Points + Cash Redemption Options: Calculating the Value

Maybe it’s because you’re a low spender who doesn’t travel much. Or maybe you’re just spreading your spending among several reward cards. Whatever the reason, the balance in your rewards account is never quite enough to get a free flight, hotel stay or gadget.

If the rewards program affiliated with your card has a “cash + points” option, though (see table below), you still might be able to put your points to good use. This feature, which goes by a variety of names, is most common with hotel rewards cards. For example, check out the options with the Starwood Preferred Guest Cash & Points program:

Whatever the program, a cash + points option will work like this: Instead of waiting until you have enough for a reward, you pay a lower amount of points toward a reward and then cover the rest with cash.

Is it worth it? Do the math

When you mix points and cash, it can be difficult to determine the value you’re getting. Are these programs letting you put your points to good use? Or are they causing you to throw both points AND money out the window?

For merchandise, each rewards point generally has a fixed cash-back value, and you simply pay for the remaining balance with cash. With travel, however, things can be more complicated.

As an example, let’s take a closer look at the Starwood Preferred Cash & Points program – and do the math for a hypothetical Thursday at Aloft Orlando Downtown. This hotel is Starwood Category 3, meaning you’d normally need 7,000 points for a free night. However, because you’re using the Cash & Points feature, you’re spending 3,500 points and \$55.

Keep in mind, your numbers will vary, based on your particular rewards program.

Step 1: Calculate the full cost of the hotel room, including taxes. For the Aloft Orlando Downtown, that’s \$190 per night.

Step 2: Calculate the value of the points, if you were to redeem for a free night. Divide \$190 by 7,000 to get \$0.027. In other words, your points are worth 2.7 cents, when redeemed this way.

Step 3: Calculate the amount you’re paying out of pocket. When you book with Cash & Points, room taxes are NOT included, as they are when you book a free night, completely with rewards:

Here’s the tax break-down for the room:

When you book with Cash & Points, you pay taxes only on the cash portion. So, you’ll be paying 12.5 percent in taxes (\$6.60) on the \$55 you spent. That’s \$61.60 out of pocket.

Step 4: Calculate the value you’re getting for your points when using the Cash & Points feature. Normally, this room would cost you about \$190. Instead, it’s costing you \$61.60 plus 3,500 points. Subtract the amount you’re paying out of pocket from \$190, and you’re left with \$128.40. That’s the amount you’re covering with the 3,500 points. Divide \$128.40 by 3,500 to get the point value: \$0.036. In other words, your points are worth 3.6 cents when you use the Cash & Points feature – nearly 1 cent more than if you were to redeem for a free night.

Step 5: Find out how much value you’re getting for the money you spend out of pocket. The value of your points is only half of the equation. You also need to see how much bang for your buck you’re getting on the \$61.60 you’re shelling out. Because the room would normally cost 7,000 points, and you’ve already spent 3,500 points, that \$61.60 is covering the other 3,500 points. Essentially, you’re paying \$61.60 for 3,500 Starpoints. That means you’re buying them for about 1.8 cents each. If you buy Starpoints through the program’s website, they cost 3.5 cents each. So you can look at Cash & Points as a way to get Starpoints on the cheap.

Conclusion: Using Cash & Points yields a great value for this particular property, both for the points and the money you’re spending.  The value of the points you redeem actually increases, compared to redeeming for a free rewards night. And the amount you spend in cash amounts to getting a discount over buying Starpoints outright.

Be careful, though…

Using points plus cash won’t always be so clear cut. For example, take a look at the Points & Cash option with the IHG Rewards Club, for the Holiday Inn Express & Suites in Berkeley, Calif.:

Follow the steps above, and you’ll find that the room costs \$192.64, once tax is factored in. Your points are worth 0.64 cents each when you redeem for the free night – but only 0.57 cents when you redeem using IHG’s Points & Cash. Meanwhile, you’re paying \$78.64 once tax is factored in to buy 10,000 points. You’re getting a big discount there, at least, as it would normally cost you \$135 to buy that many points from IHG. So, while you sacrifice some point value, you’re still essentially getting points at a discount.  If you need to get rid of some points, that might still be worth it to you.

In short: It pays to do the math before parting with your money or points.

Other things to consider

If you’re considering taking advantage of your program’s cash + points option, remember that some properties may charge resort fees (in addition to taxes). You might be able to get these waived (travelers on various discussion forums say they have) — and some hotel chains waive them automatically for rewards stays. Be sure to call the property ahead of time to see what you could be charged.

Another thing to check is whether you’ll earn points on points + cash stays. This varies by program, and some treat points + cash stays like rewards stays – and don’t allow you to earn points.

Chart: Compare points + cash reward programs

Want the ability to book with cash and points? This chart contains a round-up of the reward programs that allow you to do so – and the cards that let you rack up points for them. We’ll be updating it as terms change, but be sure to check your reward program’s terms and conditions for the most up-to-date information.

Reward programs with points + cash options
ProgramAffiliated cardsHow it works
Starwood Preferred Guest (Cash & Points)Starwood Preferred Guest CardBook nights in a standard room or suite for roughly half the number points you'd otherwise need, plus \$30 to \$675, depending on the hotel category and room type. American Express is a CreditCardForum advertising partner.
IHG Rewards Club (Points & Cash)IHG Rewards Club VisaWorks for both merchandise and hotel stays. For merchandise, shop the online catalog that lets you pay a smaller number of points plus cash for electronics. For hotel stays, you get a 5,000-point discount if you pay \$40, and a 10,000-point discount if you pay \$70.
Hyatt Gold Passport (Points + Cash)The Hyatt Credit CardBook reward nights using half the points you'd otherwise need, plus between \$50 and \$300, depending on the hotel category.
Marriott Rewards (Cash + Points)Marriott Rewards Premier Credit CardAvailable for stays of 2 nights or more – pay for part of your stay in points, and then tack on nights paid for with cash. Individual nights must be paid for all in points, or all in cash -- you currently can't combine points and cash for a single night. 2016 update: Marriott has announced it will begin allowing cash + points toward single or multi-night redemption stays beginning March 24, 2016.
Hilton Honors (Points & Money)Citi and AmEx Hilton Honors cardsFor standard rooms at select properties, you can book a rewards night for as few as 2,000 points (reward nights normally start at 5,000 points), plus as little as \$30.
Club Carlson Rewards (Points + Cash)Club Carlson VisaBook rooms starting at 5,000 points (reward nights usually start at 9,000 points) to 20,000 points, plus a cash amount determined at the time of reservation.
Delta (Pay with Miles)Delta SkyMiles cards from American Express Available only to SkyMiles cardholders. Depending on the original fare price, you can redeem a sliding scale of miles for a discount (10,000 miles for a \$100 discount, for example). American Express is a CreditCardForum advertising partner.
Alaska Airlines (Money and Miles)Alaska Airlines VisaUse 10,000 or 20,000 miles to get a 50 percent discount, up to \$100 or \$200, respectively, off a ticket.
JetBlue (Cash + TrueBlue Points)JetBlue MasterCardOnly for vacation packages. Number of points and amount of cash required revealed at booking.
Virgin AtlanticVirgin Atlantic White and Black cardsRedeem miles in increments of 3,000 for flight discounts. You can still earn rewards on these bookings.
American Airlines AAdvantage programAAdvantage credit cardsOnly available for card rentals and hotels booked through American Airlines.
Discover (Pay with Cashback Bonus)Discover itYou can use some or all of your cash-back rewards to pay for part of an online purchase with Discover's partner retailers. Pay cash for the rest.
American Express Membership Rewards (Shop with Points)Any card that earns Membership Rewards pointsUse points toward the partial cost of a purchase on Amazon.com or the Membership Rewards online mall, and pay for the remaining balance with your card. American Express is a CreditCardForm advertising partner.