Many travel loyalty programs have different ways you can redeem your points. You can book travel through a travel portal. You could apply your points towards travel you’ve booked on your own and you might be able to transfer your points to other loyalty programs. Heck, you might even be able to use your points for gift cards or a statement credit.
Know your travel rewards programs
While having all of these options may seem great, many people don’t realize that the value of your points changes depending on the type of redemption. You obviously, want to maximize the value of your points which is why you want to know your travel rewards programs inside out!
Figure out the value of your points
With any travel rewards program, you need to figure out the value of your points. Take the cash value and divide it by how many points it takes for that redemption. Then take that amount and multiply it by 100 and you’ll know how much one point is worth.
For example, let’s say it takes 1,000 points to redeem $10 in travel. The formula is $10 / 1,000 = $0.01, or 1 cent per point. Now let’s say it takes 1,400 points to redeem $1 in gift cards. The value of your points would be .07 cents each.
Obviously, in this case, it would be better to use your points for travel over a gift card. Since every redemption value is different, you always need to calculate what your points are worth before cashing them in.
Note that if you’re using your points for a flight, but you still have to pay taxes and other fees, you need to subtract those expenses from the value of your flight to get an accurate value for your points.
Now let’s look at some specific travel rewards programs to show you how you can get the most value for your points.
With RBC Rewards, you have a lot of options if you want to redeem your points. Here’s what it would cost you if you wanted to redeem $100 in value.
- 10,000 points – Travel booked through the RBC Rewards travel portal
- 10,000 points – Travel related gift cards
- 14,000 points – Non-travel gift cards
- 17,200 points – Statement credit
Clearly using your points for travel-related expenses gives you the most value for your points. However, there are a few ways to increase the value of your points even further.
RBC has an Air Travel Redemption Schedule where it costs a set amount of points (with a maximum ticket value) to fly to specific destinations. For example, here’s what it would cost and the maximum value for some of the available routes.
- 15,000 points – Within or to an adjacent Province/Territory/U.S. State. $350 max ticket price
- 35,000 points – Anywhere in Canada/U.S. except Hawaii and Alaska. $750 max ticket price
- 45,000 points – In western Canada/U.S. to Mexico, Hawaii, Alaska. Eastern Canada to Bermuda, Central America, Caribbean. $900 max ticket price.
When you do the math…
Your points are worth as much as 2.33 cents, 2.14 cents, and 2 cents each respectively. Using your points for the short-haul within or to an adjacent Province/Territory/U.S. State would give you the best value assuming you’re able to get the maximum ticket price. That’s more than double what your points are worth if you used your points for travel via the travel portal or travel gift cards.
RBC also allows you to transfer your points to American Airlines AAdvantage miles, Asia Miles, and British Airways Avios where your points could also have a higher value depending on what you redeem for.
It doesn’t matter if you collect BMO Rewards, Scotia Rewards, TD Rewards or CIBC Rewards, you just want to know the value of your points when making different redemptions so you can get the most bang for your buck.
With the Marriott Bonvo travel rewards program, things can be a bit tricky since every hotel has different redemption values. There’s no set value for 1 point. I personally value 1 Marriott Bonvoy point at 1 cent just so I have a reference when determining value.
Let’s say I want to book a hotel room and the cost is 40,000 travel rewards points. Based on my own valuation, that room needs to be worth at least $400 for it to be a worthwhile redemption. If the room is $350 a night, I’d be better off paying cash. Now if the room was $500, using 40,000 points would be an excellent value.
Marriott Bonvoy points can be complicated because every hotel in the chain is assigned a category number. The higher the category number, the more points it takes for a free night. In addition, they have peak and off-peak pricing which also affects the number of points required to get a free night.
Like any loyalty program, there are sweet spots, but they’re not always immediately clear which is why you need to have that reference point. To make things interesting, Marriott has an ongoing promotion where you get the 5th night free when you book 4 nights on points. This is effectively a 20% discount which can be a real difference-maker.
Now let’s talk about travel hacking for a second.
When you apply for the Marriott Bonvoy Amex Card, you get a welcome bonus of up to 51,000 points. Since I value those points at $510, it’s well worth the $120 annual fee in the first year.
From a practical standpoint, 51,000 Marriott Bonvoy points are enough to get me 5 nights at a category 2 hotel when factoring in the 5th-night free promotion. That could easily be worth more than $510.
Where you should save your travel money
On the subject of saving, if you’re building up a travel fund you should do so in a high interest savings account so your money can grow! Because of a HISA’s accessibility, it makes it a great option for saving up for a trip. EQ Bank is a great savings account to use with a high interest rate.
Travel rewards programs are more than worth taking advantage of
Especially when you’ve done your research! Using basic math, you can quickly figure out the best value for your travel rewards points. When there’s an opportunity to make a good redemption, take advantage of it. That said, if you’re satisfied with saving any amount on your next trip, there’s nothing wrong with claiming some of your points.
This post was written by Barry Choi of Money We Have.