Infographic: How to get the most out of your frequent flyer points
Just how much value can you get from 1,000 points? We've crunched the numbers.
Last week, I received an email from an airline telling me "Your 15,000 points are about to expire." With no intentions to travel with them over the next couple of months, I rushed online to find something I could purchase with my points, settling for a pair of headphones. This weekend, I'm flying to Melbourne on a flight booked using points earned with with a rewards credit card. After booking the flight, I started wondering: which of these two ways of spending frequent flyer points represents the very best value?
To find out, we crunched the numbers covering both the Qantas and Virgin frequent flyer programs in Australia. We looked four different point reclamation methods and calculated the value return on 1,000 frequent flyer points. With most rewards cards on the market returning one point per dollar, this also equates to a $1,000 spend.
It turns out that my tech purchase was probably not the best way to use up those expiring points. We checked out the sale value of five items purchasable from both the Qantas and Virgin stores - an iPhone 6, a retail store gift card, a Kitchen Aid cooker, cinema tickets and a Smeg microwave. The average value returned per 1,000 points in this case was only $5.
My flight to Melbourne would have offered much better value. We examined the points required to book flights from Sydney to Perth on ten different days, as well as the dollar cost of those flights. In this case, the value returned for every 1,000 points works out to be about $13. This is more than twice the value obtained by purchasing goods.
But you can do even better. Booking business class flights for the same dates used about twice as many points, but these flights sold for around eight times the cost of an economy seat. The $50 value per 1,000 points here is much higher.
Finally, we looked at the value obtained by upgrading your flight with points, if the initial economy leg was booked as usual. This resulted in the best value return overall, working out as $85 with Qantas and $57 with Virgin for every 1,000 points used.
So next time you build up a healthy frequent flyer points balance, think twice before blowing it on some nice new headphones. Saving your points for an upgrade will maximise your earnings.
Graham Cooke's Insights Blog examines issues affecting the Australian consumer. It appears regularly on finder.com.au.