Everyone takes a different approach to collecting miles and points. Some rack up points with a specific goal in mind, while others rack up points and almost view it as their retirement account, with no plans to redeem rewards anytime soon.
The issue, as we see all too often, is that loyalty programs tend to devalue over time. In this post, I’d like to talk specifically about how you can best diversify your points and avoid devaluations, since this is an issue that many in the points hobby struggle with.
Below are some general thoughts on how to diversify your miles and points and avoid devaluations, in no particular order.
In this post:
Earn & burn, don’t view points as your retirement account
I think this is the single most important point I can make — whenever possible, always take an “earn & burn approach” to your points. All the time I hear from people who say “I’m earning points for retirement, and I look forward to redeeming them all then.”
Now, let me of course acknowledge that not everyone will always be in a position to redeem — maybe you can’t take time off work, or maybe there are other life circumstances. However, I absolutely can’t emphasize enough that I wouldn’t recommend viewing your points balance as a retirement account (well, unless you’re retiring shortly).
Why? Keeping points in an account in the long run is like keeping money in an account without accruing interest. It’s even worse than that, because odds are that your points currency has a higher inflation rate than most “real” currencies.
When you compare award redemption rates now to what they were a decade ago, in many cases you’ll find that award points requirements have gone up by over 100%.
Some might say “but I want to be able to travel when I retire.” That’s great, I’m all for that. The good news is that there are lots of opportunities to efficiently earn points, and those will (hopefully) still exist in retirement.
While points devalue over time, the great news is that it’s also easier to rack up points than ever before, in terms of how many points you can earn per dollar spent on credit cards, in terms of opportunities to buy points, etc.
So while the rewards you earned in the past are worth less now than they were then, there are still lots of amazing opportunities.
Earn transferable points whenever possible
While I do take an “earn & burn” approach, I will say that if I’m going to rack up points in the long-run, I always prefer for it to be transferable points currencies, whether those be points with Amex Membership Rewards, Capital One, Chase Ultimate Rewards, or Citi ThankYou.
Why do I feel more comfortable racking up transferable points without a short-term use?
- As the name suggest, the points can be transferred efficiently to various other airline and hotel programs, so you’re more shielded from devaluations than when earning points with a single program
- For several years now I’ve valued all major transferable points currencies at 1.7 cents each, unlike individual airline and hotel points currencies, where I’ve found the value to decrease over time; admittedly the same valuation doesn’t really help in keeping up with inflation, but it’s better than nothing
- Odds are that if you’re maximizing your travel credit card rewards, you’re earning one of these points currencies, so the points are also the easiest and most practical to rack up; this could be with cards like the Capital One Venture X Business (review), Chase Sapphire Preferred® Card (review), Citi Strata Premier® Card (review), etc.
Shield yourself from devaluation with airlines & hotels
Admittedly many of us still earn points with specific airline and hotel loyalty programs. This can be through our natural travel patterns, because having a co-branded credit card makes sense, because we rack up points through third party activity, etc.
Of course I’m not opposed to collecting airline miles and hotel points, but I do make an effort to limit my balance in these programs at any given time. What are my considerations here?
- I try not to have more points in an individual account than I could realistically redeem for a couple of aspirational trips; that way if there is an advance notice of award pricing changes, I can book trips to get the most value from my points
- I try to focus on earning rewards with programs that can be trusted; this can include those that have a history of giving advance notice of pricing changes, and programs that publish award pricing, rather than having dynamic pricing (for example, programs like Air Canada Aeroplan and World of Hyatt)
- Be careful racking up points in a program that have a single award sweet spot; if that redemption is devalued, the whole reason you collected points may no longer apply (for example, redeeming Virgin Atlantic points on All Nippon Airways)
Be strategic about the points currencies you earn
There are so many huge credit card welcome bonuses out there nowadays, and it can be tempting to apply for just about all of them. The thing is, you still want to be strategic. Often I’ll hear from readers who have points balance with 10 different currencies, but don’t actually have enough points with any one program for it to be useful.
So, what’s the best way to handle this?
- The beauty of collecting transferable points is that they have many overlapping transfer partners, meaning that in many cases you could redeem Amex and Chase points toward the same redemption
- If you’re earning a specific airline or hotel points currency, I’d recommend having a general goal in mind, and then earning enough points to be able to redeem for that
You don’t want to be in a situation where you’re looking to visit Paris for five nights, and have 80,000 Hilton points, 30,000 Hyatt points, 100,000 IHG points, 40,000 Choice points, etc. (well, unless you want to change hotels every night).
Bottom line
Everyone’s strategy with miles and points will differ based on their own circumstances. In general, I highly recommend taking an earn & burn approach when accruing points, rather than viewing your rewards balance as a retirement account.
I try to mitigate the risk of any award program devaluations by accruing transferable points currencies whenever possible. If I am going to earn a specific airline or hotel points currency, I try to keep my points balance small enough so that I can redeem almost all of those points within several months in the event that there’s a devaluation.
What’s your strategy to diversifying points and minimizing the risk of points being devalued?
BA's devaluation is coming soon and trying to figure out what to do. Might as well bounce around the Avios ecosystem for now.
Agree with all points you make. While I agree it's typically unwise to earn and accumulate points with a specific airline, I'd be curious to hear your take on Alaska Atmos. While it's technically an airline currency, there are so many possibilities and sweet spots. The argument could be made that one should earn Bilt points, since they transfer to Atmos but also to a list of airlines and hotels, but Bilt doesn't offer signup...
Agree with all points you make. While I agree it's typically unwise to earn and accumulate points with a specific airline, I'd be curious to hear your take on Alaska Atmos. While it's technically an airline currency, there are so many possibilities and sweet spots. The argument could be made that one should earn Bilt points, since they transfer to Atmos but also to a list of airlines and hotels, but Bilt doesn't offer signup bonuses (yet – figure that changes in February), making Bilt points harder to earn. Especially since Atmos has two solid credit cards with good bonus categories, there's definitely a case to accumulate points with them.
Rakuten transfers to Bilt - got my first Bilt points last month. Still two more 1:1 Rakuten:Bilt transfer dates on 2/15/26 and 5/15/26.
Your assumption crash and burn when Atmos devalue partner redemption.
Yea... They already lost Latam which was an amazing sweet spot (60k to Easter Island from the USA).
The subject of accrued points devaluing and the aspiration to save them for retirement came up 12 or 18 months ago. What I've been doing since then is, if the return per point is good, use points and put the cost of the ticket I would otherwise have bought in a savings account. If it was an aspirational trip I bank the amount of cash I'd have realistically paid for a ticket if the reward...
The subject of accrued points devaluing and the aspiration to save them for retirement came up 12 or 18 months ago. What I've been doing since then is, if the return per point is good, use points and put the cost of the ticket I would otherwise have bought in a savings account. If it was an aspirational trip I bank the amount of cash I'd have realistically paid for a ticket if the reward wasn't available.
That way I don't have to worry about the points devaluing, and I'll have a retirement travel kitty that I can use to buy points (or tickets). It takes a level of focus not to spend it on just anything, but cash in a savings account is just another 'flexible transfer currency'.
Transferable points just aren't worth 1.7 cents per point anymore. Increasingly, they don't transfer 1:1 to airlines, and airlines have all devalued. 1.3 cents per point is honestly generous.
Oh come on. "Increasingly" is still like 1 out of 10 airlines, and if you can get to Europe in business class for under 100k in J on all three alliances.
If you spent 80k points + $350 on a one-way ticket that would cost $2,500, you're well above 1.7
Brex and HSBC are no longer 1:1 programs for all partners. Capital One has multiple partners that aren't 1:1 transfers. Amex cracked too. Meanwhile, where are you finding an 80k TATL business class award, especially from the west coast? These used to be commonplace, they are very rare now given how airlines have largely stopped giving partners award inventory. So you have to factor that in too. Plus, brokers use bots to snipe what little...
Brex and HSBC are no longer 1:1 programs for all partners. Capital One has multiple partners that aren't 1:1 transfers. Amex cracked too. Meanwhile, where are you finding an 80k TATL business class award, especially from the west coast? These used to be commonplace, they are very rare now given how airlines have largely stopped giving partners award inventory. So you have to factor that in too. Plus, brokers use bots to snipe what little inventory does become available.
And then there are devaluations. It used to be 12.5k for a domestic economy class award. Now it's an average 22.5k to start. If you need positioning flights, you have to factor this in too.
All of that adds up to 1.3cpp being generous now. Can you still get outsize value, if you work really hard and know a lot? Yes, but I am genuinely expert in this stuff and it's super hard now. Not impossible, but close.
My points value built way up due to lack of international travel during Covid, cancer, and other life issues. But we got back at it last year, with 2 international trips in J, then 2 more this year. I was a bit freer with the points, being willing to spend more miles for great routing. But just 8 round trip tickets is enough to make me start panicking about miles balances! We actually still have...
My points value built way up due to lack of international travel during Covid, cancer, and other life issues. But we got back at it last year, with 2 international trips in J, then 2 more this year. I was a bit freer with the points, being willing to spend more miles for great routing. But just 8 round trip tickets is enough to make me start panicking about miles balances! We actually still have plenty, but because I tend to cancel things and re-book when something much better comes alone, I have stranded points at various airlines. My next job will be to figure out good ways to use my Virgin, BA, Qantas, Hilton, IHG, and through some miracle, Delta points.
This is an excellent article. Obviously a balance between diversification and earning and burning.
For most people looking to take 1-2 trips a year using points to offset part of the expense, I'd recommend a simple strategy like a Citi Strata Premier and a DoubleCash. Can diversify with a Chase Sapphire Preferred with a Freedom Unlimited. Split your spend between the ecosystems, pay attention to what card you use for what spend to maximize...
This is an excellent article. Obviously a balance between diversification and earning and burning.
For most people looking to take 1-2 trips a year using points to offset part of the expense, I'd recommend a simple strategy like a Citi Strata Premier and a DoubleCash. Can diversify with a Chase Sapphire Preferred with a Freedom Unlimited. Split your spend between the ecosystems, pay attention to what card you use for what spend to maximize bonus categories, and watch the points roll in.
Have some general destinations that you might want to go in mind, but be flexible. Run searches regularly. That will give you a sense of what you will realistically be able to redeem points for at a good redemption rate. For a family of 4, it's going to be hard to find business class seats for 4 people during the same weeks that everyone else is traveling. Especially round trip. You may do better redeeming your points for hotels.
But also, know what you value. If you don't value a name brand Park Hyatt luxury hotel, there are lots of wonderful boutique hotels out there (especially in a place like Paris) with prices that will not break the bank. Pay cash for the hotels and use your points for airfare. And while business class is of course more fun, it's ok to redeem points for economy travel - last I checked there was not a law against it, and there can be some excellent economy redemption opportunities.
No offense to Disney Mouse, but just get out there and see the world. Kids can make all sorts of memories in all sorts of places. Use your points to broaden your horizons and explore.
Oh, goodie.. let's treat these corporate pseudo-currencies like all other investments... 'diversify!'
So, what are the equivalent of complex 'derivatives' within this mostly-unregulated 'market'? Like, let's get some '(miles)-backed securities' (MBS), 'collateralized (point) obligations' (CPO), and 'credit-(card) default swaps' (CDS)...I recommend some 'senior tranche' ...options contracts for redemptions... uh no, there's a 'margin-call' on my SkyPesos! Where's my bailout?!
Oh, goodie.. let's treat these corporate pseudo-currencies like all other investments... 'diversify!'
So, what are the equivalent of complex 'derivatives' within this mostly-unregulated 'market'? Like, let's get some '(miles)-backed securities' (MBS), 'collateralized (point) obligations' (CPO), and 'credit-(card) default swaps' (CDS)...I recommend some 'senior tranche' ...options contracts for redemptions... uh no, there's a 'margin-call' on my SkyPesos! Where's my bailout?!
Could you be possibly a tad cynical?
Right now most of my spending is for transferable points, though that’ll change next year as I put spending on my Summit card to climb the status ladder. AMEX mainly for flights, Chase for hotels (when I’m not trying to use a credit), Bilt for dining, and Cap One for most of the non-bonused spend. I get my AA points via the Bask Bank partnership, so I’m not focusing much on Citi spend at this point.
I agree with all the points, and just to add, my loyalty to any program has fallen through the floor in the last 2-3 years. Watching points currencies lose value, hotel groups become financial instruments rather than hospitality chains, airline award availability get shadily eroded by programs that need to make a buck. I have shifted towards burning points/miles whenever I can, and shelling out $ with cash back or buying tickets/rooms outright with whatever...
I agree with all the points, and just to add, my loyalty to any program has fallen through the floor in the last 2-3 years. Watching points currencies lose value, hotel groups become financial instruments rather than hospitality chains, airline award availability get shadily eroded by programs that need to make a buck. I have shifted towards burning points/miles whenever I can, and shelling out $ with cash back or buying tickets/rooms outright with whatever brand gives the most value. They treat us like a resource to be milked, so will I, and little more.