What is a Reward Point Really Worth?

Reward points are earned through credit cards. They’ve a lot of hype, as they are one of the most prominent benefits of owning a card. For every dollar you spend using your credit card, the creditors give you subsequent reward points, which you can use later. Most of us are pretty familiar with these points, but what is a reward point worth? For every dollar you spend, you get about a penny’s worth of reward points. Now that might seem like a small amount, but when they really start piling up, then you get the benefits.

It’s very common to use these reward points on airfare. Almost all credit card companies require you to get a specific amount of reward points before you can travel, usually around twenty-five thousand for an economy class seat. Sounds good? It’s not always a bargain, because it all depends on how much the ticket is worth. Sometimes, it would be cheaper to spend your reward points on something else, because the ticket is cheaper than the reward. This is not always the case, but it does happen. So before spending all of your hard-earned reward points, consider this formula: FP/PR whereas FP is the fair price and PR is the points you need to get the specific reward.

There are a lot of gifts and services you can redeem by using reward points. You can get anything from songs to software, a GPS unit to an LCD TV. You might think that these are great to redeem, but most of the time, they’re not the best value (less than a penny per point). You might be better off buying these things instead.

Let’s take American Express cards for example. They offer iTunes songs, Wii video games, Mac operating systems, Sony TVs, GPS units, couture perfumes and bags, wines, coffee makers, toys, office chairs, magazine subscriptions, bed warmers and hotel accommodations. However, the only real bargain you’ll get is when you exchange your points for a pet bed warmer. The warmer is worth $49.95, which makes a reward point equivalent to around eight cents. Unlike the bottle of wine, which costs about $44.99 where your reward point equivalent is three cents, you get much better value.

Reward points are great if you want freebies and other exciting privileges. If you’re trying to save a lot of money, though, it’s not always the best option. Sometimes you’ll be better off buying your own items, instead of exchanging your reward points. It’s not impossible to get your reward points’ worth, if you are careful in making your decision.

Again, before exchanging your reward points, calculate your points’ worth before anything else, using the formula FP/PR. This is the only way you’ll know for sure if you’re getting a good deal. Keep in mind that you get more benefits when exchanging reward points for airline flights, as opposed to exchanging them for gifts. If you’re looking for a foolproof plan, redeeming points for airline tickets are your best bet.


CreditCards.org enables consumers to search and compare credit cards, review the best credit cards offer, and apply online. Includes a comparison of Visa, MasterCard, American Express, and Discover cards in categories such as: 0% APR, balance transfer, cash back, low interest, rewards, bad credit, small business, student, and others.