Why it’s okay to save up credit card points

Some websites will make you think that saving up credit card points is hoarding, which has a negative connotation. They say it’s one of the worst possible things you could do and you’re losing so much in opportunity cost by doing so.

However, those websites have a profit incentive to say that. If you use more points, you’re more likely to apply for a travel credit card through their websites, which generates them a lot of referral money from the banks.

Unlike those websites, this blog has no incentive to sell you on more credit cards. We don’t earn any money at all from anything. We just share what works for us and that’s it.

This post is intended to share our side of this debate and, hopefully, convince you to use your points wisely.

The more you spend, the less you have

This is supposed to be obvious to anyone who has good financial sense, but apparently not to the people on certain travel blogs peddling the nonsense that you need to spend all your points ASAP.

Saving up points for a big redemption lets you gain more value out of your points. The patience plays off.

Most airlines (and banks) hope you take the bait by booking domestic flights with miles/points. They tend to be under 30,000 miles, and if you have that in your account, it’s tempting to just go for it, right?

Nope.

Considering that 30,000 miles can also get you an international round trip in lie-flat business class between China and Japan on JAL, it is most certainly not a good redemption when you compare all your options!

Admittedly, not everyone will be taking that exact route. But there are a plethora of good redemption sweet spots out there.

Imagine if you had 60,000 points and you redeemed them all for two domestic flights, which saves you $500. But one day, you actually found a transoceanic business class redemption for 60,000 points that goes for $5,000 if paid in cash. Regretting that decision now?

Points and miles are your savior for booking last-minute flights

It happens to all of us—something happens and we have to get somewhere fast. For most people, they are left with no choice but to fork out a boatload of money for a middle seat on the next flight out.

However, for people with enough miles, they can afford to find better deals and book a last-minute redemption.

This is why it’s so important to have points and miles—they are a parallel currency that operates inside its own economy. There are certain cases when points tend to offer much better deals than cash. Last-minute flights are a prime example of that.

Note that I didn’t say “good deals”. It probably still won’t be that good of a deal if booked with points. However, it’ll be a lot less painful.

For example, I recently had to fly back to my parents to take care of some family business. I needed to be at my destination within 24 hours. The cheapest cash fare I could find was for $800 round trip, whereas the most I’ve ever paid for this route was $600 during Thanksgiving. However, I checked United and saw that there were some timings and routes that only went for 30,000 miles total. As I had well north of 200,000 Chase Ultimate Rewards points, this was easily affordable.

This is typically a poor redemption, but for a last-minute booking, this was a good find. (Not the best possible deal out there for last-minute bookings overall, but for this route, it was the best I could do.)

By booking with points, I got to fly a $800 flight for only $300 worth of points.

God forbid something were to happen to your loved ones, but if you are ever in that situation, would you want to be stuck paying hundreds (or thousands) of dollars in such difficult times, or would you rather have your options open?

Depreciation is a thing, but it’s not that fast

Unless your points are about to expire and you have no other way to extend the expiry of the points except by spending (which is almost never true, by the way), there is no rush to use up your points.

Points depreciate as airlines systematically raise prices of award tickets. (This is called a devaluation.) However, some people throw around depreciation as if your credit card points were going to become worthless like Zimbabwean dollars. This is simply not true.

Sure, you might end up paying 10-30% more next year if the airline you want to book through suddenly decides to raise prices. But does that mean you should book a half-hearted trip just to take advantage of the first deal you see? That wouldn’t be very wise.

Airlines will always devalue redemptions every so often, but they all do it separately. They don’t collude together to devalue all at once (because if they did, they would be breaking antitrust law!). If you have Chase, Amex, or Capital One points, your credit card points can be transferred to at least a dozen different partners. The likelihood of all of them devaluing all at once by the same magnitude is highly unlikely and it has never happened before. So if one door is closed, you still have alternatives.

But what if you want to fly on a specific airline? Don’t fret. Various airlines are allowed to sell award seats on other airlines, usually their partners in other countries, for the currency of the selling airline, not the operating airline. For instance, for a United flight with saver availability, I can usually book with either Air Canada or United for that exact same flight. However, Air Canada and United will have different prices for that flight. You can then do your research and pick the one that’s cheaper. 🙂