# Getting poor value for my points to redeem business class flights to South America, is it better to convert my points to cash instead and pay outright?

Hello Hacker Community!
Here is the situation:
Currently have nearly 1 million points between 2 separate credit cards with no simple way to redeem points for flights required to South America without adding a whole lot of unnecessary extended travel time and destination as per recent previous discussions with other Point Hackers regarding the airline monopolies and stinginess of LAN and Qantas to South America overall.

A friend in the US recently suggested just redeem the points as cash back onto my credit cards and pay for the fares outright instead. Hmmm…perhaps that works for US Citibank credit cards but not sure of the value with Australian credit cards given I have no experience yet transferring points/redemptions for a flight to date. Point Hacks has been a huge resource and as a ‘newby’  just about to perhaps action a ‘first transaction’ please have patience with my seemingly naive questions. Hope to resolve all the uncertainty and bring clarity to the decision making process with support and advice from all you pro’s out there. Many thanks in advance!

Doing the maths: Using Keith’s calculations in his very easy to read and informative Points Guide #6 Using Points- know when you shouldn’t use frequent flyer points I applied his example given in the article to my flights.

A Qantas business class seat between Syd/Santiago for dates required: \$8720.58, earning 22, 500 Qantas points (Bronze- the ‘commoner’ level).  Qantas states it’s a ‘business sale’ fare, but honestly… it doesn’t appear to be much of a real discount.

In contrast to redeem points the fare requires 1, 266, 345 points of which 139,070 redemption points are tied up in taxes, surcharges (Qantas quotes value of \$764.89).

Therefore: 1,266, 845 + 22,500 = 1, 288,845 is the real impact of factoring in the Qantas points lost through the point redemption.

Additionally in quoting Keith’s article #6, Keith states “what I really saved if I had paid the cash fare, less taxes paid with the points fare” would be in my example: \$8720.58 - \$764.89 = \$7955.69.

Final calculation therefore is a value of .62 cents: 7955.69/1,288,845 * 100 = .6172.

Is this correct? This seems like really poor value even for a business class seat.

Question: Perhaps would better to pay for a ticket outright, earning Qantas points and save my 1 mill points for the next trip to some other more ‘points friendly fare’ destination? OR as my friend suggested redeem all my points for cash back onto my credit card which would then offset the cost of the airfares?

Okay… I’m no maths whizz (and neither was the real Gidget) so I’d appreciate your help:

Question: How do I calculate the ‘exchange rate‘ in redeeming points for cash onto the credit card to assess the real not perceived value?

For example: One card offers \$100 = 14,500 in increments up to \$1000 = 130,000 points whilst the other card only offers \$50 and \$100 = 12,500 and 25,000 points increments respectively. Big difference between card providers and I’d like to know the actual value (or ‘devalue’ if this is the case).

The other biggest concern is holding so many points I intend to utilize but presently cannot without accepting a loss. Also there is the potential uncertainties of devaluation in other ways at any time by the card providers chopping and changing as expressed in Keith’s highly informative and timely articles discussing this topic and upcoming RBA announcements in May.

Question: Will the changes make travel redemption’s more difficult and unreliable for consumers or will it open up more opportunities? That said maybe it’s not a good idea (nor safe) in future to accrue so many points in the longer term with a goal in mind?

Okay over to you… Your thoughts on all of this? Any advice you can provide would be much appreciated.

Again many thanks for your sharing your expertise, time and help. Look forward to hearing from you all.

Go Well Point Hackers!
Gidget

Hey - this is a good one to dig into.
The reason you are getting such a low value is due to the high price (in points) being charged for this redemption when not at ‘saver’ or classic award level, due to lack of availability. The lack of availability is the crux of the problem here, meaning you are doing sums around high prices for these direct flights.
So on the assumption that availability does not improve for you for direct flights, then you’ll need to be prepared to route differently to get good value, or just travel somewhere else (the save for another trip option).

I would not cash out your points for cash type rewards unless you know you will never set foot on a plane ever again and this is your last chance to use them - or you absolutely must travel in Business Class, and absolutely can’t afford it unless you cash out your points in this way.
You can almost always get better value by transferring over to frequent flyer programs and using for another trip. So maybe this is a kick to plan a trip around destinations where you can use them - given you can book 11-12 months out, you can get thinking and researching early to lock things in (if that works with your lifestyle / job, it might not of course).

Just what comes to mind for now!

I tend to agree with Keith.  In this particular case, redeeming points is not good value at all. You’re better off paying it yourself  (in my opinion premium economy is better value) and saving your points for a better value redemption

Many thanks for responding, am grateful for your generosity to share your expertise with us all.

In taking this thread further there were other questions in my original post which perhaps may have appeared a little off topic but are still relevant to those of us in the community who may currently have ‘hoarded’ points over time.

From the original post:
“There is the potential uncertainty of devaluation in other ways at any time by the card providers chopping and changing as expressed in Keith’s highly informative and timely articles discussing this topic and upcoming RBA announcements in May.”

Questions:

1. Could the upcoming changes possibly make travel redemption’s more difficult and unreliable for consumers or will it open up more opportunities? Have some confusion regarding what and how the anticipated changes may translate into reality in terms of points earn and redemption. Is the RBA’s decision potentially an improvement, expansion of opportunities for consumers or a dismantling of the relationship between airlines and card provider programs?

2. That said would it be strategic for people at this time to perhaps wait, exhale and watch what changes occur in upcoming months before they shop around for a new card?

3. The question also begs…perhaps it’s also no longer a good idea (too risky) in future to accrue so many hard earned points in the longer term with that big goal in mind? Particularly since credit card points are theoretically and seemingly akin to Monopoly money until they are redeemed- game over anytime the card provider or airlines choose to change the terms and conditions.

4. Conversely could it be deemed prudent to transfer or sweep the points to an airline FF program for safekeeping on a regular basis, particularly since credit cards often have an expiration date for point redemption? Believe Keith may have covered this subject previously, just can’t put my hand on the article at the moment. Is there even such a thing as ‘safekeeping’ anymore? (grin)

Specifically have not mentioned the brand of the cards publicly because they both were the proverbial ‘mistake one had to experience’ in credit card land, instigating current motivations to become much better educated on how the whole system works, have a go using the points efficiently as possible and move on.

In closing if and when I eventually apply for a different card I shall ensure Keith receives the referral commission. This is something we all should consider doing to support Keith’s ongoing efforts in educating, enlightening and bringing together this like minded community of adventurous, committed, savvy travelers.

Again thank you to all (especially Keith) for your ongoing help and expertise in pointing myself and others in the right direction.