January 6, 2014
Yesterday morning I was thinking that it may be time for me to work on increasing my Ultimate Rewards point balance. Thanks to the upcoming United and Hyatt devaluations, I spent a large percentage of my Ultimate Rewards points on a big summer vacation with pre-devaluation point prices. In July, my family of three will fly Lufthansa first class to Paris (via Munich) and we’ll return from Zurich two weeks later. For the first 5 nights, we’ll stay at the Park Hyatt Vendome in Paris… in a suite. And, the last 3 nights will be at the Park Hyatt Zurich. Again, in a suite. In between, we’ll spend Club Carlson points and maybe even some cash.
Despite booking with pre-devaluation charts, this is far from a frugal trip. I spent 135,000 United miles per person round-trip. And, I spent 264,000 Hyatt points for 8 Park Hyatt suite nights. A large portion of the United miles and Hyatt points were transferred from my Ultimate Rewards accounts. I could have booked a nearly as good trip in business class, and in other hotels (or B&Bs, or apartments) for far fewer points & miles. But, I’ve been point-rich lately and feel good about splurging here.
So, now I’m looking at my point balances (thanks in large part to Award Wallet), and I see the following balances across my wife and I (limited to major airline and transferable points programs):
- Chase Ultimate Rewards: 300,000 (bigger than I expected)
- American Express Membership Rewards: 250,000
- Starwood Preferred Guest (SPG): 95,000
- American Airlines + US Airways: 463,000
- United: 71,000
- Delta: 655,000
- British Airways: 210,000
- Alaska Airlines: 0
When collecting points & miles, I usually do so opportunistically. If there’s a great signup bonus or a great portal promotion, I’ll often take advantage of it regardless of whether I think I need those particular points and miles. Recently, though, I’ve increasingly chosen to earn cash rather than points & miles. Partly, that is due to devaluations in many programs. And, partly it is due to the fact that I already have enough points and miles to cover nearly any travel I’m interested in.
I’ve mentioned in many prior posts, that when earning points or miles from a credit card or portal, you are implicitly buying those points by forgoing a cash back credit card or portal. For example, if you earn 1 mile per dollar from your credit card, but could have used a 2% cash back card instead, you are essentially buying those miles for 2 cents each (see “Buying points, unwittingly“). Is it worth it?
Depending upon your situation, buying points may or may not be a good idea. Take my point totals above, for consideration. With 655,000 Delta miles socked away, I’d be crazy to buy more Delta miles except at extremely low prices. On the other hand, I have relatively few SPG points and no Alaska Airlines miles. Both programs offer opportunities for flight awards that are not realistically possible with other programs. It would make sense for me to “buy” into either or both of those programs.
Given my unique circumstances, here is my estimate of how much I’d be willing to spend if I could easily “buy” points or miles in each program:
- Chase Ultimate Rewards: 1.2 cents each. Worst case, I could use points to book airfare at a value of 1.25 cents each, and would therefore save a bit. Best case, I would transfer to airline or hotel programs for outsized value.
- American Express Membership Rewards: 1.5 cents each. Membership Rewards has many more airline transfer partners than Chase. My favorite use of points to-date was to transfer Membership Rewards to Singapore Airlines to fly Singapore Suites class.
- American Airlines + US Airways: 1 cent each. I have enough miles right now to cover near-term needs so I have no need to invest in more. Plus, an award chart devaluation in the near future seems inevitable.
- United: 1 cent each. By supplementing with Ultimate Rewards, I have enough United miles for now.
- Delta: .8 cents each. Since Delta allows paying with miles at a value of 1 cent per mile I should be willing to pay up to 1 cent each, but I simply have too many of these miles right now to be a serious buyer.
- British Airways: 1 cent each. BA Avios are often the most valuable currency I own thanks to their 4500 point one-way short-hop awards. But, because Avios stretch so far, I don’t have a need to get more of them anytime soon. Plus, I can always add more from my stash of Ultimate Rewards or Membership Rewards points.
- Alaska Airlines: 1.3 cents each. Alaska has some very tempting partner awards that I’d like to take advantage of!
- Starwood Preferred Guest (SPG): 1.7 cents each. SPG has a huge list of transfer partners, most of whom transfer at better than 1 to 1 when you transfer 20,000 points at a time (usually 20,000 SPG points becomes 25,000 airline miles).
With the above estimates, I don’t literally mean that I’m looking to buy points or miles at those prices. Rather, if given the choice between earning Alaska miles (1.3 cents each) or United miles (1 cent each), I would pick Alaska miles because I don’t already have enough of them. And, if given the choice between earning Delta miles (.8 cents each) or pennies, I would choose pennies (AKA cash).
Here’s an example: suppose I’m about to buy a Sno Wovel from Sears and I find that I can earn 5 Delta Skymiles per dollar by shopping through the Skymiles Shopping portal, or I can earn 5% cash back by shopping through a cash back portal. I would choose the cash back portal because I currently value pennies more highly than new Delta miles.
To be honest, I don’t run calculations every time I have to make a choice to earn miles, points, or cash. Instead, I try to keep in mind the types of points & miles I want to earn more than others, and make decisions accordingly. With all else being equal, my current preferences are: SPG > Membership Rewards > Alaska > Ultimate Rewards > BA/AA/United > Delta
Don’t agree with me
The “buy” prices I listed above are based entirely on my own situation. If I had fewer miles and was working my way towards a big trip, I might be willing to pay much more for the right kind of miles. Or, if I rarely traveled I might not want to buy miles at all. Your situation is different than mine, so your buy prices should be different than mine.
Also note that the “buy” prices listed above are not estimates of value. I’ve argued before that estimating the value of points and miles before spending them is nearly impossible (see “Impossible point valuations and the joy of free“). I often get much more than 1 cent per point value when redeeming Delta miles, so I roughly value the miles I have at around 1 cent or more each, but I don’t see the need for more of them right now.
What are your buy prices? What points & miles do you value most? Comment below.