There are various ways to pay using points and miles, as you may know if you've ever used loyalty rewards to pay for a ticket or hotel stay.
You will always be required to pay some additional fees and taxes for flight redemptions.
These costs can range from a few dollars on, say, an American Airlines domestic ticket to ridiculous four-figure sums on British Airways and Virgin Atlantic long-haul premium cabin redemptions.
In terms of hotels, you may typically redeem points for totally free stays with no out-of-pocket expenses (provided the property doesn't charge resort fees on your redemptions or imposes them).
The hotel might let you mix and match by exchanging some cash for fewer points.
If you don't have enough points or miles to cover the redemption, whether it's for a ticket or a hotel, you might be able to make up the difference with cash.
For instance, British Airways' Avios Part Payment option enables customers to pay a predetermined quantity of Avios in addition to cash to lower the cost of standard cash fares.
How do you ensure that you get the most out of your points and miles when there are so many different payment options available?
Here is my basic plan of action.
Value calculation
You must first be aware of the value of your points and miles.
Use our monthly valuations chart to find out.
Alternatives include using a straightforward value of 1 or 2 cents per point or mile for airlines.
However, it is more difficult to standardize hotel points.
For instance, World of Hyatt points are quite valuable whereas Hilton Honors points aren't worth anything.
It's time to perform some math next.
Let's suppose I use a value of 1.5 cents per British Airways Avios for the purpose of simplicity.
I have the following choices when I book a flight for an economy trip from John F. Kennedy International Airport (JFK) to Heathrow Airport (LHR).
I multiply each Avios amount by 1.5 cents, either mentally or using a calculator.
This would indicate:
• 8,450 Avios would equal $126.75.
• 13,000 Avios would equal $195.
• 10,400 Avios would equal $156.
• 5,200 Avios would cost $78.25.
• 4,550 Avios would cost $68.25.
• 6,500 Avios would cost $97.50.
Including the choice for fees and taxes in each conversion above:
• The 13,000 sum is converted to a total of $394.80 ($195 + $199.80).
• The total for the 10,400 is $390.80 ($156 plus $234.80).
• The total of $8,450 is $386.55 ($126.75 plus $259.80).
• Totaling the 6,500 is $377.30 ($97.50 plus $279.80).
• The sum of $5,200 is $372.8 ($78 plus $294.80).
• The total for the 4,550 figure is $368.05 ($68.25 plus $299.80).
As you can see, the cost of the various payment alternatives varies significantly when you convert your Avios to cash.
The most expensive choice is "most points, least cash," while the least expensive option is "least points, most cash."
I would try to pay less in Avios and more in cash in this situation.
Although I do want to use up all of my Avios at some point, it's good to stretch them out. If I were Avios wealthy and cash poor, I probably wouldn't choose the "least points" option that was the most extreme.
I would definitely go with the option that comes with 8,450 Avios instead, so I could still save money and use part of my remaining Avios.
Even though it might appear that you aren't getting a fantastic bargain if you have to spend actual money out of pocket for your flight redemption, if cash fares are more than $155 on these days, you are still saving a sizable sum of money.
Let's consider a hotel as an example.
The new Dubai Edition has the following redemption choice, which can be made with Marriott Bonvoy points.
For a two-night stay, I could pay $955.97 in cash, use 167,000 Bonvoy points, or pay for one night with cash and the other with points.
Since each Bonvoy point is currently worth 0.84 cents, 167,000 points would be worth $1,402.80.
I can tell right away that paying only in points with no cash will not be the best redemption given the cash rate of $955.97.
Say I was thinking about paying for the first night with cash and the second night with points as I try to vary things up.
I observe that the price would be 1,626 United Arab Emirates dirhams ($442.69) + 85,000 Bonvoy points (valued at $714 based on our estimation), for a total of $1,156.69.
This price is less than the points-only pricing of $1,402.80 but more than the cash-only price of $955.97.
I would definitely go for the mix-and-match option because it provides a convenient middle ground where I can still be thrilled about obtaining a good value even though I'm using a lot of Bonvoy points.
In conclusion
It can be confusing to combine points and miles with cash payments.
The process of quickly calculating the various payment alternatives ought to be made easier once you have a straightforward valuation of the points and miles you wish to redeem.
Rarely is there one ideal option.
If you have a large mileage balance, you might be content to choose less cash in exchange for slightly less value.
Forgoing some cash in order to merely slightly reduce your mileage balance could be the smarter choice if you are conserving your points for a significant aspirational redemption.
Generally speaking, the midpoint of a sliding scale of choices is where you'll get the most value.
This is the route I typically use because I accumulate and redeem a lot of miles and points each year.
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