It’s easy to collect travel points and miles, but if you don’t redeem them correctly, all that time, energy, and money is wasted.
If you use a credit card for your everyday spend, you are likely to spend more than you intend, enrich the very companies that you probably don’t like, and you might be inadvertently harming those with less means than you.
Oh, and you can’t get into credit card debt if you don’t use a credit card.
Now, I’m not against having credit cards. Here’s when I use them. And I accept that people love their travel points. That is consistently the reason people give when justifying putting everything on a credit card.
So let’s talk about travel points. Because the heartbreaking part of all of this is that many people are taking all of this opportunity cost to rack up points and miles, and then wasting them.
And you might be too.
Lest you think that I don’t know what I’m talking about, I’ve earned somewhere between 2-3 million points and miles in my lifetime. I’ve redeemed for business class international flights, and for hotels that cost upwards of $1,000 per night. I’m actually in Japan on points right now as this post is published. So I feel pretty confident on this topic.
Table of Contents
When your points are worth nothing
The first reason why you’re wasting points is because you let them expire.
Now, most times, if you have an active account, points don’t expire, but it can happen. Some programs expire points even with activity, once the points reach a certain age. Thankfully, those are mostly uncommon programs.
If you’re not diligent about keeping your points from expiring, use a service like AwardWallet or something similar. Get reminders. Otherwise all that extra money that you spent because you used a credit card is just getting thrown away.
Table stakes: 2 cents
As a rule, you want your points to be worth 2 cents or more.
Why is this? Because it’s easy to get a credit card that offers 2% cash back on everything. I’m not linking to credit cards because I don’t need to give them any more business, but search online and you’ll see what I mean.
2% cash back is 2 cents for every dollar. And since cards usually award points based on the number of dollars spent, if you earn points and are not getting 2 cents per point, you might as well have just taken the cash.
Now, there are complicating matters such as bonus points. Some credit cards offer 2 or 3 points per dollar depending on the category of purchase. But typically, most of your spend is not going to be bonused like that.
But let’s stick with 2 cents for now. What does this mean in practice?
It means that if you spend 25,000 points on something (for example), you should be getting at least $500 in value from it. If you’re only getting $250 worth of value, then you’re probably wasting your points.
Divide the price by the number of points. It should be greater than 0.02.
Best values for points redemptions
If table stakes is 2 cents, then how do you get the best value out of your points?
You look for more lucrative redemption options. Here are some ways that you can find this:
- Short-distance destinations. Sometimes airlines will have specials with low mileage redemptions. Alaska Airlines has flights that are less than 700 miles that you can redeem for 4,500 miles one way. If that flight is $200 (not unreasonable), that’s 4.4 cpp (cents per point), a great deal.
- Long-haul sweet spots. Some airlines just have sweet spots for redemption. You can fly on Aer Lingus from some U.S. airports to Ireland for 13,000 miles. If that flight is $500, that’s 3.8 cpp. (I actually did this a few years back.)
- Redeem during peak times. When airfares and hotel rooms have higher rates in peak seasons (such as Christmas), sometimes the points redemptions stays the same. Twice the price means twice the value!
- Transfer points to Hyatt. Due to a quirk in the way that Hyatt hotels count points required for free nights, you can get some very good deals by using Hyatt points for free night stays. The Park Hyatt Sydney has rooms for around $1,000 per night, but only costs 45,000 points (2.2 cpp). And if you’re willing to lay some serious cash down, the Park Hyatt Milan is even better.
Don’t waste your points
You’ve spent all this time and gone to great lengths to earn these travel points and miles. That’s great, but only half the story. It’s the redemption of those points and miles that really determines whether you get a good value out of them.
And as for that flight that got me to Japan? I flew international business class, and redeemed for around 7 cpp.
Now that’s a good deal.
