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In this video we look at the Points Guy’s valuations of credit card points and airlines miles etc… And show you why in some cases they don’t make sense and in some cases they do.
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Hey everyone credit Shifu here now I Love the points guy he was a big reason I got into the whole credit card game Back in 2016. and if you don’t know Brian Kelly is the points guy he started A website teaching people how to use Points and Miles he used to look like This it was later bought by Red Ventures The parent company of Bankrate and it Turned into this and he comes out with Valuations for every single kind of Airline miles Hotel points and of course Credit card transferable points every Month and that’s the part that I find Doesn’t really make sense for me the Credit card transferable Point valuation How do you get a point Sky valuation of Two cents per point for chase points When the most value you can get out of Them from the travel portal is 1.5 cents Per point if you have the sapphire Reserve and if you transfer them to Partners well the most valuable partner That chase has is Hyatt which the Points Guy himself values at only 1.7 cents per Point so where exactly does the two Cents per Point come from and that’s Exactly what we are going to delve into In this video but first in order to Understand what we are going to talk About how exactly do you work out the Value of points we’re going to use the Example of airline miles they tend to be Worth less when you use them for economy

And worth more when you use them for Business class and we will just point Out that it’s the same with Hotel points As well you generally get lower value Booking low end properties and higher Value booking some five-star Resort so When you book a flight with airline Miles you pay for most of the cost of The ticket with the airline miles and Then there is a small portion of taxes And fees that you will have to pay for In cash for example for us one-way Domestic flights it is 5.60 so you would Work out the value of your airline miles With this formula that the points guy Has on his website cashpries minus taxes Divided by miles or points required Times 100 equals the cents per point Value so if I was going to book a United Flight from Seattle to New York in Economy class for example this fly at 6am on May 14th is 159 or 16 900 miles So I first do cash price minus taxes 159 Minus 560 equals 153.40 then I divide that number by Number of miles needed so 153.40 divided by 16 900 which gets you This number you then multiply that by 100 to get the number of cents per mile And in this case it comes out at 0.9 Cents per mile now that is actually Below the points guys valuation for United miles for 1.21 cents per mile That he has on his website but if you go

And book business class or a first class Flight with them actually they don’t Have first class but whatever if you go Book a business class flight with them You get better value for example I was Able to get a United Polaris business Class flight from London to New York for 60 000 United miles plus 326 dollars in Taxes and fees for a fairer comparison Since this is an international flight if You book an international flight one way It’s normally way overpriced so I use Half the price of a return ticket a Round-trip ticket in this calculation so Using the same formula on a cost of the Flight of three thousand nine hundred Dollars you minus the taxes and fees you Divide by the number of miles you times 100 I was getting six cents per point in Value now that is obviously way over the Points guys valuation but the points Guys valuation at least for the major Three big U.S Airlines Delta United and American is done by an algorithm it Compares thousands of round-trip flights On a seven day itinerary Thursday to Thursday over a three-month period they Use the equation we showed a moment ago And then they take the median value from The data I.E the middle so 50 of the Flights are lower value and fifty Percent or higher and they pick the Value right in the middle they also take Both economy and business and first

Class redemptions into consideration but They say this quote Airlines tell us That the overwhelming majority of Redemptions are for domestic coach Tickets so they actually wait the Valuations at 20 business class and Eighty percent economy which is going to Skew the value towards economy towards The lower end by a lot so that means That a value of 1.21 cents per point for United miles is not that accurate for Credit card points enthusiasts who are Going to use the miles to book Polaris Business class like what you see on Screen there but it may serve as a Really good guide for the average person What you can expect is that if you are Going to book economy you’re going to Get a value a little bit lower than the Points guys valuation like you saw with That demo booking that we did 0.9 cents Per point but when you book business Class you’re going to come out above Sometimes way way above like that six Cents per Point uh booking that we Showed you so that’s why in many Situations these values don’t make sense But then when you understand the Methodology they actually make perfect But then what about transferable points Why are Chase and Amex points valued at Two cents per point and city is valued At 1.8 cents in Capital One at 1.85 Cents per point this is the part that

Puzzles me and we’re going to take a Look at that but first if you like me Have loads of credit cards that you want To keep track of data on I recommend app Max rewards it pulls data on all your Credit cards in one place even if They’re from different issuers so you Can see your transactions your balances Your points and miles and rewards Balances all in one easy to use Dashboard the app will also tell you Which card to use in which spending Category and at which local Merchant to Earn the maximum rate of rewards and Cashback if you have American Express Cards it becomes even more useful since If you have the pro version of Max Rewards Max rewards gold it will Activate your Amex offers for you so That you never miss a deal and once all Of your offers activated and added to Your card new Secret it offers that you Never knew existed will appear in your Account and it’ll activate those too Saving you even more money the average User saves around 700 a year with Max Rewards gold so guys click the link Below to get a free month of Max Awards Gold or you can just download the app And check out the free features so let’s Look at transferable points and I wanted To figure out the value of the points by Taking an average of all of the Transfer Partners okay so for chase points for

Example I added up the values of all 14 Transfer Partners I then divided them by The number of Partners 14 and I got 1.3 Cents per Point Way below the 2 cents Per point in value that the points guy Gives us now that was a mean average I Decided I would try a median like the Points guy uses for his valuation so I Put the numbers in sequence because it’s An even number of numbers 14 you Actually don’t have a middle you have Two numbers in the middle so you then Take the mean average of those two and It came out with 1.4 cents per point and That’s not great either I mean you Should be getting a minimum of 1.5 cents Per point if you have the Chase Sapphire Reserve because that’s the value you get From them through the travel portal but How does the Points Guy get two cents Per point for chase points personally I Don’t know but there are some Considerations one since they are Transferable points you have more choice Of Airlines and hotels that you could Transfer them to so they may be Accounting for the fact that you can Choose the airline that you would get The highest value from since there are So many Transfer Partners you’re more Likely to find one that is offering a High value Redemption on the date that You want to fly and you would choose That one transfer your points over then

Two they could be accounting for the Fact that you periodically get transfer Bonuses when you transfer your points Over to certain airlines and hotels for Example at the time of filming of this Video Chase was offering a 25 bonus to Transfer to Air France KLM and a 50 Bonus to transfer to Marriott bonvoy That still doesn’t quite get you up to Two cents per point for those Partners Though and the same is true with Amex They periodically offer bonuses when you Transfer to certain Airline Partners They also have the one point Amazon Discount trick where you use one point To pay for part of your Amazon order and You get a discount if you’re targeted For the deal the Points Guy actually Quotes that on his website in the Section where he talks about the value Of Amex points so maybe these things are Being taken into account to give a Slightly higher value for transferable Points it seems that the valuations for Transferable points are not Based on Algorithmic data but it stared on quote Editorial staffs expertise test Redemptions how much we would pay to Purchase a particular type of point or Mile I would love it if the points guys Staff could write an article explaining How they come up with the valuations for The four major points currencies Chase American Express Capital One and city

But even though there is some mystery Surrounding it I think the points guys Valuations are still probably the best In the industry from a certain point of View they make no sense and from another Point of view they make perfect sense And at a minimum they can serve as a Guide for people so that they know They’re not getting ridiculously poor Value for their points here are some of My tips for understanding these Valuations a bit better when using Specific Airline currencies to book Business class flights the absolute Minimum value you should be getting is Two cents per point or Mile and the Value is going to go up if your dates Are flexible and you can shop around to Get the absolute lowest rate on a points And Miles ticket when booking economy Flights with airline miles you’re Probably going to be a lot closer to the Points guys valuation in fact probably Just below it so if those points Originally were transferable points and You’re thinking about transferring them Out to Airlines stop and have a look at The value you would get from the travel Portal from that bank particularly with Chase since if you have the sapphire Preferred the points are valued at 1.25 Cents per point and if you have the Reserve they’re valued at 1.5 cents per Point so for economy you may actually

Get better value not transferring but Booking through the portal also look out For very expensive redemptions on Airlines use Dynamic pricing like they Don’t have blackout dates they just try To rip you off instead like on United The best price for our Seattle New York Flight is this green figure here and you Want to stay as close to that number as Possible if you book this flight for Double the normal price in points you’re Getting a very bad Redemption on Transferable points know that the value You get is probably based on the average Value of the Transfer Partners plus a Little bit extra to represent the fact That you have choice so you can choose The partner that’s offering the best Rate and you may get a transfer bonus For transferring your points out but What do you guys think let me know what You think about the points guys Valuations how accurate or not they are In the comments below Brian Kelly if You’re watching this I’d love to Interview on the show and you can tell Us more about how they figure out the Valuations particularly for transferable Points don’t forget to get a free month Of Max rewards gold with my link below Subscribe if you’re new and we’ll see You next time bye