Loyalty glossary · 1. Program mechanics and currency (40)
Points Plus Cash
Points Plus Cash is a redemption option that lets a member pay for a reward partly with points and partly with money, typically at a fixed conversion rate set by the programme.
Points plus cash is a redemption mechanism that lets a member split the cost of a reward between points and money. The split is set by the programme, not by the member, and that is the first warning sign. Most programmes price the cash portion at full retail and discount the points portion, so the member pays twice: once in cash and once in lost point value.
A hotel room retails at 200 dollars. The standard award is 20,000 points, which values each point at 1 cent. A points plus cash offer for the same room asks for 10,000 points plus 120 dollars. Now the points cover only 80 dollars of value, or 0.8 cents per point, a 20 percent devaluation against the standard award. That is not a convenience fee, it is a repricing.
The cash portion of a points plus cash redemption almost never earns points, even when paid with a co-brand card. A member who pays 120 dollars with a co-brand card in the example above would normally earn 240 points at 2 points per dollar, but the programme typically excludes that cash from accrual. The member loses the points they used, loses the points they would have earned on the cash, and still pays a cash price that is not discounted. That is three losses on one transaction.
Points plus cash is also a tool for clearing broken point balances. A member with 5,000 points that are not enough for a full award is nudged to spend them on a points plus cash deal, usually at a poor conversion, rather than letting them expire or sit unused. That reduces the programme's breakage liability, because the points are redeemed now instead of never. The member gets a discount smaller than the value surrendered, and the programme gets a liability write down.
The only time points plus cash is acceptable is when the points portion is valued at or above the standard award rate and the cash portion earns points through a co-brand card. That combination is rare. In most programmes, the rational move is to save points for a full redemption or pay cash and earn points on the whole amount. Points plus cash is not a middle ground, it is a tax on impatience.