When should I use my reward points?
One of the most common questions asked by people who have started collecting reward points is if they should hold their miles or spend as soon as they can. I have changed my strategy over the last several years as I used to be a hoarder. I always wanted to get the most out of my miles, but that can be a gamble. By holding on to them they are subject to the whim of the airline or hotel company.
The value per point will change each time the company makes an evaluation and decides they want to increase the cost of the room or flight. Example is when I would stay at the Palazzo in Las Vegas, two years ago would cost 50,000 points through IHG, now its 60,000 points. That is over a 15 percent increase for the exact same room.
Company risk if you hold reward points
Companies get bought and sold, one of the most popular programs is SPG Starwoods points. Recently SPG was bought by Marriott and rumors point to the programs being merged into one program sometime in August. The travel partners you can transfer to with SPG Starwoods are huge and are worth about two cents per point. Marriott points are worth about 4/5th a penny. This is a significant difference and it leaves a lot of uncertainty about if/when they combine into one program. Everyone is waiting to hear what the final transfer rate will be or if they will even maintain the same transfer partners.
It is all up to the whim of the hotel and airline companies. It is their currency. They control the value and can change at no notice. If they want, they can suspend your account and remove the miles at their control.
Earn and Spend
I recommend a “Controlled Hold” or “Earn and Spend”. If you are saving up for a specific destination, such as Hawaii, go ahead and hold them but be fully aware that they can change in value overnight. Don’t plan on them being worth the same amount that they are now, two years from now. Right now, I book out as far as I can locking in before any type of increase occurs. Try to be savvy about how you book. For example, Southwest flights I can rebook if they drop in price. Within the last month though, they have decreased the value of their points meaning you have to use more points to book a specific flight.
Chase Ultimate Rewards
This is the other reason I like to hold points in programs with banks such as Chase’s Ultimate Rewards program. Chase Ultimate Rewards on my previous blog article. At worst, there is a cash value that you can redeem for statement credits or an increase level through their travel site. You still have the flexibility to transfer to other programs when you need it. This way you are not locked into United or Southwest if they decide to devalue their points.
Flexibility is the key in managing your reward points. Allowing for flexibility gives you the best option. This allows you can customize your travel and put things more under your control.
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