G'day Mates,
As the subject says, we are not sure about which one is of higher value or the best bargain. We are offered either from NAB. Next Christmas we plan to go to US. So thinking velocity points will be good. But for each ticket you need to pay 200$. Keeping in mind that ozbargain tickets come up from time to time, we may end up getting a better deal without velocity. What do you think and why ?
Thanks :)
EDIT:: We are looking for two economic tickets. We are flexible about our dates
Relying on sales that suit christmas time is difficult too.
If you travel much, 250,000 points is worth more - even if use it for one business class redemption, it'll easily be worth over $1,500.
Business class seats are overpriced to begin with. So the 'value' when redeeming for business class is overstated.
OP, another option is to take the points and sell them on the black market, where they could fetch $2,500. Here's an example, but it is of course against the T&Cs and you risk getting your account suspended.
If you would otherwise be paying cold hard cash to get a business class seat, then the value is not overstated.
Value is subjective. Some people believe $1000 is good value for the use of a business class seat for 120 minutes. Some people believe there is better value in paying $50 for an economy seat on a low cost airline, and using the remaining $950 for other things.
You're not comparing apples with apples here. It is not about which class you decide to travel in or what you decide to spend your money on. The real question is, does the OP use Virgin?
The OP has the opportunity to decide between taking $1500 in cash or taking 250,000 points - the points can potentially be worth much more if OP maximises its value. To someone who travels on Virgin anyway, those points can be redeemed for services valued at much more than $1,500.
The points will obviously not be worth as much for someone who doesn't normally travel Virgin at all.
For example, I might travel to LA once a month on virgin business class. The price is typically a little over $8,000 for a return trip. The number of points that must be redeemed for this flight is just under 200,000, plus around $400 in taxes.
If the points were taken instead of the cash, the final value of the points in this case would be approximately $6,100. You might think that the business seats are overpriced, but the fact is, if I took $1500 in cash and didn't have those points, I would have that $1,500 and still need to fork out another $6,500 for that ticket.
It is not about which class you decide to travel in or what you decide to spend your money on.
Yes it is. As you point out, the points are worth money.
It's a case of maximizing how much money those points are potentially worth.
You mentioned in your earlier post:
… sell them on the black market, where they could fetch $2,500…
There's a reason why some people are willing to pay that high of a price for the points.
It's not about maximising what the points are worth in terms of prices of goods. It's about maximising what the points are worth in terms of personal subjective utility.
If you don't PERSONALLY value business class as worth $8000 to you then using the points for that won't give you $8000 of utility.
It's utils maximised $1500 versus utils maximised 250000 points and that may not be buy getting the most sticker price per point. If you buy $10000 worth of goods that are only worth 5000 utils to YOU, when you had the opportunity to buy $6000 worth of goods that are worth 6000 utils to you, then you've (profanity) up.
This is why I use my points on economy seats even though using them for business class upgrades would yield a better sticker price dollar per point redemption. I don't value the business class upgrade enough for it to be the utility maximising choice.
Here is a very good reason not to risk selling your points: http://www.ausbt.com.au/velocity-accounts-being-suspended-du…
There's more risk for the buyer than the seller. The seller can at least keep the money, but the buyer loses their points and the money.
@inherentchoice: Makes no difference to me. I wouldn't feel good about the situation at all if I was a seller and the buyer lost all their money. Not to mention essentially being blacklisted by the airline and having my account suspended. Not a good outcome for anyone.
@The Champagne Mile: If you never had or intended to use your velocity account, and you reaped $2500 in cash instead of $1500 - isn't that a good outcome?
@inherentchoice: Not if that $2500 was given to me by someone who later lost the points they'd bought for that money, leaving them high and dry.
Knowingly taking money from someone for a points transaction (which is clearly against airline T & Cs) when there is a high risk that the points will be confiscated is in my opinion simply unethical, and I wouldn't be comfortable doing it (though clearly others would).
The cash is higher value because you can use it anywhere.
Would you take $100 cash over a $500 Myer card?
What are you trying to say?
250k velocity points = $1388 in Myer vouchers. So of course I would rather $1500 than a $1388 Myer voucher.
I'm using an example to say that the value of cash is not higher just because you can use it anywhere.
Anyone who has an idea about frequent flyer points would know that redeeming the points for something that is not related to flights is going to return the least value.
Not necessarily. The calculation is the utils you would receive from a utility maximising deployment of $1500 versus the utils you would receive from a utility maximising deployment of 250k points.
For some the cash will win, for others the points.
Points easily. 250,000 points is 7 return trips to Perth and back. If you value that at a $200 off peak price, that's $2800 worth! Same points all year if you're a little bit flexible,
I mean this is a pretty specific scenario in saying that…
And how much are the taxes for those trips?
$17 each way i suppose
Like my economics professor used to say, "Cash is King".
In this case the way I would see it would be like this.
Highest value of redeemable giftcards available (ones that i would actually use).
BP = 17,000 pts for $100
250,000 / 17,000 = 14 (rounded down).
14 BP Gift cards at a value of $1400.
Leaving you with 12,000 points
or another $50 BP Card.
so 250,000 = 'cash equivalent'(as i know i will use these)of $1,450 worse case scenario.
$1,500
vs 250,000 points ($1,450 BP Giftcards worse case)
For $50 i'd choose points as they have a higher earning potential.
We've seen quite a number of enquiries for this NAB offer for small loan sizes (~$250,000) where people are facing significant costs in refinancing, so their primary motivation was wanting the $1500 to cover that cost.
If you're doing this purely to facilitate a future holiday, however, there could be cheaper mortgages and/or lenders that are offering both cashback and points - and could therefore be more appealing.
An example of this could be Virgin Money's Reward Me home loan, which at $750,000 loan size (which is now becoming a pretty average loan size for Sydney and Melbourne) would be 3.69%p.a.(CR 3.83%p.a.), offer you 252,000 points over 3 years (spending $1000p/m on the attached High Flyer card - you can make your own calculations here) and depending on the broker you use could come with $1000 cash back at settlement.
Hope this helps.
Velocity points, redeem for business class.
I assume you are wanting to use the points for business class redemptions? How many people are you looking for?
I would be tempted to go with the points, however there is a real unknown over whether you will be able to find availability over Xmas time, even if you try and book a year out. Maybe someone here may have an idea about likely availability, or otherwise over at AFF.
Also keep in mind that Velocity points can be transferred to Singapore Krisflyer, so might give you some more options for availability.
In short, assuming you can use for travel at some stage, whether the US trip or something else, I would go the points - even as worst case using for gift cards as stated above, they are essentially the same value, and has potential for real upside.
Thanks a lot for all your responses. The poll is a tie but from the comments it's pretty clear that if we can't get the dates then points won't be useful. Is there a way to search for the tickets and dates now ?
Got the same offer with NAB. Choose the $1500 as i didn't plan to travel far anytime soon. Still waiting for it to come through 3 months on though. Did you get the free credit card option? I choose the Qantas Premium and received 30000 Q points.
We have got that option. We have to pick a credit card. We will be taking a rewards plus interest free shopping option credit card. It's included in the package which costs 395$ per year for the loan
Rewards seats are only released about 365 days in advance (AFF forums can tell you the exact number of days for each airline). So no, you can't search for your specific dates at the moment.
OP - if you go for the points and decide to sell them, i'm a buyer. Message me.
…a buyer, and a member for all of 14 minutes. Hmmm.
The short answer is, it depends on your circumstances and preferences.
If you like travelling then the 250k is a no brainer.
If you don't like travelling then the $1,500 is more enticing.
To me, 250k points is worth much much more than $1500. I flew business class to London on Etihad and it cost me 125k points each way - that fare would have cost about $14k
But would you have willingly paid $14000 for it if you didn't have the points?
No, but that isn't the point - i purposely earnt the points so i could fly business class without having to pay business class prices
I accept that - but you would be lying to yourself if you told yourself that you were getting $14000 value out of it if you were personally never planning to pay that price to fly business class in the first place.
It'd be similar to saying you could buy a Ferrari for $100k, which is $200k off the RRP so you're making a 66% saving. Irrelevant if you never intended to buy it at $300k in the first place.
That must be one heck of an expensive business class if it was $14k.
Great discussion going on here…
Mostly been answered by others, but it really depends on how you plan to use it.
Considerations:
To give some background as to what the relevance of the above questions are…
Without knowing your situation though, I would lean towards the cash.
250,000 Velocity Points will surely be redeemable on airfares that would cost greater than $1500, however the availability/timing of those reward flights may not always suit your travel plans.