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Points to dollars: How to calculate the value of rewards points

Not sure how many dollars you need to spend to obtain that coveted reward? Here’s a look at how points currency works.

The value you get from a rewards credit card, such as an Airpoints card, largely depends on whether or not you can use the points and other perks to justify the card’s fees, rates and any other costs. With points, the value often depends on what rewards you redeem.

We take a look at how to work out this value, as well as what else to think about when you’re looking at a rewards card.

Compare rewards credit cards and apply securely

1 - 8 of 23
Name Product Purchase Rate Annual Fee Balance Transfer Rate
American Express Airpoints Platinum Card
19.95% p.a.
Receive 300 bonus Airpoints Dollars when you apply online, are approved and spend a minimum of $1,500 on your new card within the first 3 months of membership. This offer is available to new Card Members only. T&Cs apply. You will also earn 1 Airpoints Dollar for every $59 you spend on your card.
American Express Airpoints Card
0% for 6 months (changes to 19.95% p.a.)
Be rewarded with 50 bonus Airpoints Dollars. Simply apply, be approved and spend $750 on your new Card within the first 3 months of membership. This offer is available to new Card Members only.
American Express Gold Rewards Card
19.95% p.a.
Receive $200 credit when you apply online, are approved and spend $1,500 on your card within the first 3 months of membership. Offer is available to new card members only. T&Cs apply. You will also earn 2 Membership Rewards points for every $1 spent on eligible purchases.
Farmers Mastercard
25.95% p.a.
Collect points on everyday purchases when you link your Farmers Mastercard to a valid Farmers Club Card. Collect 1 Farmers Club point for every $10 spent. Subject to lending criteria, fees and T&Cs apply.
Flight Centre Mastercard
22.95% p.a.
Use your Flight Centre Mastercard for everyday shopping and earn rewards as you spend. Earn 3 Flight Centre Rewards for every $100 spent at a Flight Centre Store and 1.5 Flight Centre Rewards for every $100 spent on standard purchases. Subject to lending criteria. T&Cs apply.
Kiwibank Air New Zealand Airpoints Low Fee Visa
16.9% p.a.
1.99% p.a. for 6 months
1.99% p.a. on balance transfers for 6 months.
ANZ CashBack Visa Credit Card
19.95% p.a.
Kiwibank Air New Zealand Airpoints Platinum Visa
20.95% p.a.
1.99% p.a. for 6 months
1.99% p.a. on balance transfers for 6 months.

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Steps to calculate the value of rewards points

An important detail to note: there is no fixed dollar value for points when redeeming them. This is because the number of points you need for a reward varies depending on what you redeem them for and the actual rewards programme.

However, you can get an idea of what your points are worth for any reward using the following steps:

  1. Estimate the retail value of your chosen reward

    For example, if you wanted to redeem your points for a flight, you could go to the airline’s website and search for flights on your chosen travel dates. Or, if you wanted to use points for a coffee machine, you could search for a similar model sold at different retailers. With gift cards and other similar cashback rewards, the value is already established (e.g. a $100 gift card = $100 value).

  2. Divide the cost of the reward by the number of points needed

    This gives you the value of each point and is usually a fractional number. For example, if you wanted to redeem 36,000 points for a flight that retails for $533, the result of this calculation would be $0.0148 (or about 1.5 cents).

    This provides each point’s value, but comparing cents (or fractions of cents) is sometimes confusing when you’re looking at different reward options. If you find that’s the case, a simple solution is to look at the value you get for every 1,000 points redeemed. You can do this by adding a third step:

  3. Multiply the value per point by 1,000

    This typically gives you an answer that’s in dollars and can be easier to compare because most of the time you redeem thousands of points for a reward anyway. So with the example reward flight in step 2, you would get $14.80 worth of value for every 1,000 points used.

How to write this as an equation

Using the example of a reward flight above, here is how the basic calculation per point would look:

533/36000 = 0.0148 (or 1.48 cents per point)

Here is how the calculation looks per 1,000 points – bearing in mind that you do the calculation in brackets before anything outside the brackets.

[533/36000] x 1000 = 14.80

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 are rewarded with vouchers or gift cards, shop for items that are on sale. With Airpoints rewards, go for the flights that are more expensive and generally never marked down.

For example, a domestic flight from Auckland to Wellington may be as low as $85, while one going to London could cost $1,630. If the domestic flight costs 7,000 points with the rewards programme and the international one costs 62,500 points, the value of flying to London using your rewards is higher.

Using the value per 1,000 points calculation, the international flight would offer you $26.08 per 1,000 points, while the domestic flight would offer you $12.14.

What other factors should I consider?

The value you get from reward points – sometimes known as the “points currency” – is influenced by many factors. Some of the other key details to think about include:

  • Additional reward costs. Some rewards attract additional charges. For example, flights might have airline fees and taxes, while retail items like coffee machines could attract shipping costs. So before redeeming, check whether these expenses are charged separately or factored into the points needed for a reward.
  • Credit card costs. The annual fee, interest charges, international transaction fees and any other charges you often pay for your credit card can offset the value you get from reward points. Ideally, you should get a card with lower fees than the value you think you realistically get from rewards.

A reward or Airpoints credit card is only really worth it if the benefits outweigh the card’s annual fee, interest charges and other costs. As points are one of the biggest perks on these cards, working out the potential value you can get from them makes it easier to compare and find a card that fits your goals.

Frequently asked questions

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More guides on Finder

  • How to travel further with flexible reward points

    Credit card reward programs often give you more flexibility with your points than frequent flyer options. Here’s what you need to know to get more value from them.

  • Credit cards that reward spending

    Our guide will help you compare different reward cards from various card issuers and reward programs so you can settle on a card that will allow you to earn maximum points according to your spending patterns.

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