How travelers can avoid points and miles hoarding

Many frequent travelers amass huge piles of travel points and miles. Yet, unlike saving real money, saving travel rewards is usually a poor financial choice. Points and miles tend to lose value over time, can’t be invested and can even expire. Trying to choose a smart way to redeem points and miles can lead to analysis paralysis, which is why it’s better not to overthink it. Use these rewards for normal travel, such as visiting family, and don’t get caught up in “maximizing” value by flying first class to Bora Bora. When in doubt: Spend, don’t save.

Most personal finance advice boils down to this: Save as much as you can, and spend as little as you can. That’s the simplest way to accumulate wealth, build investment income and achieve financial independence (even if it’s not so simple in practice).

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.

“I hear all the time from business travelers who ‘saved their miles for retirement,’ and are devastated to learn that the purchasing power of their miles isn’t what it would have been five, ten, fifteen years ago,” Tiffany Funk, co-founder and president of travel rewards booking search tool Point.me, said in an email. “Programs have successfully made loyalty currencies feel so valuable that people are often reluctant to use them because they are afraid they are giving up too much value.”

Several factors explain why hoarding travel rewards isn’t a great idea:

• 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.

Yet, despite these facts, the saving habit can be hard to undo. Especially for those with a psychological bias toward “maximization.”

Can’t get no satisfaction

Analysis paralysis can pose one of the biggest challenges