How to calculate the value of your credit card’s rewards points

Not sure how many dollars you have to spend on your credit card to get that coveted reward? Here's a look at how rewards points really work.

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It’s easy to get excited about a credit card that rewards you for your spending until you start trying to figure out the details. A rewards credit card can get you some great stuff just for using it, but first, you need to figure out how. With points ratios and tiers to further complicate matters, it’s no wonder some users end up not using their rewards at all.

Before you start comparing rewards credit cards to find the best one for your needs, you’ll need to know the basics of reward point currency. This is where you figure out how many dollars you need to spend to get points, and how many points you have to earn to get your reward. Once you have that down, you’re just a simple math equation away from determining how much value you actually get from the rewards.

American Express Cobalt Card

American Express Cobalt Card

19.99 % APR

Purchase interest rate

Eligibility criteria, terms and conditions, fees and charges apply

American Express Cobalt Card

Apply today and earn up to 5 points for every dollar you spend on eligible purchases. Terms apply.

  • Purchase interest rate: 19.99%
  • Cash advance rate: 22.99%
  • Annual fee: $120
  • Credit rating: Fair, Good, Excellent
  • Minimum age: Age of majority in province/territory of residence
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Rewards points credit cards comparison

Name Product Bonus Points Rewards Program Purchase Interest Rate Cash Advance Rate Annual Fee Rewards with this card Description
American Express Cobalt Card
40,000
Membership Rewards
19.99%
22.99%
$120
Earn 5 Membership Rewards points per $1 spent at eligible grocery stores, restaurants, bars, cafés and food delivery services, and earn 2 Membership Rewards points per $1 spent at eligible gas stations, and on transit and travel purchases, and earn 1 Membership Rewards point per $1 spent elsewhere. Terms apply.
Earn up to 40,000 Membership Rewards points. In the first year, earn 2,500 Membership Rewards points for each billing period when you charge at least $500 in eligible purchases to your card (for a total earn of up to 30,000 Membership Rewards). Plus, earn up to 10,000 Membership Rewards points when you spend a total of $3,000 in purchases in your first three months.
The Platinum Card from American Express
50,000
Membership Rewards
N/A
N/A
$699
Earn 3 Membership Rewards points for every $1 spent on eligible dining in Canada, 2 Membership Rewards points for every $1 spent on eligible travel purchases as well as hotel and car rental bookings made with American Express Travel, and earn 1 Membership Reward point for every $1 spent on all other eligible purchases.
Earn a Welcome Bonus of 50,000 Membership Rewards points when you spend at least $3,000 on eligible purchases within the first three months.
BMO World Elite Mastercard
35,000
BMO Rewards
19.99%
22.99%
$0 annual fee for the first year ($150 thereafter)
Get 3 BMO Rewards points per $1 spent on eligible travel, dining and entertainment purchases (up to $50,000 spend annually), and get 2 BMO Rewards points per $1 spent on all other eligible purchases (and once you reach the $50,000 annual spend).
Earn a bonus of up to 35,000 BMO Rewards points with a minimum spend of $3,000 on eligible purchases in the first three months of card membership ($250 travel value to be used towards a flight booked through bmorewards.com). Plus, get the $150 annual fee waived in the first year. Apply by May 3, 2020.
Scotiabank Passport  Visa Infinite Card
25,000
Scotia Rewards
Visa Infinite
19.99%
22.99%
$139
Earn 2 Scotia Rewards points for every $1 spent on eligible grocery store, dining, entertainment and daily transit purchases, and earn 1 Scotia Rewards point for every $1 spent elsewhere.
Earn up to a total bonus of 35,000 Scotia Rewards points (a $350 value). Earn 25,000 Scotia Rewards points when you spend at least $1,000 on eligible purchases in the first 3 months ($250 value). Apply by March 1, 2020. Plus, earn 10,000 Scotia Rewards points each year when you spend at least $40,000 annually on eligible purchases (up to $100 value).
SimplyCash Preferred Card from American Express
N/A
Cash back
19.99%
22.99%
$99
Earn 2% cash back on all eligible purchases.
Earn 5% cash back on all eligible purchases in your first six months (up to a maximum spend of $6,000, or $300 in cash back). Plus, get a rate of 1.99% on balance transfers for the first six months with no balance transfer fee. Transfer up to 50% of your credit limit or $7,500, whichever is less. This offer is only available at the time of online application.
Tangerine World Mastercard
N/A
Tangerine Money-Back Rewards
19.95%
19.95%
$0
Earn 2% cash back in two categories of your choice (or three categories if you open a Tangerine Savings Account and directly deposit your cash back into the account), and 0.5% cash back on everything else.
Earn a $250 Bonus when you spend at least $5,000 on eligible everyday purchases in your first three months as a new cardholder. Apply online by March 31, 2020. Plus, get a 1.95% interest rate on balance transfers for the first six months (valid within the first 30 days of account opening).
BMO CashBack World Elite Mastercard
N/A
Cash back
19.99%
22.99%
$0 annual fee for the first year ($120 thereafter)
Earn 1.5% cash back on all eligible purchases.
Get up to 5% cash back on all eligible purchases made within the first 3 months (up to a maximum spend of $4,000). Plus, get the first year annual fee of $120 waived. Apply by April 30, 2020.
Scotia Momentum  No-Fee Visa Card
N/A
Cash back
7.99% intro APR for the first 6 months, 19.99% thereafter
22.99%
$0
Get 1% cash back on all eligible gas station, grocery store and drug store purchases and recurring bill payments, and get 0.5% cash back on everything else.
Get a 7.99% introductory interest rate on all eligible purchases for the first 6 months. Apply by March 1, 2020.
American Express AIR MILES Platinum Credit Card
2,000
Air Miles
19.99%
22.99%
$120
Earn 1 AIR MILE for every $5 spent on eligible food, drink, gas and transit purchases (up to an annual spend of $30,000), and earn 1 AIR MILE for every $10 spent on all other eligible purchases (and after the $30,000 annual spend).
Earn a Welcome Bonus of 2,000 AIR MILES when you spend at least $1,500 in eligible purchases within the first three months. Plus, get a rate of 1.99% on balance transfers for the first six months with no balance transfer fee. Transfer up to 50% of your credit limit or $7,500, whichever is less. This offer is only available at the time of online application.
American Express Business Edge Card
30,000
Membership Rewards
19.99%
22.99%
$99
Earn 3 Membership Rewards points for every $1 spent on eligible business essentials including office supplies, electronics, rides, gas, eats and drinks (up to an annual earn of 75,000 Membership Rewards), and earn 1 Membership Reward point for every $1 spent on all other eligible purchases.
Earn up to 42,000 Membership Rewards points in your first year. Earn a Welcome Bonus of 30,000 Membership Rewards points when you spend at least $5,000 on eligible purchases within the first three months, and earn 1,000 Membership Rewards points each month (a total of 12,000 annually) when you spend a minimum of $3,000 on eligible purchases.

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How to calculate the value of rewards points

Since each rewards program is different, you’re going to have to do the calculations for each credit card you’re considering. To make it as comparable as possible, at least try and narrow your search down to the type of rewards program you want first. For example, if you’re looking for shopping rewards, choose a few shopping rewards credit cards to make a fair comparison. Then, follow these steps to see how much value you could get for your points:

  1. Calculate. The easiest way to determine point currency is to calculate the points you will need to buy $1 worth of rewards. To do this, you will need to divide the number of points needed to redeem a reward by the retail price of that reward.
  2. Compare. Let’s say you used a $50 gift card as your reward to compare and it costs 7,500 points, you would need 150 points for every dollar the reward is worth – 7,500 (point cost) / 50 (retail value of reward) = 150.
  3. Result. After using this equation on comparable rewards with different credit cards, you can pick out those with the greatest value by looking for the ones with the lowest result. The lower the number of points, the better the value.
  4. Earn rate. Now you will want to look at the earn rate. Using the same example, if the card has a 1:1 ratio on points to dollars, then you need to spend $150 in order to get $1 of rewards value. With a better earn rate ratio, such as 2:1, you would only be spending $75 in order to earn $1 back.

In order to make sure that your calculations are as accurate as possible, compare similar rewards across a variety of different credit cards. Gift cards and coupons are the easiest to compare, as their retail value is the same as their face value.

How to calculate the value of travel rewards

Using miles as the point of reference is the easiest way to calculate the value of a travel rewards credit card. You can also use the actual flight ticket price to do the comparison.

  1. Price calculation. Divide the value of the reward in dollars by the points needed to earn it. The value of the reward would be the actual dollar cost of the flight. This will give you the ticket value in relation to your travel rewards points.
  2. Mile calculation. If you prefer to compare rewards points for miles, you would simply divide the number of miles between two of your favourite destinations by the number of rewards needed for that flight. This will give you an idea of the point value for mile, helping you to make your comparisons across different credit cards.

See the below table to how you can use your points currency to calculate the value of your rewards.

Figuring cost per mileVancouver to Calgary
Miles603
Cost for flight$189
Rewards points needed for flight8,000
Rewards points are worth0.07 cents each

What other factors should I consider?

When trying to figure out the value of a credit card rewards program, there is more to think about than the points and how much they’re worth.

  • Annual fee

Fees and interest rates can make a rewards card less appealing, as these costs can be high with these types of credit cards. The higher the annual fee, the lower the value of the rewards program.

For example, you have earned 14,000 travel rewards points and plan to use them to fly from Vancouver to Toronto. For the purpose of this explanation, let’s say that normally that flight costs $500. Now, you’re thinking “what a great deal!” until you factor in an annual fee of $240. That just about halves the value, which will be reduced even further once you factor in any interest you’re charged (if you carry a balance from month-to-month).

  • Bonus features

Some rewards credit cards come with added features that just may make those fees and interest rates worth it. Complimentary travel insurance, concierge services and rental car discounts are just a few of the perks you may find with a rewards credit card. These services and features add value to the rewards card.

For example, if you were to travel to Thailand yearly, travel insurance could cost you around $100. If your card offers complimentary travel insurance coverage, then you can offset part, or all, of the annual fee with what you would normally pay for travel insurance.

How can I make the most of my points?

Treat your points like you would cash when it comes time to redeem them. If you’re rewarded with coupons or gift cards, shop for items that are on sale.

With travel rewards miles, go for the flights that are more expensive and generally never marked down. Keep in mind that you’ll have to factor in other costs, such as the higher taxes that are added on to an international flight. Taxes usually cannot be paid for with your points, and will reduce their value.

How to compare reward programs

When comparing the programs that accompany rewards credit cards, consider the following factors:

  • Points currency. The real value of the rewards offered are determined by the value of the points and any fees. Taking the time to make the calculations will ensure that every dollar you spend is being stretched to its limit.
  • Fees. Remember, the lower the fees and interest, the more value you get from the rewards. Few rewards cards have no fees, but you can choose a low cost rewards card if you wish.
  • Perks. You also have the little extras that can go a long way in increasing a rewards program’s value. Look for things like complimentary insurance and hotel discounts if you want to maximize your rewards potential.
  • Features. Some rewards cards also come with features that may be valuable to you outside of the rewards program. Balance transfer offers, for example, could save you thousands of dollars if the interest rate is significantly lower than what you’re paying now.

See the full range of rewards cards

Bottom line

With just a few minutes of work and some minimal math calculations, you can figure out how valuable a credit cards rewards program is. Not only does this allow you to choose the best credit card for your needs, it also helps you understand how the points program will work and most importantly, how it’s going to work for you.

Frequently asked questions

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