Since I got into points and miles nearly 14 years ago, I’ve flown in fancy first-class cabins, stayed at incredible hotels, and had epic adventures. Despite getting exceptional value for my points over the past decade, my highest point redemption was not for travel. Surprising, I know.
Among travel hackers, there is consensus on one thing: The best use of points and miles is for travel. After all, first-class flights and luxury hotels cost thousands of dollars. By redeeming your points for these ultra-luxurious awards, you’re getting the highest value-per-point possible, right? Wrong. At least in my case, it is because last year, I redeemed my favorite points at a rate that far exceeds any conventional valuation.
I redeemed Amex points at a rate far exceeding any conventional point valuation.
How I value my points
Most blogs value points at 1.2-1.8 cents each – a convention I don’t subscribe to because I’ve historically earned most of my points through manufactured spending. I’ve made redemption decisions based on my acquisition cost rather than the potential “maximum value” I could gain from them. Still, I respect this attempt to provide a baseline to folks who want to get the most value for their hard-earned points.
For many people, value-per-points becomes an important metric for determining whether they made a “good” or “bad” redemption. This number is calculated by dividing the value obtained from a redemption by the number of points redeemed and multiplying by 100.
For example, if you redeem 100,000 points for a ticket that costs $5,000, you’d calculate the value-per-point as follows:
$5,000/100,000 = 0.05 x 100 = 5 cents per point
Five cents is excellent, considering most airline miles and hotel points are valued at under two cents each. However, a few months ago, I exceeded this number—to the tune of $55.94 per point. No, that is not a decimal error. I’m prone to making math errors, but this is not one of them.
How I redeemed Amex points for $55 per point
Back in October, Amazon was running its Prime Big Deal sale (i.e., many useless things were being sold at steep discounts well ahead of Black Friday). I usually ignore these sales but decided to check for any good Amex redemption deals. Occasionally, Amex will offer steep discounts on Amazon purchases in exchange for redeeming just one Membership Rewards point.
My sister was eyeing a new Kindle Scribe, and I wanted to see if I could save her some money. Sure enough, Amazon was offering a pretty incredible deal: 50% off eligible items, up to $80, when you redeem points. I played around with the Pay with American Express function and had to redeem a minimum of 1.43 points for the discount.
The Kindle Scribe cost $255, so the 1.43 points I redeemed triggered the full $80 discount. It brought the price down to $189.64 with taxes. But more importantly, redeeming less than two Amex points saved me $80 on a Kindle. As points valuations go, this one comes up to $55.94 per point:
$80/1.43 Amex points = A value of $55.94 per point
Even the most expensive first-class ticket or hotel stay wouldn’t have given me this much value for my points. And while I only redeemed a little over one point, I think this matters. Why? Because we sometimes lose track of all the possibilities out there when it comes to redeeming our rewards.
Moral of the story
While the $80 off promo was valid on one purchase only and thus not scalable, it was still an excellent use of Amex points. But the moral of this story isn’t that redeeming points for travel is terrible or that there is a sea of more lucrative ways to use them. Instead, it’s that sometimes we get so stringent in our line of thinking, “the best use of points is for travel,” that we miss out on great opportunities and experiences.
I’m not talking about the experience of owning a Kindle Scribe – how many times have you overanalyzed an award redemption and decided not to use your points because you’re supposed to save them for ultra-luxurious travel? Most of the time, I’m not even thinking of the Amex/Amazon discount redemptions because I’m so wrapped up in maximizing every point I have. I’ve probably lost out on hundreds of dollars in savings as a result. So keep your eyes open and avoid the tunnel-vision mindset that limits how you redeem your points.
Furthermore, always maximizing the “value per point” on award redemptions is not everything. If that becomes the focus, we lose out on the bigger picture, which is to make memories and gain valuable experiences through travel.
Plus, it’s kind of ironic that despite all these premium award redemptions I’ve booked in the past decade, my best use of points (in terms of pure value-per-point) ends up being on Amazon.
What’s been your best point redemption to date? No wrong answers.
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Click bait and stupid at that. So you had a special opportunity to save a few bucks by burning one point. That’s great. But as it represents an infinitely insignificant way of using points and isn’t scalable at all, is it relevant for establishing point value?
It’s like saying that when you save some money via a card membership benefit that doesn’t require using any points at all, you receive INFINITY cents per point spent. Or rather, not spent. But it doesn’t make for a good title, I get it.
The point is to poke holes into the idea that “value per mile” is everything – it’s not. As demonstrated by this scenario. Maybe I explained it poorly.
Value per mile is everything – times number of miles redeemed that way, obviously. There are irrelevant edge cases of course, like yours.
Acquisition cost is a murky metric. Can’t separate it from opportunity cost – opportunity PASSED in order to acquire the miles – and these opportunities are different for each person. Acquisition cost is also largely irrelevant – and if your redemption decisions are based on it, I see them as irrational.
There are upper and lower bounds. How much would you spend out of pocket in order to get from point A to point B if the award wasn’t available – it doesn’t have to be cash value of the SAME flight, certainly not if you wouldn’t take it. Paid revenue flight, of course, is worth slightly more than your point redemption, as you’d also earn miles for flying, earn rewards for buying the ticket, perhaps get closer to qualifying for elite status, etc. But more importantly, you’d have to be truthful with yourself in regards to how much you would actually spend. Flexible destinations also make it harder to put a price tag on your points – would you buy a paid ticket and fly ELSEWHERE if you couldn’t find an award to your preferred destination and paid tickets were too expensive?
As for lower bounds, until recently it was possible to redeem unlimited points to your Schwab account at 1.1 cents per point, for example, and thus it made no sense to do anything LESS profitable than that. With that redemption method capped now, the floor is even lower.
What many bloggers don’t like to admit is that points and miles have a MARKET VALUE. Pretending that it doesn’t exist doesn’t make it disappear. The range between what you’d be willing to buy at vs what you’d be willing to sell at (GASP! BUT THIS IS PURELY HYPOTHETICAL, SO IT’S OK!) is much narrower compared to upper and lower bounds discussed above.
Apparently someone feels a need to mansplain. I knew exactly what the title was about, because I’ve done it as well. Best use of 1 or 2 points you can do!
To each his own. I hear your argument about opportunity cost and maximizing. If you’re laser-focused on using your points for first-class travel because that’s the highest value, you’ll miss out on valuable travel opportunities. I’ve used miles for economy class just to save money (and because the acquisition cost was low enough that it still made sense).
Most people will never be that diligent when it comes to digging for the best redemption, but there are a few. Thank you for posting YOUR example and PERSONAL experience.
I’ve definitely become less diligent over the years! Nowadays if it saves me money, I do it. In this scenario, it obviously worked out well but I’ve redeemed miles for economy class before just to save a buck.
Booooooooooooo. Clickbait. Booooooooooooooooooooooooooooooo
Which part? The “How I redeemed Amex points for $55 per point?” Because that’s exactly what I did.
The worst clickbait ever. And full of pop up ads, making it impossible to read. Since you admitted that you don’t organically charge, I hope Amex does a Financial Review on you and all the blue vultures who ensure that every good deal is ruined forever. #DeadbeatAMEXCustomer #AMEXRatTeamSeeThis