June 27, 2014
Conventional wisdom in the points and miles game is to “earn and burn”. The idea is to earn enough points for your next trip, spend the points, travel for nearly free, and repeat. There are a few big advantages to this approach. For one, you are almost guaranteed to get good value from your points. Hopefully you’ll know up-front how many points you’ll need and you’ll have a good idea of how much money it will save to use points instead of cash. Another advantage is that this approach protects you from devaluations. Airline and hotel programs regularly change their award charts for the worse or, in the case of hotels, move their best properties up to the next award tier (meaning more points are required for a free night). Changes like these cause a decrease in the value of your banked points since you can no longer get as much from those points. By earning and burning, you can greatly decrease the chance of being left holding many devalued points.
Earning and burning has its virtues, but its not perfect. Suppose, for example, that you need to book a last minute flight. Airlines like to jack up last minute prices to extreme levels. Meanwhile, they tend to open up saver level award space at the same time. When given the choice of booking a $1100 last minute flight vs. a 25,000 mile award, you may wish you had kept some airline miles around, just in case. A more common issue is with award availability. Maybe, for example, you built up enough AA miles for a dream trip to Asia, but then can’t find saver level awards in both directions. You may wish then that you had miles that could be used for Star Alliance or even SkyTeam flights to increase your chance of finding those awards.
Instead of earning and burning, another approach is to earn points, miles, and cash (AKA Penny Points), opportunistically. 100,000 AA miles for signing up for a credit card? Yep, sign me up. Over 20 points per dollar by shopping at Sears through the Southwest Rapid Rewards portal? Cool, I’ll do my online shopping there. 3000 Club Carlson points for a 20 minute survey? OK, why not? 3% cash back plus credit card rewards for buying Amex gift cards? You bet. 5% cash back from buying gift cards at drug stores and grocery stores? Absolutely.
I’m an opportunistic hoarder and I believe it serves me well. When planning trips, I have the luxury of using whichever points are best for the situation at hand. In one trip last year, for example, I had to fly out on an earlier flight than my wife and son. For my outbound flight, I found a great option using AA miles. For their outbound flight, there were great one-way paid options, so I used my Citi ThankYou points for a value of 1.25 cents per point (thanks to my Citi ThankYou Premier card) and they earned Delta Skymiles for that flight. On the return, we traveled together using United miles. We have had similar luck using our hotel points opportunistically. When we have a destination in mind, I use AwardMapper to see which hotels are in the area and how much they cost in points. I then use TripAdvisor to look at reviews. And, finally, I go to the hotel’s website to look for award availability. I always check paid prices too because sometimes my Penny Points give me more value than hotel points. And, of course, there are many more great lodging options available when you’re willing to pay cash.
Another reason I like this approach is for opportunistic travel. I travel regularly, but rarely do I plan way ahead. This past winter was so bitterly cold, for example, that my family took several unplanned trips to warmer areas. In these cases, I always have the luxury of using whichever points work best for the situation. Sometimes I’ll use one type of points for outbound flights and another for the return. Other times, I’ll find good award availability round-trip for one person and I’ll use Penny Points (or ThankYou points) for the others.
Opportunistic point hoarding is not perfect. It does leave you exposed to devaluations. And, the chance that orphaned points in miscellaneous programs will go forever unused is fairly high. Keeping track of my points via Award Wallet helps a lot, but I’m sure I have points today that will never get used. For example, I have no idea what to do with my 6050 Voila hotel rewards, nor do I remember how I got them. To ameliorate this issue, I prefer to build up points in the most flexible points programs: Penny Points (cash), Ultimate Rewards, Membership Rewards, and Starwood Preferred Guest (SPG).
I’m curious to hear from readers. What is your point earning and burning strategy? I don’t think that one is better than another in absolute terms. Instead, I think that opportunistic point hoarding works best for me. What about you?