It’s easy to think of points and miles as a variant of Monopoly money. To some, they’re easy to throw around and spend nonchalantly; they can almost seem ethereal.
To others, travel rewards can be easy to hoard. They are a form of currency, after all — and we can become as stingy with our reservoir of points as we are with our hard-earned savings account balances.
However, there is one very important distinction between travel rewards and cash: Unlike most true currencies, which can appreciate if invested well, your points and miles are almost guaranteed to lose value in the long run.
In other words, points and miles are not a great long-term investment. The sooner you can spend them after earning them, the more value you’ll likely receive. We’re reminded of this seemingly every few months with painful airline and hotel devaluations when programs suddenly increase their prices, often without warning, meaning you’ll need more points and miles than you did yesterday. In other words, your rewards are suddenly worth less.
Let’s examine why carrying large balances of points and miles without a plan to use them is a bad strategy. This will help you avoid setting yourself up for disappointment, heartache and a possible loss in net (rewards) worth.
Related: Getting started with points, miles and credit cards to travel
Points and miles devaluations
In recent years, we’ve seen several egregious devaluations from some of our favorite loyalty programs. The general mantra is that transferable rewards such as Chase Ultimate Rewards points or American Express Membership Rewards points are slightly more insulated from devaluations than rewards in a frequent flyer or hotel program.
Points like these can be redeemed for a fixed rate, at the very least.
But even transferable currencies take a beating now and again. For example:
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Devaluations occur so often that it’s easy to forget how many have happened. While some are worse than others, here’s a brief overview of some of the other major changes in the last couple of years.
Hyatt adds peak and off-peak rates, moves many properties to a higher category
Hyatt has remained a bright spot in the “free travel” world, always offering reliable award prices and great value for its points.
That’s still largely the case, but it continues to increase the categories of popular hotels, making the World of Hyatt Credit Card’s annual free night certificates less and less valuable. This year, Hyatt announced that 137 hotels and resorts were moving to higher award categories, costing travelers more points to stay at these properties.
Plus, Hyatt’s recent partnership with Mr & Mrs Smith doesn’t follow an award chart. These hotels are dynamically priced, consistently delivering a value of under 1.5 cents per point (lower than our December 2024 valuation of 1.7 cents per World of Hyatt point). While that’s not the end of the world, it does mark the first time Hyatt has flirted with dynamic pricing, which has us wringing our hands a bit.
Related: Easy ways to maximize Hyatt award redemptions
Marriott eradicates its award chart
We thought Marriott was through with coy devaluations. After announcing that it would toss its award chart in the bin, it moved to dynamic pricing in 2022. Marriott continues to raise the ceiling on award night prices — what once was 100,000 Marriott Bonvoy points became 120,000 points and then 150,000 points. (A few odd properties cost exponentially more, such as Ritz-Carlton Reserve properties and the infamous North Island, a Luxury Collection Resort, Seychelles.)
Alaska Airlines’ award chart hit with devaluations
In March, Alaska Airlines devalued its Mileage Plan award chart regarding longer flights within the U.S. For example, economy flights within (or between) the mainland U.S., Alaska and Canada ranging from 2,101 to 4,000 miles saw a 40% increase, going from 12,500 miles to 17,500 miles.
More Avios needed for domestic flights operated by American and Alaska
This past year saw several devaluations of Avios for domestic flights. Across the five different loyalty programs that use Avios as their loyalty currency:
Finnair Plus now remains the best option for booking most flights within the continental U.S. (and Canada) with Avios, charging just 11,000 Avios each way in economy class, which is a great option for longer itineraries.
Related: 5 versions of Avios: When to use Aer Lingus, British Airways, Finnair, Iberia and Qatar Airways
Virgin Atlantic makes flying on ANA and Delta more expensive
Virgin Atlantic has had some of the absolute best deals in award travel for a long time — but they’re slowly but steadily repenting.
In early 2023, Virgin Atlantic increased prices for first-class awards on All Nippon Airways by up to 42%, souring one of the sweetest points and miles spots. Then, in early 2024, Virgin Atlantic began charging up to 60% more for certain economy Delta Air Lines flights and up to 50% more for Delta One (business-class) flights.
Later in 2024, Virgin Atlantic’s Flying Club program increased the cost of business-class redemptions flying on ANA by as much as 26% and also added a huge surcharge to the cost of Delta One redemptions to and from Europe (although availability is hard to find).
What about cash?
Even if you collect and redeem points at a fixed value — which is the case when you have cards like the Capital One Venture Rewards Credit Card, a popular option that lets you offset paid travel at a rate of 1 cent per mile — your rewards still lose value over time. The U.S. Bureau of Labor Statistics estimated that the inflation rate in the last 12 months rose 2.6% on major items.
What if you’d opted for cash from the beginning? We like to think of our travel rewards as “free,” but you’re sacrificing money for miles every time you swipe a rewards card instead of a cash-back card. This creates an opportunity cost, which we can peg at roughly 2% per dollar spent thanks to cards like the Citi Double Cash® Card (see rates and fees), which offers 1% when you buy and 1% as you pay (effectively 2% back on purchases).
If you’d chosen to earn cash back instead of points, you could have invested that money for growth instead of watching the value of your rewards erode over time. Whether you opt for a fixed-value investment such as a bond or pursue something riskier (but potentially more rewarding) like stocks or real estate, you should consider earning rewards that have the potential to grow over time — if you aren’t planning to spend them soon.
How to redeem your points for maximum value
Redeem your points and miles regularly, and don’t let your balances creep too high. If you find yourself with hundreds of thousands of points but no trips on the calendar, figure out when your next vacation will be and start planning.
If you’re in the enviable position of earning more points than you can spend, consider sharing your wealth with friends or family members.
You might even consider switching to a cash-back credit card. There can be such a thing as having too many points and miles if you can’t spend them fast enough. If you know you can quickly replenish your loyalty accounts, earning cash in the interim is not a bad decision.
The other great form of protection involves diversification. Currencies that transfer to several airline and hotel programs aren’t impervious to devaluation, but they still offer far more redemption outlets if an airline or hotel program makes a drastic change.
So, if you don’t already have a card that earns transferable points, now’s the perfect time to get one.
Diversification goes beyond credit card rewards, too. If you usually shop through the Delta SkyMiles shopping portal, consider using the American Airlines shopping portal for a couple of months instead. This will help you build a balance with another loyalty program, giving you more options for award flights and protecting your overall mileage balance from a possible Delta devaluation.
Related: Airline credit cards vs. travel credit cards: Which are best?
Bottom line
Points and miles can give you a massive return today and an unremarkable return tomorrow. Simply put, this currency is not for investing, as you are at the whims of the program, which can and will increase prices occasionally without warning.
So, live by the “earn and burn” philosophy and get value from your miles before they depreciate. If you haven’t already, look at the points you have right now and ensure you plan to use them before the next wave of inevitable devaluations hits.
