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this week’s episode Part of our new series called “This or That,” where the NerdWallet Travel team compares different ways to travel.
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our take
If you have a lot of credit card points, airline miles or hotel points, you may be wondering whether to redeem your points or pay for cash for your next trip. One of the biggest mistakes is to save your words indefinitely. Hoarding points is a poor strategy because airline miles and hotel points usually devalue over time as loyalty programs gradually increase the number of points it takes to book a flight or hotel night.
Once you have enough points for the award travel, you should calculate the redemption value by dividing the cash value by the points value or use a calculator, This will give you a percentage-per-point value of your redemption. then compare it NerdWallet Core Values What should be the value of each point.
If your redemption value is the same or higher, you’re getting a good deal for your points. Also, note that you can Transfer Your Credit Card Points Sign up for an airline or hotel loyalty program and spend fewer points using that program than booking through a credit card’s travel portal. you may want to consult another calculator To help you figure out this step.
On the other hand, if the redemption rate you calculate is low, pay cash instead if you can afford it without going into debt. There are many advantages to paying with cash, including allowing you to earn Elite status credits and more points on your bookings. If you are trying to meet the spending requirement for a credit card sign-up bonus, you should pay in cash.
our suggestions
- Always calculate the percentage-per-point value of your redemption. If a flight costs $500, or 50,000 points, divide $500 by 50,000. Then compare that value with NerdWallet’s baseline values to see how much your points are worth. If your redemption value is high, book it!
- Check whether transfer partners have a better redemption value. If you have a travel credit card or are considering getting one, check whether there are opportunities for you to book for fewer points with a transfer partner rather than booking through the credit card’s travel portal.
- You don’t want to hoard marks. Earn them and then use them as fast as possible before your points devalue.
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The article Smart Money: ‘This or That’: Booking With Points Versus Cash originally appeared on NerdWallet.
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