Travel rewards from credit cards are extremely useful to help you save on your travel expenses. They lead to almost free flights or hotel stays, and let you take out-of-the-country vacations you wouldn’t be willing to spend cash on.
Throughout the COVID-19 pandemic, lots of flyers have been hoarding travel rewards points in hopes they’ll be able to use these points when the time is easier and safer. Nowadays, some of these consumers are starting to use their rewards while there are still others who are waiting for a fully safe world before going back to traveling.
Whether you’re part of the first group or the second, it’s important to know the downsides of saving your travel rewards for too long.
- Demand and fare costs are increasing.
A recent study by Citi and The Harris Poll indicated 28% of travelers will use credit card points or airline miles to book their next adventure. The same survey indicated 74% have or will pay using a credit card, suggesting some are deciding to earn more travel rewards rather than spending what they have. As airlines and hotels continue to recover after the near travel halt during the initial pandemic shutdowns, they are looking for ways to eliminate this risk off their balance sheet.
Every year, at least a few major loyalty programs announce devaluations to their award charts, or eliminate them altogether. It’s all but inevitable that flyers will have to pay more for an award flight or hotel room in their loyalty program of choice a few years from now.
One tip to help avoid the rising cost of award travel is to focus on earning transferrable rewards like Chase Ultimate Rewards or American Express Membership Rewards. Transferrable bank points allow you to take advantage of different program’s sweet spots, ensuring you shell out as few points as possible.
- Devaluations are inevitable.
If there's one thing we've learned over the years, it's that devaluations—the act of lessening the current value of a point or mile—are likely.
There's no better example of this than Delta SkyMiles. Just in 2021, Delta increased the award price for partner business class awards to Europe by up to 160%—from 75,000 SkyMiles each way to as much as 195,000 SkyMiles each way if booked within 21 days of travel. That makes your points worth less, which is why it is often a good idea to use points and miles for a good value when you can.
- Award tickets get free changes.
During the worst days of the pandemic, airlines were desperate to attract travelers back to the skies. In a drastic move, they removed change fees from many tickets. Suddenly, travelers no longer needed to pay hundreds of dollars to make changes to a flight.
One overlooked aspect of this great news is that airlines also dropped change fees from mileage tickets as well, as long as you avoid booking basic economy awards. While there are some exceptions, like United Airlines, travelers can generally change or cancel mileage tickets for free until close to departure.
For some, the problem is not saving their travel rewards for too long but not having enough points or miles that can earn a reward. If you find yourself experiencing this dilemma, here are some tips on what you can do instead:
- Boost your points or miles balance.
Boost your small balances on existing accounts by signing up for a new credit card, as doing so often offers large sign-up bonuses that you can add to your existing balance. You can use the CardMatch tool to help you choose the right one.
You may also boost your existing balance by transferring your points from your existing accounts to the below programs:
• American Express Membership Rewards
• Chase Ultimate Rewards
• Citi Thankyou Rewards
• Capital One Miles
Whether you prefer signing up for a new credit card or transferring points through the loyalty programs stated above, doing so will help you turn your small points into substantial ones.
- Share or transfer points to another account.
Some loyalty programs allow you to share or transfer points to other accounts so you can gather enough balance for rewards redemption.
This technique is called point pooling.
The thing is, some programs allow point pooling on the condition that account holders must pay a hefty fee to transfer points between accounts. Using family accounts presents one long-term strategy to solve this issue. However, there are other more short-term solutions.
These credit card and hotel loyalty programs below offer point pooling for FREE:
• Hilton Honors: Allows you to pool points for free with up to 10 accounts. The transfer minimum is 1,000 points and the transfer maximum is 500,000 points per calendar year. Each account holder can receive up to 2 million points per calendar year.
• Marriott Bonvoy: Lets you pool points to anyone for free, as long as the account you’re transferring points to has been open for at least 30 days. You can transfer up to 100,000 points and receive up to 500,000 points per calendar year.
• World of Hyatt: Enables you to transfer points to anyone for free by filling out a point combining request form. You may transfer points once every 30 days.
• American Express Membership Rewards: While you can’t directly pool points to other AmEx accounts, you can still transfer your points to airline or hotel programs. Only then will you be able to transfer these points to authorized users after 90 days of adding the points to your loyalty program account. You can also transfer points directly into accounts of any of your additional card holders.
• Capital One Rewards: Lets you transfer your small balance to travel partners or to another account. The account has to be under your name only.
• Chase Ultimate Rewards: Lets you pool your points to another member of your household. Only one member of your household is eligible and you can only change the member once a year.
• Citi ThankYou Rewards: Allows you to transfer points to other Citi ThankYou account holders for up to 100,000 points per calendar year. The accounts do not have to be linked, but some restrictions apply so be sure to read the rules before transferring points or miles.
- Donate your points.
Another way to put your small points or miles balances into good use is through donations. How?
Several airlines and hotels have charities they partner with. If you don’t feel like signing up for a new credit card, transferring your points through various loyalty programs, or pooling points to other accounts, you might want to use your small balance wisely by donating them for a good cause.
However, keep in mind that some airlines and hotels have a minimum donation requirement.
- Consider using your small points or miles balance for other means.
If you still don’t feel like doing the tips above, you may consider getting the most out of your small balance by using it for other means such as:
• Getting a room or seat upgrade
• Buying gift cards
• Paying for magazine or newspaper subscriptions
• Purchasing merchandises
Example: Delta lets you redeem 1,600 miles in exchange for 50 issues of Bloomberg Businessweek. Normally, this magazine costs USD 70, so your miles are worth USD 4.38 per piece when used for this. That’s a good way to spend your small balance.
- Purchase miles.
Generally, buying miles is almost never a good deal, even during big promos. However, there are some situations when it still makes sense.
The most common scenarios are when you are close to an award, but still short of it, and you need to top off the account with a small number of miles to obtain a meaningful redemption. In some programs, purchasing a small number of miles might also extend the expiration date for your existing miles.
Another case when purchasing miles makes sense is when you get a better value from redeeming the miles than purchasing a ticket. These are very rare, but most often can be found in last-minute premium class tickets. The fares can be exorbitantly high, but the cheapest awards often show the best availability at the last minute.
If none of these tips helped you out with your specific case, you can always wait to redeem until you earn some more points. Though, some of these strategies are sure to get you that point a lot faster than waiting!
The Best Travel Rewards Credit Cards
Selecting a travel rewards card can sometimes be a challenging decision. There are lots of great options with tempting welcome offers. However, before you choose the first one you see or encounter, below are a few important questions you need to ask yourself:
- What kind of rewards would benefit you the most?
- What categories do you regularly spend money on?
- What categories do you find value in?
- Are you willing to pay an annual fee?
Here are some of the best travel rewards card available today:
- Chase Ultimate Rewards: One the 4 major credit card reward programs in the U.S. We refer to these rewards programs as “super-programs,” as they all combine over a dozen major rewards programs into one.
The most valuable benefit of the Chase Ultimate Rewards program is the ability to transfer points to 10 airlines and 3 hotel programs with a 1:1 ratio. This partner transfer benefit is only available to holders of Chase Sapphire cards (both Reserve and Preferred) and Chase Ink cards.
If you have any other Chase cards that earn Ultimate Rewards such as Chase Freedom, you may be able to transfer those points as well by moving them to one of those eligible cards first (Sapphire cards or Ink cards).
Click here for more information on Chase Ultimate Rewards.
- Citi ThankYou Rewards: Another one of the 4 major credit card reward programs in the U.S. The most valuable benefit of the program is the ability to transfer to 15 airlines with a 1:1 ratio. This benefit is only available to the holders of Citi Premier and Citi Prestige cards.
Citi Thank You tends to offer limited-time bonus offers from time to time, usually once a year. Here are some of the consistently-observed bonuses over the past few years:
- 25% bonus to Air France/KLM Flying Blue, Avianca, and Qantas
- 10% bonus to Cathay Asiamiles
Citi ThankYou currently doesn’t have hotel partners, and its “book travel” option can no longer be used after it dropped the 25 percent bonus. If you cannot find a good deal on a ticket you want to book by transferring miles to a partner airline, simply buy the best option you can find, pay with Citi Prestige, and earn a 5X bonus (3X bonus for Citi Premier) for the purchase. Then, simply redeem statement credit for the value of your purchase.
Click here for more information on Citi ThankYou Rewards.
- American Express Membership Rewards: Another major credit card reward program in the U.S., although AmEx Membership Rewards is the “original super-program.” It was launched in 1991 and was initially called Membership Miles.
Today, there are many ways to use the membership rewards program, but transferring points to airline miles to redeem for travel remains the most lucrative use of these rewards. All other uses bring between half a penny to 0.7 of a penny of value (with exception of gift cards which may bring up to a penny). Airline miles can bring you at least 1.1 to 1.8 cents of value and if done right, you could get as many as 5 to 10 cents of value per mile.
AmEx Membership Rewards works with 18 frequent flyer programs and 3 hotel frequent guest programs.
Click here for more information on American Express Membership Rewards.
- Capital One Rewards: This is the latest entrant to compete with the Chase Ultimate Rewards, Citi ThankYou Rewards, and AmEx Membership Rewards.
Capital One has not yet created a luxury flagship card with high annual fee and extensive amenities similar to Chase Sapphire Reserve, Citi Prestige, or Platinum AmEx.
Today, there are 4 Capital One credit cards that participate in the airline transfer program: Venture Rewards, VentureOne, Spark for Business, and Spark Select for Business. Capital One works with 16 frequent flyer programs and 3 hotel frequent guest programs.
Click here for more information on Capital One Rewards.
Spend Now, Don’t Save
Hoarding your points isn’t beneficial in the long run because it leaves you vulnerable to external factors that are out of your control. Additionally, it doesn’t always reward you with invaluable travel experiences.
This is why earning points and miles is only half of the travel rewards journey’s fun, and it’s important to have a plan to use the rewards you earn as early as possible. It can make sense if you’re saving points for a specific trip, but make sure you cash in your rewards as soon as you can. Without a plan, you could see your trip cost more than initially predicted.