Points to dollars: How to calculate the value of rewards points

Not sure what your rewards points are worth? Here's how to work out the dollar value so you can get more bang for your buck.

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The value you get from a rewards or frequent flyer credit card largely depends on whether or not you can use the points and other perks to justify the card's fees, rates and any other costs. With points, the value often depends on what rewards you redeem. So, let's take a look at how to work out this value, as well as what else to think about when you're looking at a rewards card.

Steps to calculate the value of rewards points

An important detail to note: there is no fixed, dollar value for points when you're redeeming them. This is because the number of points you need for a reward varies depending on what you redeem them for and the actual rewards program.

But you can get an idea of what your points are worth for any reward using the following steps:

  1. Estimate the retail value of your chosen reward

    For example, if you wanted to redeem your points for a flight, you could go to the airline's website and search for flights on your chosen travel dates. Or, if you wanted to use points for a coffee machine, you could search for a similar model sold at different retailers. With gift cards and other similar cashback rewards, the value is already established (e.g. a $100 gift card = $100 value).

  2. Divide the cost of the reward by the number of points needed

    This gives you the value of each point and is usually a fractional number. For example, if you wanted to redeem 36,000 points for a flight that retails for $533, the result of this calculation would be $0.0148 (or about 1.5 cents).

    This gives you the value of each point, but comparing cents (or fractions of cents) is sometimes confusing when you're looking at different reward options.If you find that's the case, a simple solution is to look at the value you get for each 1,000 points redeemed. You can do this by adding a third step:

  3. Multiply the value per point by 1,000

    This usually gives you an answer that's in dollars and can be easier to compare, because most of the time you'll be redeeming thousands of points for a reward anyway. So with the example reward flight in step 2, you would get $14.80 worth of value for each 1,000 points used.

How to write this as an equation

Using the example of a reward flight above, here is how the basic calculation per point would look:

533/36000 = 0.0148 (or 1.48 cents per point)

Here is how the calculation looks per 1,000 points – keeping in mind that you do the calculation in brackets before anything outside the brackets.

[533/36000] x 1000 = 14.80

What is 1 Qantas Point worth?

How can I make the most of my points?

Treat your points like you would cash when it comes time to redeem them. If you are rewarded with vouchers or gift cards, shop for items that are on sale. With frequent flyer rewards, go for the flights that are more expensive and generally never marked down.

For example, a domestic flight from Melbourne to Sydney may be as low as $85, while one going to London could cost $1,630. If the domestic flight costs 7,000 points with the rewards program and the international one costs 62,500 points, the value of flying to London using your rewards is higher.

Using the value per 1,000 points calculation, the international flight would offer you $26.08 per 1,000 points, while the domestic flight would offer you $12.14.

Rewards credit cards comparison

Data indicated here is updated regularly
Name Product Bonus Points Rewards program Rewards Points per $ spent Purchase rate (p.a.) Annual fee
ANZ Frequent Flyer Black
120,000 bonus points
Qantas Frequent Flyer
Visa/MC
1
20.24% p.a.
$425 p.a.
Earn 120,000 bonus Qantas Points & $275 back when you spend $4,000 in the first 3 months. Plus, airport lounge passes. Ends 9 June 2020.
Westpac Altitude Platinum Qantas
60,000 bonus points
Qantas Frequent Flyer
Visa/MC
0.5
20.49% p.a.
$200 p.a.
Get 60,000 bonus Qantas Points when you spend $3,000 within 90 days.
Qantas American Express Discovery Card
Qantas Frequent Flyer
Amex
0.75
20.74% p.a.
$0 p.a.
Earn 0.75 Qantas Points for your everyday purchases, uncapped, and pay $0 annual fee for the life of the card on this no-frills frequent flyer card.
Qantas Premier Platinum
100,000 bonus points
Qantas Frequent Flyer
Visa/MC
1
19.99% p.a.
$299 p.a.
Get up to 100,000 bonus Qantas Points, 75 bonus Status Credits and a 0% p.a. balance transfer rate for the first 18 months.
American Express Qantas Business Rewards Card
140,000 bonus points
Qantas Business Rewards
Amex
1.25
N/A
$450 p.a.
ABN holders w/ $75,000 revenue. Get 140,000 bonus points, 3x points on eligible Qantas flights & 2 lounge passes per year.
Qantas Premier Everyday
25,000 bonus points
Qantas Frequent Flyer
Visa/MC
0.75
19.99% p.a.
$29 p.a. annual fee for the first year ($49 p.a. thereafter)
Get up to 25,000 bonus Qantas points, a discounted first year annual fee and complimentary insurance covers.
Coles No Annual Fee Mastercard
flybuys
Visa/MC
0.5
19.99% p.a.
$0 p.a.
Earn flybuys points for your spending and save with an ongoing $0 annual fee and 0% p.a. on balance transfers for 18 months.
Coles Rewards Mastercard
flybuys
Visa/MC
2
19.99% p.a.
$99 p.a.
Earn 2 flybuys points / $1 spent and save with a 0% balance transfer offer. Plus, 0% international transaction fees on purchases.
Qantas American Express Ultimate Card
55,000 bonus points
Qantas Frequent Flyer
Amex
1.25
20.74% p.a.
$450 p.a.
Get 55,000 bonus Qantas Points, a $450 Qantas Travel Credit and 2 yearly complimentary Qantas Club lounge invitations with this premium card.
St.George Amplify Platinum - Qantas
60,000 bonus points
Qantas Frequent Flyer
Visa/MC
0.5
19.74% p.a.
$99 p.a.
Earn 60,000 bonus Qantas Points, plus enjoy 0% p.a. on balance transfers for 6 months and complimentary insurance covers. Ends 2 June 2020.
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What else do I need to think about?

The value you get from reward points – sometimes known as the "points currency" – is influenced by many factors. Some of the other key details to think about include:

  • Additional reward costs. Some rewards attract additional fees and charges. For example, flights might have airline fees and taxes, while retail items like coffee machines could attract shipping costs. So before redeeming, check whether these expenses are charged separately or factored into the points needed for a reward.
  • Point transfers. If you want to transfer credit card reward points to a frequent flyer program, be aware that the transfer rate could affect the value you get from your points. For example, if 2 credit card points transferred to 1 frequent flyer point, you'd end up with half as many points after the transfer. But if that meant you got a higher-value reward flight, it could be worth it. You can compare point transfer rates for credit card reward programs in this guide.
  • Credit card costs. The annual fee, interest charges, international transaction fees and any other charges you often pay for your credit card can offset the value you get from reward points. Ideally, you should get a card that has fees which are lower than the value you think you will realistically get from rewards.

A reward or frequent flyer credit card is only really worth it if the benefits outweigh the card's annual fee, interest charges and other costs. As points are one of the biggest perks on these cards, working out the potential value you can get from them makes it easier to compare and find a card that fits with your goals.

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2 Responses

  1. Default Gravatar
    MiteshNovember 13, 2012

    I have 500,000 altitude points – what is this in frequent flyer points and how do I check where I can fly to with those points

    • Avatarfinder Customer Care
      JacobNovember 14, 2012Staff

      Hi Mitesh.
      49,920 Altitude points* = 312 Air New Zealand Airpoints
      50,000 Altitude points* = 25,000 Asia Miles
      50,000 Altitude points* = 25,000 Singapore Airlines KrisFlyer Miles
      50,000 Altitude points* = 25,000 Malaysia Airlines Enrich points
      50,000 Altitude points* = 25,000 Qantas Frequent Flyer Points
      50,000 Altitude points* = 25,000 Velocity Frequent Flyer Points

      Thanks for your question.

Credit Cards Comparison

Data indicated here is updated regularly
Name Product Purchase rate (p.a.) Balance transfer rate Annual fee
HSBC Platinum Credit Card - Balance Transfer Offer
19.99% p.a.
0% p.a. for 22 months
$129 p.a.
Save with a 22-month balance transfer offer. Plus, lounge passes, travel insurance and an annual fee refund when you spend an eligible $6k/year.
St.George Vertigo Classic
13.99% p.a.
0% p.a. for 18 months
$55 p.a.
Get 0% p.a. on balance transfers for up to 18 months with no balance transfer fee. Plus, a low annual fee and purchase rate. Ends 2 June 2020.
ANZ Frequent Flyer Black
20.24% p.a.
20.24% p.a.
$425 p.a.
Earn 120,000 bonus Qantas Points & $275 back when you spend $4,000 in the first 3 months. Plus, airport lounge passes. Ends 9 June 2020.
Westpac Low Rate Card
2019 Winner
Westpac Low Rate Card
13.74% p.a.
0% p.a. for 16 months
$59 p.a.
A no frills, low rate card offering 0% p.a. interest on balance transfers for the first 16 months, with no balance transfer fee.
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* The credit card offers compared on this page are chosen from a range of credit cards finder.com.au has access to track details from and is not representative of all the products available in the market. Products are displayed in no particular order or ranking. The use of terms 'Best' and 'Top' are not product ratings and are subject to our disclaimer. You should consider seeking independent financial advice and consider your own personal financial circumstances when comparing cards.

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