It’s tempting to use points and miles for travel, cash or other rewards just because you have a high balance. For the uninitiated, they still look at points and miles as freebies.
The truth is points and miles are currency. The value for a single point/mile isn’t high, usually about 1-2 cents a piece. But the benefits can be huge without a whole lot of time or effort. In fact, it’s lost money if you’re not considering it as a viable way to automate your everyday budget purchases into a passive income.
Making five figures a year is a pretty easy feat for most people if they’re willing to put a few hours in every month.
For now, focus on the one fundamental rule, understanding the value of a point or mile. Again, they’re all worth 1-2 cents but the variation can be big. The Points Guy has a fantastic monthly chart showing the valuation of points across every loyalty program and you can find it here.
We can get into earning points/miles later, but next time you look at burning through your stash, look at these values and compare it to the cash price of the hotel room or flight ticket. Sometimes you can get a $1,000 flight for 10,000 points, and sometimes you can get a $100 flight for 25,000 points. Just multiply the points required for the redemption by the value and see if you’re better off using the points or sticking with cash. It varies on every search, so don’t just burn the points without understanding their value as currency.
