When to Pay with Points, and when to Just Pay

It happens from time to time. When do we pay with points? And when do we pay for things normally and earn more points?

For me, it comes down to the Return on Expense.

In our most current case, we’re looking to get a hotel room while family was coming to town for the holidays. My wife was looking at a local hotel and it was going to be around $100 a night or 27,000 points.

If we value the Hilton Honors point at half a cent, those 27k points have a value of $135. It wouldn’t make sense to spend it on a $100 room. We’d be losing about a third of the value.

If it were $150 for that room or 27,000 points, we’d be getting more value out of our point spend (about 10% more value). So in that case, I would definitely choose to spend the points over spending the cash.

How do you choose when to spend the money, and when to spend the points?