We’re All Hoarding Points & Miles. Does That Mean They’ll Be Worth Less?

American Express points out in a recent article what most of us already know.  If you’re earning points and miles via a travel reward credit card right now, you’re earning at a much higher rate than your redeeming them.  That’s if you’re redeeming at all.  AMEX makes the point that many folks are hoarding their points and miles until they can use them again for travel.  Will that be in 2021?  2022?  That’s a really good question, and it’s also where the problem comes in.

Popular travel reward credit cards have done a good job spinning up new bonus categories and benefits to keep customers spending on those cards.  I’ve lost track of the number of credit cards I hold right now that have added bonus points for grocery store purchases.  And, that doesn’t count over-the-top bonuses like the 10 miles per dollar I got offered earlier this week.

Will Your Points Be Worth Less When It Comes Time To Use Them?

I hate the term “devaluation”.  It seems to be a pet term of just about all of my fellow travel bloggers.  The term isn’t wrong, but I don’t think the average Joe or Jane thinks about it using big words.  They want to know if they’ll still be able to go to Hawaii with their American Express Membership Rewards.  Or, maybe Portugal with their Chase Ultimate Rewards.  Most folks aren’t traveling to the far corners of the earth multiple times per year.  If you’re reading this, you’re more likely to be saving up for a great family trip than planning 10 of them.

So, are your points and miles going to be worthless?  The good news is no, they won’t be worthless.  But, they will be worth….less.  Let’s get back to that term, devaluation.  The term is generally used in the travel world to indicate when a program increases the “cost” (in miles or points) to redeem an award.  United did this just recently with partner awards.  It can also refer to when an airline restricts the number of “saver” or cheap awards you can book, even when more expensive ones are available.  I was just discussing how Delta did this recently in an incredibly painful way with international awards.

Should You Stop Collecting Points And Miles?

This is a really valid question right now.  Everyone has the opportunity to earn cash back instead of points and miles.  Chase has even instituted a new benefit “Pay Yourself Back” where you can get a higher cash back rate than you otherwise would normally get.  They’re also currently offering a higher rate of redemption if you cash in your Ultimate Rewards points for Apple products, just in time for holiday shopping.  And, there may be cash back cards you’re not even aware of.  Bank of America has a program that can earn you 5% cash back on a category each month if you give them enough business.

It’s definitely a fair time to ask if you should be earning points and miles, especially since credit cards that earn travel rewards typically have much higher annual fees than a cash back credit card.  That means right now, you’re probably paying one or more high annual fee for the privilege to earn rewards that you’re not actually using at the moment.

We already have good evidence that airlines and hotels are raising the prices for awards.  And, with a buildup of points and miles, there will be more people chasing the most desirable flights and hotels when it does come time to cash in.

Still, I think it makes sense to collect points and miles.  Certainly not at any cost.  And, you really should look long and hard at cash back cards to figure out if they’re a better deal for you.  After all, if you were able to get 5% cash back on a big chunk of your spending now, in the midst of the pandemic, you could be well situated when it is time to travel.  Airfare is historically low on some routes, and that should continue for some time.  We’re seeing some of the cheapest hotel rates in years in key markets like New York City.  Heck, even the Maldives has been on sale. Paying cash over the next few years could unlock some really awesome value if you tuck some cash aside.

The Final Two Pennies

It’s important to make sure you’re thinking about how you’re spending today.  There are lots of opportunities to stock up on points and miles. Will you be able to use them for that dream trip when the time comes?  Would it be better to tuck a bit of cash away for future travel?  These are all good questions to be asking right now.  I’ll be maxing out that 10 miles per dollar offer I got from American Airlines.  But, I’ll also be signing up for that beast of a cash-back card Bank of America offers as soon as we’re done refinancing our house.

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8 Comments

  1. I’m spending my miles as fast as I can. Amex points for paid business class for me, some FHR hotels, but, mostly flights. Currently in Europe goofing around, in December starting 4 months blasting around South America, then Central.

    My fiancé and I find it so strange that people aren’t traveling.
    *shrug*
    Whatever! There is a big world to explore, and I’m burning my Amex points on travel right now!

    1. George, I’m going to live vicariously through you! I’m not really ready to be out there traveling with all the various restrictions. But, I’m glad you’re getting lots of value out of your Membership Rewards points.

  2. I have set a goal for each company or transfer partner. I know as travel resumes people will be anxious to travel. Currently I’m sitting on almost 8,000,000 points. Some have more value than others of course even with AMEX I have about 1.2 million. I have two thresholds before I hit the road one is it safe to travel two the dogs will be OK when I leave the second more important than the first.

  3. Miles and Points is my hobby. It is not an investment strategy. It makes me happy feeling that I have “beaten the system” when I am sitting down in a premium airline seat or nice hotel room with little to no out of pocket cost. Earning cash rewards and putting aside a little bit more into my brokerage account may indeed be responsible, but it is not much fun.

  4. I hoard amex points only. I know i have a minimum cash value of .0125 with schwab platinum. so if i get 4x points that is 5% cash at a minimum. Maybe i find better value on travel- but no risk of devaluation

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