You’ve learned everything, you’ve optimized your spending and you’ve gotten some great sign up bonuses. Now that you have a big stack of points, it’s time to use them. Unfortunately, this could be the most difficult part of the entire process depending on what you’re looking to do. As always, we’ll try to keep it as simple as possible for you. This course is an overview of redeeming points that puts some of the other 401 level courses in context.
Let’s do some math
The first thing you have to do is learn about the math that is at the center of travel hacking. I know not everyone likes math but math drives everything that travel hackers do. So many questions people have can often be answered by math. Is this a good card to get? What card should I use for _____? Is this a good redemption? These questions and a lot more can be answered by math. The math starts with cents per point or cpp. This is also how different points currencies are bench marked.
Review the course on understanding redemption value first and then review the course on calculating cents per point.
Now that you fully understand cpp, you have to learn about the value of the points and miles that you have. What are they worth? This might sound odd but each points currency has a different value. This really confuses some people because they look at one card that offers 60,000 points and another card that offers 160,000 points. If you didn’t know any better, you’d think that the second card is a lot better since 160,000 is worth more than 60,000. But you’re not gonna fall into this trap. Read this course to learn more about this topic.
It’s time to put all of this math together. You understand how to calculate cpp and what the different points currencies are worth. Before you start redeeming your points, you have to learn how to do the math to determine what is a good redemption. If you checked out some award space, you might see that the hotel you want will be 150,000 points for 5 nights. Is that a good deal or a bad deal? No one can answer that question until you do the math. This course will help you put it all together to make sure you’re getting the best redemption possible.
Earn and burn
You may be thinking “ok, so now I’ll just save up my points for several years so they build up and then I’ll use them”. That’s not exactly the best plan. Points get devalued over time just like how a dollar bill in your pocket loses value over time. For more information, review our course about why it’s important to earn and burn. Now this doesn’t mean that you need to burn points every few months but saving them up for several years isn’t a great strategy.
Let’s redeem those points
We’ll use Chase as an example here since we’ve focused so much on them on this site. You have several different options for your points. Remember the values we’ve discussed previously? Chase points are worth 2cpp. With that in mind, let’s look at your options:
-Cash back: 1cpp
-Chase Travel Portal: 1.5cpp (with CSR otherwise 1.25 with CSP)
-Transfer to travel partners: 2cpp
You might be asking, why would anyone choose cash back or the travel portal? That’s a very good question since most people aren’t in the habit of giving someone $1 and getting 50 cents or 75 cents of value. As I’ve said before, redeeming points can be complicated so consumers pay for convenience. It’s easy and convenient to get cash back so it’s worth the least. It’s easy to use the portal so you also get less value. Transferring to travel partners isn’t incredibly complicated but it’s not nearly as easy as the other options. Thus, you get more value.
For more information, review our course on how to redeem Chase points and our course on why you should not use the portal.
In the end, how you decide to use points is up to you. Hyatt gives you the best value by far. They certainly have some great resorts but Marriott and Hilton have a much bigger footprint. If you really want to go to a specific place where Hyatt isn’t an option, you have to do the math to determine what makes the most sense. Remember that transferring miles is a one-way street. If you transfer too many or wind up not needing them, you can’t get them back. They’ll just sit in that account, so you want to make sure you do things the right way.
We like getting beginners started with Hyatt because it not only provides some of the best value, it’s also easy to understand. If you’d prefer to use a different hotel program, you have to take advantage of transfer bonuses and free night awards in order to make the math make sense. That can get rather complicated so that’s why it’s best to start out with Hyatt until you get more experienced.
Putting it all together
Here’s what we suggest you do if you’re just starting out. First, understand all of the math as we discussed above. Second, understand the travel partners for the credit cards points currency you are focusing on. Third, practice some mock bookings. Where do you want to go and for how long? Is award space readily available? If you want to go to New York City tomorrow, you could probably find award space. If you want to go to a specific all inclusive resort, you may have to book a year in advance. Understanding availability will help you plan. How many points would you need for this mock booking? While this number may change by the time you’re ready to book, it still helps to understand how many points you need so that you have a goal to work towards.
Now we have to focus on airfare. What is going to take to get you to this destination? Airfare is much more dynamic so the price today can be much different tomorrow. However, if you look at the airfare over several months, you can at least get an idea as to what the average rates are. Conversely, the miles needed are usually more standard (at least with some airlines). If the cash price is out of reach, you may have to use miles even if its not the best redemption.
Add up those numbers and that’s your goal. What’s it going to take to get there? Between SUBs and optimized spending, you should be able to have an amazing vacation that isn’t many years away. Remember that every point counts so you should do everything you can to increase the amount of points that you are earning. Before you know it, you’ll be going on that trip for free!