Don’t be fooled, using points is never "free"

While it is common for travel bloggers (including us) to say things like “fly 15 hours in first class for free,” it is actually incredibly rarely, if ever, the case that these things are actually free. Most of the time, when a travel blogger says some trip was “free” or “only $200!” they mean it cost some, often huge, amount of points with little or no cash cost. This isn’t the same as free.

Okay, so it looks free...

First of all, it’s important to understand why redemptions look free. Let’s take our post on getting to Walt Disney World for a family of four for five nights for under $350. Yes, a family that follows that post from start to finish will have the trip and only be $350 worse than when they started. However, along the way, they spent a lot of assets, in the form of points, that they acquired. For that reason, the redemption looks like it only costs $350. This ignores, however, that once you have the points, you can spend them on a variety of things, including a statement credit.

Cash Money and that First Class Life

The point is that points and miles are often (although not always) as good as cash. Once you have them, spending them is a cost, even if you obtained them at no cost. A good example is the Chase Sapphire Reserve’s 100,000-point signup bonus. That bonus can be used for: (1) $1000 statement credit, (2) $1500 on travel expenses, or (3) to fly some first class products that can cost in the tens of thousands of dollars were you to pay cash.

Spend your points on a statement credit and you could be missing the chance to fly like this. Photo: Pyonko Omeyama

Spend your points on a statement credit and you could be missing the chance to fly like this. Photo: Pyonko Omeyama

If you’re going to fly some $10,000 first class no matter what and you use your Chase points for $1500, you’re throwing away $8500 when you use those points! Or if you use the points to get a statement credit of $1000 when you definitely will spend $1500 cash on travel in the future, you’re throwing away $500.

Point Valuations

Estimating the value of points is no simple task because it varies from person to person. Someone who travels frequently will get 1.5 cents per UR point without a thought. Someone who never travels will likely wind up with closer to 1 cent per point. There are a couple of sites out there that try to assign value to points—like The Points Guy and One Mile at a Time. It’s no easy task, but these estimates should give you some idea of what you’re “spending” when you use your points.

Take a Second

It’s fine to put together a plan about how you’re going to get and use your points, but there are a lot of redemptions—even pretty good ones—I wish I could take back now that I have a better understanding of all my options. There’s nothing wrong with taking a second when you actually have those points to reevaluate what they mean to you.