One Big Frightening Reason to Redeem Credit Card Points Faster

Earning credit card rewards points for travel can be fun and exciting, and it feels as if you’re building up a special “savings account” to spend on travel. But the problem with travel rewards points, especially frequent flyer miles and hotel loyalty programs, is that — just like real money — they can lose value over time.

That’s right: airline frequent flyer programs and other travel loyalty programs can “devalue” your miles and points at any time, if they choose. In the same way that travelers and credit card customers constantly try to get more value for your money (and your reward points), airlines, hotels, and other travel companies are constantly trying to maximize profit — even if that means giving you less value for your reward points.

Let’s look at what credit card reward points devaluation could mean for your travel dreams — and how to fight back.

How points devaluation hurts credit card customers

A new report from the Consumer Financial Protection Bureau (CFPB) released on May 9, 2024 found that reward points devaluation is one of the biggest frustrations reported by credit card customers. “Consumers mention that issuers and merchant partners reduce the value of rewards already earned by increasing the number of points or miles needed for a redemption,” the CFPB report said.

Credit card rewards devaluations end up giving you less value for your points — like a price hike, but for points instead of dollars. Let’s say you’ve earned 100,000 frequent flyer miles with your favorite airline credit card. You want to use those miles to book a flight to Europe. But suddenly, the airline announces that instead of 100,000 miles to book a round trip award flight to Europe, you’re going to need 120,000 miles — your miles just got “devalued” by 20%.

Hotel loyalty programs can do this too. If you’re saving up hotel loyalty points, you could discover that you aren’t able to book as many free hotel stays as you had expected. And reward points devaluation doesn’t always happen as some big, publicly-announced, across-the-board change. Sometimes it happens quietly behind the scenes, as prices get hiked for in-demand flights and hotels — you might notice when searching for cheap flights or hotel stays that the prices for redeeming points and miles have gone up.

Airlines and hotel brands are always trying to charge the highest prices they can get, and making you spend more of your miles and points is part of that calculation. But it can feel demoralizing to save up points and miles, only to realize that they’re hard to redeem or worth a lot less than they used to be.

How to fight back against points devaluation: Spend, don’t save

The first thing to keep in mind about credit card reward points — whether you’re using an airline credit card, hotel credit card, or general travel credit card, is that points are meant to be spent. Your credit card rewards are not a savings account. Points do not earn 5.00% interest like cash in the bank.

So don’t save up your points for too long. Even if you get a big bonus welcome offer from a new credit card, make a plan for how you’ll redeem those thousands of points. Try to spend your travel reward points as soon as you can on a vacation. If you wait another year, the airlines might devalue your points, causing you to lose the equivalent of hundreds of dollars of value.

Diversify your “portfolio” of credit card points

Another strategy to fight back against credit card points devaluation is to avoid committing your money to any one airline or hotel loyalty program. In the same way that you should diversify your money as an investor (by owning lots of different stocks and bonds), you should diversify your “portfolio” of credit card rewards. Choose a travel rewards credit card that offers transferable points you can use with a wide range of airlines and hotels, not just one company.

For example, the Chase Sapphire Preferred® Card and Chase Sapphire Reserve® let you earn Chase Ultimate Rewards points that can be transferred to multiple travel partners, on a 1:1 basis. It’s like having multiple hotel and airline credit cards, all in one. These Chase travel rewards cards let you transfer your points to the frequent flyer programs of United Airlines, Southwest Airlines, and many international airlines.

For example, if you have 50,000 points on your Chase card, you can turn those points into 50,000 miles on United MileagePlus®. This makes it easy to redeem your points (in the form of “miles”) on any partner airline that’s offering good deals for the flights you want.

Airline credit cards are still a good way to earn frequent flyer miles, but read the fine print to make sure you’re not limited to using your miles only on one airline. For example, United MileagePlus® lets you use United frequent flyer miles to book award flights with its Star Alliance™ international partner airlines.

Bottom line

Don’t let credit card points devaluation hold you back from earning great travel experiences. Just be prepared for the possibility of a “price hike” in the form of needing more points to book free travel. Airlines and hotels are always trying to maximize their revenue, just like all businesses. You can still get good deals with a bit of research and hustle — and with the best travel credit cards in your wallet.

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