As someone who has been guilty of this in the past, the idea of having “a million points” seems like a great goal! After all, the more points you have, the less you have to spend out of pocket- or so the theory goes. However, is hoarding points a smart move, or does it have hidden drawbacks? Let’s look in to why hoarding your points for too long might not be the best strategy!
Points Lose Value Over Time
Credit card companies, airlines, hotels, and even popular chains like Starbucks have become infamous for a frustrating trend: not only are prices steadily rising, but reward programs are frequently adjusted in ways that erode the value of what customers have diligently earned. Take Starbucks, they recently implemented a significant increase in their redemption rates. A latte once cost 150 stars (approximately 4.2 cents per star), it now costs 200 stars, slashing the value per star to 3.1 cents. This doesn’t sound like a large increase, however it is a staggering 25% decrease in value, forcing consumers to earn and spend far more to enjoy the same “free latte”.
Points Can Expire
Although many credit card rewards programs tout “no expiration dates”, hotels, restaurants, and airlines often have expiration dates due to inactivity. Let’s look at a few examples:
- Marriott Bonvoy points don’t “expire” as long as you stay at one of their property’s at least once every 24 months.
- Starbucks Stars expire 6 months after they are earned on a monthly basis. If you earn 200 stars in January, you have until July to use those stars or they are gone!
- Delta SkyMiles currently never expire, however as more airlines began to change the terms of their programs this is always a possibility.
- American Express points never expire as long as your account is open. This leads back to a previous post I made about why you should never close a credit card, but instead downgrade it to a no annual fee card and leave it in a drawer.
Missed Redemption Opportunities
The reason most people hoard points is either for YOLO(You Only Live Once) trips or “because I may need the points one day”. If you are saving your points for a YOLO trip with a specific end date in mind, that is a fantastic strategy if it is within the next 12 to 18 months. If you are saving points because you don’t want to spend them, you are essentially holding on to a depreciating asset; losing you value on a daily basis. If you were to take those points and use them to pay for dinner, tickets to a movie, a quick weekend getaway, or even a statement credit, you are earning immediate value. You don’t have to spend all of your points in a week, however having a “spend” strategy is a great idea!
Develop a Strategy!
Credit card points can be a wonderful tool when used wisely. Instead of hoarding them, embrace a strategy of consistent redemption. By leveraging your points regularly, you can enjoy instant gratification without the worry of expiration dates, devaluations, or missed opportunities. Stay tuned for my next post, “How to use all of your hoarded points”!
What are your thoughts on credit card rewards strategies?
Have you ever had points expire without realizing it?
The Points Authority: Mastering The Points Game 