How to calculate dining credit card rewards value

Quick insights

If you earn rewards on dining purchases with your credit card, you might already know that points can add up over time. But what are those points actually worth? The answer isn't always straightforward, because the value of your points can change depending on how you redeem them. Here's a closer look at how to figure it out.

What dining rewards are worth

Dining credit cards let you earn rewards—usually points, miles or cash back—on purchases at restaurants, coffee shops, fast food spots and sometimes food delivery services. There are different types of dining rewards depending on the card, but the basic idea is that your restaurant spending earns you something back.

The value of your points depends on your card's rewards program and how you choose to redeem them. The same number of points might be worth different amounts depending on whether you redeem them for cash back, gift cards, travel or something else. Note that your dining rewards don't have to be redeemed toward dining—those points you earn on meals out with friends might help cover part of your next vacation.

How point values vary by redemption method

Some rewards programs offer several ways to redeem points, and each method may assign a different value to each point. For example, points may be worth about 1 cent each when redeemed for cash back, depending on the program. When redeemed for travel, the value can be dynamic, with some programs offering boosted point values or bonus redemption rates depending on the booking.

This means that 10,000 points might be worth $100 as cash back but potentially more when redeemed for travel. The redemption method you choose can have an impact on what your dining rewards are actually worth. The way credit card points work varies by program, so it may be worth comparing your options.

Some redemption options tend to offer less value per point. Redeeming points for merchandise or through certain third-party checkout options might give you less than 1 cent per point, while transferring points to travel partners could potentially offer more. The best way to use your points may depend on your goals and spending habits.

Figuring out your cents per point

To compare redemption options, it may help to calculate the cents-per-point value—sometimes called CPP. This tells you how much each point is worth for a specific redemption.

You need two pieces of information: the cash value of what you're getting and the number of points required.

Cents per point = (Cash value ÷ Points required) × 100

For example, if a gift card costs 10,000 points and would normally cost $100 in cash, the calculation would be:

($100 ÷ 10,000) × 100 = 1 cent per point

If the same 10,000 points could be redeemed for a travel booking worth $150:

($150 ÷ 10,000) × 100 = 1.5 cents per point

In this example, the travel redemption offers more value per point. You might also want to factor in any taxes or fees associated with a redemption, since those can affect the actual value you receive.

How earning rates affect your return

The value of each point is only part of the picture. Your card's earning rate on dining also matters. Some cards offer elevated rewards on dining purchases—for instance, earning 3 points per dollar spent at restaurants.

To figure out your effective return—the percentage of each dollar that comes back to you in rewards—you can multiply your earning rate by your cents-per-point value:

Effective return = Points earned per dollar × Cents per point

For example, if your card earns 3 points per dollar on dining and each point is worth 1 cent, your effective return would be 3%. If those same points are worth 1.5 cents when redeemed for travel, your effective return would be 4.5%.

A real-world example

Let's say you spend $400 per month on dining and your card earns 3 points per dollar on restaurant purchases. Over a year, that's $4,800 in dining spend and 14,400 points earned.

If you redeem those points for cash back at 1 cent each, they'd be worth $144. If you redeem them for travel at 1.5 cents each, they'd be worth $216. The difference—$72—comes from choosing a different redemption method.

This is a simplified example, and actual values may vary by card and program. But it illustrates why knowing your point values may help you get more from your dining rewards.

Maximizing your dining rewards value

A few things might help you get more value from your dining rewards:

If you're comparing credit card options, it may help to look at both the earning rates and the redemption flexibility each card offers.

In summary

Calculating the value of your dining credit card rewards may help you make more informed decisions about how to redeem them. Not all dining rewards are created equal, and the same points can be worth different amounts depending on how you use them. By comparing cents-per-point values across redemption options and factoring in your card's earning rate, you might be able to get more value from the points you earn on dining purchases.