Some rewards credit card users make the mistake of accumulating massive sums of points and holding onto them for dear life. Here’s how to start using your points wisely.
Credit card rewards can help you plan a dream vacation, but letting your points sit on the shelf can eventually leave you grounded.
While consumers must pay airline taxes and fees to redeem airline miles, and they may have to cover resort fees, parking, and other extras when they redeem hotel points, travel rewards offer tremendous value in a travel economy that has become increasingly expensive over the years. After all, you can easily use miles to pay for flights that would normally cost thousands and hotels you couldn’t normally afford.
Curiously enough, not everyone racks up points with the goal of scoring a luxury trip to the Maldives or a family trip to Disney World. Instead, some rewards enthusiasts make the biggest mistake you can make in the rewards world – they accumulate massive sums of points and hold onto them for dear life.
Ryan Inman, a 34-year-old husband and father from San Diego, is a self-described hoarder who has accumulated over 450,000 Chase Ultimate Rewards points with no travel plans in sight.
The financial planner says he and his wife (a physician) earned their stash of points by maximizing all the sign-up bonuses on cards like the Chase Freedom and Chase Sapphire Reserve and using them for all their regular spending. He also has an Ink Business Preferred Credit Card he uses for all his business expenses.
Inman says that while he has no plans to travel now, his goal is racking up points in the Chase ecosystem so they can have “several nice vacations paid for when the kids are older.” Plus, “it would be nice to see a million points,” he says.
The problem? Inman’s children are ages 2 and 4. It could take him years to reach the million-point milestone or to be ready to finally take those nice family vacations he’s saving up for. In the meantime, he could be missing out in more ways than one.
Point inflation is real
Having too many points and miles you’re not using may be the definition of a first-world problem – but it is still a poor plan, says rewards expert Scott Mackenzie of Travel Codex. That’s because points and miles are constantly subject to inflation as programs are devalued, meaning members are asked to redeem more and more points for the same trip over time.
Case in point: Delta Air Lines stopped offering an award chart that outlined how many miles you’d need for various fares in 2015. Since then, rewards rates for some routes have fluctuated dramatically. Worse, without an award chart, you basically have no way to plan or “save up” for a flight you want to book later on.
Travel expert Brandon Neth of FinanceBuzz shares another example that is fresh on everyone’s mind – the recent merger of Marriott Rewards with the Starwood Preferred Guest program.
This one really hurt, he says, since there was lost value in how to earn and redeem points, where you can redeem points, the way credit cards in the program earn rewards and how the nights and flights packages could be used.
“It was a complete restructure of the Starwood Preferred Guest program that many considered to be the best in the hobby,” he said. “If you were hoarding points at that time, you likely lost serious value.”
Then there are times when you may lose out on a way you can redeem your rewards altogether. Neth noted that Chase recently dropped Korean Air as a transfer partner. The bank added JetBlue as a partner around the same time, but that doesn’t help anyone who was saving up points to redeem on Korean Air.
“This was a big hit for many of us and took away a high value transfer partner,” he says. “Although Chase Ultimate Rewards points retained the same value otherwise, the loss of this particular partner devalued the currency, in my opinion.”
Flexible travel points you can redeem for one cent each (like miles earned with the Barclaycard Arrival Plus World Elite Mastercard) only devalue when the price of travel goes up. However, airline and hotel loyalty programs are especially susceptible to devaluations since they are constantly tweaked, and usually not in a way that benefits consumers.
Travel expert Johnny Jet says while he used to be able to fly from Los Angeles to New York City for 25,000 American AAdvantage miles in business class. The same flight now costs 97,500 miles.
These examples are just a few of the many, many devaluations and losses in value that airline miles, hotel points and flexible travel points have experienced over the last few years. But they underscore an important lesson.
“Just like cash stuffed under a mattress, points lose value the longer you hold them,” said Mackenzie.
And while you can invest your cash savings to keep up with or beat inflation, you can’t do the same thing with points and miles.
See related: 5 times you should transfer your points to card partners
Why people hoard points
It can be difficult to convince people to get serious about points they probably accumulated for free and don’t come with any real consequences either way. Travel rewards don’t carry the same high stakes as a retirement account, after all. You can earn them easily and redeem them or not, but it’s not going to make a big difference in your life outside of your vacation plans.
Plus, some people prefer having a stash of points they can pull from at any time. There are many reasons why, including life’s many “what ifs.”
“I think some people, including myself, like to keep some miles and points around for an emergency because they’re great to use for last-minute trips,” says Johnny Jet.
Imagine you have a last-minute funeral to attend across the country and can’t justify paying an exorbitant cash rate. This is one situation where having some airline miles on hand could save your budget while allowing you to be with your family.
Mackenzie also notes many people are concerned that they’re not getting a good value for their miles.
“They may have been told when they started earning that some hotel or flight was the best redemption opportunity,” he said.
Or, they may hold out for one specific trip and ignore other opportunities that come up along the way.
This problem is compounded by the fact that popular points and miles blogs constantly glamorize certain travel redemptions. In the rewards world, dramatic headlines get the most clicks, says Neth. So, when people read headlines that say things like “This couple flew in Singapore Suites for only $100 and got 20 cents per point,” they hold out for something similar.
Unfortunately, articles with clickbait headlines like this one foster the mindset that people should only redeem points when they can extract a ridiculous amount of value from them. Worse, they explain redemptions that can be hard to duplicate in real life.
See related: How do you redeem cash back rewards?
Here’s why you should spend your miles
If you’re sitting pretty on a big pile of travel rewards points, experts say it is time to stop hoarding and start spending. Not doing so could mean ending up with less value from your points in the end – even as your stash continues to grow.
Plus, you could be missing out on opportunities to travel – which is the likely reason you started earning points to begin with.
If you have traveled some but just haven’t pulled the trigger to redeem your miles, Mackenzie recommends assigning a target value for each of them and then checking for redemption opportunities each time you fly.
“If you can get good value redeeming miles for a weekend trip to see family, go ahead and book it,” he says. “It is not always necessary to hoard miles for a blowout vacation several years into the future.”
The important thing is to use the miles for a trip you value and feel happy with, not trying to satisfy ideal redemption strategies you might read about online. In other words, don’t let perfect be the enemy of good enough, he says.
If you’re unsure how to use your miles, consider joining a Facebook community of like-minded travelers who can help you learn how to redeem points and book amazing award trips. Facebook has loads of communities, but you can also check out Flyer Talk and Reddit/AwardTravel, says Neth.
Additionally, if you are truly concerned about utilizing your points poorly, there are plenty of great award booking agencies that can do the legwork for you for a fee – usually $100 to $200.
No matter what you do, stop hoarding and start exploring your options. Remember why you started collecting travel rewards to begin with and plan the trips you’ve always dreamed about.
Cashing in points for 2 cents each may not be sexy, but it will help you see the world at prices you can afford. You can’t take your rewards with you when you die, so what are you waiting for?