Why you should never redeem points for products over flights

author-avatar By on October 10,2019
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.

ProductRetail dollar valueTotal Qantas points requiredQantas point valueTotal Velocity points requiredVelocity 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.


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author-avatar
William Jolly joined Savings.com.au as a Financial Journalist in 2018, after spending two years at financial research firm Canstar. In William's articles, you're likely to find complex financial topics and products broken down into everyday language. He is deeply passionate about improving the financial literacy of Australians and providing them with resources on how to save money in their everyday lives.

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