, 2014, which especially impacts their top tier properties
  • Southwest Rapid Rewards, which has a revenue based redemption program, announced a devaluation to how many points it requires per dollar to book a “Wanna Get Away” fare. Each point is now decreasing in value from 1.67 cents to 1.43 cents for bookings made on or after March 31, 2014

In March I valued Ultimate Rewards points at 1.8 cents each, last week I valued Ultimate Rewards points at 1.6 cents each, so what do I value them at now, in light of the Hyatt devaluation? I probably now value Chase Ultimate Rewards points at 1.5 cents each.

When I valued Ultimate Rewards points last week I made one major error. I valued them the same I did their most valuable transfer partner, and didn’t assign them a premium. Several of you called me out on that, and you’re absolutely right. Chase rewards points should have a higher value because of their flexibility. Even if the value of the individual transfer partners is now lower, there is a tangible benefit to being able to choose where your points are directed, so the value of Ultimate Rewards must necessarily be higher than that of their best partner.

What do I value the individual points currencies of Chase Ultimate Rewards’ transfer partners at after their individual devaluations? Off the top of my head I’d say:

  • I value Hyatt Gold Passport points at 1.4 cents each (there are still many great category six properties for 25,000 points per night, like the Park Hyatt Maldives)
  • I value United MileagePlus miles at 1.4 cents each (I’d be hard pressed to value them lower since redemption rates for travel on United didn’t go up by that much)
  • I value Korean Air SkyPass miles at 1.4 cents each (while they can be a pain to book through and have some ridiculous rules, 160,000 miles for roundtrip first class to Asia is tough to beat given how much award space they release, and that their fuel surcharges are mild)
  • Southwest Rapid Rewards points will be redeemable for 1.43 cents each towards the cost of a ticket

So I think 1.5 cents per Ultimate Rewards point is a fair valuation, assigning them a slight premium over the valuation of any individual points currency.

Even with the lower valuation, my advice for accruing points through credit card spend hasn’t actually changed.

To reiterate what I said in my post about if you should change your credit card strategy:

The Barclays Arrival World MastercardStarwood Preferred Guest® Credit Card from American Express, and Starwood Preferred Guest® Business Credit Card from American Express remain the best cards for everyday spend

If you’re spending money in a category that isn’t otherwise eligible for bonus points, just as before the above cards remain your best options.

  • The Barclays Arrival essentially earns you the equivalent of 2.1% cashback towards travel (you earn two miles per dollar, each mile can be redeemed for one cent towards the cost of travel, and you get a 5% refund when making redemptions)
  • I value Starpoints at 2.2 cents each, so the SPG American Express cards remain a great value
  • Both cards have reasonable annual fees as well, which are waived for the first year

Beyond that, these are probably the two lowest risk points currencies out there. I can’t imagine the Barclays Arrival will switch from their “one point gets you one cent” model anytime soon, and similarly Starwood has so many airline transfer partners that even if one were to devalue, it wouldn’t drastically change the value of those points.

The Chase Sapphire Preferred® Card remains the best “all in one” card

Despite the devaluation, there’s still not really any card that can compete with the Chase Sapphire Preferred® Card:

  • You earn 2x points on dining and travel (and while there are other cards that offer bonus points on airfare and hotels, for example, this card has a much more liberal interpretation of travel, as it includes parking, train tickets, etc.)
  • The card has no foreign transaction fees

So for spend in a category that otherwise doesn’t accrue bonus points the Barclays Arrival or Starwood American Express Cards are still your better options, but that has always been the case. Every traveler should have a card with no foreign transaction fees, and the double points on dining and all travel expenses are pretty unique to the Chase Sapphire Preferred.

The Ink Plus® Business Credit Card, Ink Bold® Business Charge Card, and Ink Cash Cards offer the single most compelling category bonuses

The Ink Cards have some of the most lucrative category bonuses out there:

  • 5x points on spend at office supply stores, and on cellular phone, landline, internet, and cable TV services
  • 2x points on spend at gas stations and on hotels

Everyone has to crunch the numbers for themselves as to whether they do enough spend on the cards to justify the annual fee, but whether the points earned are worth 1.6 or 1.8 cents doesn’t materially alter the value proposition of these cards, in my opinion.

For big spenders the Premier Rewards Gold Card from American Express can be very lucrative

In terms of the ability to earn points, the only American Express card that can compete with the Chase Sapphire Preferred is the Premier Rewards Gold Card, which offers the following category bonuses:

  • 3x points for flights booked directly with airlines
  • 2x points at US restaurants, US gas stations, and US supermarkets

If the annual fee were $90 lower I’d say it would be great competition for the Chase Sapphire Preferred for just about anyone.

For the average consumer, however, it’s probably not great beyond that.

So while these devaluations are discouraging and frustrating, for the most part you’re still better off accruing a points currency than cash back, unless you can tailor that to specific bonus categories as well.

I’m curious, what do you value Ultimate Rewards points at after all these devaluations?

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  1. Off the top of my head… 1.1 cent each. United was the most common transfer partner for me and now that partner awards have become pretty much unattainable, plus the fact that no one really wants to fly United metal all the way to Asia…
    Hyatt devaluation wasn’t as steep but they were my second major transfer partner.
    With all this in mind I think 1.1 cents is really quite generous.
    Will 2013 be renamed the Weimar Republic year of FF programs? 😉

  2. @romsdeals

    But those redemptions do not make much sense for most people who play this game… if I wanted to fly coach I’d get Barclays arrival card and I would not bother with UR points at all.

  3. It was fun while it lasted.

    I’m not sure that I necessarily agree that “flexibility” gets much of a premium. At least it doesn’t for me. Personally I find that the hotel programs aren’t that valuable. I can usually find a reasonably priced good-enough hotel or apartment in the places I travel such that spending 10s of thousands of points for 1 night doesn’t make sense. For me, the real value in points/miles is premium class international airplane seats. The value of those in terms of out of pocket costs is many, many times higher than a hotel room. For my purposes then airline partners are the biggest factor. And with UA’s devaluation that makes their miles and this UR points worth less.

    It is certainly an interesting time. For those of us without mileage millionaire status having a couple of hundred thousand miles makes the planning and figuring out where to go from here a bigger puzzle I think.

  4. For the AMEX PRG 15k MR bonus. Can you get that more than once?
    I’m chatting with an amex rep who’s saying I can only get it once (just qualified for this calendar year, and he’s saying I can’t get it next year)

  5. With your valuations, how can you possibly claim the Sapphire or Ink cards are better than the Fidelity 2% cash back AMEX, or 1.5% cash back VISA???

  6. @ Jeff — I wouldn’t use the Chase Sapphire Preferred for non-bonused spend. As I said, I prefer the SPG card or Barclaycard Arrival for that, both of which offer ~2.2% value. I like the Chase Sapphire Preferred and Chase Ink for the category bonus and no foreign transaction fees.

  7. On an unrelated note – I just noticed my sapphire preferred did not award any bonus miles at gas stations. I secure messaged them and they confirmed that gas stations are not part of “Travel” – did anyone else get that recently? I know I used to get 2 points at gas stations using the sapphire preferred. Anyone can confirm? Thanks.

  8. @ Jo — The agent is correct, the Chase Sapphire Preferred doesn’t consider gas to be a “travel” category. The Ink cards do earn double points on travel, though.

  9. Never saw a points bonus for gasoline with CSP.

    I’d value “ultimate” rewards at 1.25 points per dollar, which makes the 2% cash back cards a much better value when you can’t get a bigger cash discount.

  10. There are too many variables for a set value, including how many you have and how you plan in using them. I go to Belgium every summer (x3) in business. Brussels is one of the easier European destinations to get 3 business class tickets (although harder this year than last for sure). So for me, I have a high verde motion for my United/UR miles. My parents who travel domestic coach, not do high. The same goes for AA miles if you can use a 16 segment Explorer award zone 5-7 your miles are worth a lot. If you have to use “standard” domestic awards, not so much…

  11. @Martin Kovalsky, I agree with you completely. There are still far to many variables. In my case even economy class redemptions to Europe via United Miles are still getting you 1.6+ points per dollar in most cases.

    As for actually earnings. I’m earning approximately 2.2 points per dollar on average this is using the freedom, ink plus and CSP.

    Freedom gets 5X on gas 6 months out of the year. That coupled with 2X points per dollar on gas on the Ink the rest of the year is 3.5 points per dollar on gas each year not including the 10% bonus on points with the freedom. That still beats out what you’d get from the amex cards.

    I’m going to give Chase another year and see what happens, I’m really hoping Chase will add new transfer partners.

  12. I agree with 1.5

    I value United much higher for I consider UA metal a decent option to Europe and offers good European business class redemptions. Each one of us has different valuations based on our travel style and needs.

    Just wish Chase could add Lifemiles as a transfer partner.

  13. Hi Lucky –
    With all the changes and devaluations in loyalty programs recently, would you consider posting a list of all of our program point valuations? I use your valuations to plan my credit card spend and I would love to have everything updated in one simple post that I can bookmark. Thanks!

  14. @ Ross — Thanks for the request! Plan on posting an updated valuation of all points currencies before the end of the month. Stay tuned!

  15. Thanks for your response Lucky. The guy I was on AMEX chat with was. . . .an idiot.
    I called MR, and they confirmed he was an idiot (their words not mine). I can get the 15k bonus every year on PRG after 30k spend.

  16. Ben, I am debating wether I should transfer SPG or Chase points to BA avois for getting C+P tickets. What are your recommendation? Thanks!

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