On my mind: Buying points without a plan

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Every now and then it’s possible to buy hotel points or airline miles cheaply.  For example, Hilton frequently offers their points for a half cent each.  IHG also sometimes makes it possible to indirectly buy points at about a half cent each, or less.  And Avianca regularly offers their LifeMiles miles for about 1.4 cents each or less.  They even offer a subscription in which you can buy points monthly for as little as 1.35 cents per month.

Similarly, transferable points programs often offer transfer bonuses.  At the time of this writing, for example, Amex is offering a 30% transfer bonus to Virgin Atlantic.  That means that every 1,000 Amex Membership Rewards points transferred will result in 1,300 Virgin Atlantic points. You can find current transfer bonus promotions here.  To me, these transfer bonuses are very much like point sales.  While these bonuses are in effect, you can use your transferable points to “buy” airline miles or hotel points more cheaply than usual.

Our standard advice: Don’t buy without a plan

Every time we write about a point sale or a transfer bonus, we write something like “don’t do it unless you have a concrete plan for using the points.”  The reason for this advice is that, without a plan, you might end up getting less value from your purchased points than the amount you paid (in cash or in transferable points).

For example, with one exception that I can think of, Hilton’s top tier properties cost 95,000 points per night when standard rooms are available.  With Hilton’s 5th Night Free awards, a 5 night stay would cost 380,000 points.  If you have plans to go to such a hotel, it can be worth it to buy the points at a half cent each: $1900 for 380,000 points.  That can be a bargain for a 5 night stay considering that some of these top tier properties cost $1,000 or more per night.

But if you buy points without a specific plan for how to use them, you may end up disappointed.  When you’re ready to use your points, you may find that standard rooms are not available at the place you want to stay.  Or, you might find that Hilton has raised award prices.  Or, you may find that cash prices are actually dirt cheap on the dates of your visit and so your $1900 “investment” ends with a poor return.

Pondering new advice…

My recent post about Choice points has me reconsidering the above standard advice.  The trigger point came when I was able to stay in a great little Inn in Princeton for 20,000 points per night instead of $400 per night.  I got 2 cents per point value from Choice points which I had purchased on sale for less than half a cent each.  I didn’t have a plan for those points when I bought them and yet, over time, they’ve consistently led to outsized value.

While I had that reserve of points, I used them opportunistically.  Each time I needed a hotel stay, I checked the Choice website for options.  Most of the time I didn’t like the available options, or the options I did like didn’t offer good value for my points.  But every now and then I struck gold and found that my points were super valuable.  Now I’m eager to replenish my stockpile. Next time there’s a good sale on Choice points, I’m in.

Hilton is a different story.  I already have a large stockpile of Hilton points partly because I bought lots of points during a sale years ago.  That proved to be a mistake: I’ve rarely found uses for those points where I’d get much more value than I paid.  Don’t get me wrong, I know that there are good values to be had in Hilton’s program, but for whatever reason my travel needs haven’t led me to them.  So, with Hilton, I don’t think I would look to replenish my stockpile once it’s spent… unless things change.

Things are even worse for me with Radisson Rewards points.  Back in the day when the program was called Club Carlson, there were easy opportunities to rake in tons of points.  So I raked.  Later, Club Carlson devalued their program when they took away the credit card option to book 2 award nights for the price of one.  Since then, I’ve rarely used my remaining points.  These days, if I find a Radisson hotel I want to say in, I don’t worry about the point value — I just spend the points.  They don’t do me any good sitting around.  At the same time, I still buy Radisson points each year… sort of.  I have both the business and consumer Radisson Rewards cards, each of which gives me 40,000 points per year in exchange for the annual fee ($60 for the business card and $75 for the consumer card).  You can think of this as me buying 80,000 points each year for $135.  That’s a per-point price of only 0.16 cents.  Given that the points are usually worth closer to 0.4 cents each, I’m a buyer even though I don’t have any near term need for those points.

Where does that leave us?  Sometimes it’s good to proactively buy points without a plan and sometimes it’s not.  It’s good when you’re confident that you’ll get significantly more value from the points than what you paid, even if you’re not sure right now how you’ll do that.  It’s bad if there’s a good chance that the points will be used for less value or, worse, not get used at all.  It takes time and experience to get a sense of whether or not you’ll use points to good value.  It also helps to have deep knowledge about the point programs and about your own travel style.  With Hilton, for example, I’d argue that the best values are at the bottom and top end hotels.  If you’re likely to use your points at either extreme, then you might do very well buying points.  If you’re more likely to use points at mid-tier hotels, you might not get good value… unless you tend to book rooms during peak cash price times (New Years eve in New York, for example).

Back to standard advice… with a twist

I don’t think there’s a simple formula to help decide whether or not it makes sense to buy points.  The usual advice “don’t buy without a plan” is about as good as it gets.  However, I think it’s OK if the “plan” is a bit vague.

For example, when I see the opportunity to buy Choice points at a half cent each, or less, I’ll do it.  My “plan” is to continue to do what I’ve done before: opportunistically look for good value uses for my points.  When I find those uses (and history tells me that I will), I’ll spend the points.

Similarly, as I described above, I’ll continue to buy Radisson points for 0.16 cents each even though I rarely find great value in that program.  I’ll do it because, it doesn’t take a great redemption to make 0.16 cents a great deal.  My “plan” is simply to make sure that I use the points for significantly better than 0.16 cents each.  For example, I took a look at pricing for a random night at the Radisson Blu Chicago.  The cash price was $239 and the point price was 70,000.  Each point, then, is worth 0.34 cents towards a room.  That’s hardly an amazing redemption, but given that I bought points at 0.16 cents each, it’s a very good deal: half price.

Final answer: Before buying points make sure you have a plan to get significantly better value than you paid.  The best plans are concrete: your plan is to use the points for a specific award on specific dates where you know that the awards are available.  But vague plans are OK too if you know what you’re doing.

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Kate
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Kate

Both my husband and I “buy”Radisson rewards the same way. We almost never use them, except on a trip to Denmark and Finland, and it worked out well there. I tell myself as a backup it’s a way to get a quite nice hotel room in London for less than the points from the two cards, so less than $135. But we’ve been to London so many times, no plans to go again anytime in next few years. Same logic for Chicago.
I heard there were some new hotels opening up in New York, so maybe that would be a possibility. I remind myself it would be a pain, if not impossible, to get the cards again, so each annual fee, we keep holding on. But it starts to add up to real money after awhile.
Are there any desirable hotels at all in the US, other than Chicago?

huey judy
Guest
huey judy

Kate, I often use my Radisson points to book the Country Inn properties for work. Radisson was “born” in Minneapolis, so I’m surprised there aren’t more really good ones in the midwest. The Euro Radissons are very good … it’s literally worth a trip to Berlin just to spend a week at the Radisson Blu, a spectacular property.

Impunity
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Impunity

*use the points for significantly better than 0.16 cents each. For example, I took a look at pricing for a random night at the Radisson Blu Chicago. The cash price was $239 and the point price was 70,000. Each point, then, is worth 0.34 cents towards a room. That’s hardly an amazing redemption, but given that I bought points at 0.16 cents each, it’s a very good deal: half price.”

Shouldn’t you compare similar hotels at other chains to arrive at the 0.34 cents value?

Larry
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Larry

You nailed the two currencies I will buy without a plan. Choice, for all its hassles, are really nice to have at the daily getaways rate or even sometimes at the points plus cash rate. And I will even spend more if I drop below 6,000 points in order to get back up to the magic 6k level of points. And Radisson being the one remaining program where a credit card annual fee gives you points instead of a free night cert is a no brainer to me at the price. I sort of view my Hyatt annual fee as buying 15,000 one year expiring points.

The other two currencies that I will also buy sometimes without a plan are Alaska and IHG depending on my balances. When IHG gets down around .5 cents either using the points plus cash trick or an occasional promo, I will buy them if my balance is low. Same with Alaska in smaller amounts to get my balance to the Asia redemption amounts.

AeroLance
Guest
AeroLance

Thanks Greg! I’ve come to a similar conclusion on certain currencies as well. I fly Cathay Pacific 4-5 times per year. There is no doubt outsized value with CX using Mileage Plan, but if I really need to lock in dates that are weeks or months away on Cathay (using points), the greatest availability is thru Asia Miles directly. There was a 30% transfer bonus on Amex MR a while back. I speculatively transferred 50K MR points, and quickly used them. Looking back, I wish I transferred more.

toomanybooks
Guest
toomanybooks

Buying Radisson points is not a great deal in general, but using the credit card on normal “1x spend” is. 5x on all spend. Plus a free US Radisson night per $10k, up to three times a year. That can be another 2-3% in value, or more. Chicago Rad Blu can be $600 a night during big conventions and such.

Probably marginal target for lots of people but terrific for some.

There are some good Radisson deals. I know of a 15k redemption in an area without many choices that is regularly over $100 plus tax.

There are 2 Radissons in NYC (midtown and Wall Street) with another one to come soon supposedly. And one at JFK.

Just did a quick search. For tonight, this hotel comes up over $600+tax vs. 70k. I have never been there, so it might be crummy, but seems at least a decent redemption.

https://www.radissonhotels.com/en-us/hotels/radisson-new-york-midtown

JB SanDiego
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JB SanDiego

I booked at Hilton in San Bernardino, CA for a concert in October for my daughter and two of her friends. Almost all hotels, if not all had sold out by September. I had less than 100 Hilton points when all of a sudden Hilton had their 0.5 sale! Waaaahoooi! I ended buying $300 for 60K points. That’s was enough to get a standard room with a kitchen and the works for 4 people for 2 nights. This is a newly built Hilton! With the popularity of the concert and hotels fully booked, those rooms where going for $500+ per night. So with the points purchase, this came out to $150 per night with free breakfast for 3 and less than 2 miles from the concert and activity center!!!

This is truly a nice write up, to say the least!!

Thanks Greg!!

Chaz
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Chaz

Greg, I agree with your recommendations. The key point is that stockpiling points/miles is rarely a good idea (with some lucky exceptions you noted). At any time in future, points/miles are much more likely to be devalued than to increase in value.

Of course, with regard to hotels, some people travel a lot and are frequently looking for rooms on points, and they might find value in speculatively purchasing points in view of their general plans. Others may only occasionally be on the search for rooms on points (or pay) and they are more likely to be disappointed if buying points speculatively.

Another angle that hasn’t been specifically mentioned is what price breaks you might enjoy based on being a senior, a AAA member, government employee, etc. In my experience, sometimes room prices under these plans are so low that I can’t justify using points. So that has led to some unexpected stockpiling. But one has to check carefully, because sometimes these “discount” opportunities cost MORE than the rack rate. It’s quite variable.

In summary, if your stash of points/miles is growing, you probably shouldn’t buy more unless you have a specific plan and confirmed that you can get what you want. If you are using up your stash regularly with good value, go ahead and buy more — you’ll probably use them well.

Emily
Guest
Emily

We buy Hyatt points with a rough plan to use them. I knew we’d be going to Japan next spring so I bought points both times I could. I just used everything I had booking that trip and it’s a huge win. But as a globalist and knowing Hyatt inside and out it’s easier to do.

Brands
Guest
Brands

Great article, Greg. I agree with you, Choice Points are a great option to buy speculatively at around .5cpp, and I find IHG is another great option at .5cpp, especially with the 10% rebate on points and 4 for the price of 3 reward nights since I hold both cards, that is essentially a 33% discount on 4 night reward stays. I think Marriott used to be easier to get good value from points, but has become much more difficult with the expanded award chart and peak nights, and I almost never find an opportunity to redeem Hilton nights for much more than .5cpp, which is the best acquisition cost you can buy them for. (and plus, since I am a Marriott Platinum member, I am able to earn points quickly through paid stays with at least 21 points per dollar spent in addition to welcome bonuses and any promotions Marriott has at any give time) Hyatt points are quite expensive to purchase normally, and are relatively easy to earn through CSR spend, so I don’t look to buy those, either. I might have to see if I can get those Radisson cards, they (and Wyndham) are the only major hotel rewards programs I really haven’t delved into, but it seems there is some great value to be had with them, if only I could get approved for a US Bank credit card…

WR2
Guest
WR2

Also have to consider how common the point sale/transfer bonus is, and how likely it will appear in the future. Hilton regularly has point sales so no need to jump on it unless you have a specific plan, and for me it’s only to top up account to 380k.

Virgin Atlantic also regularly has 30% transfer bonuses, so no need to do it unless you have a plan….but I recently jumped on it anyway and booked an ANA F itinerary for next year that I’m not 100% sure I can take, mainly because I heard rumors that this sweet spot will be going away soon.

cafesandalleyways
Guest
cafesandalleyways

I think you can buy miles “without a plan” that in fact does represent a plan. It’s true that you may be buying them without an immediate redemption in mind. But the purchase can represent a very “reasonable” plan. The reasonable plan is this: to pick up a reasonable amount of miles, at a reasonable price for a future use in which you’re reasonable certain you’ll be able to leverage them. Sounds like a plan to me.

Grant
Guest
Grant

@Greg, I do the same “buy” miles with my USB RR CCs. I recently cashed in ~150k RR points for 4 stays at various Radisson Blu hotels around Ireland.

Good think you didn’t have a stock pile of Best Western Rewards points 🙂

I do have a stock pile of Wyndham Hotels points from the CC, but no concrete plans to redeem them yet 🙁

Kalboz
Guest
Kalboz

Kinda of OT!

If you have plans to visit/stay in Santa Monica, Wyndham has a decent property with a very short walking distance to the pier (ocean & beach), 3rd Street Promenade, and Santa Monica Place. Avoid the uber expensive JW Marriott or the mediocre DT Suites or the LM Delfina: https://www.flickr.com/photos/kalboz/albums/72157700743779534

Grant
Guest
Grant

Thanks for the hotel recommendation. Great photos 🙂

huey judy
Guest
huey judy

Interesting post, Greg. I am a loyalty program’s poster child. Almost exclusively, I stay at Hilton, IHG or Radisson properties. I have their affinity credit cards and top status as well. I rarely have to stray out of my loyalty corral. I use my Chase URs, in conjunction with hotel points and cash, to set up stays in wonderful hotels that are very affordable. United occasionally offers 100% bonus to buy miles, I always jump on that. I would like to see Delta make a bonus offer one of these days. I’m able to book travel far enough out so I never am shut out of using my points or miles. So I’ve always stockpiled them and haven’t regretted it. If my HHonors balance goes below 300K, it makes me nervous! I think this works because I plan and book our travel and often set up trips eight months out. We’re self-employed, so there’s no corporate travel department, travel agent or scheduling problems. We travel lots, and I just don’t think about devaluation of those points, earning them through stays and the CC bonuses seems to work out well. Thanks for continuing to cause me to think about it all.

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[…] from Frequent Miler writes about his evolving view on buying points without a plan. I think this is a back and forth that most people who have been collecting points for a while go […]

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[…] It can make sense, though, if you’re confident that you’ll find great opportunities (see this post for a full discussion of this topic).  The following guide looks at current point buying deals, along with some example best uses.  […]