Maximizing the Value of Your Points

Every major points blog has its own way of “valuing” points and miles with the Pointsguy probably having the most well known page on point valuations. The issue with all points valuations is that their true value depends on how you are likely to use points, your “use cases”. On individual airlines the value per mile can vary significantly with the highest value per point usually derived from business or first class tickets and the lowest value for economy. For major card issuers (Chase, American Express, Citi, and Capital One) the value per point can vary significantly depending on how the points are used or where they are transferred.

I have distilled down how to maximize the value of your points to a few rules below.

Rule 1: Points you don’t use are worthless  

I am guessing that like me you have points lying around a program you don’t use often. Although some airlines and hotels have points that never expire, most have some kind of limitations. Nerdwallet has a great list of when points and miles expire which I have summarized in the table below.

Most domestic airlines and hotels have expirations on points in the event that an account does not have activity within a 12 or 24 month period. Activity is usually defined as earning or redeeming miles/points in your account. If you have an airline’s credit card it is usually pretty easy to keep your account current as the points you receive for spending should normally count as activity. Frontier, Spirit, and IHG (Intercontinental hotels) have points that expire after 12 month of inactivity. International airlines typically have longer 18-36 month expiration periods.

One area not covered by the Nerdwallet article are the major card issuers points. Amex, Chase, and Capital One points don’t expire. Some Citi points expire, but it depends on the card.

Rule 2: Don’t hoard points

The one constant in the points and miles game is that airlines and hotels devalue their points over time. They either do it directly by reducing the dollars per point or indirectly by increasing the number of points you need to make a redemption for example making the same hotel cost 6k points instead of 4k. Another form of devaluation is “dynamic pricing” where you need more points during busier peak times of year. Although the less busy times are also somewhat cheaper, on average the points become less valuable.

Rule 3: Having options is valuable

Points in a credit card currency are far more valuable than any single airline or hotel because they have the most “option value”.  A single airline or hotel inherently has limited destinations and use cases. They may have transfer partners, but they are usually more expensive than direct bookings or using points to book with the hotel/airline. Points that are held directly with one of the major credit card issuers should therefore be retained until you are sure you want to transfer them so that you maximize the potential possible use cases.

There can be some instances where there are large bonuses of 20%+ to transfer miles to a particular program. If you know you have an upcoming need for those points or frequently use their program, it may still make sense to speculatively transfer points.  Frequent Miler has a great list of current transfer bonuses and a history of transfer bonuses that will help you get a sense of the frequency of a particular offer.  

Rule 4: Use points on what you want not on what you get the most value per point from

Use points in a way that fulfills your vacation goal, whether you are a “luxury maximizer” a “most bang for your buck” or a mix of both kind of person.

The luxury maximizer

If you are someone who loathes sitting on a flight for 10 hours cramped in an economy class seat from LAX to Heathrow (like me) then it may be worth using your points for a business class redemption even if you would likely save more money by spending your points on two economy class seats for the same number of miles. You are likely to get the most value per point (1-6 cents) expended because the sticker price of business class tickets are so high, but you may not derive $6,000 of value on a flight where economy class tickets cost $1,000.  Luxury hotels don’t usually have as high of a dollars per point as business/first class flights, but in some instances you could get 2-4 cents per points especially at high end Hyatt properties. The same logic applies, you are getting a lot per pointm but also spending a lot more points in total.

Most bang for your buck

Although business class generally has the highest value per point, it usually requires 50-100k+ points per ticket plus a fee which can usually pay for 2-4 economy class tickets on a long-haul international flight. Unless you have unlimited points you will end up burning more of your total points with 4 business class tickets than with 4 economy class tickets. Therefore, people who want to spend the least amount of money on flights may try to maximize the number of economy flights they can get with their points as it reduces the total number of points they have to spend and frees up points they can use on other flights or hotels. Hotels are usually less dynamically priced than airlines so usually you will get a similar value per point on lower end and luxury hotels with the aforementioned high end Hyatts being a notable exception.