Stop hoarding points

How to avoid points and miles pitfalls

Most personal finance advice boils down to this: Save as much as you can, and spend as little as you can.

Yet when it comes to travel rewards — those points and miles earned through airline, hotel and credit card programs — this conventional wisdom is turned on its head. Saving a million miles might sound impressive, but it’s generally a poor financial decision.

1 Hoarding travel rewards isn’t a great idea.

Several factors explain why:

• Points devalue over time. Although 2022 was a rare exception where many points became more valuable because of the relative cost of cash fares, rewards generally lose their value over time.

• They’re un-investable. Unlike dollars, which can be invested to reap the benefit of compound interest over time, travel rewards just sit there.

• Some points expire, and programs can always go belly up. There’s nothing guaranteeing the value of points and miles except the companies offering them.

2 Can’t get no satisfaction

Analysis paralysis can pose one of the biggest challenges to points and miles hoarders. Making the decision to spend that pile of rewards accumulated during the pandemic is one thing.

Actually spending them is another.

“I just give the advice not to overthink it,” says Adam Nubern, a certified public accountant who specializes in serving digital nomads.

3 Take charge of your points

Travel rewards bloggers have long hyped redemptions that offer the absolute best value. Taking a first-class flight to Asia might offer 5 cents per mile in value, while an economy flight within the U.S. could yield only 1 or 2 cents per mile. This creates an incentive to use miles for the most lavish, luxurious options.

But those high-end redemptions only offer more value because the cash equivalent is so high. A round-trip flight to Asia can cost $10,000 when paying cash, which makes points and miles redemptions seem like a great value — but only by comparison.

Instead, travelers sitting on a cache of points should keep it simple. Taking a flight to visit family? Use airline miles. Looking for a hotel during a road trip? Use credit card or hotel points.

Just make sure the redemption you choose doesn’t offer value too far below baseline. Use an online calculator to compare the value of using rewards or paying cash.

This article was provided to The Associated Press by the personal finance website NerdWallet. Want to suggest a personal finance topic that Quick Fix can address? Email apmoney@ap.org