Worked Examples and Checklists
What are my credit card points worth? Calculating cents per point in Canada
How to calculate the value of credit card points for statement credits, travel, gift cards, merchandise and award flights, including taxes and fees, with illustrative Canadian examples.
A point is worth the cash you save by redeeming it, minus any cash you still pay, divided by the number of points used. If 40,000 points plus $160 in taxes and fees buys a flight that would cost $640 in cash, each point is worth ($640 − $160) ÷ 40,000 = 1.2 cents. The same program might give only 0.6 cents per point as a statement credit. Which number you use when comparing cards changes the answer, so value points at the redemption you will actually make, and treat high-value redemptions as a bonus, not the base case.
This guide belongs to the rewards card worked examples. All redemption values are illustrative and are not taken from any real program.
The formula
Cents per point = (cash value of what you receive − cash you pay on top) ÷ points used × 100
"Cash value" means what you would actually have paid for the same thing, not the highest listed price. If you would not have bought it at all, its value to you is lower than its price.
One program, six redemptions
Illustrative values for a single fictional program:
| Redemption | Points | Cash you pay | Cash value to you | Cents per point |
|---|---|---|---|---|
| Statement credit | 10,000 | $0 | $60 | 0.60 |
| Travel credit on any travel purchase | 10,000 | $0 | $100 | 1.00 |
| $50 grocery gift card | 6,500 | $0 | $50 | 0.77 |
| Blender listed at $120, which you could buy for $90 | 20,000 | $0 | $90 | 0.45 |
| Award flight with a cash fare of $640 | 40,000 | $160 | $640 | 1.20 |
| Transfer to a partner program for a flight with a cash fare of $420 | 25,000 | $90 | $420 | 1.32 |
The difference between the lowest and highest redemption is almost three to one. That is why "3 points per dollar" can be worth between 1.35 and 3.96 cents per dollar in this one program.
Hidden costs in travel redemptions
- Taxes, fees and carrier surcharges on award flights are paid in cash. Subtract them, as in the formula.
- Lost earnings: paying cash for the flight with your card would have earned points or cashback. On a $640 fare at 1%, that is $6.40. Subtracting it lowers the award value slightly: ($640 − $160 − $6.40) ÷ 40,000 = 1.18 cents.
- Flexibility: award seats may be refundable or changeable on different terms than a cash ticket. A cheaper non-refundable cash fare may not be the right comparison.
- Availability: the redemption you calculated must actually be bookable on your dates.
- Dynamic pricing: many programs now price awards based on the cash fare, which narrows the gap between "good" and "average" redemptions.
Using point values in a card comparison
- Pick the floor value: the redemption you are certain you will use, for example a travel credit at 1 cent or a statement credit at 0.6 cents.
- Pick a realistic best case: a redemption you have actually made or are planning, for example an award flight at 1.2 cents.
- Run the card comparison at both values. If the card wins only at the best case, it is a gamble on future redemptions.
Illustrative example. A card earns 45,000 points a year on your spending and has a $120 fee.
- At 0.6 cents: $270 − $120 = $150
- At 1.0 cents: $450 − $120 = $330
- At 1.2 cents: $540 − $120 = $420
A no-fee flat 1.25% card on $24,000 of spending returns $300. The points card beats it only if you redeem at above about 0.93 cents per point. See comparing two cards on your spending for the full break-even method.
Points lose value over time
Points are not savings. They earn no interest, and programs can change the number of points needed for a reward, change partners or end. A point held for several years may buy less than when it was earned. Unless you are saving toward a specific redemption, redeeming regularly protects value. See points expiry and program changes.
Cashback: the benchmark
Cashback is worth exactly what it says: 1% back is 1 cent per dollar. When you compare a points card with a cashback card, convert the points card's earn rate to a cashback equivalent:
Cashback equivalent = points per dollar × cents per point
At 2 points per dollar and 0.75 cents per point, the equivalent is 1.5%. If a no-fee card pays 1.5% cashback on the same purchases, the points card needs extra benefits or a better redemption to justify any fee.
Frequently asked questions
Is one cent per point a good value?
It is a common reference point because many programs offer fixed-value travel redemptions near it, but it is only a reference. Calculate the value for your own redemption.
Should I use points for merchandise?
Merchandise often gives the lowest value per point, especially if you value the item at the price you would actually pay. It can still make sense to use small balances that would otherwise expire.
Can I combine points with a partner?
Some programs allow pooling or transfers between household members; others do not. Read the program rules, including what happens to points on separation or death.
Do points have value if I cancel the card?
Often they are forfeited if not redeemed or transferred before the account closes. Redeem first.
Sources
- Financial Consumer Agency of Canada — understanding rewards programs and credit card features
- Office de la protection du consommateur — rewards programs and prepaid cards in Quebec
- Canadian Transportation Agency — air passenger rights that apply to award and cash tickets
