Why you might (and might not) buy Gold Points for 0.4 cents each

A few bloggers have pointed out today that the current Club Carlson Gold Point flash sale allows you to buy up to 70,000 Gold Points for $280, or 0.4 cents each. I'm looking at my travel plans to decide whether to go for it. Here's why.

Opportunity cost and revealed preferences

In my discussion of Frequent Miler's latest experiment in mile and point valuations, I argued that the only kind of valuation that makes any sense for a travel hacker is asking the question,

"how much do I need to value a redemption to justify putting the needed spend on a co-branded credit card instead of a 2% or 2.22% cash back credit card?"

In my detailed analysis of Club Carlson's award chart, I found that it's relatively easy to justify manufacturing spend on the Club Carlson co-branded credit cards, requiring a valuation of just $111 per night at Category 6 properties like the Radisson Martinique on Broadway, where I stayed last weekend, while any value in excess of that is pure profit.

And I do, indeed, manufacture spend on my Club Carlson credit card, earning 5 Gold Points per dollar and foregoing 2% or 2.22% cash back on the same non-bonused spend.

That means I have what economists call a revealed preference: I'd rather hold 5 Gold Points than 2 or 2.22 cents, by definition valuing Gold Points at over 0.4 cents each, the price at which they're currently for sale.

That doesn't mean you should buy opportunistically

I have two simple goals here on the blog: destroying the undeserved reputation of the Chase Sapphire Preferred and convincing people to value their points correctly. The first appears hopeless, but I'm going to keep chipping away at the second.

The only mile-and-point valuation that matters is the value you get out of your miles and points — and the least valuable point is the one you don't redeem.

That means if you have a Club Carlson co-branded credit card and want to plan a weekend trip to New York, you can prepay $203 for two nights in advance by buying the "29,000 + 21,750" package. It's pretty hard to find a $101.50 night in the middle of Manhattan, and while the Radisson Martinique (deservedly) doesn't have a great reputation, that's still a pretty compelling value.

On the other hand, if you don't have upcoming travel plans where you can get an outsized, or at least good, value like that, the Gold Points are just going to sit in your account and fester, losing value with each devaluation, while you'll be out $203 in cold hard cash.

If you bought the maximum number of Gold Points during this promotion (70,000), you would need to aggressively plan some redemptions for them. Of course, the problem with planning your redemptions aggressively is that it might lead you to overlook even better values at other properties.

Conclusion

Take a look at your travel plans and point balances before deciding whether or not it makes sense to participate in the current flash sale.

In either case, the sale ends Thursday, June 19, at 11:59 am EST.