Introduction
Have you ever wondered what a point is worth? Is it a penny? A dollar? Or does its value fluctuate within the vast landscape of loyalty programs? In this post, we’ll demystify the process of calculating the value of points, explore the crucial distinction between Fixed and Variable-Value points, and introduce the concept of Target Redemption Value (TRV).
Ready to figure out what your points are worth? Let’s dive into the true value of points.
TLDR:
- To calculate the value of a point, use the formula in the post.
- Fixed-value points offer simplicity and stability, while variable-value points provide potential for greater returns.
- Target redemption value (TRV) is a benchmark to determine the value of a redemption.
- Redemptions greater than or equal to the TRV are considered good value.
- The TRVs below are based on personal opinion and are subject to change.
Fixed-Value and Variable-Value Points:
Not all points are created equal, and understanding the difference between fixed and variable-value points is crucial to unlocking the full potential of travel rewards.
Fixed-value points have a consistent, predetermined monetary worth (e.g., 1 cent per point). This predictability makes redemptions easy and is why fixed-value points are often used for cash back or simple travel bookings. Their value is stable, tied directly to currency.
In contrast, variable-value points fluctuate in value with each redemption, especially for travel such as flights and hotels, where demand and timing are key factors. While this variability requires more planning, it also unlocks the potential for higher-value redemptions, particularly for premium travel experiences.
In essence, fixed-value points offer simplicity and stability, while variable-value points provide potential for greater returns with strategic use. Understanding this difference is key to optimizing point redemptions. Now, let’s move on to calculating the actual value of a point.
Calculating the Value of a Point:
To calculate the value of each point in a redemption, we use the following formula:
Note: When redeeming variable-value points, it’s crucial to deduct “taxes and fees” from the “$ value of redemption” to accurately determine the true value of each point.
For Example:
A one-way economy class ticket from YVR to NRT via Air Canada on March 10, 2025 costs 61,500 points + $61 (taxes and fees). The same flight costs $776 in cash. In this example, the value of each point would be ($776 – $61) / 61,500 = $0.0116 or 1.16 cents per point.
Note: Cent(s) per point (CPP) is the value expressed when calculating the value of a point.
Now that we’ve calculated our point value, we can use that information to assess redemptions strategically. By comparing the calculated value to the target redemption value (TRV), we can determine if a redemption is truly worthwhile.
Target Redemption Value (TRV):
The target redemption value (TRV) is a benchmark that helps gauge the value of your points. It’s the minimum value expected for each point during redemption. If a redemption is same or higher than the TRV, it is considered a good redemption. If it is significantly lower, it is not considered a good redemption. The TRV is determined by researching average values of redemptions, considering the flexibility of the points, and looking at different rewards options.
To keep things simple, the following tables list the TRV for several Canadian rewards programs. It’s important to remember that these values are averages extracted from redemption data and may not represent the actual value achieved during redemption.
Fixed-Value Points Valuation (TRV)
| Points Program: | Value Per Point: |
|---|---|
| American Express Membership Rewards* | 1 cent per point |
| BMO Air Miles | 10.5 cents per point |
| BMO Rewards | 0.67 cents per point |
| CIBC Aventura* | 1.25 cents per point |
| MBNA Rewards | 1 cent per point |
| RBC Avion* | 1 cent per point |
| Scotiabank Scene+ Points | 1 cent per point |
| TD Travel Rewards | 0.5 cents per point |
| WestJet Rewards | $1 per WestJet dollar |
Variable-Value Points Valuation (TRV)
| Points Program: | Value Per Point: |
|---|---|
| Air Canada Aeroplan | 2 cents per point |
| Air France KLM Flying Blue | 2 cents per mile |
| Alaska Airlines Mileage Plan | 2 cents per mile |
| American Airlines AA Advantage | 2 cents per mile |
| American Express Membership Rewards | 2 cents per point |
| British Airways Avios | 2 cents per Avios |
| Cathay Pacific Asia Miles | 1.6 cents per mile |
| RBC Avion | 2 cents per point |
Hotel Points Valuation (TRV)
| Points Program: | Value Per Point: |
|---|---|
| Best Western Rewards | 0.8 cents per point |
| Hilton Honors | 0.7 cents per point |
| IHG Rewards | 0.5 cents per point |
| Marriott Bonvoy | 0.8 cents per point |
| World of Hyatt | 1.8 cents per point |
| Wyndham Rewards | 1.2 cents per point |
To determine if a redemption offers good value, compare the calculated point value—using the formula above—to your TRV. If the calculated value is far below your TRV, it means the redemption is not aligned with your desired value, and there are likely better redemption opportunities. In this scenario, it’s often better to pay with a credit card or use fixed-value points and save your variable-value points for a more advantageous redemption later.
Conclusion:
In this post, we explored the true worth of points by examining fixed and variable-value points, learning to calculate CPP, and understanding how to use TRVs to evaluate redemptions. Keep in mind that TRVs are personal, and the tables above are merely guidelines. With this framework, we are now equipped to determine which redemptions are worthwhile.
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