If you want to travel, should you go for points and miles or for cashback?

Yes, yes, I know the answer is “both”. But bear with me for a moment.

Shawn at Miles to Memories has a nice rundown of the new $300 gift cards at Staples. He’s got a section where he lays out how much it will cost for a night at a Hyatt:

• Category 1 – 5,000 points – $29 in fees with $300 cards.
• Category 3 – 12,000 points – $69.60 in fees with $300 cards.
• Category 5 – 20,000 points – $116 in fees with $300 cards.
• Category 7 – 30,000 points – $174 in fees with $300 cards.

That’s a helpful way of looking at it. It’s easy to engage in mental sleight-of-hand and say to yourself, “The fees are 3% but I’m getting 5 points per dollar, and those points are worth two cents each, so I’m actually making 7%!” Well, you are and you aren’t.

Last summer the family and I had a wonderful stay at the Hyatt Regency Suites in Atlanta. It’s a category 1 and the rooms go for around $150 per night, so that represents a value of three cents per point, which is phenomenal. (Have I mentioned I love Hyatt? Well, I’m mentioning it again.)

So if I get some $300 gift cards from Staples and cash them out, and then use the points to stay at that hotel again, am I making $120 per night? On the one hand, those rooms do go for somewhere in the mid-$100s. But on the other hand, if I were paying with cash instead of points I would probably find a cheaper option around $100 per night. It wouldn’t be as nice, of course, But just like that, my “profit” gets reduced to $70.

Or I could make like Chasing The Points and get some Hyatt gift cards for 15% off. Plus the Upromise portal pays 4%, so that’s 19% off the aforementioned $150 per night,which puts my “profit” somewhere in the low 90s. Although I’d also get some Hyatt points plus credit for a paid stay, so the “profit” would be a little lower than that.

But keep in mind this is a high-value scenario for Hyatt. What if you’re staying at a Category 3 ($70 in fees as per the above table) that goes for $120 per night? That puts the value per point at one cent instead of three. That’s a lot lower than what I look for in Hyatt point redemption values, but then I loves me some Category 1 hotels. For what it’s worth, Frequent Miler puts the fair value of Hyatt points at 1.1 cents each.

If you’re able to knock 19% off a hotel going for $120 per night, that puts the price at $97. That means your “profit” is only $27 in this case. And to earn this discount you had to buy $2,400 (8 x $300 cards) of Visas at Staples and then go liquidate them at your preferred retail establishment. I’m not saying you shouldn’t do it in this case, but I am saying it’s not a no-brainer decision. And keep in mind that, as Freequent Flyer points out, “liquidation bandwidth is more limiting than purchase bandwidth.” The question is whether there are better things for you to buy and liquidate.

What if you’re doing cashback? Suppose you’ve got a no-fee 2% card like the Double Cash or the Fidelity Amex. If you were to buy $2,500 (5 x $500) of Visas with a $3.95 fee and earn 2%, you’ve got $30 in cold, hard cashback which you can then use for the hotel of your choice. And you’re not limited to a chain hotel, Hyatt or otherwise. And you won’t wind up with orphan points in your loyalty program account.

And of course if you’re doing Amex gift cards combined with a portal bonus combined with a credit card that pays more than 2%, then the calculations can move even more in favor of cash.

In short, the best route to take depends on a lot of different things. Make sure you do your homework, don’t earn points pointlessly, and don’t overlook cashback as a way to achieve your travel goals. You won’t be Vendoming if you go the cash route, but you may be able to come out ahead financially.