Originally Posted by
dom89
Thanks for the replies. I just realized that I had wrong calculations and never submitted my edit until now. Could you please re-read the OP and let me know if you what have said so far still applies?
smb12, I had not thought about the opportunity cost. That is something for me to keep in mind.
RandomBaritone, I know the ratio varies which is why I gave the mint example since those prices are pretty standard with $598.10 being the lowest you can find recently. One thing that prompted me to make this post is I recently booked a roundtrip ticket to SDQ from JFK during a recent sale. The cost in dollars would have come out to be $366 but in points I ended up paying 8000 points + 104 in fees and I am trying to figure out if I ended up saving dollars by using my points. In this case the point value is definitely higher than 1.3
The value of a point is "flexible" and you effectively get to choose when it's "worth it." Each airline is different. Like recently...I could fly LAX-NRT for 60,000 MR, but cash fares were $550. I'd be getting <1 cent per point in value...and my "bar" for MR is 1.7cpp, so I would rather pay cash.
In your last example $366 vs 8000points+$104. Without taking opportunity cost into the picture, your 8000 points is offsetting the $262 ($366-104) you would have paid going full cash. $262/8000 = 3.3cpp. I'd say, you made a good choice...ESPECIALLY if you value those points around 1.3cpp. At 1.3cpp, 8000 points = $104. So your total was $208. You just spent $208 to get a $366 ticket. Did you do well?
You just bought that ticket at "46% off". But it's defined BY YOU. If your bar is 4cpp (unlikely)...then almost every time...you'll be "saving money" by just spending cash.