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As hotels remain largely closed and planes remain grounded, airlines and hotels are looking to generate cash flow from other sources. Off late, we’ve seen them sell their miles and points at a discount. With normal travel not resuming any time soon, should you buy?
Miles & Points Promos
Alaska Airlines, Hilton as well as United are selling their points at discounted rates. In the coming months, we may see more brands jump on to the bandwagon. However, does it make sense to take part in these discounted sales?
Base Redemption Value
On the internet, you’ll see many articles stating CPP (cent per point) as the basis for valuing miles and points. However, that’s only partly true. While you may redeem Hilton points at only 0.4 CPP, you can earn them a lot easier, thanks to Hilton’s amazing co-branded card bonuses.
While CPP is a guideline, it doesn’t give us the full picture. CPP simply represents the value at which you redeem your points. It doesn’t take into account other factors like the ease of earning, lucrative promotions and availability of redemption options.
Airlines and hotels are facing a cash crunch. Customers aren’t buying tickets at the rate they were a few month back. They’re now looking at their loyalty programs to help them out.
In the past, I’ve bought points at a discount. However, I’ve only done so when I’ve fallen short for a specific redemption. For example, I’ve bought Hilton points in the past when I’ve fallen short by a few thousand points in order to use Hilton’s 5th night free benefit.
Similarly, I’ve bought Alaska miles when I’ve fallen short by a few thousand miles in order to redeem for a Cathay Pacific business class flight to Asia.
Even if you have excess cash on hand, hoarding points may not be the best option. Airlines and hotels have full control and can make changes of bring about devaluations to their loyalty programs. For example, even though I’ve never bought Delta miles, my six figure SkyMiles balance isn’t worth as much as it was 5 years ago.
The Pundit’s Mantra
In the coming months, I won’t be surprised if more travel companies extend similar miles & points sales. If you have excess cash on hand and have an immediate use, it makes great sense to buy them. However, you may be putting money on an asset that is most likely to depreciate in value over the long term.
I still find credit card welcome bonuses to be the best option to rack up miles & points quickly. With Amex and Chase points, I have easy access to top off my balance in most of the major airline and hotel programs.
Will you buy points in the upcoming weeks if these historically discounted sales continue? Let us know in the comments section.
This card is currently offering a 50,000 points bonus and a 0% Intro APR for 1 year, with a $0 annual fee!