I think the point holtju2 is trying to make is that people are choosing to take miles/points (such as with the SPG AMEX card) instead of getting cashback. Thus, the cost of the miles/points is actually the lost opportunity to take the cash. Since 1% cashback cards are the defacto standard, 1 cent per mile/point should be the minimum cost you are assigning in any of your calculations. I would further argue that credit card spend for things like gas & grocery purchases should use 3 cents per mile as the cost since that is the going rate on the Chase Freedom card.