Why you should never redeem points for products over flights

Photo by NeONBRAND on Unsplash

Airline points experts have crunched the numbers on rewards points and confirmed that flights remain much better value for points than consumer products.

Australian airline rewards website Point Hacks analysed the cost of points for nine popular products across both the Qantas Shopping and Velocity eStore (Virgin) websites and compared them against the cost of using points for six popular flights.

The results show the per-point values of flights were up to six times better than in-store products, indicating that customers should avoid redeeming their points for things like toasters.

Point Hacks’ spokesperson and frequent flyer expert Daniel Sciberras said product redemptions are generally considered low value.

“Redeeming points on products generally aren’t good value compared with flights, especially long-haul international flights in premium cabins,” Mr Sciberras said.

“You should be looking for at least 2 cents per dollar for an ideal redemption value and this isn’t something you are likely to get with products.

“Most of them fall between 0.4 to 0.8 cents, while flights are between 1.5 to 14 cents per point.”

What this means is you’re likely to get around 1.5 to 14 cents worth of value for a single rewards point when redeeming them on a flight, while that same point would only give you about 0.4 to 0.8 cents worth of value on a tangible product.

The table below shows Point Hacks’ complete breakdown of using Qantas and Virgin Velocity points for products, flights and intangible services like car hires.

Product	Retail dollar value	Total Qantas points required	Qantas point value	Total Velocity points required	Velocity point value
$50.00 Westfield Gift Card	$50.00	11,010	0.45c/pt	10,900	0.46c/pt
Delsey 68cm Montrouge 4-Wheel Expandable Trolley Case	$255.00	83,930	0.30c/pt	94,812	0.27c/pt
Sofitel Gold Coast 31 Dec 2019-1 Jan 2020 – Double or Twin Classic	$404.40	96,416	0.42c/pt	93,700	0.43c/pt
Car Hire – 3 days – Standard	$191.16	30,000	0.64c/pt	26,900	0.71c/pt
iPad – WiFi 32GB	$469.00	80,600	0.58c/pt	92,871	0.51c/pt
Bose Soundlink Revolve Speaker	$249.00	54,690	0.46c/pt	61,823	0.40c/pt
Breville Bit More Plus 2 Slice Toaster	$59.00	12,730	0.46c/pt	15,039	0.39c/pt
Bose Soundlink Around Ear Headphones II	$329.95	59,690	0.55c/pt	67,763	0.49c/pt
DeLonghi – Nespresso Citiz & Milk Coffee Machine	$269.00	47,600	0.57c/pt	69,772	0.39c/pt
Virgin Australia Sydney- Hong Kong economy flight	$727.94			55,600 + $253.96	0.85c/pt
Virgin Australia Sydney- Hong Kong business class return flight	$4,683.66			131,000 + $298.32	3.35c/pt
Qantas Melbourne-Sydney economy return flight	$575	16,000 + $74	3.13c/pt
Qantas Melbourne-Sydney business class return flight	$1,806	36,800 + $74	4.70c/pt
Qantas Sydney-LA economy return flight	$1739	83,800 + $408	1.59c/pt
Qantas Sydney-LA business class return flight	$8,829	216,800 + $718	3.74c/pt

Source: Point Hacks

The table shows how longer-haul and higher-class flights (Sydney-LA economy return flight, Melbourne-Sydney business class return) represent far better value than products like headphones or an iPad.

While an iPad costs between 80,000 to 92,000 rewards points for a retail value of about $470, an economy flight from Sydney to Los Angeles will cost almost the same number of points for a retail value of more than $1,700.

All of the flights analysed have a point value of at least 0.58 to 4.7 cents per point, while the products compared have a value of just 0.3-0.64 cents per point.

Despite the lack of value, Mr Sciberras says there are still some situations where redeeming points for products can be appropriate.

“For instance, when your points are about to expire and you aren’t looking to fly anywhere soon, or for those who don’t particularly enjoy flying, my suggestion is to purchase products when they are on sale in airline rewards e-stores, where you will use at least 35 per cent less points,” he said.

“For example, a Delsey trolley case and a DeLonghi Nespresso Machine can each cost almost half of their original price in points during a promotion period.”

Credit card points can expire depending on the card and the airline, rendering them useless if they aren’t used.

A study by Citi found 47% of rewards cardholders like to accumulate points even if they don’t use them, and given the average rewards cardholder is sitting on about 50,000 points (also Citi), this seems like a lot of points going to waste.

Program	Expiry
ANZ Rewards	Three years
NAB	Three years
American Express	None
Citi	None
Commbank	None
Westpac	None
Velocity Frequent Flyer	36 months of inactivity
Qantas Frequent Flyer	18 months of inactivity
Flybuys	12 months

Examples of how often points expire with various banks and airlines.

Furthermore, 37% of Australian cardholders say their rewards card provides them with no positive value and is even costing them money, based on an ME survey of more than 1,000 Australian cardholders.

As for the biggest dollar benefit received each year, the most common (20% of respondents) said it was “only up to $50 per year”.

This is quite concerning when you consider 37% of cardholders say they only have a credit card to benefit from the rewards.

---

Latest Articles

• More gain, less pain for Australian property market as more properties sell for a profit January 25, 2020
• How to buy property through an SMSF in Australia January 24, 2020
• When do CommBank, NAB, ANZ and Westpac think the next RBA rate cut will be? January 24, 2020
• ANZ, Westpac, Bankwest cut rates on home loans January 24, 2020
• Term deposit wrap: CBA and ANZ cut rates January 24, 2020