On my mind (award anxiety edition)

Membership Rewards mistake

This week, Nick has been wringing his hands over a couple of recent award redemptions.  First, he questioned his own wisdom in trading in 64,250 Capital One “miles” for a $900 Marriott gift card because he could have redeemed for Avianca Lifemiles instead.  Next, he regretted transferring 36,000 Amex Membership Rewards to Choice in order to book an awesome looking suite at an Ascend Collection hotel.  In the latter case, he could have bought the require Choice points for far less.

Nick transferred Amex Membership Rewards to Choice to book this hotel. Buying Choice points via the points + cash trick would have been a better deal.

My gut reaction to Nick’s Marriott gift card post was “of course it was a good redemption.”  Conversely, in his other post, when Nick wrote that he didn’t previously know that you can always buy Choice points for 0.75 cents each via the points+cash trick, my thought was “What?! Haven’t you read and memorized every post I’ve written?”  After all, I wrote about this exact trick four years ago (“Manufacturing Choice. Is it worth it?“), and again about a year ago (“Great hotel point value near LAX, and a magic mirror“)   I kid… sort of.

Nick’s award anxiety got me thinking…  Is there any easy way to know if an award represents good value?  Again, my gut tells me that trading in 64,250 Capital One “miles” for a $900 Marriott gift card is a solid bet.  Meanwhile, I completely agree with Nick that transferring Membership Rewards points to Choice 1 to 1 is poor value.  But my gut isn’t always right.  And my gut is not always available to others trying to make these decisions.  Instead of relying on my gut, can we develop a simple formula that tells us whether or not an award is a good use of points?

I’m writing this post without knowing the answer in advance.  My hope is that the act of writing will help clarify my thoughts and develop into something useful.  If it doesn’t, so be it.  At least I tried.  Let’s go…

Factors to consider

Off the top of my head, here are some factors that seem important when deciding whether an award offers good value:

What is the award worth?

Nick used a special feature unique to his old Capital One card to redeem Capital One “miles” for a $900 Marriott gift card.  The value of that gift card can be estimated in a number of ways: How much could he get if he sold it?  How much would it cost him to buy $900 in Marriott gift cards if he bought them during sales?  How much value in credit card rewards does he lose by paying for Marriott stays with gift cards instead of credit cards?

Figuring out the value of an award is way beyond the scope of this post, so for the sake of argument I’m simply going to declare that the value of his $900 gift card is 90% of face value: $810.

With his Choice Privileges award, the best way to value the hotel stay may be to decide how much Nick would have paid if he had decided to stay somewhere on a paid rate.  For the sake of argument, let’s say that he could have found an equally good hotel option for $200 per night.

What do I give up by booking with points instead of cash?

When you book a flight using airline miles or a hotel using hotel points, there is a sacrifice.  You do not earn miles or points for the trip, you do not earn elite qualifying miles (but most hotels do offer elite qualifying nights), and you usually won’t qualify for any promotional bonuses.

When booking hotels, you also give up the ability to earn extra points or cash back by clicking through a portal for the booking.  It’s not unusual for some hotel chains to offer 10% cash back through portals like TopCashBack, so that can be significant.

Things are even more complicated when you use bank points to book travel.  With flights, you will earn redeemable miles and elite qualifying miles.  With hotels, though, if you book through the bank’s travel portal, you won’t earn hotel points or elite qualifying nights for your stay.  Also, you might not receive any elite benefits such as free breakfast, lounge access, etc.

Recommendation: Estimate the value of the things you are giving up by booking an award and use that amount to reduce the estimated value of the award.  For example, let’s say that you are considering using hotel points to book a stay that would have otherwise cost you $225 per night after taxes ($200 before taxes).  And, let’s say that you estimate the value of the points you would earn on this stay at $15 per night.  Plus, let’s say that you would give up earning 5% back through a portal, so that’s another $10 per night.  In this example, then, you would reduce the estimated value of the award accordingly: $225 – $15 – $10 = $200.

What does it cost to acquire the points?

Nick can earn 2 Capital One “miles” per dollar through spend on his Venture Rewards card.  If his best alternative is to earn 2.5% cash back with his Alliant Visa card, then Capital One miles can be said to cost him 1.25 cents each.  Of course this is only true if Nick could have used the Alliant card to earn 2.5% back in every situation.  If he first maxes out use of his Alliant card, then his cost per point would go down based on his next best alternative.  For example, if his next best option was a straight up 2% cash back card, then his Capital One “miles” can be said to cost him 1 cent each.

Similarly, with Amex, Nick can earn 2X Membership Rewards points per dollar with up to $50K per year spend on his Blue Business Plus card.  Again, this costs him 1.25 cents per point compared to spend on his Alliant card.  That said, he can acquire Membership Rewards points much more cheaply with his Amex Gold card which earns 4X at US grocery stores on up to $25K spend per year (then 1X).  Still, to keep things simple, let’s say that acquiring Membership Rewards costs 1.25 cents per point.

What about Choice Points?  If Nick acquires Choice Points by transferring 1 to 1 from Amex, then Choice points cost him the same as Amex points: 1.25 cents each.  On the other hand, now that he knows the cash+points trick (reserve a cash+points hotel and then cancel it in order to buy Choice points indirectly), he knows that he can buy Choice points for 0.75 cents each.  So, each dollar spent on his Alliant card indirectly earns 3.33 Choice points!

Interim Formula 1

Based on the above factors, it seems like we can use a simple formula to decide if an award is worthwhile.  We simply want to know if the value of the award is more than the acquisition cost of the points used to book the award.

Example 1: Marriott Gift Card

  • Award value: $810
  • Point cost: 64,250 points at 1.25 cents each = $803.13
  • Is the award value greater than the point cost?  Yes, but barely.

In this case, given that we estimated Nick’s cost to acquire Capital One “miles” at 1.25 cents each, the redemption for the gift card valued at 90% of face value is just barely higher than the cost to replenish those points.  So, from this perspective, it’s not a slam-dunk win.  On the other hand, the gift card was conservatively valued at 90% of face value, so it can still be a win if Nick knows that he’ll fully use the card.

Example 2A: Choice hotel via Amex point transfer

  • Award value: $200 per night
  • Point cost: 12,000 point per night at 1.25 cents each = $150
  • Is the award value greater than the point cost?  Yes.

We can see that this is a good value award until we consider the price to acquire Choice points:

Example 2B: Choice hotel via Points+Cash trick

  • Award value: $200 per night
  • Point cost: 12,000 point per night at 0.75 cents each = $90
  • Is the award value greater than the point cost?  Yes!

This is obviously a great deal.  And it leads me to adjust the formula a bit:

Interim Formula 2

Previously I wrote that we simply want to know if the value of the award is more than the acquisition cost of the points used to book the award.  However, example 2B proves that we also need to know if there is another option where the point cost is significantly lower.  And I’ll add another: we also need to know if there is another option where the award value is significantly higher.  For example, if Nick had found another option for 12,000 points per night which included free breakfast, he may have valued that slightly higher.

So, our current approach is:

  1. Identify options
  2. For each option, compare award value to point cost
  3. Choose the option with the biggest differential.

What if you’re points rich?

What if Nick already has more Capital One “miles” than he’ll ever use?  Does that change our approach?  I think it does.  It doesn’t make sense to calculate the cost to replenish the miles if he never needs to.  Instead, I’d argue that any time he can get more than the default value for those points, he should go for it.  In the case of Capital One “miles”, he can always use them to “erase” travel charges at 1 cent per mile.  So, I’d argue that he should use 1 cent per point as the benchmark.

Points-Rich Example: Marriott Gift Card

  • Award value: $810
  • Point default value: 64,250 points at 1 cent each = $642.50
  • Is the award value greater than the point cost?  Yes, by a good margin

If Nick is points-rich with Capital One miles, then the gift card award is a no-brainer.

What if you’re points poor?

In Nick’s post about the Marriott gift card, he wrote that he may get more value from Capital One points by transferring to airline miles, especially when Capital One offers a transfer bonus.  To pull a number out of a hat, let’s say that he could have gotten $1500 in value from the same 64,250 points by transferring to airline miles (Nick gives an example of using the points to fly business class to Europe one-way).  In that case, the value differential is awesome:

  • Award value: $1500
  • Point cost: 64,250 points at 1.25 cents each = $803.13
  • The award value is far higher than the cost.

If he was points rich, I’d argue that the gift card was still worth doing since he could do both the gift card award and the flight award.  But if he was points poor, he would have to choose one.  And it seems like the airline mile option is the better better bet.  Right?  Not so fast…

What if you have other points currencies?

Nick can always use his Amex, Chase, or Citi points to transfer to airline miles.  So, even if Nick spent all of his Capital One “miles” on the Marriott gift card, he’d still be able to transfer other points to airline miles.  Unless he wanted airline miles in a program that’s unique to Capital One, he’d still be OK with spending down his Capital One points.

So, in a way, the decision of whether you are points rich or points poor should be considered across points programs to the extent that the types of awards are similar.

Greg’s “is this a good award?” formula

OK, this isn’t really a formula, but I don’t want to change the whole post to use a more appropriate word like algorithm.  So, here goes:

1. Decide how to value your points

Are you points rich or points poor? If you have more points than you’ll ever use, then you should value them lower than the person who has just enough points to book a meaningful award.

A better question may be whether you feel a need to replenish any points you use.  If so, you should value your points at the cost to replenish them.  If you don’t need to replenish them, then value the points at the easiest redemption value. I like this approach better than the “poor/rich” determination because it can apply in more situations.  For example, you may have a small number of points in a program but have no desire to ever replenish them.

If you don’t know how to value your points, you can always use our Reasonable Redemption Values.

2. Identify options

With any travel need, you are likely to find multiple options.  In Nick’s post about using Choice points, for example, he also considered booking hotels with Hyatt points (25K points per night) or IHG points (45K points per night).

3. Estimate the value of each option

When comparing hotels, you might value them equally or you may value one or another option higher based on perks (free breakfast, for example), location, reviews, etc.

Don’t forget to consider things you give up by booking with points or miles.  If you won’t earn miles, hotel points, elite qualifying miles/nights, or portal cash back then you should value the award that much less.

4. Compare each option’s value to its point value

Which option gives you the biggest bang for your buck points?


The final “formula” presented above seems pretty obvious in hindsight.  Did it accomplish what I had hoped?  Early in this post I asked “Is there any easy way to know if an award represents good value?”  I did present a method for doing so, but I’m not sure it’s easy.  In particular, the question of how best to value your points is extremely tricky.

I also think the formula falls short in addressing Nick’s question of whether to go with the bird in the hand (the Marriott gift card) vs. two in the bush (transferring points to airline miles for a possible future award).  My framework for answering this is to ask yourself whether it’s a real trade off.  If you go for the bird in hand, will you still have enough points available for the two in the bush?  If so, it’s not really a trade off at all.  Go for the bird in hand now and the better award later, when you’re ready.  If your points balance isn’t that high, though, then you’ll have to decide which you want more.

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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“With hotels, though, if you book through the bank’s travel portal, you won’t earn hotel points or elite qualifying nights for your stay.”

You might also lose breakfast and other perks if you do not book direct, I believe.


Thanks for yet another very thoughtful article. Let me add two more items to the equation:

1. For hotels (Marriott and Hilton but sadly not Hyatt), 5th night free can significantly add to the value of your points. Some can’t use this, but our family has many times.

2. For air, I think few people think about one huge benefit of a points reservation–the power to “make it all go away”. If something comes up, most programs will let you cancel two airline tickets and reinstate miles until fairly close to the flight for any or no reason for a minimum penalty (say about $200–sometimes less or free if you have status). That doesn’t work with non-refundable airline tickets. Combine with hotels which do not have crazy cancellation periods and tours that can be cancelled easily (Viator is 24 hours for most tours), and I get peace of mind in case plans change or something comes up. I would much rather book a points airline ticket 9-11 months in advance than a paid ticket for this reason. Yes, I understand and sometimes buy travel insurance (mainly for medical coverage and evacuation reasons), but then I need to fit within the confines of the policy for my reason to cancel.


Having to book a specific date can be another consideration when reviewing all options. In Nick’s case, I think paying a little over on a room to spend $2,000+ on dinner on a hard-to-get reservation date is a fair trade-off.


Sigh. Still amazed to see these egregious comparisons time and again, especially from bloggers who specialize in points and cashback from credit cards.

Greg, you conflate tax-free points with after-tax cash and treat them as if they are equivalent value. You need to adjust for the taxes on the cash you earned to buy things to get an apples-to-apples comparison.

This comes into play in your valuation of Nick’s $900 Marriott gift card being worth $810 because that’s what he could theoretically purchase it via discounted sales with “cash”. Except Nick had to pay tax on that cash (payroll/income/state/local), while his points were tax-free. Just say Nick’s all-in tax rate is only 33%, then his apples-to-apples cost is $810 plus about 50% (yes, 50%, not 33% – it’s a function of the math involved).. So to get apples-to-apples equivalent value, Nick would need to spend $810 plus $405 (ie, 50%) in taxes . $1215 would be Nick’s real apples-to-apples value of that nominal $900 Marriott gift card he got from his Capital One points.

That’s why I love points/cashback earned via credit card spend – they aren’t taxed, so they are always dramatically more valuable than people realize.


Great article again. There are many extra factors to consider: is the program running a promo? (like the doble elite nights on paid stays than Marriott is running now) or extra points, etc. So I take a far easier approach: I use points to pay for things I could never afford or be willing to pay for: the $6000 business class ticket, the $600 hotel room,etc. I check the cash price and I ask myself: do I want to pay for this or I dont feel like paying and then use points. I use the published value of each point, multiply and then if I am close I decide points or cash adding current promotions. If it is amazing value then its points. And then sometimes I dont feel like paying at all…the $350 hotel room, no chain attached I may use chase points at 1.5 cents if I dont feel like paying. Easy approach and dont lose sleep about it.


Oh my gosh. You’re making my head spin.

Fat Ted
Fat Ted

Thanks for this, I like the reminder that it’s always important to think about the value. I will just add that for many, there is pure enjoyment and relaxation in redeeming points earned through difficult work travel being redeemed for “free” personal travel. That’s harder to quantify, but definitely plays a part in my redemption.


You better be careful and not let lint gather in your belly button as you ponder this!


[…] his decision. Luckily, Greg from Frequent Miler is there to do what he does best. Which is writing an amazingly in-depth article about all the things you can think about to determine if your redempti…. The number of things to consider is truly […]


When you calculated the cost to replenish with Amex, you said “this costs him 1.25 cents per point compared to spend on his Alliant card”

But since we value Amex MR at more than 1.25, this is a good trade off? Wasn’t sure how much you wanted to dig into this in the post but this confused me for a second.