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Travel credit cards are an excellent way to generate an array of rewards, including airline miles, hotel points, and adaptable travel credits. The value of the points you gather may fluctuate based on how you choose to redeem them; in certain premium instances, you might achieve a valuation of 2 cents or more per mile or point.
Conversely, you could also find yourself redeeming your rewards for items that afford minimal value—sometimes even as low as half a cent per point. While such redemptions aren’t necessarily “wrong,” they typically result in a loss compared to more valuable alternatives.
If you own a travel credit card, a hotel loyalty card, or a versatile travel rewards card enabling you to redeem points for flights, accommodation, and other perks, consider the following redemption practices you might want to steer clear of.
1. Merchandise
A number of rewards programs allow you to convert your points into merchandise. For instance, you might exchange your points for purchases made on Amazon or at Apple stores through specific rewards platforms.
While this isn’t the worst approach, cashing in your points for gadgets, small appliances, and similar items typically yields just about one cent per point, and often even less.
Delta SkyMiles has some particularly unfavorable merchandise redemptions. For instance, they require 141,880 miles for a 10.5-inch iPad Air with Wi-Fi, which retails for just $649 on Apple.com, resulting in a value of less than half a cent per point.
Though it may be tempting to use points for retail goods (after all, free things are appealing), waiting to accumulate enough points for more valuable items can be well worth it.
2. Low value transfers to airlines
Frequent travelers often recognize that transferring points to airlines can yield better value, yet it’s important to bear in mind that this isn’t a given. While valuable airline transfers can be advantageous, not all programs offer equal benefits.
Generally, transferring points to an airline partner can net at least 2 cents per point upon redemption, as points usually transfer at a ratio of 1:1, barring a few exceptions.
However, some programs present disappointing transfer rates. For example, IHG Rewards enables transfers to airlines like Air France/Flying Blue and Alaska Airlines at a rate of only 2,000 airline miles for every 10,000 hotel points converted.
Conclusion: not all transfers of points offer equivalent value. Sometimes you may need to sacrifice points during the transfer process, but if you’re giving up thousands simply for the sake of transferring, it’s wiser to look for alternative travel partners instead.
3. Using airline miles for hotel bookings
If you’re sitting on airline miles that seem difficult to utilize, it might be tempting to redeem them for hotel stay through an airline’s platform. While this option isn’t entirely negative, the value returned is generally low.
Take American AAdvantage as an example: redeeming miles for hotel stays might not yield much value. For a random stay this year, they ask for 188,500 miles to book a night at the Ritz-Carlton Bal Harbour in Miami, which costs around $1,185 per night if paid out of pocket. This pegs the value below 1 cent per mile, leading to much higher value if the miles were instead used for flights.
Resist the urge to instantly book all your travels with points; saving for future trips can often yield better value. (See also: How Travel Rewards Cards Can Help You Score Luxury Travel Perks)
4. Gift cards
Nearly every rewards program provides the chance to exchange points or miles for gift cards. While this option can be sensible if travel redemptions aren’t available, you may end up receiving less than one cent per mile in value from airline loyalty programs, and flexible options might only bestow around 1 cent per point.
Redeeming travel rewards for gift cards should generally be a last-choice option, ideal only if travel scenarios are not plausible or if your miles are nearing expiration.
5. Magazine subscriptions
Avoid redeeming miles for magazine subscriptions. Despite some programs like Delta SkyMiles promoting this feature, where you can exchange miles for subscriptions such as to People or The Wall Street Journal, it remains a poor investment of your airline miles.
6. Booking low-cost flights with miles
Diligently check the cash price of any flight you intend to book using miles before completing your award redemption. Aim to secure at least one cent per point in value when using airline miles for flights, and if you cannot meet that benchmark, consider opting for a cash payment instead. Some experts suggest aiming even higher for values nearing 1.5 cents per mile or close to 2 cents.
When fares drop below the usual prices, utilizing cash or flexible travel credit may be more beneficial. (See also: 9 Hidden Expenses to Plan for When You Redeem Travel Rewards)
The bottom line
Even though multiple redemption methods exist for your travel rewards, that doesn’t imply you should employ them all. For the most part, redeeming travel award points, airline miles, and hotel points for their intended uses is far more conducive to value.
If you wish to utilize rewards for gift cards, cash credits, or merchandise, you might consider obtaining a cash back credit card that accommodates these standard redemptions. Your rewards are yours to use as you see fit; however, travel rewards tend to yield greater value when utilized for travel purposes instead of shopping.
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