Points, Miles, or Cash: An Earner's Dilemma

So, now you're aware of the options for earning "kickbacks" for your online shopping.  That brings up a dilemma that I frequently face: If I can earn X% cashback, X miles per dollar, or X points per dollar for shopping at a website, how do I choose?  Well, there's a simple answer and a more complex answer.

The simple answer is: Take the Money.  For the average person the best cashback percentage is usually worth more than the best miles offer.  If you want to keep things as simple as possible while maximizing your actual financial benefit, then always pick the best cashback percentage you find on Evreward.com. 

The more complex answer is... more complex.  It depends primarily on how you value your points and on how you plan to use them.  Value will often be referred to in shorthand as “cents per mile” (CPM) or “cents per point” (CPP) and expressed in decimal form, e.g. I value Priority Club points at 0.5 CPP and I value Delta Miles at 1.2 CPM.  The value that you assign to a particular program’s points or miles should guide your decision making process.   In order to determine how you value points, you should consider how you plan to redeem them.

Take Delta Skymiles, for instance.  I generally redeem Skymiles for Transatlantic (TATL) Business Class tickets.  A round-trip TATL ticket costs 125,000 Skymiles at the "low" award level.  By contrast, the cash price for such a ticket is routinely $3,000 or more.  But that doesn't mean that 125,000 miles are worth $3,000 to me, because I'd never pay that much for a ticket.  Consequently, the miles are only worth what I would pay for the ticket.  I'd pay $1,400 dollars for a TATL ticket in business class.  Dividing $1,500 by 125,000 tells me that each Skymile is worth 1.2 cents to me.  

The same logic applies to any other points "currency."  If I redeem 20,000 hotel points for a stay that I would otherwise pay $100 for, then each point is worth .5 cents to me.  I recommend coming up with a baseline figure for what you think your points are worth and letting that guide your decision on which shopping portal to use.  While there are ways to maximize the value of your points through strategic redemptions, its best to be conservative when placing a cash value on them.