What is Cent Per Point or CPP 

Author: Matthew July 10, 2024

If you've been reading along, you've seen that I estimate the value of my points redemptions by calculating the "cent per point" of the redemption. Is this actually a good way to measure the value of a redemption? Let's take a look at how this is calculated, these industry standard of evaluation, and what I simply think might be "good." 

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Evaluating Point Redemption Value

Standard CPP Evaluation

Terrible: < 1 cpp - redeeming points for anything less than one cent per point is terrible value since most cards let you redeem for statement credit at 1 cpp. That would be a much better option than using even more than 10,000 points to redeem $100. 

Baseline: = 1 cpp - redeeming points at the standard cashback baseline likely isn't worth it as it's likely easier to just redeem as statement credit through the bank's own program.  

Questionable: 1 cpp - ~1.5 cpp - here we start getting more subjective. Many cards offer discounts or bonuses with points in this range. Most notably is the Chase Sapphire Reserve that gives a 50% boost in points when redeeming through their travel portal. Because of this higher baseline, it likely isn't great to redeem for flights/hotels at this right since there are ways to get that money straight back through a couple additional hoops. 

Not great: 1.5 cpp - 1.99~ cpp - while in this range we're now getting more value than any baseline you can get with bonuses, it's generally viewed as not great because of the opportunity cost for way better redemptions. However, if you have a lot of points and it's for something cheap, then it might be worth getting the free value. 

Standard: 2cpp - the goal for every travel hacker is to get at least double the value of your points that you would have gotten otherwise in cash. I'm not sure how this standard really came to be, and it may just be some arbitrary determination. Personally, like getting 2+ cpp because I redeem a lot of my points through Hyatt's program, and they typically range in the 2+ cpp valuation. 

Sweet Spot: ~3cpp - 9cpp - Again, still subjective, but anything in this range is really good value for hotels and flights since you're increasing the value of your points to acquire something likely expensive. 

Jackpot: 10cpp+ - This is the obtainable fountain of youth redemption, where you're really getting the bang for your buck, likely accessing international business class flights that you wouldn't be able to afford with cash. 

Rationale and Feedback

Overall, I think this is a pretty good standard to base your redemptions off of since the main decision point is whether you should pay in cash or use points considering normal factors. Obviously these rates are intended for a traveling audience where the ability to get 10x value from your points is possible. Speaking of 10x... is it really that amazing considering there's likely little chance you would have paid for that flight in cash anyways? Let's get into the different schools of thought on valuation. 

Different Schools of Thought

There are likely way perspective I could capture, but I want to focus on some angles that I think about when redeeming points or at least that I have heard from others. At the end of the day, there isn't a one way you have to do redemptions since it depends on your life circumstances and how much effort you want to commit. Yes, you can go on some amazing trips if you play your cards right, but sometimes that's not the goal for everyone. Point is (pun intended) there's no right answer. 

Ferrari vs. Ford

If you were looking for a car, the average US adult might look at a Ford, or something affordable - maybe even a used car. If, you magically were gifted a Ferrari (or at least sold for very cheap), would you say you got the value of a Ford? For the sake of this example, let's remove the mpg and functionality talk, since in the flight world, you're getting from point A to point B at the end of the day. 

In this scenario do you consider you got the value of a Ferrari or a Ford? Team Ford would say you were only looking for a Ford and got a "similar" car that did everything you needed to do and you wouldn't actually have paid for a Ferrari. Team Ferrari would say, you got the full value of a free (or cheap) Ferrari because of the external benefits (e.g., status, comfort, etc.). And of course there's every spectrum in between calculating maybe you got the value of a Ferrari - what you budgeted for. Again, no side is right, but it's something to consider; are you comparing to what you actually received or what you would have actually paid for? 

Get me there vs. Luxury Travel 

Some travel hackers only focus on getting to the destination, so will forsake any business class seat and just go for the cheapest redemption. Many times they say they'd rather get 3 free roundtrip flights in economy instead of just 1 business class flight.  In some cases, that comparison could be true - Air France's business class round trip can be as low as 100K, while their economy can be as low as 25,000. On other routes, that simply isn't the case. Going to Australia you can find 85,000 points in business, economy is still going to be around 60,000 points. The difference of 20,000 points isn't that much, but a couple thousand dollars might be. You might still want to save the 20,000 points, but for me, that's going to be worth getting a lie-flat seat to fly across the world. 

That said, even in economy, you can still find some pretty solid redemptions, but you'd be hard-pressed to find the 10x valuation, simply because business class seat prices are just way more, debatably inflated to offer the larger numerator in the cpp calculation. 

Effort vs. Convenience

While the high cpp redemptions are quite rewarding in my opinion, there can be a lot of hidden costs to acquiring that valuation - mainly time. You can find some crazy redemptions either by good timing/knowledge or simple luck, but most of the time, finding that business flight to Japan will take a lot of time to research, analyze, and potentially stay up until 2am when they release award seats. On the other hand, you can just go with the first points option you find for economy or business, no matter how expensive it may be. So here, think about if all the effort you're putting in into finding award seats is worthwhile 

Other Factors

I've redeemed some points for really low valuations - my lowest being a 1.17 redemption at the Grand Hyatt Athens. However, I felt comfortable using that because of several factors:

• The stay was only for one night, and so it wasn't that many points, only 9,000 points used.

• The cash price was $105, so it would have been more "worth" it to pay in cash, but I simply wanted to make my trip as free as possible. And $100 saved is still $100 saved. 

• I have so many Chase/Hyatt points accrued that 9,000 points was a drop in our points bucket, so I didn't feel the opportunity cost as heavily. 

Take another example during COVID-19. Money felt like it was getting tighter, so I redeemed almost 100,000 Chase points through the pay yourself back feature that got me 50% bonus in redemptions, giving me about $1,500 in statement credit. Even though this isn't really that great of a redemption, at that time, I felt it was more important to have the money in my pocket to be used, rather than saving for a trip that might not ever happen. 

I don't regret either decision because both made sense based on that present lifestyle. 

Free is Free

Again, at the end of the day, remember, free is free. Like it says in Ecclesiastes 1:2: "Life is fleeting, like a passing mist. It is like trying to catch hold of a breath; All vanishes like a vapor." There's no value if you just hoard all your points until you die. My philosophy with points is that free is free. Yes, I feel capable that I know I can get pretty good value out of my points, but I'm willing to go for some "bad" redemptions because getting a free economy trip makes my life easier and even happier.