How to Calculate the Value of Your Rewards Points: A Simple Guide

Almost every major retailer, airline, and credit card provider has a loyalty scheme, and they all speak the same language: rewards points. You earn points for spending, but what are they actually worth? Is 10,000 points a good deal for a flight, or a terrible one for a toaster?

Understanding the value of your points is the key to unlocking their true potential. It transforms you from a casual collector into a savvy shopper who can spot a great deal and make your spending work harder. It's the difference between getting a free coffee and flying business class for the price of economy.

This guide will demystify the world of rewards points, showing you how to calculate their value in simple, practical terms. 

But what if earning rewards didn't require complicated maths? Discover a simpler way to get more from your spending with Curve Cashback.

The Basic Formula for Point Value

At its core, the value of a rewards point is what it gets you. The calculation to find this is simple:

• Formula: Cash Price of Reward (£) / Number of Points Required = Value Per Point (£)

To make it easier to compare, it’s helpful to express this value in pence. To do that, you just multiply the result by 100.

• Formula in Pence: (Cash Price / Points) x 100 = Value Per Point (p)

Let's see how this works in the real world.

Why Do Point Values Change?

Before we calculate, it's important to understand why a point's value isn't fixed. A point's worth changes depending on how you redeem it because companies assign different values to their rewards. A flight has a high perceived value and is part of their core business, so they might offer a good rate. In contrast, a toaster bought from a third-party supplier is a pure cost to them, so they offer a poor redemption rate, hoping you won't notice.

How to Calculate Point Value for Different Rewards

Let's break down the most common redemption scenarios.

Scenario 1: Redeeming for Cashback or a Statement Credit

This is the most straightforward way to value points because the cash value is explicit. It provides a crucial baseline for all other comparisons.

• Example: Your credit card offers you a £50 statement credit for 5,000 points.

• Calculation: (£50 / 5,000) x 100

• Result: Your points are worth 1p each.

This is your benchmark. If another reward gives you less than 1p of value per point, you're likely better off just taking the cash.

Scenario 2: Redeeming for Travel (Flights & Hotels)

This is where you can often find the best value, but it requires a bit more research.

• Example: You want to book a flight to Paris. The airline is offering a seat for 15,000 points + £50 in taxes. You check the cash price for the exact same flight on the same day, and it’s £230.

• Find the "real" cash value: First, subtract the taxes you still have to pay from the cash price: £230 - £50 = £180. This is the value your points are actually covering.

• Calculation: (£180 / 15,000) x 100

• Result: Your points are worth 1.2p each.

In this case, redeeming for the flight gives you better value (1.2p) than a simple statement credit (1p). This is a good redemption.

Expert Tip: Look out for "dynamic pricing." This is when the number of points required for a flight changes based on demand, just like cash prices. Always compare with the cash price at the time of booking.

Scenario 3: Redeeming for Gift Cards or Merchandise

This is often the lowest-value way to use points. Companies hope the convenience will distract you from the poor value.

• Example: The rewards catalogue offers a £25 Marks & Spencer gift card for 4,000 points.

• Calculation: (£25 / 4,000) x 100

• Result: Your points are worth just 0.625p each.

Before redeeming for products, always check the item's price online. A coffee machine offered for 20,000 points might only cost £80 in the shops, giving you a poor value of 0.4p per point. You would have been better off taking a £100 statement credit (at 0.5p/point) and buying the machine yourself.

A Simple Strategy for Maximising Your Points

1. Establish Your Baseline: First, find out what your points are worth as cash or a statement credit. This is your "floor" value. Never redeem for less than this.

2. Define Your Goal: Are you saving for a specific holiday, or do you prefer the flexibility of cashback? Knowing your goal stops you from wasting points on low-value impulse redemptions.

3. Always Do the Maths: Before you click "redeem," take 30 seconds to run the calculation. Compare the value per point against your baseline.

4. Watch for Pitfalls: Be aware of expiry dates, taxes on flights, and limited availability of reward seats or hotel rooms.

The Problem with Points: Complexity by Design

As you can see, the value of points is constantly shifting. This complexity is often intentional. It makes it difficult for consumers to know if they're getting a good deal, leading many to make poor redemption choices or let their points expire altogether.

The Curve Solution: Simple, Transparent Rewards

This is where Curve Pay's approach to rewards stands out. After seeing how complex traditional points can be, you can appreciate the power of simplicity. We believe earning should be easy and transparent.

With Curve Cashback, the calculation is always the same: 1 point = 1p.

There are no complicated redemption portals or fluctuating values. When you earn 100 points, you have £1 in your Curve Cash account that you can instantly spend on anything you like.

Furthermore, Curve Pay allows you to stack your rewards. You can pay with your favourite rewards credit card through Curve Pay, earning your credit card points and earning Curve Cashback on top. It’s the simplest way to maximise the value you get from every single pound you spend, without the complicated maths.

From Complex Calculations to Clear Value

Calculating the value of your rewards points is an essential skill for any savvy consumer. It helps you cut through the marketing and see the true return on your spending.

However, the world of points can be deliberately complex. By choosing a system with clear and upfront value, like Curve Cashback, you can skip the hard work and be confident you’re always getting a simple, powerful return on every purchase you make.

Ready to stop calculating and start earning? Learn more about Curve Cashback.

Frequently Asked Questions (FAQ)

What is a "good" value for a rewards point? 

Generally, aiming for 1p per point or higher is a good benchmark. Anything significantly below that, especially for merchandise, is often a poor-value redemption.

Is it better to collect points or get cashback? 

It depends on your goals. Dedicated travel hackers can sometimes get outsized value (2p+ per point) by redeeming for business-class flights. However, for most people, the simplicity and flexibility of cashback offer more consistent and practical value.

Are hotel points a good value? 

They can be, but you must do the maths. Hotel point values vary dramatically between brands and even between different properties within the same brand. Always compare the points price with the cash price for your specific dates.

Do rewards points expire? 

Yes, many programmes have expiry rules, often after 12-24 months of inactivity. This is another complexity to keep track of. Curve Cash points also have an expiry period, so it's always best to use them as you earn them.

Read more about Curve Pay plans.