For cash back credit cards, the reward is clear: it is a percentage of every dollar spent. For example, you can earn 1% cashback on all purchases. However, for reward cards, the exact value of the reward is not always that clear. That's because you earn points, not cash back. When these points are incurred, these points can later be redeemed for goods and services such as flights, hotels or electronics. But how do you know which credit card is used and what points are earned to get the best value for your expenses? The answer can be difficult to calculate and determine.
How much are credit card points worth? It depends on
To find out which credit card offers the best rewards, we need to know how many points are awarded for every $ 1 spent. We must also determine the value of the goods and services for which the points can be redeemed. For example, 10,000 points that can be redeemed for $ 250 travel worth more than 10,000 points that can be redeemed for just $ 100 in merchandise. Your individual preferences also matter how much your points are worth. For example, do you estimate more than one flight on Air Canada at Store Gap? Think about which credit card is best rewarded for your consideration.
For cash back credit cards, the reward is clear: it is a percentage of every dollar spent. For example, you can earn 1% cashback on all purchases. However, for reward cards, the exact value of the reward is not always that clear. That's because you earn points, not cash back. When these points are incurred, these points can later be redeemed for goods and services such as flights, hotels or electronics. But how do you know which credit card is used and what points are earned to get the best value for your expenses? The answer can be difficult to calculate and determine.
How much are credit card points worth? It depends on
To find out which credit card offers the best rewards, we need to know how many points are awarded for every $ 1 spent. We must also determine the value of the goods and services for which the points can be redeemed. For example, 10,000 points that can be redeemed for $ 250 travel worth more than 10,000 points that can be redeemed for just $ 100 in merchandise. Your individual preferences also matter how much your points are worth. For example, do you estimate more than one flight on Air Canada at Store Gap? Think about which credit card is best rewarded for your consideration.
Start with the critical information
1. How many points will be awarded per US $ spent? Note that not all purchases bring the same number of points. The points you earn depend on the credit card and the shopping category. For example, if you take your Capital One Aspire Travel World MasterCard with you anywhere, you will receive 2 points for every $ 1 spent. With the Scotiabank Gold American Express, you get 4 points for every 1 USD spent on gasoline, groceries, food and entertainment and 1 point per 1 USD for all other purchases.
2. What these points can buy: The credit card issuer also states how many points have to be redeemed for a particular good or service. Here, the rating of points can be difficult.
At Aeroplan, a return flight from Toronto to Los Angeles costs 25,000 miles. You also have to pay taxes and surcharges. How much is this flight worth? Depending on the time and day, it can regularly cost between $ 550 and $ 850. In addition, taxes must be paid in cash in addition to the required points. To estimate the value of an airplane mile for a flight to Los Angeles, we use an average fare of $ 700. Airplane taxes for a flight to Los Angeles are around $ 180. To determine the value of an aeroplan mile, we first deduct the taxes to determine your net gain on redemption of 25,000 miles: $ 700- $ 180 = $ 520. Since taxes must be paid in addition to the required point amount, there are 25,000 Miles worth $ 520. To find the value of an airplane mile, divide $ 520 / 25,000 = $ 0.0208. Toronto to Los Angeles is a great flight to redeem your Aeroplan miles, as each mile is worth $ 0.0208.
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