SubscribeFri 20 Jul 2007
I’ve tried to sign up for most reward programs to make sure I’m not leaving anything on the table. I’m good with the airlines and the credit card. Not so good with the hotels - I don’t travel for work and as result rarely stay at the same hotel chain. Hotels unlike airlines are much less of a commodity. Location, amenities, and price play much a greater determining factor on where I stay. Not only are there fewer airline options, but the options available are usually similarly priced and as result I have accumulated miles on a few airlines rather than scattering points across the board.
A few years ago, I signed up for an account at points.com with the intent of exchanging points between vendors. I’ve never ended up using the service mostly because the penalty you take on swapping between different programs is significant, and swapping options are limited. Most of the major vendors do not let you swap from other programs into their program. For example I cannot swap Delta miles into American Airline miles or vice versa. U.S. Airways is the only airline I have miles on that I can actually swap into and out of. Continental and United do not collaborate with points.com
Given that points.com does not offer an effective way to make reward programs a universal medium of exchange, how do you quantify the value of the points you have? Credit card programs are generally the easiest to value as they usually can be exchanged for credit on a bill, or even a check. Hotel and Airlines points are more difficult because of the restrictions they place on use of the programs. However, I’ve decided to estimate what my points are worth.
The estimate is somewhat on the high side given that partial points (i.e. points between reward levels) have no value. This is really only a issue with the Airline miles and Hotel points. My methodology for estimating a value of miles is that I basically value a domestic flight at $300, and then use the points required for a domestic flight. Example: 54,5000 United Points. 25,000 Points for a flight. 54,5000/25,000*300 = $654. In truth there are many different grades of flight rewards. I’ve used the lowest level with the most restrictions which in my opinion is equivalent to advance purchase cross country flight which would be a good deal at $300. Using miles for a flight that costs less than that does not make sense. In the case of Hyatt, I used the equivalent of an $120 hotel room for their lowest reward level which costs 5,000 points.
I know I’m a victim at times of my desire to hoard points For that reason, I think it’s important to assess the monetary value of the points. The airlines, and credit card companies win when the customers don’t use their points. By translating the value into dollar terms, it’s easier for me then use them instead of actual dollars.
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July 20th, 2007 at 9:40 am
My personal opinion is that you should use points as soon as you possibly can. They don’t accumulate “point interest” and the likelihood is that the hotel/airline/etc. is going to raise the points per reward at some point. So if you have 25000 points for a roundtrip flight, keep in mind if you hoard it that someday soon they’ll raise the roundtrip requirement to 30000, and you’ll still have just 25000 sitting there. I used to hoard points but suddenly realized I’d be better off saving my money (which DOES earn interest) by using points now and money later, rather than money now and points later.
All of this is not to mention that the blackout requirements are getting ridiculous to the point where I just can’t use my points when or where I’d like to, regardless.
July 20th, 2007 at 8:18 pm
I definitely agree - points should be used. The temptation to hoard at times is hard to overcome. On airlines though, I like to get enough for international travel however.
July 25th, 2007 at 2:48 pm
To me, using points is all about conversion rate, which as was pointed it, can be highly variable. I think I can definitely be deemed guilty of “point hoarding” but you don’t want to be too quick in exchanging points for a domestic ticket at $300 (a reasonable fare these days). I save my points for a “rainy day” when I have to use them without much advance purchase, where the alternative is fares in excess of 5 or 6 hundred dollars, but often the point difference is minimal. (though sometimes they charge a fee for last minute use). Even so, I find it easier to use 50,000 miles for a 500 dollar ticket than 25K for a 250 dollar one — I just really have a hard time spending that much on airfare, but if you have to travel last minute - you have no choice, unless you can use miles!