Originally Posted by nabeelj
Am I just imagining things, or were these points worth ~1.6c before? They now seem to be worth 1.2-1.25c.
Originally Posted by gerald5
Yes the points have been devalued by 22% with no prior communication. Disappointing.
I finally had some time to analyze this a bit:
So, first things first, where did I get my 1.6c value? Specifically, from three places:
1. PenFed Premium Rewards T&Cs
give examples of redemption values, all of which come to 1.6c per point.
2. 5-10 tests (several months ago) of comparing simple flights to Travelocity and Expedia. I mostly compared AA and UA flights from YYZ and ORD to random cities. I got a valuation very close to 1.6c per point almost every time.
3. The program requires you to pay a minimum of 75% of the first ticket by points. If you try to pay cash for the 25% or for additional tickets, you quickly figure out the cost of the flight. Doing this several months ago resulted in a valuation of 1.6c per point.
Now, #1 hasn't changed, but #2 and #3 now result in 1.25c per point.
As such, 1-(1.25c/1.6c) = ~22% devaluation.