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Most of the time when you pull out a credit card, it's just to make a payment. But what if you could get other benefits too?
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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.
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:
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).
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:
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.
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 = 14.80Treat 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.
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:
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.
* 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.
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
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.