Why You Shouldn’t Hoard Your Points – A Losing Battle
Are you a hoarder or are you a spender? Or are you some combination of both? When it comes to credit card points it can be very easy to fall into the hoarder category and be too afraid to spend your hard-earned points. You might convince yourself that it’s worth it to save all your points for a big redemption someday. Take it from me, I’ve been saving points for the past 3 years to prepare for our next trip to Japan and even as we get closer to booking the trip, I can already tell it’s going to be hard for me to spend the points that have taken so long to save. My Japan on Points series covers what I’m planning and how I’m using my credit card points to accomplish my travel goals for my family. While for the most part I have been hoarding my points, there have been moments where I’ve spent points to make international travel a little cheaper when we went to Europe last year. But today we’re going to talk about why you shouldn’t really hoard your points but instead spend them! If you’re new to the blog be sure to check out some of my other posts that speak about different areas of the credit card points game HERE!
Types of Devaluations
Why is hoarding points bad? The simple answer is point devaluations. Now these devaluations can happen in a couple ways. If you’re using a transferrable points currency card like Chase Ultimate Rewards, American Express Membership Rewards, Capital One Miles, the devaluation can come from changes that the underlying bank makes to how their cards / points ecosystem works. For example, prior to the latest update to the Chase Sapphire Reserve, Ultimate Rewards points with the Sapphire Reserve card were guaranteed to be worth 1.5 cents per point so long as you made a travel booking through Chase’s portal. There were ways to get more value if you transferred out to transfer partners and get up to 5 cents per point, maybe more. But when Chase updated the Sapphire Reserve, they introduced Points Boost, which essentially made it where your points could be worth anywhere from 1 cent per point up to 2 cents per point…no longer the guaranteed 1.5 cents per point. If you’re able to get a booking where your points are worth 2 cents per point, great, you’re actually getting better value. But those might be harder to snag than just having the locked in 1.5 cents per point value.
The other way that devaluation can hit you is if you have co-branded credit cards. These would be cards through your hotel and/or airline brands of choice. Similar to transferrable currency cards, if the brand behind the points currency that you’re earning makes changes to their rewards policy, it’s 99.9% not going to be in your favor regarding the value of your points. One of the most recent examples that comes to mind was the devaluation of Hyatt points. Now Hyatt has become a lot of people’s favorites because their rewards redemption program doesn’t use a dynamic pricing schedule like competitors Hilton and Marriott do. They classify all their different hotel brands into tiers and each tier costs a certain number of points. Now Hyatt still uses their tier structure, but the devaluation came when they changed the amount of points that each tier costs. So for example, if a given hotel room used to cost 20,000 points per night in a given tier let’s say it went up to 30,000 points per night. Now that’s not a real figure, those values are just to show how a devaluation can hit. Same room, now 10,000 points more. This is why devaluations can be so frustrating and why you shouldn’t hoard your points as much as possible.
Embracing Points Devaluations
Devaluations are inevitable, and with things costing more points these days it’s hard to not hoard your points. My advice would be to strike a balance between saving up your points but also making sure that you spend them. That way when a devaluation hits, it doesn’t sting as much because you’re regularly using your points and you just accept that devaluations are part of the game, but they shouldn’t stop you from playing altogether!
My Story of Having to Spend Points
Going back to the statement I made earlier in this post about how I spent some points on our trip to Europe last year, here’s some of the backstory. We planned a trip to Europe with my wife’s cousin. The trip was going to take us to Switzerland, Belgium and France. Now compared to Japan, going to Europe is more expensive due to the fact that the currency exchange isn’t in our favor coming from the US. On top of that, Switzerland is just a very expensive country. We had paid for most of our trip and we were now planning the Belgium part of the trip. Instead of paying out-of-pocket for another hotel I decided to take roughly 280,000 Hilton Honors points (I had about 750,000 at the time) and use it to get us a hotel in Brussels for the time we were going to be in Belgium.
For us that was 280,000 points well spent because it ended up saving us roughly $800 of additional expense on an already expensive trip. Now there was part of me that had a hard time pulling the trigger to spend the points because I was on track to have 1 million Hilton points by the time we were ready to plan the Japan trip that I keep referencing. But at the end of the day I’m glad I did it! Not to mention I’ve been able to grow my points bank back up a little bit for Hilton, currently sitting at around 662,000 plus I have 2 Free Night Awards that can all go to our Japan trip. You just have to find that balance that will work for you and figure out how and when you spend your points, but ultimately you have to be sure to use your points and enjoy the benefits that come with using them.
Conclusion
I guess when I think about it, as much as I like seeing my points balances grow, I have to stop and ask myself “What’s the point of accumulating all these points if I never get to reap the benefits of them?” And when I think about it from that perspective, I find myself encouraged to try and find the best ways to put them to work.
