Is it Better to Buy Points, Use Cash, or Use Points?

We came across a scenario recently and thought we'd share on how we analyzed which would be the best way to go about booking a camping trip to Cape Cod, where we'd be staying at an AutoCamp, which classifies itself as a boutique hotel that provides luxury tents, cabins and custom designed Airstreams for you to camp at (basically, glamping).

They recently just partnered with Hilton, so with the welcome bonus of 90K points I received when I applied for my Hilton Honors US American Express Credit Card, I figured this would be a fun way to use these points.

However, upon researching how many points it would be to stay, I learned that it would be better to just pay with cash vs. using my points. The reason being is right now it's 70K Hilton Honors points per night to rent an Air Stream, or I could pay cash, with it only costing $339/night.

Now why would I pay cash over using points?

Well, when you break it down, they are effectively valuing the points at only $0.0048 cents ($339/70,000), so less then half a cent per point. Usually you want to get over 1.25 cents per point when redeeming points (this all depends on which point currency your redeeming as well).

Which means, for me to use points in this example, the cost/night would need to be at least $875/night for it to make sense for me to redeem 70K points.

This is all personal preference as well. You might be ok with redeeming your points for 1 cent/point, or even less, it all depends on what you value your points at.

For instance, Prince of Travel values Hilton Honors points at .005 USD cents, so half a cent, therefore, if you value your points at this amount, then you'd want to redeem them for higher then their value.

Lastly, if you are going to redeem points, make sure you can redeem them for more then what you could buy them for.

Which is why in this scenario we wanted to look at how much it would cost to buy Hilton Honors points, (or whichever miles and points you will be using). With Hilton Honors points, usually you can buy a point for 1 cent, however, sometimes they offer bonuses, such as the one they are currently running, where you get a 100% bonus on the points you're buying, which is great, as you can effectively buy points at half a cent (and the approx value of them).

Now, if you are buying points at half a cent, (the cheaper the better), and you are going to use those points now to book this trip, you are still better off using cash, because as we mentioned, you are only redeeming your points for $0.0048 cents ($339/70,000). This means that you are actually losing money, as we bought them for more then they are being redeemed for, and for more then what they are worth (according to Prince of Travel).

In this scenario then for it to make sense to use points, based on the cost to buy them, with the bonus, the cash value of a night stay would need to be a minimum $351, as this then values the points at $0.00501 cents ($351/70000), which is higher then what it costs to buy them, and more then the value of them.

This just further shows you that using points in this situation is not a good idea.

Here's a great tool by Max Miles Points that I use in determining whether it is better to use cash, book through the credit card travel portal or transfer/buy points.

What do you think about that!!??