Splitting Expenses When Redeeming Points For Travel: What’s Fair?

An OMAAT reader asked me a specific question about the concept of redeeming points and splitting expenses when on a friends trip. While I shared my take on his specific scenario (and he asked to remain anonymous), I thought it would be interesting to address this topic more broadly.

The premise is simple — say you’re taking a trip with family or friends, and you plan to split expenses. If you have hotel points or airline miles and book a portion of the travel for everyone with those (rather than cash), how should that be accounted for when it comes to everyone paying their fair share?

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Should that be viewed the same as paying cash for that portion of the travel, or are points just a “free” reward that you should share with friends and family, which shouldn’t otherwise be accounted for?

The complicated psychology of points as a currency

Points are a form of currency, plain and simple. Fortunately they’re not taxed if earned as a reward for something, but there’s almost always an opportunity cost to both earning and redeeming points.

For credit card spending, you’re typically forgoing at least 2% cash back if you’re choosing to earn travel rewards. Meanwhile many of us outright purchase points, at a direct cost. For that matter, I pay income taxes by credit card for a fee, as I find it to be a worthwhile rate.

If you’re anything like me, you have a specific valuation for each points currency, and are deliberate with when you’ll redeem points, whether it’s for airline tickets or for hotels. In my household, Ford knows that one of the best ways to get under my skin is to claim that points are “free,” and to ask me to redeem non-saver awards, or at a bad value, because points aren’t a currency (that’s one battle I won’t let him win!).

There’s also no denying that the psychology here is a bit complex, and many people do view points as a “free” reward that they should use whenever possible. Like, I don’t blame those people, because for a lot of folks, miles & points aren’t the center of their world… fair enough. 😉

For example, I always like to treat my family to travel whenever I can, as it’s one of my love languages, and I refuse to let them pay anything. But whenever I traveled with my late mom, I’d always have to lie to her and tell her that I redeemed points for our travel, as it’s the only way she wouldn’t feel guilty. If I said I paid cash, she just refused to take the trip, but if I redeemed points, she was much more okay with it (though she’d also always ask how many points I’m redeeming, without having much context for the relative value of currencies, heh).

I think travel “trading” with points is mostly fair

If you’re taking a trip where you’re splitting expenses, I think it’s totally fair that travel booked with points would count toward someone’s “share” of covering expenses. Now, everyone will take a different approach here, but I do think there are some additional considerations.

For one, you should use a reasonable valuation if you’re redeeming points for travel. In other words, if you’re taking a trip to Europe with a friend and redeem points for you both to fly business class, you shouldn’t expect your friend will then drop $15K on hotels, if that’s the retail value of those business class tickets (because it’s unlikely you would’ve paid that much if cash were the only option).

Meanwhile if you redeem 40,000 Delta SkyMiles for $500 worth of economy tickets for you and a friend, I don’t think it’s unreasonable to have your friend offset that by covering around $500 worth of hotel stays.

I tend to think that if you’re redeeming points, you should be on the generous side when it comes to the approach you take, and perhaps apply some sort of a discount, just so everyone feels good about the situation. Like I said above, the perception people have of points certainly complicates things.

I also think this goes both ways, and if you’re splitting the cash cost of a hotel room and one person earns points and elite nights, it’s not unreasonable that they’d pay a larger share of the cost, since they’re also benefiting from it more.

Like I said, personally when I book travel for people with points (whether they’re traveling with or without me), I always view it as a gift, and it’s the area of my life that I’m most generous with. For family and close friends, it’s the least I can do…

Does this violate airline & hotel loyalty rules, though?

Almost all airline and hotel loyalty programs have rules against buying, selling, or bartering points. So some people might wonder if you’re actually violating rules if you are traveling with a friend and you use your points for flights, while they pay cash for hotels, and vice versa.

I mean, I’d say that technically this constitutes bartering, as you’re exchanging goods or services without using money. That being said, that’s not something I’d personally be too worried about, as there’s not really a trail here that airlines or hotels could follow, and I’m not sure this really violates the spirit of programs.

It’s way different than selling miles or points to a stranger, which is a huge underground industry. Technically, I suppose you’re also bartering if you make an agreement with your child that you’ll take them on a vacation if they get good grades in school, and then redeem points for it. But it’s also something that’s unlikely to get you in trouble.

Bottom line

Nowadays many people fund their travels with miles & points, in order to cover flights and hotel stays. For many friends and family trips, people split costs, so as you’d expect, points add an extra layer of complexity to things.

I absolutely think it’s fair for travel paid with points to be considered similar to cash when it comes to splitting expenses. Points consistently have either a direct cost or opportunity cost.

That being said, I do think it’s important to be reasonable. If you redeem 100,000 points for a first class ticket that would retail for $10,000, don’t expect your friend to be on the hook for $10,000 worth of hotels. Instead, if points are involved, I think it’s worth being on the generous side, or at least, not going over the top with accounting for the value of those rewards, especially if you’re splurging on more luxurious travel than you’d have if paying cash.

Even when being reasonable, this does sometimes lead to “bad blood” between people, especially for those who insist that points are in fact a “free” currency.

Where do you stand on splitting travel expenses when points are involved?