What your points are worth
The first step of the VER System™. Before you earn or spend a single point, know what it is worth in dollars, and price the trips you want in points.
1 · Why it matters
Not all points are equal
Every loyalty program is its own currency, with its own exchange rate. You would never compare a $100 dinner in New York with a ¥100 coffee in Tokyo just because both cost "100". Points work the same way, and most people forget it.
Four times the points, the same value. Count points without their exchange rate and the Hilton redemption looks four times worse than it is.
Skip the valuation and you take the wrong decisions
The wrong card
A hotel card earning 6 Hilton points per dollar sounds better than one earning 4 Amex points. On $15,000 of groceries it gives 90,000 points worth about $450, against 60,000 Amex points worth about $1,080.
The wrong transfer
Amex moves 1 point into 2 Hilton points. It looks generous, but it turns a 1.8¢ point into two 0.5¢ points: 1.0¢ of value. Almost half is lost on the way.
The wrong redemption
Value points at a blog's best case and you hoard them for a trip that never comes. Value them at nothing and you spend them on gift cards worth half their value.
2 · Three values
A floor, a baseline and a ceiling for every currency
A point doesn't have one value. It has a range that depends on how you use it. The baseline is the one you use in every decision.
The safety net
What anyone can get at any time, such as a travel portal booking or a statement credit. Never redeem below it, and cash out at the floor rather than let points expire.
Your exchange rate
What you can realistically repeat several times a year with moderate planning. It drives every cash-or-points decision.
The aspirational maximum
What perfect conditions deliver: long planning, flexible dates, lucky space. A reason to approve one great redemption, never the value of a whole balance.
Set your own baseline in five steps
- 1List 5 to 10 redemptions you would really book in the next 12 months.
- 2Price each one with real availability: cash price minus taxes and fees, divided by the points.
- 3Take the median, not the average, so one great deal doesn't inflate it.
- 4Cut it by 10 to 15% for devaluations and close calls.
- 5Date it and review it every quarter, or at least after major changes in the program.
No data of your own yet?
Start from The Points Investor Valuations
Baselines for 58 currencies, reviewed every month; members also get floor and ceiling. Set your own value on any of them, and every calculator on the site uses it.
3 · Judge a redemption
How good is my redemption?
The Value Multiple compares what a redemption gets per point with your baseline, so redemptions in different currencies can be compared on one scale.
The Redemption Value Ladder, with examples
Aspirational Play
4× and aboveW Maldives, 10 nights in a beachfront villa at peak season: 448,000 Marriott points for an $18,000 stay. 4.0¢ a point on a 0.7¢ baseline. 5.7×
The Sweet Spot
1.5× to 4×United business class Newark–Paris round trip: 136,000 miles plus $235 against a $4,350 fare. 3.0¢ a point on 1.8¢ Chase points. 1.7×
Solid Value
0.8× to 1.5×Hyatt Category 4 off-peak: 15,000 points for a $280 night. 1.87¢ on a 1.8¢ baseline: a toss-up, so check against cash. 1.0×
Last Resort Only
0.5× to 0.8×Domestic economy at dynamic pricing: 20,000 miles plus $5.60 for a $250 fare. 1.22¢ on 1.8¢ transferable points. Paying cash wins. 0.7×
Value Destroyer
Below 0.5×Amazon gift cards with Amex points at 0.7¢ on a 1.8¢ baseline: 61% of the points' value destroyed. 0.4×
A Tier 1 award is worth building a trip around when you find one, but it isn't a plan. Repeatable Tier 2 redemptions, a few times a year, deliver more over time than waiting for the perfect first-class seat.
4 · Set your targets
Work backwards from the trips you want
Not "how many points can I earn?", but "how many points do my trips need?". The answer sizes everything in the Earn step.
Four steps to your points budget
- 1List the trips you want in the next 12 months: how many long trips (10 to 14 days) and short ones (3 to 5 days), where, and in which cabin and hotel class.
- 2Price each trip in points, per traveller, using realistic award prices and real availability, not the cheapest price on the chart.
- 3Add a 20% buffer for price moves, flexibility and opportunities.
- 4That's your target: the points you need, in the programs that can book those trips.
Size it for 12 to 18 months
Points are not a savings account: award prices rise every year, so hold what your next trips need and use it. Two long international trips at 120,000 points each and two domestic trips at 30,000 make 300,000 points a year. Eighteen months of that is a 450,000-point target: this trip funded, the next one funded, and room for opportunities.
Not every trip has to be on points. Paying cash for some, and keeping points for the trips where they beat cash, is usually the best mix.
What a trip costs in points
Per person, at conservative baseline values.
or 110K Hilton
or 450K Hilton
or 700K Hilton
Multiply by party size
Solo
Use the figures directly. One seat is the easiest to find, so premium cabins and top hotels are within reach.
Couple
Two flights, one room. Earning nearly doubles with a second player: a million points over two years is realistic.
Family of three
Three flights, one room or two. Plan 9 to 12 months ahead for school holidays.
Family of four
Four flights, two rooms. Use points for some seats and cash for the others, paying cash for the traveller who flies most or holds status.
Let the calculator do it
Travel Goal Calculator
Enter your trips and who is travelling, and it gives you the target in points, buffer included.
5 · Pitfalls
Six ways valuations go wrong
Cherry-picking the best deal
"I got 6¢ on one first-class award, so my points are worth 6¢." That was a ceiling, not a baseline.
Fix: value at what you can repeat 5 to 10 times a year.
The phantom cash price
A $12,000 first-class seat you would never have bought doesn't save you $12,000.
Fix: compare with the fare you would really have paid.
Ignoring availability
"Awards from 12,500 miles" means nothing if every date you want costs 30,000.
Fix: only count prices you can actually book on real dates.
Trusting blog valuations blindly
They reflect someone else's travel, and sometimes a reason to make cards look attractive.
Fix: use them as a starting point and a sanity check.
Never updating
Programs change their charts every year or two, and a stale baseline leads to stale decisions.
Fix: review quarterly, or at least after major changes in the program.
Comparing points, not value
14 Hilton points per dollar and 4 Hyatt points per dollar earn about the same. The bigger number isn't the better deal.
Fix: convert every multiplier into cents before you compare.
6 · Tools
Value your points
Baseline Calculator
Your personal baseline for a currency, from your own redemptions, with the five-step method.
Live Nov 27 VALUEThe Points Investor Valuations
What every currency is worth in cents per point, with the date of the last update. Members also see floor and ceiling.
Live Nov 9 VALUETravel Goal Calculator
How many points your target trips need, with the pricing ranges and the 20% buffer.
Live Nov 27Go deeper
Keep going
The VER System™
How this step fits the whole method, in one page.
The Points Challenge
The method applied to real trips every week, with real prices.
The book
Part II of the book, Chapters 4 to 7, covers valuation, the CVP Formula™, the Ladder and portfolio sizing in depth.
The Points Investor Workbook
Your portfolio in Excel: a personal best-card table by category, thresholds, bonuses and renewals tracked.