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!