What Points and Miles Are Actually Worth

A balance of points and miles looks like money and behaves differently in every respect that matters. It has no fixed value, it earns no interest, it can be devalued without notice by the party that issued it, and it can expire.

Treating it as savings is the mistake that costs people the most. Treating it as a coupon with an uncertain expiry date produces much better decisions.

Value is set at redemption, not at earning

The same point can be worth wildly different amounts depending on what you exchange it for.

The way to price any redemption is a single division: the cash price of what you are getting, divided by the points it costs. That gives a value per point, and it is the only number that lets you compare one redemption against another.

Two disciplines make that figure honest.

Use the price you would actually have paid. Valuing a first-class seat at its published fare produces a spectacular value per point and is fiction if you would never have bought it. The relevant comparison is against the economy seat you would otherwise have booked.

Subtract the cash still required. Most redemptions carry taxes and surcharges, and on some carriers those surcharges are large enough to make the redemption poor value regardless of the points.

The points valuation calculator does the division and the subtraction together.

The redemptions that are consistently poor

Some uses are reliably at the bottom of the range, and they are the ones presented most prominently.

Merchandise and gift cards through a programme portal. Almost always the worst rate available, and the catalogue is designed to look generous.

Statement credits at a fixed low rate, which set a floor rather than a target.

Cash back at a poor conversion, for programmes that offer it.

The floor matters as a benchmark: if a redemption is worth less than the cash-out rate, take the cash. But planning to use the floor means the points were never worth more than a plain cash-back card would have given, which is worth knowing before choosing a card at all.

Better uses are generally travel redemptions where the underlying cash price is high relative to the points required — which is why the same programme can offer both terrible and excellent value on the same day.

Devaluation is the points and miles risk

This is the fact that should govern how you hold a balance.

Programmes change award pricing whenever they choose, usually with little or no notice, and the direction is almost always the same. A redemption available today for a given number of points may cost substantially more next year.

Several consequences follow.

A large balance is a depreciating asset. It earns nothing and loses purchasing power on a schedule you do not control. This is the reverse of the compound interest that ordinary savings earn, and unlike inflation it can arrive in a single step.

Earn and burn beats hoarding. Accumulating toward a distant aspirational redemption exposes you to devaluation for the entire holding period. Redeeming regularly at decent value is a better strategy than waiting for an exceptional one.

Dynamic pricing has largely replaced award charts. Where programmes once published fixed prices per route, many now price awards against cash fares, which removes most of the outsized value that expert redemptions used to capture.

Expiry rules matter. Some balances expire after a period of inactivity, and a small qualifying transaction usually resets the clock — worth knowing before a balance disappears.

Whether a card is worth its fee

The arithmetic here is more tractable than the points question, because most of the value is not in points at all.

Count the concrete benefits first. A free checked bag is worth its face value every trip — the baggage fee guide covers what that saves for a family. Rental car coverage frequently replaces what the rental desk sells at high margin, which the rental car vs rideshare guide touches on. Travel protections often duplicate a policy you would otherwise buy — the travel insurance guide covers which.

Then count the credits you will genuinely use. A credit for a service you do not want is not worth its face value.

Then, and only then, count the points, valued at a realistic redemption rate rather than an aspirational one.

If the fee is not covered before you reach the points, the card is being justified by the least reliable component.

The rule that outranks all of this

Points are worth a small fraction of a penny each. Credit card interest is charged at rates that dwarf any rewards rate in existence.

Carrying a balance to earn points is always a loss, and not a close one — the credit card payoff calculator shows how quickly interest overtakes any conceivable rewards. The same applies to spending more than you would have in order to hit a bonus threshold: the marginal spending costs full price and earns pennies.

Applications also affect your credit file, so opening several cards in a short period has a cost that the credit score guide covers, particularly if a mortgage application is anywhere on the horizon.

The honest summary is that points and miles are a modest discount on spending you were going to do anyway, paid for by merchant fees, and worth optimising only after the ordinary things — not carrying a balance, not overspending — are already in place.