What Points Should You Earn, and How Many Points Are Too Many?

Reader Rob P asked for,

[a] post on your “earn and burn” philosophy would be helpful. How do I know if I’m hoarding too many UR points and not spending them enough?

I explained ten years ago why points programs devalue. They’re private currencies without any binding constraints. The Supreme Court even limited your right to sue this year. Programs can do as they wish with impunity.

There’s tremendous value in frequent flyer programs but you should not save points now for some future day in which you might spend them.

In general your points will never be worth more tomorrow than they are today. The only real exception to that has been the introduction of alliances. The ability to redeem across partners, even on the same award ticket, made existing points more valuable not less valuable.

But the cost of awards goes up, and in most cases the rules associated with redeeming awards get more restrictive (the United-Continental merger is an exception, as it spelled an end to United blocking otherwise-available awards when the airline didn’t want to pay for the seats and also led to more generous routing rules).

In general I recommend points that transfer to other programs, you’re diversifying your points holdings even by accumulating a single currency. Starwood, Chase, American Express (and to a lesser extent Diners Club and Citi’s Thank You Points) are more desirable than individual airline miles because you can put your points where you need them when you need them later.

But this isn’t a panacea. Transferrable points can devalue. We just had a scare with Chase removing points transfers to Korean Air from its website, although it looks like this may be temporary and we’ll get these transfers back. But it serves as a reminder that even these programs can devalue – although usually with notice.

American Express has lost transfer partners many times in the past (US Airways, Continental, Northwest, to name a few). Starwood has devalued its transfer ratios… Qantas used to be 1:2. United used to be 1:1. For a time Singapore went down to 2:1 but was brought back up to parity.

There are two lessons:

  1. Burn as you earn. You don’t care about devaluations as much if you are earning and burning in roughly the same period, under the same award chart. It’s much easier to earn points than it used to be. What’s a problem is earning points 10 years ago, when it was harder to do so, and spending them now when awards are more expensive.
  2. Diversify your points. I like having Chase, Starwood, and Amex points.. and also points with various airline and hotel programs. That way I don’t take a hit to my entire portfolio when a single program devalues.

These two pieces of advice sound somewhat in conflict and they are. Diversifying involves building up large points balances that you aren’t likely to spend right away.

The truth is I earn points too quickly to spend them right away, so I want to have them spread out as best I can. Plus I don’t know what my future self will want or need in terms or rewards. I’m hedging not just devaluations but unknown future preferences.

I don’t want too many points. I want to have enough points in a given program to redeem them, and then earn points in the next program until I have enough for the redemption I’m likely to want. And then the next program. Meanwhile I’d be redeeming.

Although in practice I diversity, I spend points regularly, but I earn faster than I burn. So I will become the victim of devaluations, as I have in the past. Knowing that causes me to discount, now, how much I value the miles I’m accumulating — so I’m willing to spend less to accumulate them than if I were going to use them in the near-term.

About Gary Leff

Gary Leff is one of the foremost experts in the field of miles, points, and frequent business travel - a topic he has covered since 2002. Co-founder of frequent flyer community InsideFlyer.com, emcee of the Freddie Awards, and named one of the "World's Top Travel Experts" by Conde' Nast Traveler (2010-Present) Gary has been a guest on most major news media, profiled in several top print publications, and published broadly on the topic of consumer loyalty. More About Gary »

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  1. I agree with the earn em and burn em philosophy, but I also agree that I like to have enough points in a variety of programs so that I have enough points to go / stay wherever I want at any time

  2. I generally agree with the premise of this article, your points will rarely (if ever) gain value over time, and will almost certainly devalue over the years. It’s also good to have a strategy, try to plan where you want to go and work towards programs that will meet those goals.

    It’s difficult though when you travel with a family. I’m not just saving for me, or even my wife. I need to fly 4 of us wherever we want to go. That’s why I’ve been earning for the past few years without any real spending or plan, so when we do make a plan (Hawaii next year with little flexibility on dates) I have a healthy balance across various programs to increase my odds of a score. Even though flight schedules aren’t out yet for my dates of travel, I feel really good that I’ll have options, with the ability to pump up to over 300k in any airline (thanks to UP, MR, and SPG).

    So I agree with you, spend what you can as soon as you can, but it’s ok to build up a balance if that’s what you’ll need to hit your travel goals.

  3. Thank you Nathan for highlighting a miles/points challenge that many who read BoardingArea.com don’t have to face as often as parents of nuclear families desiring to fly internationally. Case in point – to travel from Boston to Australia every other year for four people (2 adults & 2 children) via AA/Qantas is 300,000 mile/points – worth about USD$10,000 in airfare. I would love to dream about the first class travel I could enjoy with 300K AA miles at my disposal. However, I prefer to creatively earn as many points/miles as I can so that my children can spend more time with their Australian family members. While I appreciate all the 1st Class Krug champagne blogger posts – family travel on points is rarely as glamorous as the bubbly flowing from the bar at the front of plane….

  4. While I agree with the philosophy of churn and burn, and certainly points will be worth less tomorrow than they are today, I think that aiming to keep your earnings exceeding your burn rate isn’t a negative thing.

    Obviously there are more costs associated with manufactured costs, but when it comes to credit card signups I think holding off on cards when you know you won’t be using the points in the near future comes at a greater cost than any devaluations. (Loss of churns, big bonuses, hitting cards that are phased out e.g. Ink Bold)

    The way I see it is I want to have three years worth of vacations banked in the extremely unlikely event that the points dry up (I rotate focusing on programs similar to you). At worst it provides flexibility and helps me get where I want when.

  5. Treating friends & family to flights & hotel rooms is a perfect way to dump those extra miles/points you won’t use in the next year or two.

    Merry Christmas, Ma.

  6. When I was doing a lot of business travel, I earned points much faster than I could spend them. That’s coming in handy now that my business travel is way down – I’m using my stashes of UA and AA points for air travel, and focusing on earning primarily CSP points for flexibility and Club Carlson points for as long as they’re offering such good value for hotel stays.

  7. this article made me start thinking about the one million points that had been sitting in different accounts forever. I guess I will have to burn some in the summer lol.

  8. We did the opposite of earn and burn, and it worked great for us. We did the opposite – we hoarded points until retirement. While working work travel earned points, but vacation time was too precious to give any flexibility. Now as retirees, we have had the points and the schedule flexibility to grab front cabin international saver fares. This more than offsets the effect of any devaluations. However, the best use of points has been last minute non-saver domestic trips for unexpected funerals. Airline funeral fares are a joke. Always keep enough miles for the unexpected funeral or other emergency.

  9. I’ve seen the “don’t over diversify” advice before, and luckily didn’t follow it. I got the LH Miles and More card with no solid plan on how to use the miles. Then a few months ago, I grabbed one of the nearly illusory AA FC TATL awards for my wife and I.

    But AA would only give us that award one way, and we will need to come home eventually. So off to the LH website, and guess what, there was a FC award out of Frankfurt the very day we wanted to come back. And leaving in the afternoon, so we will have plenty of time to enjoy the FC Terminal. 🙂

    So yes, don’t over diversify, but do have miles and points in several programs. The days when you could just book whatever you wanted with whatever program you have loyalty to are long, long gone.

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