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Here's Why You Should Use Your Travel Rewards Every Year
A lot of us are under the impression that hoarding points towards travel is better than spending them. Many novice travelers use this strategy as well, saving up points until they have a substantial amount and then blowing the bag on a trip.
Contrary to popular belief, however, if you want to maximize your travel rewards, it’s best to redeem them regularly. Holding on to your rewards can even become quite risky.
Here’s why you should be redeeming your awards every year:
Switch In Travel Rewards Partners
If you use popular rewards programs like Chase Ultimate Rewards to Capital One Venture Rewards, you are allowed to transfer points to any travel partner in the program. The downside to this is those travel partners could get switched out without warning which can completely ruin your travel plans.
Increase In Costs
Airlines or hotels sometimes do devaluations which is an increase in the costs of reward redemptions. Devaluations result in you having to spend more of your points when redeeming them for flights or hotel accommodations. These increases can occur at any time, changing the worth of your points. Some devaluations have resulted in redemptions doubling in cash.
Although this scenario is unlikely, it is very well possible. Credit card companies have the right to close your accounts. If that does occur, they most likely will not give you the chance to use your remaining rewards.
The two most common reasons why a credit card company would close your account:
- They think you’re taking advantage of their rewards program. You will most likely get flagged for doing things like purchasing a lot of money orders with your credit card to earn points. This can result in the card company shutting down your account indefinitely.
- You are a high-risk customer because you default on payments on a consistent basis.
Your rewards can expire, depending on the travel rewards program. The good thing is, if you earn points using a credit card, they will most likely remain valid as long as you have the card. It’s important to research the rules of the rewards program so they don’t end up expiring before you use them.
Decreasing value Of Points
Inflation is one of the main reasons why it isn’t wise to hold on to your travel rewards — it results in you losing value when you don’t use your travel rewards.
For example, if you had 30,000 travel points at the beginning of 2015, you could redeem them for $0.01 per point. You ended up saving the points until the beginning of 2019 and you redeemed them for $300. Although it’s the same $300 redemption in 2015 and 2019, because of inflation, $300 at the beginning of 2015 has the same purchase power as $323.11 at the beginning of 2019. You will get less value for your points if you wait to redeem them.
This leads to an important question: how often should you be redeeming your travel rewards? It’s best to keep it simple.
If you have available travel rewards, then use them. Only wait it out if you have a more costly trip coming up where you could get more value out of.
Yes, having a ton of points may look good but at the end of the day, those points are just there. They’re not growing in value which is why you should take full advantage and redeem them!