Points value: Is there a right or wrong target?

Calculating points value is very easy; we detailed all the steps you should go through with your thought process in this article. However, whether to redeem your points or pay with cash may linger on.

Indeed, you may have already consulted our semi-annual estimate of the value of Reward Points in Canada and found out about the target points valuation we give, but is it the proper valuation for you?

Ultimately, how can you know the accurate point valuation for your situation?

In this article, I chose Aeroplan to demonstrate the thought process you should go through, but it can apply to all airline and hotel loyalty programs.

Let’s look at possible points valuations for Aeroplan, Air Canada’s loyalty program. You can redeem your points in many ways: purchase airline tickets, merchandise, gift cards, etc.

As this program is intended for air travellers, the best use will be for purchasing airline tickets. This explains the value of 2¢ per point. Here’s how we narrowed it down to that number:

As you can see, the 2¢ per point is an average value we gave because, as per experience, it is very common and easy for anyone to achieve that target.

To assess the value of your points, you need to identify the flights you want to purchase using Aeroplan points. Then, consult Google Flights or the airline’s website to compare the prices in points versus money by searching for the value of the same itinerary but using cash.

For example, you can fly to San Diego, a beautiful family destination, and reach the 2¢ per point target while travelling in economy class.

(2,766 $ – 546.68$) ÷ 98,400 × 100 = 2.26 ¢

When someone is flying in economy as compared to business class, the number of points needed for the redemption of the latter is usually twice the cost of the former.

On the other hand, when you are paying in cash, the price isn’t 2X higher but more likely to be 3X, 4X or 5X.

Indeed, you can see that the business class award fare is not even 2X the fare of economy class on this screenshot:

Therefore, it is easier to achieve a higher point valuation when flying in business class since the number of points you need doesn’t go up as the cash price does. Good luck finding business class cash fares that are only twice the cost of economy!

What if the place you wish to visit doesn’t hit the 2¢ per point target for your dates? Remember, award fares on Air Canada and all cash fares are dynamically priced, so it will depend on your desired days to travel.

For example, we often see this kind of result when searching for award fares to Europe; because the competition is fierce, cheap cash fares can easily be found, and your point valuation might turn around the 1.5¢ per point mark like these flights to Portugal:

(4,959 $ – 475.80$) ÷ 285,200 × 100 = 1.57 ¢

Then, you must remember that points are there to help us reduce our costs. For some, $5,000 can be a lot of money, and points can make the difference between being able to travel or not at all.

So instead of paying that amount, it might be better to use your points rather than leaving them sitting and doing nothing in your account, especially if you don’t have any better use for them in the short term. Points could pay for your airfare, and the money can cover your accommodation, excursions and restaurant bills instead.

Additionally, even if you can afford to pay that kind of liquidity, redeeming points means you can utilize that $5,000 for other purposes. You can easily find another way to spend or save that amount.

Did you max out your kids’ RESP (Registered Education Savings Plans)? By investing $2,500 per kid in their RESP, you can obtain a 30% government grant. That money will grow with compound interest while your points won’t. So, is it preferable to put that $5,000 towards Portugal or max out your children’s RESP for the year?

No kids? How about maxing out your Registered Retirement Savings Plan (RRSP) for an income tax refund?

Points are not an investable asset, while cash is.

Therefore, if you are waiting for a hypothetical potential higher points valuation that may or not come, it might be better to redeem points if you have concrete projects you can use your money on. Only you will know what is most appropriate for your situation.

When earning points, it is advisable to use (burn) them before they devaluate. Indeed, loyalty programs are always at the mercy of chart revamping, more commonly known as devaluation. While 285,000 Aeroplan points may be enough for your family trip to Portugal now, it may be a different next year.

Points devaluation is similar to what inflation does to cash; the difference is that money can be invested to counter the effects of inflation.

While we encourage saving your points for better use, that purpose shouldn’t be too far out in the future; you should burn your points in no longer than two years. After that, while a devaluation might not be sure, the chances are that you will need more points for the same objective.

Points may be easier to earn than cash. Indeed, with all the generous sign-up bonuses out there, one or two credit card subscriptions might do the trick. For example, both parents could sign up for the TD^® Aeroplan^® Visa Infinite* Card and earn more than enough points for a family getaway in North America or even more, depending on the award fares available.

Ten minutes to subscribe, then use your credit cards to settle your usual bills and voilà! You will have a boatload of points. On the contrary, earning the same worth in cash from your points valuations might take a while, depending on your job and salary.

You can find the best current credit card offers here:

If you never seem to reach that target valuation everyone talks about, you may need to reconsider if you choose the right program for your situation.

Indeed, if you love all-inclusive resorts but opted for Aeroplan points, you are likely to be stuck with a 1¢ per point valuation for all your holidays, which is what Aeroplan points are worth when redeemed for that kind of trip.

But hey, if you got those points for free from a signup bonus and have no other plans for them, why not use them instead of burning cash? Just adjust your strategy for the next one!

Calculating points valuations is easy-peasy; it’s simple math. However, interpreting the result may be more difficult as there are many personal things to consider.

There is no right or wrong value if points help you achieve something you wouldn’t have been able to do without them. That is the basis of travel hacking: use points to save money.

Finally, don’t let them devaluate while waiting and hoping for a better redemption that may or may not come!

Points truly have value once they are redeemed, and how you employ them will dictate your personal point valuation target.