Most cards give you points or cash back on purchases. Rewards value is our dollar estimate of a card's points over one year. Basically, it's how much we think those points accumulated in a year would be worth in cash.
To get the rewards value, we factor in the sign-up bonus (if you qualify) and your monthly spend to determine the number of points accumulated in a year. We then multiply the number of points by the value of each point to determine the rewards value.
Example: Let's say you qualify for the sign-up bonus of 50,000 points and you will accumulate an additional 20,000 points in the year (total of 70,000 points that year). This card has amazing flexibility and reward options, so we think each point is worth 2 cents. Ergo, the rewards value will be 70,000 points x 2 cents per point = $1,400.
What is points value?
Points value is the cash value of what we think a point or mile is worth. Not all rewards programs are created equal, so we use points value to help equalize the playing field. We factor in redemption options, award availability, and transferability to other rewards programs in our decision. Stay tuned for a blog post about this!
Example: Let's say Rewards Program A has good flexibility on redemption options, and it can be redeemed for gift cards, travel, and tons of other options. We might value this program highly, at say, 1.8 cents per point. Now, let's say Rewards Program B doesn't have great redemption options, and points can't be transferred to other programs. We might only value this program at 0.8 cents per point.
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