When You Should Use Points & When to Pay Cash for Hotels

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When should you use points and when to pay with cash for hotels? That’s a common question when you’re a rewards traveler and you travel hack.

It’s almost like which came first the chicken or the egg?

Should you pay cash or use points? Which is best?

Reader Jose sent me a Facebook message asking

Hello Debra,

Have you ever stayed at the Hyatt Regency Phuket Resort? The Hyatt in Phuket is only $90 per night or 12,000 points not sure if it’s worth it or better just paying the $90.

I stayed at the Hyatt Regency Phuket Resort for three nights in March when I traveled to Vietnam, Indonesia, Thailand, and Malaysia.

At $90 a night, that’s a great deal!

For Jose, paying cash for the hotel is the better option than using points.

But it’s not always that simple.

How do you decide when to use points?

When is it better to pay cash?

Is there an easy way to decide if you should use points vs paying cash?

Let’s take a look.

When You Should Use Points & When to Pay Cash for Hotels

Some people like to assign an arbitrary value of a point. For example, a Chase Ultimate Rewards point is worth 1.5 cents.

You’ll see several of these types of valuations. Most are within a few cents of each other.

There’s nothing wrong with assigning a value to a point.

But it’s not the end-all.

Nor is it the only way to determine how much a point is worth.

I prefer to use an easier approach.

How Much Did That Point Cost?

You can assign a value to your points but often that number is arbitrary.

Because it’s based on the value you’re getting for your point.

And that value is not a set number. Which can change depending on how much it costs to use the point.

That’s why you should value your points based on what they cost.

Whether you have a stash of points or are looking to earn points a specific amount for a trip, you should know how much you paid for each point.

Calculate how much it would cost you to use that point against how much it would cost to pay cash.

Then compare the two figures. Choose the one that costs the least.

You can even go as far as figuring out how much it cost you to earn those points.

Let’s look at some examples to better illustrate my point (pun intended).

7 Times You Pay With Points Instead of Cash for Your Hotel

Expensive Hotels

You should use points for stays at expensive hotels like the Park Hyatt Maldives.

Everyone loves the Park Hyatt Maldives. Who wouldn’t? The hotel is on a private island with white sand beaches. It’s simply paradise.

But paradise can be expensive.

A night at this luxury hotel costs 25,000 points.

Depending on when you stay you could pay over $1,000 a night. Yep, $1k a night for a standard room.

Let’s assume the night you want to stay costs $1,000 a night or 25,000 points a night.

You can use your stash of Hyatt points from the World of Hyatt credit card or The World of Hyatt Business Credit Card.

Or transfer Chase Ultimate Rewards points from a Chase Ultimate Rewards points earning card like the Chase Sapphire Reserve® Card, Chase Sapphire Preferred® Card, or Ink Business Cash® Credit Card.

You can also buy Hyatt points for 2.4 cents each.

So 25,000 points would cost $600. You’d save $400 a night using points vs paying cash.

Pro-tip: Check to see if the hotel offers a Points + Cash Rate. You can save both points and cash.

During the Holidays, Summer, and Spring Break

Even if you don’t stay at fancy hotels, staying at a hotel during the holidays, summer, or spring break in cities like New York and Los Angeles can be pricey.

Using points will generally be cheaper than paying cash.

Spending New Year’s Eve at the Hilton Times Square costs $1,719 a night. But it’s only 80,000 points.

If you didn’t have Hilton points you could buy Hilton points for 1 cent each.

Buying 80,000 points would cost $800 – almost half the cost of paying cash!

You Need Multiple Rooms

If you have a large family or travel with your adult children and you need multiple rooms it can be cheaper to redeem points for the hotel than pay a cash rate.

You can book all the rooms using points or just one room.

Pro-tip: Even if you redeem points for multiple rooms, you’ll only earn elite stay credit for one room.

There’s a Point Sale

You can save a lot of money when the hotel programs have a point sale, offer rebates when you redeem points, and offers select hotels at reduced points rates.

If you’re already done the math and discovered that you’d save money paying with points vs cash, you’ll save a lot more money when you can buy points at a discount.

Currently, IHG is offering an 80% bonus on points. So instead of paying 1.15 cents to 1.35 cents per point, you’ll pay 0.56 cents to 0.64 cents per point!

Not only can you save money you can get extra nights for less. Think of it as your own version of a Fifth Night free program.

Buy hotel points:

• Choice
• Hilton
• Hyatt
• IHG
• Marriott
• Wyndham

Pro-tip: Be sure to read the only time you should buy hotel points.

You Can Get the Fifth Night Free

When staying at the same hotel for multiple nights, it can make more sense to pay with points instead of cash.

You can get the fifth night free when you redeem points at Hilton, Marriott, and Starwood hotels.

So you redeem points for the first four nights and you get the fifth night for free.

This means your week-long vacation just got cheaper. Whether you stay at expensive hotels, moderately priced hotels, or inexpensive hotels.

Pro-tip: Short on points? Book the first four nights with points, get the fifth night free, and pay cash for the last two nights.

Solo Female Travel

Being able to use points to stay at well-known hotel chains in some countries means you don’t have to give up your travel dreams.

You can visit places that you might be hesitant to travel to because it’s not considered as safe as other cities.

Using points lets you stay in more central locations closer to places you want to see or things you want to do.

And you can lessen your risk of getting mugged.

Pro-tip: You don’t pay taxes or resort fees on point stays. No money is collected after your stay. So your wallet stays safely in your purse and no one knows how much cash you’re carrying.

This is another reason why I like using Uber and Lyft when traveling.

You’re Point Rich, Cash Poor

One of the best times to use points vs cash is when you’re point rich and cash poor.

Having a lot of points is a good thing because it gives you freedom and flexibility.

But stockpiling points to save for a rainy day isn’t the best move.

Saving points for a specific trip is a good plan. But hotel programs frequently change their award charts.

Those points you saved for your dream trip might not be worth as many free hotel nights as you thought.

Use points when you can an

Pro-tip: Don’t think of your points as your retirement plan, think of them as your emergency fund.

Save just enough for several trips but not for a lifetime.

Because points, like currency, can devalue.

7 Reasons to Pay Cash vs Points for a Hotel Stay

Inexpensive Hotels or Cheap Prices

You should pay cash instead of redeeming points for inexpensive hotels or cheap prices on hotels.

When Jose is traveling to Thailand, the Hyatt Regency Phuket Resort is only $90 a night.

But if he paid points, it would cost 12,000 points a night.

Using my how much did points cost calculation explained near the beginning of the post, it would cost Jose $288 a night if he bought 12,000 Hyatt points for 2.4 cents for his stay.

Jose earns most of his points from spending at office supply stores like Staples.

He gets 5x points up to $25,000 a year when he pays with his Ink Business Cash® Credit Card. To get 12,000 points he’d have to spend $2,400. That’s way more than $90 a night!

For Jose, it’s worth paying cash to stay at the Hyatt Regency Phuket Resort.

Pro-tip: If a hotel costs $100 or less, you’re better off paying cash than using points.

Because even if it only costs you 5,000 points for a free night, you’ll spend $120 to earn 5,000 points.

You’ll Earn More Points

When you pay cash for your room, you’ll earn more points that can be used for future stays.

If you use a hotel branded card to pay for your stay, you’ll multiply your points further:

• World of Hyatt credit card and The World of Hyatt Business Credit Card – earn 9 points for every $1 you spend at Hyatt hotels
• IHG One Rewards Premier Credit Card – earn up to 26 points for each $1 spent at IHG hotels
• The Marriott Bonvoy Bevy™ American Express® Card and Marriott Bonvoy Brilliant® American Express® Card – earn 6 points for every eligible $1 you spend at participating Marriott Bonvoy hotels
• Hilton Honors American Express Card – earn 7 points for every eligible $1 spent at participating Hilton hotels.
• Hilton Honors American Express Business Card – earn 12 points for every eligible $1 you spent at participating Hilton hotels

Pro-tip: Although hotels only let you earn elite night credit for one room, you can earn points for up to 3 paid rooms per night.

You Get the Fourth Night Free

You should consider paying cash if you have a benefit like the fourth-night free perk from the Citi Prestige card.

When you pay for three nights at the same hotel with your Citi Prestige card, the fourth night is free.

Pro-tip: Do the math before deciding to pay cash.

Just because you get a free night, paying for the other nights could cost more than if you used points.

The Points+Cash Rate Costs More

If you’re considering paying cash for your hotel, check to see if they offer a points+cash rate.

Not all hotels offer this rate and sometimes it’s only occasionally. But when you can find one, sometimes it’s a good deal.

A points+cash rate saves you both points and cash because you pay half the cost of points plus a fixed cash rate for your hotel.

Compare the cost of a points+cash rate to see if you’re truly saving money or if you’re paying more.

Sometimes a points+cash rate will cost more than if you paid only cash.

This can happen when prices are low such as offseason. Or when the combined cost of using points and cash costs more than paying for a room.

I recently stayed at the Hyatt House across from Universal Orlando Resort. The cash rate for my stay was $247 a night. Or I could pay 8,000 points. I chose the points.

Currently, their cash rate is $137 a night and they are offering a points+cash rate of 4,000 points + $55 a night.

On initial glance, paying 4,000 points and $55 sounds cheaper than paying $137.

But it’s not.

You will pay $14 more if you choose the points+cash rate.

Because it costs $96 to buy 4,000 Hyatt points plus the $55 cash so your total cost is $151.

Whereas if you pay cash you’re only paying $137, a savings of $14.

Pro-tip: You only pay tax on the cash portion of a points+cash rate.

Someone Else is Paying

If you’re traveling for business and someone else is paying, pay cash. Don’t use your points.

Even better if you can charge the room and your company reimburses you. You’ll earn points for the stay plus bonus points for using a hotel branded credit card.

Pro-tip: You can deduct cash costs for travel on your taxes but you can’t deduct using your points.

Save your points for personal vacations not work trips.

You Get Special Benefits

It can be worth paying cash instead of using points if you get special benefits.

When you book your hotel with programs like Hyatt Prive, Amex Fine Hotels & Resorts, and Visa Signature Hotels get special benefits like resort credit.

In some situations, your resort credit is more than the price of your hotel.

You get $100 resort credit at the Delano Las Vegas when you book through Amex Fine Hotels & Resorts. On certain dates, the cash price is only $90 a night.

Pro-tip: You earn elite stay credit and all World of Hyatt perks when you book a Hyatt Prive rate. Send me an email if you want to make a Hyatt Prive reservation.

You Don’t Have Enough Points

If you don’t have enough points or if you’re saving points to use for a more expensive trip, it’s okay to pay cash.

After all, cash is king. There’s nothing wrong with paying cash.

Just try to get the best value for your cash.

Pro-tip: Have a plan to earn more points. Whether it’s buying points or applying for new credit cards.

Be sure you know what points you need and what cards can get you the points.

Conclusion

When should you pay with points and when should you pay with cash for hotels?

Knowing when to pay with points and when to pay with cash requires simple math. You have to calculate how much it costs to use the points versus paying cash.

Because there’s a cost associated with using points, even if you have a stash of points from big bonuses from cards like the Chase Sapphire Preferred, the Chase Sapphire Reserve, and Ink Cash.

Check for the best credit card bonuses.

Once you know how much it costs to redeem points compared to paying cash, then you can decide if it’s cheaper to use points.

Though it seems like using already earning points would be cheaper, it might not be. Because sometimes you can buy hotel points like Hyatt and Hilton for cheap.

Sure, you already have sunk cost into earning those points and miles. So you may want to factor that in as money already spent.

But if you plan on traveling a lot, in some situations it’s cheaper to pay cash now and save your points for another trip.

Just remember, points are a form of currency. And with any currency, there can be devaluations.

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