Everyone takes a different approach to collecting miles and points. Some collect points with a specific goal in mind, while others rake in points and almost view it as their retirement account, with no plans to cash in on rewards any time soon.
The issue, as we often see, is that loyalty programs depreciate over time. In this post I specifically wanted to talk about how you can diversify your point of view and avoid devaluation, as this is an issue that many hobbies struggle with.
Below are some general ideas on how to diversify your miles and points and avoid devaluation, in no particular order.
Earn and burn points, don’t look at your retirement account
I think this is the single most important point I can make – always take an “earn and burn” approach to your points whenever possible. All the time I hear from people who say “I’m earning points for retirement, and I look forward to cashing in on them all.”
Now, I must definitely admit that not everyone will always be in a position to redeem – maybe you just can’t take time off from work, or maybe there are other life circumstances. However, I can’t stress enough that I wouldn’t recommend viewing your points balance as a retirement account (well, unless you retire shortly).
Why? Keeping points in an account for a long period of time is like keeping money in the account without earning interest. It’s worse than that, because chances are your issue currency has a higher inflation rate than most “real” currencies.
When you compare rewards redemption rates now with rates a decade ago, in many cases you will find that the rewards points requirements have increased by almost 100%.
Some might say “But I want to be able to travel when I retire.” That’s great, I’m ready for it. The good news is that there are plenty of opportunities to earn points efficiently, and they (hopefully) still exist in retirement.
While points depreciate over time, the good news is that buying points is easier than ever, in terms of how many points you can earn per dollar spent on a credit card, your opportunities to buy points, and more.
So, while the rewards you’ve earned in the past are worth less than they were at the time, there are still plenty of wonderful opportunities.
Earn transferable points whenever possible
While I take an “earn and burn” approach, I will say that if I am going to score points in the long run, I always prefer it. Transferable Digit Currencieswhether they are numbers Amex Membership Rewards, capital a, Chase Ultimate Rewardseither city thank you,
Why do I feel more comfortable collecting transferable points without short-term use?
- As the name suggests, points can be efficiently transferred to various other airline and hotel programs, so you are more protected from devaluation than earning points with the same program.
- For many years now I important All major transferable point currencies at 1.7 cents, unlike personal airline and hotel point currencies, where I depreciate in value over time; Admittedly, that same valuation doesn’t really help keep up with inflation, but it’s better than nothing.
- Chances are if you’re maxing out your travel credit card rewards, you’re earning one of these currencies, so points are also the easiest and most practical; This can happen with a card like this Capital One Venture X Rewards Credit Card ,review, Chase Sapphire Preferred® Card ,review, City Premier card ,review), e.t.c.
Protect yourself from devaluation of airlines and hotels
Admittedly, many of us still earn points with specific airline and hotel loyalty programs. This may be through our natural travel patterns, as having a co-branded credit card makes sense, as we collect points through third party activity, etc.
Of course I’m not opposed to collecting airline miles and hotel points, but I do try to limit my balance in these programs at any time. What are my thoughts here?
- I try not to keep more points in a personal account than I can realistically redeem for some aspirational trips; That way if there is advance notice of prize price changes, I can book trips to get the most out of my points
- I try to focus on earning rewards with programs that can be trusted; This can include those that have a history of notifying pricing changes in advance, and programs that publish award pricing rather than dynamic pricing (for example, programs such as Air Canada Aeroplan and World of Hyatt).
- Be careful in scoring marks in a program in which a single award sweet spot, If that redemption is devalued, the full reason for the points you collected may no longer apply (for example, Redeem Virgin Atlantic Points on All Nippon Airways,
Be strategic about the currencies you earn points
there are so many Huge Credit Card Welcome Bonus There are nowadays, and it can be tempting to apply for all of them. The thing is, you still want to be strategic. Often I’ll hear from readers who have points balance with 10 different currencies, but don’t really have enough points with any one program for it to be useful.
So, what’s the best way to handle this?
- The beauty of collecting transferable points is that they have multiple overlapping transfer partners, which means that in many cases you can redeem Amex and Chase points toward a single redemption.
- If you’re earning a specific airline or hotel point currency, I suggest keeping a general goal in mind, and then earning enough points to be able to redeem for that.
You don’t want to be in a situation where you want to go to Paris for five nights, and have 80,000 Hilton points, 30,000 Hyatt points, 100,000 IHG points, 40,000 Choice points, etc. (Well, unless you want to change hotels every night).
Everyone’s strategy with miles and points will be different depending on their circumstances. In general, I highly recommend taking the earn and burn approach while earning points, rather than viewing your rewards balance as a retirement account.
I try to minimize the risk of devaluation of any rewards program by earning transferable Points Currencies whenever possible. If I’m going to earn a specific airline or hotel points currency, I try to keep my points balance small enough so that I can redeem all those points within several months in the event of devaluation.
What is your strategy to diversify points and reduce the risk of devaluation of points?