The new true value of Ultimate Rewards

Now that United miles are worth less [please note the space between “worth” and “less”. United miles are not worthless, but are worth less than before], the question on everyone’s mind is how much are they worth now?  And, for those of us who are big fans of Chase’s Ultimate Rewards points (which can be converted to United miles), an even more important question is how much are Ultimate Rewards points worth now?

Buried in the onslaught of blog posts about United last Friday, was my subtle announcement saying that Chase will soon increase their signup bonus for the Chase Sapphire Preferred® Card by offering an extra 5000 points for adding an authorized user (see “The best cards get better, plus 5000 points“).  Once, this would have been big news.  Do we even care anymore?

My Fair Trading Price chart puts a measly 1.31 cent per point price tag on Ultimate Rewards points.  This is not an estimate of how much value you may get from your points.  Instead, it is an estimate of the opportunity cost of using a Sapphire Preferred card for everyday spend to earn Ultimate Rewards points instead of using a 2% cash back card for that same spend.  It is intended to represent the usual price that people (mostly unknowingly) pay for Ultimate Rewards points.  And, since the best way to earn United miles through everyday spend is with the Sapphire Preferred card, United miles are given the same Fair Trading Price as Ultimate Rewards points.  These Fair Trading Prices do not change with the United devaluation from gold to Stardust.  Fair Trading Prices are not affected by redemption values.  Use these prices not to estimate how much value you might get from these points, but rather to give you a rough idea of how much it would be reasonable to pay for these points if you have no set plans yet on how you would want to use them.

So, Fair Trading Price can be a useful metric, but it doesn’t really help identify the value of points and miles.  In my post “Impossible point valuations and the joy of free” I asserted that it is impossible to assign a fixed value to most points and miles programs.  The value depends upon how many points you have, how you plan to use them, and many other factors. 

Ultimate Rewards points can be used in many different ways.  If you redeem points for cash or merchandise, you generally get 1 cent per point value.  If you redeem for travel through the Ultimate Rewards travel center, then you get 1.25 cents per point value (when redeemed with a premium card such as the Sapphire Preferred, Ink Bold, or Ink Plus).  If you transfer points to Southwest Airlines and redeem those points for Wanna Getaway fares, you get about 1.5 cents per point value.  Beyond these fixed value options, things get murkier.  If you transfer points to British Airways, United, Amtrak, etc., the value you’ll end up getting varies widely depending upon how you use those points and miles.  Usually points will be worth at least a penny each, but it is often possible to get far more value: 3 cents, 5 cents, or even 10 cents per point value.

The United MileagePlus devaluation has decreased the probability of getting outsized value (e.g. 5 to 10 cents per mile) from your miles if you would have used those miles for international luxury travel.  That doesn’t mean you won’t get that much value, it just means that the options for doing so have dwindled.  If the changes to the award chart do not affect you (because you wouldn’t have flown the affected routes anyway), then United miles should be worth the same to you as they were before.  If, however, you primarily wanted to use United miles for awards that have now skyrocketed in price, then obviously United miles have decreased substantially in value for you.

Bottom line

So, what are United miles and Ultimate Rewards points now worth?  For many, they are worth less than they were before.  For some, their value hasn’t really changed.  For me, the value has decreased but I have no idea by how much.  I still love the Ultimate Rewards program.  Most redemptions I have done in the past would not have been affected by this change, so I know that I can continue to use Ultimate Rewards for high value redemptions.  It is true, though, that the options have decreased, so I should value the points less.  How much less?  I can’t say.

Post summary (for those who don’t want to read the whole post)

What are Ultimate Rewards and United miles now worth?  I have no idea.

About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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Comments

  1. At least 25% less on average just looking at the price increases, so if you thought they were 2c each, now they are 1.5-1.6c in value you can get from them.
    The opportunity cost remains the same, so the benefit real and perceived is much less.

    Let us say NO one goes in F anyway besides Lucky so what is left is a solid 25% increase in overall premium travel at least. One often needs partners to get a reasonable redemptions.

    At some point, UA will be like BA and LH with YQ, then there is no value with CC spend at least. Only sign up bonuses and portals may have some use.

  2. For me the value is exactly the same as it has been before:1.25 cents per point. But only because United was never the desired transfer partner to begin with. As long as Chase lets me redeem my points for travel and get 1.25 cents, thats where the valuation will stay.

  3. Hyatt is still a decent redemption option when the cash price for a room is high; I sincerely hope they don’t go the way of Hilton with their point values. For luxury flights, however, there are still some sweet spots with BA Avios to certain geographic regions via OneWorld partners.

  4. I can still get 3-4 cents of value out of them. My goal is to get to the destination, regardless of cabin, and I can easily string together routings that would cost 3x or 4x of what the mileage outlay is. Lets not forget the ability to change flights, even while itinerary is in progress. That has a lot of value to me as well.

  5. I take a few big trips a year to north asia. Started with economy but for the last few years have been able to go business and travel legs on Singapore, Asiana and some other delightful carriers. The changes truly go right at my redemptions. Now I would(and I say would because I’m still evaluating where and how much pursue UR and MP points)the points/miles only for economy redemptions, and in that area lots of things have changed in the past couple of years. Delta is opening up more asia flights with a SEA-ICN, and suddenly their 70k redemption is the same as United(not to mention with everyone competing for United metal on these awards in the future who knows if United’s superior booking tool will make booking that award easier than the Skypeso’s horrid award tool). More and more carriers offering flights have helped push economy tickets down to sub $800…at 70,000 miles we’re looking at a 1.1 cents/mile redemption.

    I guess the difference between the UR/MP of old and the new will be that I certainly won’t put spend or effort into either program as a default–it will be sign-up bonuses, promos and the like, but will target my efforts where I can get better value. Nothing shocking from an individual’s valuation standpoint, but I assume others will naturally do the same if they’re affected as I am and will lead to a not insignificant change in spending for Chase and to a lesser degree MP. I will probably default to a high cashback card.

  6. What’s the chance of getting the 5,000 authorized user bonus if I signed up for the card 30-60 days ago and added an authorized user when I signed up. I’ve heard Chase is usually pretty good at honoring better deals that are offered within 90 days.

  7. Ideally, you might look into running a script or bot that captures the lowest-fare cost of round-trips on particular routes versus the United redemption amount on for the same airports and dates (conditional on availability).

    This technique, excludes, however, the flexibility of the extra stopover and open jaws on award tickets, plus 24-hour stopovers. However, the lack of 100% award availability should lead one to discount the value of United miles by some percentage.

    Using this technique for the trips we’re planning to take in the next 24 months has usually shown me that flying coach internationally is going to return a United mile value of less than two cents. (And good luck getting award availability to Oaxaca next summer.) For that reason and set of results, aside from minimum spending thresholds and churns, I’m switching to >2.2 cents cashback.

    So the calculation as to where to allocate card spending, and thus the value of redeemed United miles, becomes more trip and person/family-specific. Before the devaluation, the cheap business awards were the correct optimal redemption value for a wider variety of people, families, and trips.

  8. United miles value certainly depreciates, but UR can be transferred to Hyatt hotel, Korean Air and British Air. I would keep on collecting UR, just not as enthusiastic as before.

    Regarding UA miles, I am curious if UA will release more and rare first-class seats. If that is the case, that will be a motivation.

  9. It’s always nice to see a thoughtful post during a storm. I’m no less likely to earn a UR point now than I was before. They still have good value depending on how you use them. Some short haul fares are out of sight, and transferring to BA to redeem on AA can be a really great value for short haul if driving or Amtrak is not an option.

  10. How will this affect the ability to use Chase Ultimate Rewards redeemed as Avios for short hull flights within the U.S? I have found great deals by using Chase UR to book short one-way flights on American through British Airways. Will this now change? Does it make UR / Avios more or less valuable?

    • Tony, I don’t think this changes thing with transfers to BA in any way. Those transfers are just as valuable now as they were before. I suppose that you could argue that transfers to BA are now more valuable in relation to other options, but in absolute terms I don’t see any change.

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