There are an incredible amount of points and miles currencies out there. Are they all worth the same? **The short answer is no. **

**How do I calculate or know how much a point is worth?**

**A point is worth the cash value it can give you when you redeem it**. Let’s say a hotel room costs $200 dollars per night or 10,000 points, the points value would be $200 dollars / 10,000 points = $.02 dollars / point or 2 cents per point.

Some points currencies are **fixed value** and **some vary in value**.

**Fixed value means the points value doesn’t change and the amount of points for a redemption changes based on the cash price.**For example, a $200 dollar hotel room per night is 10,000 points while a $300 dollar hotel room per night is 15,000 points. The point remains at a 2 cent value.**Points that vary in value, are where points redemptions are set in value even if the cash value varies.**For example, a flight has a set 10,000 point value regardless if the flight is $200 dollars or $300 dollars. The points could be worth 2 cents or 3 cents in this scenario.

**Should I only invest in high value points?**

**No**, don’t just invest in high value points because they are worth more. You always have look at the **earning percentage**. **The earning percentage is: (Points value) x (# of points earned per dollar spent).** What this effectively means is if you earn points with a lower value at a much higher rate than you earn points with a higher value, you could possibly earn enough lower value points to offset their lower points value.

Earning rates are how many points you earn per dollar spent. This can be from either credit cards or loyalty programs from traveling. Let’s compare Hilton points and Marriott points to show an example of earning percentages versus points value.

- Hilton points – Vary in value but generally are worth .5 cents per point
- Marriott points – Vary in value but generally are worth .7 cents per point

Marriott points are worth .2 cents per point more than Hilton points. This makes you inclined to earn Marriott points. Let’s look at earning rates from their credit cards on non bonus spending (i.e. earns the lowest points per dollar).

- Chase Marriott Rewards Card – Non bonus spending earns 1 point / dollar
- American Express Hilton HHonors Surpass Card – Non bonus spending earns 3 points / dollar

You earn more points per dollar for Hilton but does it offset their lower points value?

- Marriott – (.7 cents per point) x (1 point / dollar) = .7 % earned from non bonus spending
- Hilton – (.5 cents per point) x (3 points / dollar) = 1.5% earned from non bonus spending

**With the higher earning percentage, Hilton points beat out Marriott by it’s earning rate and thus I would rate invest in Hilton points.** Of course there are a lot more factors to think about too when investing in points such as bonus spending, points earned by paid travel, which hotels you want to redeem your points at, etc. but do always consider the earning percentage before starting to invest in points. **You might be surprised that even though a points currency is worth less, you could potentially earn a lot more return on your spending because of their better earning rates. Always, always, always look at the earning percentage.**

Agree or disagree with anything I said? Comment below!

-Nick a.k.a. Points Tutor