When planning a trip, one of the most common questions is: Should I use points or pay cash? There is no one-size-fits-all answer, but you can make an informed decision by following a simple framework.
Choosing between points and cash comes down to getting the most value out of your hard-earned rewards while protecting your wallet. Ask yourself these questions:
The easiest way to compare points and cash is by calculating the Cents Per Point (CPP). Divide the cash price of the flight or hotel (minus any taxes and fees you still have to pay on an award ticket) by the number of points required.
If the calculated CPP is higher than your personal valuation of those points, book with points. If it's lower, pay cash.
Award flights aren't entirely free. You will still have to pay government taxes and, depending on the airline, carrier-imposed surcharges. Sometimes these surcharges can be hundreds of dollars, significantly reducing the value of your points. Always subtract these taxes from the cash price when calculating CPP.
When you pay with points, you aren't earning points on that flight or hotel stay. Paying cash usually earns you miles and elite qualifying metrics. You should factor in this "forgone value" when comparing the two options.
Points bookings are often highly flexible. Many airline and hotel loyalty programs allow you to cancel award bookings and redeposit your points for free or for a very low fee. In contrast, the cheapest cash fares (like Basic Economy) are typically non-refundable.
Ready to crunch the numbers for your next trip? Use our Advanced Calculator to easily compare your options, factor in taxes, and determine the exact value of your redemption! If you are evaluating a complete vacation budget with both flights and hotel rewards, use our Trip Cost After Points Calculator to model total net cash expenditure.