Why paying more cash for an award flight can actually be smart

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If you’re a points and miles fiend like me, you’re probably obsessed with wringing every drop of value from your travel rewards. The goal is to travel as much as possible without zeroing out your points balance.

Sometimes, the best way to do this is by mixing your points with money. Depending on the loyalty program, this strategy can increase the value of your airline miles and hotel points many times over.

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Many of us got into the hobby of travel rewards to pay as little cash as possible for travel. But some unique situations make paying (partly) out of pocket too good of a deal to pass up.

Iberia, for instance, gives you a handful of award price options, each with a varying split between points and money. The more money you’re willing to spend, the more valuable your points become.

For example: You can book a one-way business-class flight from Newark (EWR) to Madrid (MAD) for as little as 40,500 Avios (plus taxes and fees, typically around $125).

This exact same ticket costs more than $4,900 when purchased with cash. That means you’ll get an incredible value of 11.8 cents each. But you can do better.

Iberia presents five more options — allowing you to pay up to $640.90 for this ticket.

It might sound counterintuitive to voluntarily pay more cash for an award flight, but watch what happens to the math for this $4,900+ ticket:

• 35,400 points + $225.90 — 13.21 cents per point
• 28,600 points + $325.90 — 15.99 cents per point
• 23,500 points + $430.90 — 19.03 cents per point
• 18,400 points + $530.90 — 23.76 cents per point
• 13,300 points + $640.90 — 32.05 cents per point

If you paid the maximum cash option, you’d get an unbelievable value of thirty-two cents per point. Kind of makes 11.8 cents per point look yawn-worthy.

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A laundry list of popular airlines and hotels allow you to mix cash with points in some form or another, including:

• Aer Lingus
• British Airways
• Delta
• United Airlines
• Hilton Honors
• IHG One
• Marriott Bonvoy
• World of Hyatt

Values vary widely; Iberia and Hyatt are standouts.

But don’t assume mixing cash and points is always a good idea; sometimes, it’s not. To make the best decision, keep in mind this magic formula:

(cash price for flight or hotel – taxes and fees associated with the award) / award price for flight or hotel = value per point

Use this equation to see which method yields the highest return per point.

For example, let’s assume that a flight costs:

• $1,000 in cash, or
• 40,000 miles and $5.60

The formula would then be: ($1,000 - $5.60) / 40,000 = 2.49 cents per mile.

If you can ignore every instinct you have as a points collector and pony up some extra cash for your upcoming travels, you may be astonished at the deals you’ll find — and the amount of inexpensive (though not totally free) travel you can achieve.

Just run the numbers first — if the per-point value barely moves between tiers, the standard award price is the smarter call.

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