The best way to understand what’s best to use your airline points on is to understand their value, says Steve Hui, points expert and founder of iFLYflat. You determine their value by calculating how many points you need to swap for the dollar value you’re getting.
“For example, a Sydney to Melbourne economy, one-way ticket might require 8000 Qantas points and $40 taxes,” says Hui. “If that same ticket sells for $200 cash, then the way to determine the value of those points is $200 divided by 8000 points. Which works out to 2.5 cents.”
A business class ticket, on the other hand, might require 318,000 points and cost $15,000. This gives you 4.7 cents value per point.
“What we try to aim for is to get value per point more to be 3 cents, 4 cents or even 5 cents,” says Hui. “Whereas if you use the points for gift cards, you’re only going to get 0.5 cents value. If you use them for economy tickets, you’re only going to get 1 or 2 cents value. Same for hotels.”
Hui says with the value system in mind, he finds gift cards and items from online stores to generally be bad value. Also, in a way, he says, redeeming points for an economy ticket is bad value. This is compared to the better value you get from redeeming them for the pointy end of the plane.
“But that all depends on how many points you’ve got and how many points you can get,” he says. “So, if it takes a long time for you to accrue points and you’re never going to get 318,000 Qantas points, for example, you’re never going to be able to use points for maximum value.”
If that’s the case, he says, using points for gift cards can be a good option because at least they are being used. Hui says he thinks it’s up to each person to decide what they’d like to spend their points on. If you look at it financially, there’s a ranking. But if you look at it emotionally, you might want to redeem your points differently.
Also, worth noting, when you spend your points on rental cards, you often have to lock in the reservation, which gives you less flexibility to change or cancel it. If you had booked the rental card directly, you would’ve likely been given that flexibility.
If you’re using points for hotel stays, keep in mind that you also won’t be able to earn any additional points — for an airline or the hotel’s loyalty program — you might’ve been able to accrue.
“When you use your points for hotels, you also might not be able to take advantage of the discounts hotels offer when you book directly, or all those cashback deals like when booking on Booking.com or using Shopback,” says Hui.
As for whether you should spend your points on lounge club access, Hui says to work out the points value — the cash price divided by the points needed — and then decide.
“Think about where those points could otherwise be used to get a higher value for them,” says Hui. “Though, if you’re not going to use the points anyway, and you don’t want that higher value item, use them on that.”
Related: All the Ways to Earn Velocity Points — Besides Flying, Of Course
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