Should You Save Your Points and Miles, or Redeem Them as Quickly as Possible?

Jul 19, 2019

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

If you’ve been building up a nice balance of points or miles, you may be considering whether to redeem them now or save them up for a ‘rainy day’. Or, you might even be thinking to save more to burn them all as part of a larger redemption.

So how do you decide when to spend those miles?

As a general rule, the miles in your loyalty account will never be more valuable than they are right now. This is because loyalty programmes have a history of regularly ‘devaluing’ their programmes. Occasionally, they may make changes that make your miles more valuable, such as adding a new redemption partner or possibly even reducing the cost of a particular award (such as the small reduction in fees and taxes seen earlier this week as part of British Airways’ trial changes to Reward Flight Saver payment options).

However, the vast majority of the time, the changes will be negative and reduce or ‘devalue’ the programme. Recently, we saw British Airways raise the price of partner redemptions, which meant Avios became less valuable than they were before the change. This was an extremely mild devaluation, with some redemptions only increasing a few percent in price.

Devaluations can be much worse — sometime with increases of 50% or even more. Programmes don’t devalue all the time — it may only be once every few years — but they can be made without notice, leaving you with miles less valuable than they were the day prior. That means that if there’s a redemption that costs 50,000 miles now, this could increase to say 60,000 miles at the next devaluation. So, you could still make that redemption, but it would make sense to do it sooner at the 50,000-mile price than later at the 60,000-mile price.

United's current multi-course service begins with an appetizer, salad and bread. Photo by Zach Honig.
United’s 767 Polaris Business Class. (Photo by Zach Honig/The Points Guy)

Most loyalty programmes understand how loyalty is built and will respect their members enough to provide sufficient notice of changes in order to allow members to redeem miles at current rates before the devaluation kicks in. Unfortunately, some programmes like Alaska Mileage Plan have made huge devaluations in the past with no warning to members.

There’s no need to panic and spend every mile the day you earn it. If you are saving up for that once-in-a-lifetime first class flight or that overwater villa, don’t think that you need to change your strategy to avoid devaluations and instead find something less valuable for which to redeem your miles. However, if you calculate it will take two years to earn enough miles for that dream redemption, keep in mind the cost may increase by that point. Or, something may change that may otherwise affect the feasibility of that redemption, such as the programme may no longer allow first class redemptions on the airline with which you were planning to redeem to fly.

Two years is quite a long time in loyalty land! I certainly wouldn’t recommend keeping miles in your account for, say five years, but I also wouldn’t recommend exchanging your miles for (small) gift vouchers every single month the day you earn them either.

My current strategy is that I try and redeem at least half of the miles I earn every year. For me, this is a good balance between earning enough miles for some premium redemptions (like a long-haul BA Club World flight for my 2-4-1 Companion Voucher) and somewhat protecting myself against future unexpected, but unfortunately inevitable, devaluations.

Featured image by Shutterstock.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.