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 every 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 every 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 Annual fee
Qantas Premier Platinum
100,000
Qantas Frequent Flyer
1
19.99% p.a.
$199 annual fee for the first year ($299 p.a. thereafter)
Get 100,000 bonus Qantas Points, 75 bonus Status Credits and a 0% p.a. balance transfer rate for 18 months (with a one-time 1% BT fee).
Qantas American Express Ultimate Card
100,000
Qantas Frequent Flyer
1.25
20.74% p.a.
$450
Receive 100,000 bonus Qantas Points and $200 back on your card when you spend $3,000 within the first 3 months. Plus, a yearly $450 Travel Credit.
NAB Qantas Rewards Signature Card
130,000
Qantas Frequent Flyer
1
19.99% p.a.
$295 annual fee for the first year ($395 p.a. thereafter)
Up to 130,000 bonus Qantas Points (100k when you spend $3,000 in the first 60 days and 30k after 12 months). Plus, a reduced first year annual fee.
ANZ Frequent Flyer Black
120,000
Qantas Frequent Flyer
1
20.24% p.a.
$425
Collect 120,000 bonus Qantas Points and $200 back when you spend $3,000 in the first 3 months. Plus, complimentary lounge passes.
Coles Rewards Mastercard
N/A
Flybuys
2
19.99% p.a.
$0 annual fee for the first year ($99 p.a. thereafter)
Enjoy $100 off a Coles Supermarket, a $0 first-year annual fee and a 0% p.a. on balance transfers for 18 months (1.5% fee applies). Ends 31 Jan 2021.
Westpac Altitude Platinum Qantas
60,000
Qantas Frequent Flyer
0.5
20.49% p.a.
$99 annual fee for the first year ($200 p.a. thereafter)
Get 60,000 bonus Qantas Points when you spend $3,000 within 90 days. Plus, a first-year annual fee discount and a long-term balance transfer offer.
St.George Amplify Platinum - Qantas
70,000
Qantas Frequent Flyer
0.5
19.74% p.a.
$99
Earn 70,000 bonus Qantas Points, plus enjoy 0% p.a. on balance transfers for 15 months and complimentary insurance covers.
Qantas American Express Premium Card
80,000
Qantas Frequent Flyer
1
20.74% p.a.
$249
Enjoy 80,000 bonus Qantas Points, $200 back and 2 complimentary Qantas Club lounge invitations per year.
Citi Rewards Card
N/A
Citi Rewards Program
1
21.49% p.a.
$49 annual fee for the first year ($149 p.a. thereafter)
Save on interest with 0% p.a. on balance transfers for 30 months with no balance transfer fee. Plus, a $49 first-year annual fee.
American Express Business Explorer Credit Card - Exclusive Offer
120,000
Membership Rewards Gateway
2
3.99% p.a. for 6 months, reverts to 19.99% p.a.
$149
Finder Exclusive. Ends 01 February 2021.
ABN holders w/ $75,000 revenue. Get 120,000 bonus points when you spend $3,000 in the first 3 months. Plus, 2 airport lounge passes.
Bank of Melbourne Amplify Platinum - Qantas
70,000
Qantas Frequent Flyer
0.5
19.74% p.a.
$99
Receive 70,000 bonus Qantas Points when you spend $1,500 each month for the first 3 months and earn up to 0.5 Qantas Points per $1 spent.
American Express Explorer Credit Card
150,000
Membership Rewards
2
20.74% p.a.
$395
Get 120,000 bonus points when you spend $3,000 in the first 3 months. Plus, 30,000 points in the second year. Ends 27 Jan 2021.
Coles No Annual Fee Mastercard
N/A
Flybuys
0.5
0% p.a. for 12 months, reverts to 19.99% p.a.
$0
Save on new and existing interest charges with 0% p.a. on balance transfers and purchases for 12 months. Ends 31 January 2021.
American Express Velocity Platinum Card
50,000
Velocity Frequent Flyer
1.25
20.74% p.a.
$375
Get 50,000 bonus Velocity Points when you spend $3,000 for the first 3 months. Plus, 100 Status Credits and luxury travel perks.
Qantas American Express Discovery Card
N/A
Qantas Frequent Flyer
0.75
20.74% p.a.
$0
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.
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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

    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.

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