When should you buy points?

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Let's dive right in:

• 🤔 Which points sales are actually worth it?

• 🍪 Tasty Travel Tidbits

• ✈️ Earn more than 20k bonus points with this airline

🤔 Which points sales are actually worth it?

Every once in a while, I tell you about great deals to save money by buying points and booking flights or hotel rooms.

But that doesn’t mean that you should always buy points…

Right now, there are a lot of points sales going on, so I thought I’d take some time to explain how to analyze these sales and possible redemptions to decide for yourself which ones are worthwhile.

First on the docket is Hyatt, which is currently selling points with a 20% discount.

While 20% doesn’t sound crazy, there are plenty of ways to save hundreds of dollars with this particular sale.

For example, let’s look at this hotel in Frankfurt, Germany. As you can see, it can be booked for as few as 3,500 Hyatt points per night with a cash cost of $235 USD.

A 5-night stay at this property would cost $1,175, which is… a lot of money. The better option would be to simply shell out 17,500 Hyatt points.

But what if you don’t have any Hyatt points?

Well, you could simply BUY 18,000 Hyatt points for just $346.

That means that by strategically buying points, you’re saving over $800… No credit card, elite status, points, or anything else required.

But don’t think that means that you’ll always save this much money from buying Hyatt points…

For example, this hotel in Dubai costs 17,000 Hyatt points per night, with a cash cost of just $122.

In this case, buying enough points for a night would cost you $326, almost THREE TIMES the cash cost of the room.

So when it comes to Hyatt, it’s entirely dependent on the specific redemption as to whether or not buying points is worth it.

But what about programs where the point cost is tied directly to the cash cost?

For example, Southwest is also currently selling Rapid Rewards points with up to a 50% discount.

But this points sale is an entirely different story than the Hyatt sale, and I’ll tell you why.

First, let’s look up a random flight on Southwest, like this one from Baltimore to Cincinnati.

The cash cost is $109 while the points cost is 7,249 Rapid Rewards points. 

To see how much value per point we’re getting here, we’ll use our classic equation:

Generally speaking, Southwest flights will yield around 1.2-1.5 cents per point in value.

If we shift gears and look at how much it costs to BUY Southwest points, we see that even with the best discount of 50%, points cost 1.5 cents each (plus you need to buy them in bulk to trigger the best discount).

In this case, you’re only breaking even (in the best-case scenario).

But even if you got slightly better than 1.5 cents per point in value, you’re still coming out behind.

That’s because there’s an opportunity cost to buying points.

Let me explain…

When you redeem points for a flight, you’re not EARNING any points in the way that you would when paying cash for a flight.

In the above example, you’d normally earn 524 Rapid Rewards points for taking the flight (six points per dollar, minus taxes) in addition to points from your credit card spend, which we’ll ignore for simplicity.

Therefore, buying points and redeeming them is “costing you” 524 more points in the sense that you’re now leaving them on the table.

Because Southwest redemption values are tied to the cash cost (unlike Hyatt), this loss will almost ALWAYS be the case.

The one exception is “topping up” your points balance.

For example, let’s say you want to book this flight from New York City to Punta Cana, which costs 29,000 points.

If you are 2,000 or 3,000 points short of being able to book this flight, it could totally be worth spending $50 or $60 on points since it unlocks a flight that otherwise costs almost $500.

In this case, the actual value per point isn’t important.

Rather, a small cash cost gets you over the threshold for booking an otherwise really high cash expense.

So here’s the bottom line…

When it comes to buying points, there are two important questions you need to ask:

1. Is the cost of buying points lower than the cash cost of the booking?

2. Is there an opportunity cost to redeeming points as opposed to paying cash?

I hope this helps you navigate the many points sales that you have been seeing lately.

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✈️ Earn more than 20k bonus points with this airline

If you’re hoping to fly to (or within) Europe and want to earn a BOATLOAD of MR points… go check your accounts for both this card and this one.

You might just see a sweet little offer waiting inside 👇

With this offer, you can earn 17,500 MR points (but actually, it’s more… 😏) when you spend $1,000 or more on ITA Airways by May 3rd, 2024.

ITA Airways is an Italian airline, and I really don’t think it takes much convincing at all to want to travel to Italy.

If you want to head straight to Rome or Milan, ITA offers a handful of non-stop routes from different U.S. cities that include San Francisco, Washington-Dulles, New York, Miami, Boston, and Los Angeles.

You can also fly with ITA to many other countries within Europe, Africa, the Middle East, and even South America.

Here are some additional details to know about this offer:

• Flights need to be booked directly with ITA Airways

• Flights must originate in the U.S and be charged in USD

• You need to book your flight by May 3rd, 2024, but you can travel after that date

Now if you managed to book a flight and hit that $1,000 mark, you would trigger the 17,500 MR points bonus.

However…

These bonus points don’t account for the points you would also earn just for using your eligible card.

For example, if you saw this offer come through on this premium card that earns 5X MR points per dollar spent booking directly with an airline, you would earn an ADDITIONAL 5,000 points (because $1,000 × 5X points per dollar) 😎

So you would actually be raking in around 22,500 MR points at a minimum.

And that, my friends, is a rad deal.

Because I value MR points around 1.8 cents apiece, 22,500 of them has a monetary value of around $405, which is a pretty darn good return.

So if you see this offer sitting in your account and you’ve been hoping to travel somewhere fun, check to see if you can make it happen on a route covered by ITA Airways!

Phew, that one was a doozy, eh?

I’m sorry for all of the math today, but I want to make sure you know that despite some great opportunities, it’s not automatically a good idea to buy points.

Anyway, I hope you all have a lovely rest of your day and I’ll see you tomorrow ❤️

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