Rewards options when you have too many points

Tony Mecia
Personal finance writer
Rewards expert who writes the "Cashing In" reader Q&A column for CreditCards.com

Rewards options when you have too many points

If you have been gathering reward points from credit cards for a number of years, you might find yourself with a lot of points – but no idea how to spend them.

Recently, CreditCards.com received a question from one of our readers, Sharon, who wrote: “I have saved up 200,000 points. I am retired and have never used any of the points. Should I just keep saving or do something with them?”

It’s easy to deride Sharon’s dilemma as a #FirstWorldProblem, but it’s one that is probably common. A lot of times, we fall into the trap of seeing an appealing offer – such as a valuable sign-up bonus or a card with big bonuses for spending in certain categories – and race ahead to claim the points without thinking through how we might use them.

It can be a good problem to have. Accumulating points is aspirational, and you can imagine the possibilities in your head – similar to thinking about what you would do if you won the lottery. Hundreds of thousands of points can go a long way. And you’re not the only one. There’s a lot of hoarding going on.

American Airlines, for instance, estimated that at the end of 2016, the value of unused frequent-flyer miles sitting in its customers’ accounts was worth $669 million of travel.

Get to know your points

If you’re faced with an abundance of reward points in your accounts, keep these things in mind: 

Understand the rewards when signing up for a card.
You don’t have to know how to spend every single point when you apply for a rewards card. But if you don’t have a specific goal in mind, then you will want to ensure you will be able to use your points in a way you find appealing.

Or make sure the points are flexible enough to appeal to you. You wouldn’t want to sign up for a credit card that gives you Southwest Airlines frequent-flyer miles if Southwest doesn’t fly anywhere near where you live, for instance.

Points tend to become less valuable over time.
Hanging onto reward points isn’t like having money in the stock market, which is unpredictable in the short run and tends to go up over time. It’s more like sticking cash under your mattress: It won’t buy as much in the future.

Travel providers such as hotels and airlines continually adjust their loyalty programs, and they tend to move toward requiring more points than in the past, not fewer.

Don’t assume heirs can inherit unused points.
Forgive me if it is morbid to point this out, but if you have accumulated a lot of points, it’s not a given that your next-of-kin will be able to use them should something unfortunate happen to you.

Most rewards programs are vague about what happens to points when a member dies, although in practice many will go ahead and transfer the balance. 

It’s OK to keep points in reserve.
Financial advisers often recommend that people keep an emergency cash reserve to guard against unexpected expenses or drops in income, and the same idea can apply to reward points.

Having points that can be used for travel means you can make decisions more spontaneously and attend family events that arise on short notice. Cashing in airline miles for travel at the last minute can be a good deal because those fares tend to be expensive.

Best strategy for using points

Personally, I favor an rewards approach that uses points regularly, keeps some in reserve and continues to add points through new cards and everyday spending. Everybody has different comfort levels of how many points is too few or too many.

Using points for travel tends to offer the best value, but if you find yourself with too many points, you can often redeem them for cash or merchandise (at a lower value). Some points are more flexible than others. It all depends on what type of points you have and what kind of rewards you value.

If I were you, I’d start drawing up plans to take a trip using some of the miles but not all of them. With 200,000 points, the possibilities of where to go are limited only by your imagination. 

 See related: 5 steps to get your rewards in order for the new year, Should you use card rewards to pay down debt?


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Updated: 06-22-2018