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If you have been slowly but surely building up a points balance in an airline program for years for an aspirational redemption, you may be in for an unpleasant surprise. Keeping your points for too long can be a big mistake and can lead to disappointment. So how long should you hold on to your points and miles? Not as long as you may think! You can read on to find out how long to save up your points and miles.
Credit Card Vs. Other Points
There are two fundamentally different types of points and miles. Those issued by credit card issuers and those issued by airlines. While each has its strengths and weakness, the key differences can be summed up as follows:
- Credit cards can be used directly with the issuer or transferred to multiple travel (including airlines) partners then redeemed for awards.
- Airline points can only be redeemed directly with issuing airline and generally can not be transferred.
- Credit card points are earned for spending on your cards, while Airline miles can be earned for flying and spending on a co-branded credit card.
Which one you chose to collect or choosing both depends on your overall travel goals and plans.
Beware of Devaluations
If you opt to hold on to your points for too long, they will almost certainly be worth less when you redeem them. This is especially true for airline miles since airlines love nothing more than a quick devaluation to reduce the value and cut a few pennies of cost. If you don’t think that is the case, do a quick web search for “your program name devaluation.” You will see news items going back years with devaluations reported virtually every year, if not more than once a year.
Since 2015 when Delta Airlines led the pack, eliminated its award charts and shifted to a “Dynamic Pricing” model for its awards, things have been awful. The lack of clarity on the cost of awards has allowed Delta to slowly eat away at the value of its awards. It is estimated that Delta awards have increased in price by over 60% across the board.
So, if you have a load of points in an Airline program and you hear that they are thinking of eliminating their award charts, you should seriously start looking for ways to use up your point balances. Historically eliminating award charts is the first step to award price inflation and loss of value.
Stay Flexible with Credit Card Points
Unless you are ideologically committed to an airline or hotel program, you are far better off staying flexible and holding the bulk of your points balance as credit card points. They offer a greater degree of stability and security (in terms of expiry and redemption value). However, in the long term, they may devalue if you always transfer them to a given airline and its program increases the cost of its awards.
A couple of our favorite credit card to get started with is the Capital One Venture Rewards Credit Card and the Chase Sapphire Preferred.
Capital One Venture Rewards Credit Card
Capital one miles has an extensive range of transfer partners. With the recent improvements in transfer ratios, it is a great option, especially if you want the broadest range of airline transfer partners. If you want to transfer points to Aeromexico, Avianca, Cathay Pacific, and Etihad Airways, then the Capital One Program is definitely worth a closer look. The top of the line personal card with Capital One is the Capital One Venture Rewards Credit Card, which compares favorably with other programs’ top-of-the-range cards, especially when you take the annual fee into account. Features of the card include:
- Earn a one-time 75,000 miles bonus when you spend $4,000 in the first 3 months of card membership
- Earn 2X miles for every purchase you make
- Earn 5X miles on hotels and rental cars booked through Capital One Travel, where you’ll get our best prices on thousands of trip options
- Receive a $100 statement credit every 4 years towards Global Entry or TSA PreCheck(R) enrollment
- Transfer your miles to more than 15 loyalty programs
- The card carries no foreign transaction fees.
- The Capital One Venture Rewards Credit Card carries a $95 annual fee.
Other programs’ top cards have annual fees that run into the 100’s of dollars per year, which makes the card’s $95 excellent value. Couple the low fee with 2X earning on everything, and the Capital One Venture Rewards Credit Card is an ideal starting point for any points and miles enthusiast.
The Chase Sapphire Preferred
Another great option to consider is the Chase Sapphire Preferred Card, especially if you are already in the Chase ecosystem or have a banking relationship with Chase. Chase Ultimate Rewards are one of the oldest credit card point currencies on the market and can yield excellent value helping you reach your travel reward goals. Like the Capital One card, the Chase Sapphire Preferred Card carries a $95 annual fee but still delivers a powerful punch, with a wide range of perks and benefits. Features of the card include:
- Earn a 80,000-point welcome bonus when you spend $4,000 in the first 3 months of card membership.
- Get a $50 annual Ultimate Rewards Hotel Credit
- Earn 5X points on travel purchased through Chase Ultimate Rewards(R)
- Earn 3X points on dining
- Earn 2X points on all other travel purchases
- Earn 5X for Lyft Rides Through March 2022.
- The card carries no foreign transaction fees.
- The card carries a $95 annual fee.
A couple of the significant strengths of the Chase Sapphire Preferred Card is the rate at which you can redeem your points through the chase travel portal and the ability to combine convert cashback earned from other cards into Ultimate Rewards points.
Holders of the Chase Sapphire Preferred Card can redeem their Ultimate Reward points through the Chase travel portal at a rate of 1.25 cents per point. This means that the 80,000-point welcome bonus is worth a whopping $1000 when redeemed directly through Chase. However, you may be able to leverage them for better value by transferring them to a partner.
Also, if you hold a Chase Cashback earning card like the Chase Freedom Flex and the Sapphire Preferred, you can then opt to convert your cashback to Ultimate Rewards points at a ratio of 1 cent per point. If you then redeem them for travel with Chase at 1.25 cents per point, an immediate 25% gain!
So How Long Should You Hold On To Your Points And Miles?
The big hint offered by most programs’ expiry policy is 24 months. Many programs will let your points expire if you have no activity on your account for 24 months. Remarkably that seems to be the magic number for how long you should hold onto your points and miles. Always aim to have a maximum two-year cycle at most before moving on to your following travel goal scheme.
A classic example of this quick turnover of points is your annual summer vacation. A 10 day/two-week summer vacation at a resort can yield a substantial number of hotel points and airline miles (especially if you can pool or credit family miles to one account). Instead of holding on to these points and miles, they can be used directly towards a stay over the Christmas or thanksgiving holidays later in the year. When it comes to credit card points, you can keep them for a slightly more extended period, but they still need to be used promptly.
Final Thoughts
Developing an earning and burning mindset is key to getting the most out of your points and miles. Try an avoid thinking of your loyalty program accounts as bank accounts where you can securely store points and miles. Instead, think of your loyalty program accounts like a refrigerator that will keep your points and miles fresh for a while, but you still need to use them sooner rather than later to get the best out of them.
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