Mixing Points and Cash: My Strategy for Award Redemptions

If you've ever used loyalty rewards for booking a flight or hotel, you might realize there are various ways to combine points and miles to cover your expenses.

When redeeming flights, you will always need to cover additional taxes and fees. These charges can range from a few dollars to potentially soaring into the thousands on long-haul premium cabin bookings with airlines like British Airways and Virgin Atlantic.

Regarding hotels, you can typically redeem points for completely free stays without any cash expenses — provided the property doesn’t impose resort fees or extra charges on award redemptions. Moreover, some hotels may allow you to pay with fewer points and cover part of your stay with cash.

If your points or miles fall short for a flight or hotel redemption, you might still have the option to pay with cash. For instance, British Airways lets travelers lower the price of regular cash fares by using a certain number of Avios alongside cash through their Avios Part Payment option.

With so many possible payment combinations, how can you maximize the value of your points and miles?

Here’s my straightforward approach.

Assess the worth of your points and miles

To start, it’s essential to understand the value of your points and miles.

To determine this, you can refer to our monthly valuation chart.

Next, it's time to crunch some numbers.

I value British Airways Avios at 1.5 cents each based on TPG's assessments. When booking a flight, I see these options for an economy ticket from John F. Kennedy International Airport (JFK) to Heathrow Airport (LHR).

Whether in my mind or using a calculator, I multiply the Avios required by 1.5 cents. This results in:

• 25,000 Avios converts to $375
• 19,000 Avios converts to $285
• 13,000 Avios converts to $195
• 9,750 Avios converts to $146.25
• 6,500 Avios converts to $97.50
• 4,550 Avios converts to $68.25

Now, let’s factor in the taxes and fees for each conversion above:

• The 25,000 Avios option totals $438 ($375 plus 50 British pounds, roughly $63)
• The 19,000 Avios option totals $425 ($285 plus 110 British pounds, about $140)
• The 13,000 Avios option totals $462 ($195 plus 210 British pounds, roughly $267)
• The 9,750 Avios option totals $452.50 ($146.50 plus 240 British pounds, approximately $306)
• The 6,500 Avios option totals $434.50 ($97.50 plus 265 British pounds, around $337)
• The 4,550 Avios option totals $437.25 ($68.25 plus 290 British pounds, about $369)

As you can observe, when converting Avios to cash, the differences in cost among the various payment choices are minimal. The 13,000 Avios option is the most costly, while the 19,000 Avios option is the least expensive.

Given that I value my Avios and notice there isn’t a significant value disparity between using more or fewer Avios, I would prefer to spend fewer Avios and pay more in cash. Conversely, if you have plenty of Avios but are low on cash, I’d suggest going for the "most points" option.

While it may feel like you're not getting a great deal by paying cash for your flight redemption, if cash prices exceed $425 on those dates, you're actually saving a significant amount of money.

How about utilizing hotel points?

Let’s examine a hotel case. Here’s a redemption opportunity at Dream South Beach in Miami, Florida, which can be booked with World of Hyatt points.

I can redeem 17,000 points for a King Bronze Room or 8,500 points plus $135 for the larger King Bed Silver Room.

Should I spend $135 to save 8,500 Hyatt points? Is this worthwhile?

According to TPG, Hyatt points are valued at an impressive 1.7 cents each, making 8,500 points equivalent to $144. If I don't have enough points to fully cover the room or wish to conserve some for a future redemption (possibly a more desirable, higher-tier property), paying $135 to save $144 worth of points is indeed a good deal.

The key takeaway

Combining points and cash payments can be quite perplexing.

After establishing a basic valuation for the points and miles you wish to redeem, you'll find it easier to quickly assess the various payment options. There's seldom a single best choice. If you have a substantial mileage balance, you might be content with a slightly lower value by opting for less cash.

If you're aiming to preserve points for a significant aspirational redemption, using cash may be more advantageous. However, keep in mind that accumulating points and miles is not advisable, as programs frequently undergo devaluation.