How much is a Point worth you may ask?

The answer is – it depends.

Let’s look at 2 extremes

One of the ways say if you had 10,000 credit card points. Let’s say it was American Express Membership Rewards points. With 10,000 points – most people would redeem it for a $50 shopping voucher at Big W or Target for example. Also to gain 10,000 credit card points you would most likely need to spend $10,000 if for every dollar you spent – you earned one dollar.

Therefore the value of 1 point is 0.5cents. The majority of people would go ahead and do this. And why not? It’s practically free as you are using your credit card for everyday expenses and after spending.

Is this the best way to redeem your hard earned points though? Ask any avid points/miles collector and the answer is a resounding NO!

This is one of the worst ways to redeem your points!

Let’s look at the other extreme.

If I had 120,000 credit card points. This enables me to fly first class from Sydney to Hong Kong return. By paying cash yourself – it can cost around $10,000 Australian dollars.

So for each point here is roughly 8 cents per point. This is by far the best way to redeem your points

So by comparing the 2 extremes the difference between 0.5 cents and 8 cents is 16 times!!!

So this alone can see how you can maximize your points!

The other thing to note is that there are strategies out there where you can get 5 points per dollar your spend.

So let us compare the 2 again.

A person who has 10,000 points who ears one point per dollar and redeems for a $50 gift card is getting 0.5 cents per dollar that they are spending.

Now the other person who is redeeming their 120,000 points for a first class flight is getting 8cents per dollar spent. Now if we factor in that this person is also get 5 cents per dollar spend on the credit card and then redeems it also on a first class fight then it would be 5cent x 8cent = 40 cents per dollar that the person is getting back.

Comparing the 2 – redeeming your points and getting 0.5 cents per dollar back and 40 cents back per dollar – that is an outstanding 80 times more you are getting back by redeeming your points for a first class seat and getting 5 times more points per dollar spent on your credit card.

The majority of the population will only ever experience a $50 gift card on a continual basis – while another person who understand the value of points will be flying first class. Choose which side you want to be on – I know for sure what I want to do.


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