Should You Hang Onto Your Rewards Points? A Different View

The conventional wisdom among experts in the points and miles game is that you should not hang onto your rewards points. Once you earn them, you should burn them as quickly as you can. You’ll still look for value — i.e., you don’t want to overpay, even in points. But as a rule, don’t hoard your points. It’s one of our Ten Commandments of Travel Rewards.

Devaluation is the Norm

Loyalty programs are infamous for devaluing their rewards. Usually, they’ll give members plenty of warning. But not always. Just ask members of Hertz Gold Plus Rewards, who were given zero notice when redemption rates increased a year ago. When you increase the number of points needed to rent a car, you’ve decreased the absolute value of your points.

Airlines and hotel companies do the same thing. Most airlines have abandoned their fixed award charts; and in most cases, the price in miles went up.

Hotel companies annually update their award charts. Some hotels require fewer points to book, while the majority of them (when they change at all) require more points to book.

So Why Hang On To Your Rewards Points?

There are always going to be times when it’s nice to have the points in your account. Let’s say you find an incredible redemption opportunity and want to book. That’s one of the key reasons why I don’t like to let my accounts go to zero. Yes, you can always buy points and miles. But even though loyalty programs frequently offer bonuses on purchased miles, they are rarely a great deal.

This is also a good argument in favor or flexible redemption currencies, like Chase Ultimate Rewards, American Express Membership Rewards and Citi’s ThankYou Rewards. These points can be transferred to a variety of airline partners, to get points in your frequent flyer accounts when you most need them. Most transfers are immediate, but check before transferring if time is of the essence.

Use Miles for Last Minute Flights

The sweet spot for booking cash fares is up to seven weeks in advance, but it’s not usually impossible to find a good fare when you book at least one week before the flight.

Sometimes you don’t have a week.

You may have a family emergency or a crisis in your business. Or on a more positive note, you have a long weekend coming up and would like to head out. Points and miles are a great option to book last minute flights, without paying the highest prices. Make no mistake, last-minute mileage bookings will almost always cost more miles. Maybe not a lot more, but usually more. (On Southwest, in particular, the price in points fully aligns with the cash price; there are no savings). But at least you won’t be out any cash beyond the fees. That’s helpful if you’re on a budget, and somewhat less annoying than paying too much in cash.

A Rainy Day Fund with Points/Miles

The economy has seriously faltered during the Covid-19 pandemic. After 20 years with the same company, I was let go in the interest of cost-cutting. In the interim, our family will almost certainly have to do with less.

But we’ll still travel, because we have a bunch of points and miles saved up in various hotel and airlines loyalty programs.

I have not always followed my own advice to burn points and miles. For many reasons, it is often harder to use them than to earn them. But I’m glad to have them now. Because while we weather this economic storm, we’ll still be able to get out and travel.

Good Values Are Easy to Find

The message has always been that loyalty programs consistently devalue their points currencies. But it’s not true right now. In fact, quite the opposite.

As we mentioned, most airlines have done away with their award charts. They are simply charging what the market will bear; and at the moment, it won’t bear high award pricing.

It’s much the same with hotels. A couple of months ago, Intercontinental Hotels Group moved its IHG Rewards program to dynamic pricing on a global basis. The result? Point bookings got cheaper than they’d been in very long time. One of our regular stops in New Orleans is the Intercontinental, which always went for 50,000 points. Not anymore. Not in this economy. I was able to use my 40,000-point free night certificate to book a room.

So the economy matters. In good times, loyalty programs will devalue their awards. In bad times, maybe not.

Final Thoughts

There is no good news here. The economy is in bad shape, and the airline industry predicts it won’t fully recover from the Covid-19 pandemic until 2024.

Should you hang on to your rewards points? It really depends on your situation. I’m grateful to have plenty of points and miles saved from the good times, to help through the tough times. In any event, I’d always recommend you have enough points and miles to fly home in an emergency.

The good advice to spend your points and miles is still good advice. But I like to keep some extras in my account, just in case…