Currently, in the world of travel and loyalty programs, points and miles have become synonymous with free flights and hotel stays.
From booking first-class flights in Lufthansa and Emirates to staying at properties like Alila Ventana Big Sur, and Grand Hyatt Kauai, the options are aplenty!
While the allure of accumulating these rewards is undeniable, there are limitations to redeeming your points and miles beyond the realm of booking flights and luxury hotel stays.
Any redemption will feel like a good redemption, especially when you’re just getting started in the world of points and miles. But as you quickly come to realize, not all travel rewards redemptions are created equal.
In this blog post, we will delve into 4 avenues to steer clear to get the maximum value possible for your travel rewards.
It is important to note that the options listed here are tagged “worst” because they are usually the lowest value option from a cent-per-point perspective.
1. Amazon & Other Online Merchants:
Linking credit cards that earn Amex Membership Rewards points or Chase Ultimate Rewards points to online merchants like Amazon, Apple, and Best Buy allows for the utilization of points instead of charging purchases to the credit card.
This means that customers have the option to use their accumulated points to pay for their purchases on these platforms. While this offers convenience, it comes at the expense of the overall value of the points.
When choosing to redeem points through online merchants, the valuation of points is typically 0.8 cents per point or even lower. This means that the value of the points being redeemed for purchases is relatively low compared to other redemption options.
The table below shows the average value of various reward programs toward purchases on Amazon and other retailers.
2. Gift Cards:
Despite the prevalence of gift card redemptions across travel loyalty programs, the value obtained from such exchanges is often low.
In contrast to other redemption choices, redeeming points for gift cards often yields only a fraction of their actual value, resulting in suboptimal returns for customers. Even reputable loyalty programs like Chase Ultimate Rewards, only offer a maximum redemption value of 1 cent per point for gift cards.
Additionally, once your points have been used towards gift card purchases, you can’t reverse the transaction if you decide to change your mind.
This is a rather uncommon way of redeeming your points that could offer you 2.5 cents to 4 cents per point value.
For instance, a 54-issue People magazine subscription usually sells for $89, but through websites like MagsForMiles, you could redeem 2,100 Delta SkyMiles to buy the same.
But, the real question comes down to this. Will you read every single issue, end to end, justifying your spending on the subscription? If not, this is not the right redemption option for you.
4. In-flight Shopping & Wi-Fi:
While the duty-free products are already tempting enough, it might just seem easier to pay for that pretty handbag with your points instead of a whopping $500. But, take a look at this example:
If you pay for this bag with points, your redemption value is (511.17/83,750) = 0.6 cents per point.
Just to highlight the gravity of the mistake if you go this route, these 83,000 miles can be used to buy a one-way first-class ticket from New York to Frankfurt, which is valued at $8000 (redemption value of 9.5 cents per point).
Honestly, there is no “wrong” way to use your points as long as you have weighed all of your options and decided on a specific redemption that fits you best.
Say you have a small number of miles with a certain loyalty program (say 500 to 2,000), and you aren’t able to use redeem them for a future trip, then it could make sense to redeem those miles for a magazine subscription. That way, you will get some value out of those miles as opposed to just letting them expire.
Because, the whole point of earning points and miles is to use them and to use them on the items that you actually want to use them on — whether that’s trips, cash-back, or merchandise.
Understanding the limitations of using points and miles for alternative purposes will help you make informed decisions and derive the most value from your hard-earned rewards.