“Don’t save your money. Spend it as fast as you can.” Can you imagine anyone giving that advice? And, if they did, would you listen to them? No way.
What if the types of things you would blow your money on were likely to become more expensive next year? Doesn’t it make sense to spend all of your money now on concerts, restaurants, clothes, whatever, since it will all likely become more expensive next year? Sure you could save your money and earn a piddling interest rate, but price increases are likely to far outpace your meager returns. Go for it now! Spend it all!
Of course, the above is terrible advice. Everyone knows that the prudent thing to do is to save money for future needs. However, when it comes to miles and points, conventional wisdom says the opposite…
Conventional wisdom in the miles & points world tells us that we should “earn and burn”. That is, we should spend our points and miles quickly after earning them because award prices are likely to increase in the future. Isn’t that similar to the poor advice suggested above?
The advice to “earn and burn” has become so ingrained into the miles & points culture that it is seemingly never questioned. I think it’s time to question it!
Devaluations happen
The driver behind the “earn and burn” advice is the expectation of devaluations. There’s no question that points and miles frequently devalue in a number of ways. Here are a few examples:
- Loyalty programs change their award charts to make awards more expensive. In the first few months of 2024, for example, ANA and Turkish greatly increased award prices. And Alaska Airlines completely changed its award charts. With the latter, for example, first class awards flying Qantas from Los Angeles to Sydney jumped from 70,000 to a whopping 130,000 Alaska miles; and business class awards flying Cathay Pacific from JFK to Sydney jumped from 55,000 to 130,000 Alaska miles.
- Loyalty programs abandon award charts and stealthily increase award prices. Very few hotel programs still have award charts at all. And it’s becoming more and more common for airlines to abandon their charts. Once the award charts are gone, it becomes very easy and very common for these programs to increase award prices regularly without notice.
- Loyalty programs add new categories. Hotel chains sometimes add new top tier categories to their award charts and they stick their most expensive hotels into those categories. Of course, they charge more points for free nights in those categories. For example, when Hyatt first partnered with SLH (Small Luxury Hotels of the World) they added a new top-tier category 8 for the most expensive SLH properties. Since then, they’ve moved more and more Hyatt properties into that new top category. And now their partnership with SLH is history.
- Loyalty programs move hotels to different categories. This happens all the time. Hotels that were category 4 are moved to category 5 or 6. As a result, award stays become more expensive and category-limited free night certificates become less valuable. Some hotels do move down in category, but somehow there always seem to be far fewer hotels moving down than up. Hyatt’s 2024 category shuffling, for example, had 137 properties going up at least one category and only 46 properties going down.
Miles and points enthusiasts get burned by devaluations like those described above. They feel like they’ve been slapped in the face by the same companies that they’ve been so loyal to. That promised dream vacation will now cost 30% more, 50% more, maybe even 100% more than before.
So, the advice makes sense, right? Spend your points and miles before the next devaluation or else you’ll get burned too!
Deals remain
One thing often overlooked by conventional wisdomers is that amidst the wreckage of even the most severe devaluations there are often bright spots. Some deals remain intact or, often, new deals appear. Here are a few examples:
- Yes, ANA increased many award prices with their 2024 devaluation, but they didn’t change their Star Alliance Round the World award pricing! That Round the World award chart was and still is ANA’s best deal, bar none.
- Turkish’s 2024 devaluation was particularly rough, but their best sweet-spot is still a fantastic sweet-spot: you can still use Turkish miles to fly all the way across the country (including to Hawaii or Alaska) for a shockingly low price. Previously one-way across the country cost 7,500 miles, but now it costs 10,000 miles. Yes, the price went up, but it’s still a fantastic deal.
- With Alaska’s new unified award charts, many new sweet-spots appeared including 4,500 miles short distance awards, and 45K business class awards between the US east coast and Europe. Tim detailed the ups and downs here: New Alaska Award Chart — Winners, Losers and Sweet Spots.
After each of the devaluations described above, opportunities remained for getting similar or even better value today than before.
Revaluations happen too
No, it’s not nearly as common as devaluations, but sometimes points increase in value. Really. Here are a few recent examples:
- New Transfer Partners: When a transferable points program adds useful new transfer partners, that can increase the value of your points because you’ll then have more ways to opportunistically use your points for great value. In recent years, for example, Citi added a few new transfer options to their ThankYou Rewards program:
- Lower award prices: This is pretty rare, but sometimes programs do lower award prices. In 2023, for example, Flying Blue lowered saver business class awards between North America and Europe to 50,000 miles one-way.
- New ways to use points: In early 2024, Finnair switched their loyalty program to use Avios and introduced new award charts. It’s now possible to move Avios between British Airways, Iberia, Aer Lingus, Qatar, and Finnair. This opens up many new ways to use your points because each program offers different partners, different award prices, and different taxes and fees. You can pick and choose the best deal for your needs.
- New partnerships: Hilton’s partnership with Small Luxury Hotels of the World (SLH) has greatly increased the value of Hilton points and free night certificates for those of us who value luxury hotel stays. See: SLH is a big win for Hilton hoarders.
- New program enhancements: Sometimes loyalty programs actually improve in a valuable way. One recent example is how Flying Blue now offers free stopovers on award tickets.
Opportunity knocks. Are you ready?
I won’t question the conventional wisdom that says that, on average, the value of points and miles decreases over time (due to devaluations like those described above). But, it is also true that every now and then unforeseen opportunities arise. And, often, the only way to take advantage of them is to have points ready for action.
One example happened in 2022 when United had wide-open business-class awards available to many far flung locations for only 60,000 miles per person. That deal died quickly, but thanks to my already having a large stash of United miles, we were able to secure a dream trip to New Zealand for the exact dates we wanted to go.
When short-lived deals like this arise, only those with a stash of miles (or transferable points) can take advantage of them.
Opportunistic hoarding and cherry picking your currency
My general approach to earning points and miles is to go for the low hanging fruit. What, there’s a 200K offer for Membership Rewards points? Great, sign me up! Ink cards are offering great welcome bonuses and great referral bonuses? Awesome, it’s time for my family to do round-robin referrals. There’s an opportunity to do something good for the world and buy miles at a ridiculously low price? I’m in!
This scattershot approach to earning points and miles leads to a nice result. When it comes time to plan a trip, I have the luxury of using whichever points currency is most valuable for that situation.
I’ll often use Qatar Avios, for example, to book short non-stop flights or JetBlue Mint. I’ll use Air Canada Aeroplan miles or Avianca LifeMiles to book Star Alliance flights. I’ll use Air France / KLM Flying Blue miles for most SkyTeam flights.
When looking for hotels, I’ll try first to identify where I want to stay. If it’s a chain hotel, I’ll see if award space is available and a good deal. If so, I’ll use the corresponding points from Marriott, Hilton, Hyatt, IHG, Wyndham, Choice Privileges, etc. If it’s not one of the those chains, is it affiliated with something like Small Luxury Hotels of the World, Preferred Hotels & Resorts, or Leading Hotels of the World? In order, those hotels may be bookable with Hilton points, Choice Privileges points, or Citi ThankYou points transferred to Leaders Club points. If I’m looking at a vacation rental, maybe I can use my Wyndham points to book it through Vacasa or Cottages.com. If the hotel is in Amex’s Fine Hotels & Resorts collection, maybe I can get $200 back by booking with my Platinum card.
On average, I believe that hoarding and cherry picking results in better value from your points than earning and burning even with devaluations taken into account.
Safe-ish investments
There’s no question that some points and miles are safer investments than others. Transferable points programs carry the least risk. If one transfer partner devalues, then there should still be plenty of others to fall back to. I’ll happily earn and hoard Chase Ultimate Rewards, Amex Membership Rewards, Citi ThankYou Rewards, etc. all day long.
At the other end of the spectrum are the points that expire with no way of keeping them alive other than spending them. ANA miles, for example, expire after a set amount of time regardless of whether you have new activity in your account. In such cases, I would be willing to redeem these points for less than their top value just to ensure that some value is received. This becomes especially true as the expiration date nears.
What if the opportunities stop?
Some will say “No, Greg, you should earn and burn now because opportunities for earning and burning may all go away in the future”. Hmmm. Yes, I can imagine a day when all of the easy opportunities for earning points goes away. Certainly card issuers have made it harder and harder over time to earn welcome bonuses for the same cards over and over. I don’t think it’s remotely likely but maybe there will come a time where they all decide that the costs of providing big bonuses isn’t worth the gain.
What about “burning” opportunities? Will they all go away? Sure, many programs will continue to devalue, but I have a hard time imagining a future where none of the loyalty programs will offer outsized rewards. Whenever airlines and hotels have excess capacity, they have the opportunity to foster brand loyalty cheaply. Why would they all stop doing that?
I think its very unlikely, but if we see a day where earning points and miles in large quantities has become almost impossible, then what? I expect that the point hoarders will be very happy that they didn’t earn and burn!
The case for “earn and burn”
There is at least one situation in which I’d argue in favor of the “earn and burn” strategy…
Some people save up for years for the perfect trip that never happens. There’s too much to do. The kids are too small. The kids are in school. There’s not enough time. Whatever.
Don’t be that person. As I proved a number of years ago (see: “One day in Beijing. Fewer words, more photos”), you don’t need to wait for the perfect opportunity. You can get a lot of enjoyment from very short trips.
People get stuck thinking that there’s no point in going to this or that far away place unless they can spend weeks exploring. When are you ever going to have weeks to spare? Instead, I think that a much better approach is to go while you can, and realize that you can always go back.
Points and miles make it possible to fit travel into the nooks and crannies of your schedule. If it takes an “earn and burn” mentality to get you to actually do it, then that, in my mind, is a good thing.
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