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Thursday, June 1, 2017

How Do You Use Your Travel Points?

I'm going to make an admission.  I love earning points - any kind of points - on purchases I would make anyway, like groceries.  I belong to different grocery store points clubs, and I have more punch cards than you can imagine in my wallet, but my favourite are travel points.



I won't get in to each individual travel rewards program and their pros and cons, but I thought I would do a general overview of how I make the most out of my points.

Many travel rewards programs that are available right now offer both travel benefits like airfare, rental cars and hotels, but also offer little bonuses like the ability to trade your points for merchandise.   So with so many options, how do you choose the best value?

The best way to ensure you're getting the most bang for your buck (or, in this case, most bang for your points), is with a little research.  I know, I can already hear the collective "boo" and "hiss", but, hear me out.  I'm going to outline a little example for you below:

Please note the points outlined in this example are not representative of any program, simply arbitrary numbers to give a visual example.

Say you are trying to decide between using your points for a flight from Toronto to New York, or, whether to use the points for a new laptop.

A couple of initial tips:

1.  If the rewards site lists a "retail value", it is sometimes higher than what you would pay in a local store, so have a look at your local store prices first.

2.  When considering your flights, many travel points programs still require that you pay taxes and fees.  It's best to check your rewards programs policies on these fees, because sometimes those costs can be significant.

Now, on to the redemption towards a reward.

In this example, we will assume that you are looking to redeem for a pretty basic laptop that is selling in your local department store for $349.99 + tax.  And the flight you are looking at from Toronto to Orlando is $335, taxes included, round trip.  (Note - I did find a laptop and a flight for each of those prices, respectively, but they were found on the date of publication, I can't guarantee the prices will be available in your city/town or at the time you look it up).

Your rewards program wants 4500 points for the laptop, and 4100 points for the flight.  No additional cost for the laptop (shipping is included), and the flight has a charge of $185 for taxes and fees that you have to pay at the time of booking.  Pretty close in benefit, right?  So this one may come down to a personal preference.

However, consider, instead of a flight to Orlando, it was a flight to Vancouver.  Cost is $610, taxes included.  Same taxes and fees on the flight as the Orlando flight and this time only 3900 points.  In my eyes, this is the clear winner for points redemption.  Let's have a look at the math:

I live in New Brunswick, so I will use our 15% HST rate for the tax on the laptop.  :

Laptop = $349.99 + tax = $402.49 OR 4500 points
Flight - Toronto to Orlando = $335 OR 4100 points
Flight - Toronto to Vancouver - $610 OR 3900 points

To determine the value per point for each redemption, I'm going to take the price of the item, and divide by the points required.  Note that I am subtracting the taxes/fees from the flight cost because you will still be paying that.

Laptop = $402.49 / 4500 points = approximately 9 cents per point
Flight - Toronto to Orlando = $335 - $185 (taxes/fees) = 150 / 4100 points = approximately 4 cents per point
Flight - Toronto to Vancouver = $610 - $185 = $425 / 3900 points = approximately 11 cents per point

So in my view, the best value is the redemption for the flight to Vancouver.

The math and research seems complicated, but I like to make sure I'm getting the best deal!

And as an additional tip - in general terms - if you are redeeming for a flight, and your originating point is within Canada, your best bet is to redeem for a flight to another Canadian destination, OR, somewhere close to the border.  This is not a tip that will suit everyone - it depends how good a deal you want to get, and what "comfort" you're willing to give up.  The option I will outline below requires more research and planning, and often more airport transfers.

I have redeemed for flights to Chicago from New Brunswick.  Usually takes one transfer to get there (no direct flights to Chicago from New Brunswick), once in Chicago, I was able to snag a direct flight to LAX for $40 (Canadian!!) taxes included.  Why didn't I redeem for the whole way to LAX?  Well, for one, I didn't have enough points to redeem even for one of us to fly the entire way to LAX, but by redeeming to Chicago, I got us both there on points.  Also, even if I had the points, it was going to be more than double the points to get me to LAX than it was to get me to Chicago.  Again, to make this decision, I had to do some analysis of the prices (how much would I be paying in taxes/fees for each destination, what are the overall costs of the flights versus what is required for points, etc).  Again - generally speaking - with a few exceptions, the Canadian route of your flight path is likely the most expensive.

Those are some of my tips on travel points redemption.  Have questions or your own tips to share?  Share in the comment section or join me on Facebook (click here) or Twitter (click here) to chat with me!

1 comment:

  1. This sounds like a great idea. I will have to check this out further. Thank you so much for sharing. God Bless

    ReplyDelete