Should I Use Points Or Cash For My Booking?

When it comes to making a booking for travel it’s often not clear if you’re getting a better deal using points or if you pay cash. With different points having different values depending on how you earn and redeem them it’s often tricky to give a straight answer. In this post we are going to attempt to answer the question, should I use points or cash for my booking?

Should I use Points? Well before anything else, you need to work out a value for your points…

How do you earn your points?

Before deciding if you should use points or cash you need to know how much your points are worth. Whilst you won’t find a valuation by hotels/airlines it’s quite easy to work out your own valuation by following the steps below.

Earn by staying/flying

If you earn your points via staying/flying your valuation might be purely based on the value you can get when spending them. Just remember if you are actively choosing to stay or fly with one brand over another you might be paying a premium for these points if comparable options are cheaper. For example, if another hotel is charging £100 for room + breakfast and is comparable quality & location to a point-earning hotel charging £150, you are ‘paying’ £50 for the points you earn from your stay. Likewise, if another Airline is charging £1000 for a Business Class seat which a comparable quality & route to a point-earning Airline charging £1500, you are ‘paying’ £500 for the points you earn from your flight.

If someone else is ‘paying’ e.g. your employer all this can completely go out the window as you aren’t paying for your points, particularly if you don’t have a choice of where to stay.

Credit card spend

If you earn points through credit card spend remember that by earning or redeeming points you are exchanging for them instead of cashback, there is always a ‘cost’ involved. This should always put a minimum floor valuation on your points otherwise you’d be better off collecting cashback!

For example, rather than spending on an Amex membership reward card (1 point per £1), you could put your spending on the Amex Platinum Everyday Card which earns 0.5% on spending up to £10,000 & 1% on spending above that. That means you’d in effect be paying 0.5p a membership reward point if you spend under £10,000 a year.

Another option you could compare to is the Amazon Platinum Card (potentially good if you shop at Amazon a lot), if you are an Amazon prime customer you’d receive 3 points per £2 spent at Amazon and 0.5 points per £2 elsewhere. 1000 points equal a £10 voucher which means by ‘choosing points’ you’d be missing out on 1.5p of Amazon credit per membership reward point on spending at Amazon and 0.25p worth on spending elsewhere.

If you are looking for a good comparison of cashback/reward credit cards take a look at Money Saving Expert’s guide here – https://www.moneysavingexpert.com/credit-cards/best-credit-card-rewards/

If you are using a membership reward card and have a minimum floor value of 0.5p you can then work out the minimum floor value of any points you transfer to. For example, Avios conversions are 1:1 so your minimum floor value would stay the same whereas Hilton conversions are 1:2 meaning your minimum floor value of a Hilton point would be 0.25p. Now, this isn’t to say that is the ‘value’ but rather a minimum value which at least ensures you wouldn’t be better off with cashback. If you receive 1% cashback that would double the minimum floor value of the examples above.

Bear in mind that the minimum floor value is an absolute minimum to ensure you aren’t worse off over choosing other options… not a reccomended redemption value! We talk about how to value several different types of points specifically in the posts linked below.

Amex points Value
Marriott points Value
Hilton points Value
Avios points Value
Virgin points Value

Making the decision

Always compare the points & cash rates when deciding whether to use cash or points. Take the cash rate of the room/flight and then subtract any taxes or fees charged on points bookings before dividing the remaining total by the amount of points required.

For example if we look at booking a long weekend in Budapest for the Christmas markets 10th December – 13th December we can get 2 business tickets from London for £463.64. The same flights would cost us 29250 Avios + £ 100.00 fees. So if we take away 100 from 463.64 we are left with 363.64, then divide this by 29250 = 0.0124321367521368. Basically a little under 1.25p a point which is decent compared to our minimum floor value above!

Then if we wanted a hotel to stay for this break, lets say, the Hilton Budapest it would set us back 409.28 euros (roughly £346.) If we divide this by the points cost (no taxes/fees) of 126,000 = 0.0027460317460317. Roughly 0.275p a point which is only a little over our minimum floor value above.

Sometimes the value doesn’t matter…

If you are redeeming for a high-end hotel or business class flights that you would never normally pay for try not to worry about the value so much and enjoy the experience. That is partly what collecting points is all about in our opinion, enjoying a little luxury that we wouldn’t otherwise be able to! Likewise if you are cash poor but points rich using points can really make a difference to your finances if you need to stay or fly somewhere, the value in such examples is of little importance.