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.
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.