Inflation is now a big topic of conversation due to the rising prices of consumer goods. But are your travel points and miles subject to the same issue? 

The travel industry has seen a rebound in the past months as more leisure travelers are booking flights at near pre-pandemic levels. After over a year of staying close to home, these travelers are again going on trips and redeeming the travel rewards they earned during the height of the pandemic. 

According to a study conducted by Citi and The Harris Poll, 28% of travelers will use their credit card points or airline miles to book their next flight. At the same time, the consumers are finally ready to cash in their expiring credits for the canceled 2020 and 2021 trips when all these points and credits are competing for the same seat and hotel room inventory—the inevitable result: scarce award availability higher award pricing.

It has been happening for a while, but the pandemic has accelerated the trend.

Below are some of the recently devalued loyalty programs: 

• In May 2020, United Airlines temporarily stopped offering dynamic award rates and went back to traditional award chart pricing. This led to higher award prices than the dynamic model offered. 
• In February 2021, Delta Air Lines’ select award flights increased price. 
• In March 2021, Southwest Airlines increased flight prices without any notice when consumers use their Rapid Rewards points. 
• In April 2021, IHG Hotels’ select award nights increased in price. 
• In April 2021, Radisson Hotels’ portfolio of hotel rooms increased in price. 
• From March 2022, Marriott Bonvoy moves dynamic pricing, effectively eliminating sweet spot redemptions and significantly raising the number of points used for an average redemption.

The brands are not exactly forthcoming about these changes. Loyalty programs are customer retention tools. So the standard technique of loyalty programs and trying to confuse the customers. They make rules more complicated to understand. They remove existing more straightforward static reward tables and make you get a separate quote for each redemption. They generally try to dress it up as “improvements” and “changes by popular demand.” They generally talk about how they made the redemptions easier to get and not talk about how they most redemptions more expensive.

According to Forter, an e-commerce fraud protection platform, there are currently around USD 48 trillion worth of unspent loyalty rewards globally. In March 2021, the American Express Global Travel Trends survey found that 63% of consumers said they were saving up their points for future travel. However, they found that they were worth less than before when they redeemed these points. 

Here’s what you need to know about airlines and hotels devaluing their points and how you can protect yourself from the rising cost of rewards redemption: 

1. Earn transferable rewards and avoid brand-specific points. 

Transferable rewards are safe options because they can be transferred to different loyalty programs. This will give you more options so you can take advantage of a program’s sweet spots and get the best value from your points. 

Meanwhile, you have to avoid brand-specific points because they’re less flexible, and you can’t transfer them to other accounts. That means you don’t have an option to redeem them for a different airline, so you’re stuck with using them within their brand no matter how devalued they become. 

2. “Earn and burn.” 

Some points and miles holders like to brag about hoarding millions of points in their accounts. However, sitting on too many points can sometimes leave you at risk of losing the value of your rewards. 

Devaluation will always be a part of loyalty programs, so the best way to avoid point inflation is to spend the rewards you have sooner rather than later. 

Sure, it’s also not wise to simply spend hard-earned rewards on frivolous redemptions that yield a lower value point. That’s why it’s important to remember why you’re trying to earn these rewards: To save money and create memorable travel experiences. 

The bottom line here is that point inflation is real. While many consumers are rattled by inflation on consumer goods, they often overlook point inflation by not spending their points. 

It is important to remember that unlike the money in your bank account, you don't own your points and have no legal rights or protections when it comes to points or miles. Legally, the airlines, hotel chains, and banks are the owners of all of ‘your’ hard-earned points. It is in the fine print that you had to agree to when you signed up. So ‘your’ points may expire or be simply taken away for any reason they see fit. Of course, taking points away would be bad business, so they are gradually devalued to soften the blow.

To hedge your bets, it’s best to choose a travel rewards program that is less susceptible to inflation. Co-branded credit cards such as Delta SkyMiles credit cards and Hilton Honors credit cards stand out with their great welcome offers. Still, they offer fewer redemption options and are more susceptible to inflation. If you’re a frequent traveler, you might want to consider getting a general travel card such as the Chase Sapphire Reserve or  Preferred Cards, Citi Premier Card, American Express Gold Gold or Platinum Cards, and Capital One Venture Rewards or Venture X Credit Card. These offer awesome rewards that are readily available, and they welcome various offers and any type of points travelers earn.