You can buy airline miles and hotel points directly or from websites like points.com. Points and miles are big business and travel companies know that the average person doesn’t fully understand how to value miles. As a result, all sorts of gimmicks for buying miles exist and a lot of people fall for them. Travel companies know that there will be a percentage of people that never even use these points and miles. Of those that do use them, many will redeem them for less than what they paid for them. It’s brilliant really. Imagine selling people 75 cents for $1. Who wouldn’t do that?
You really don’t need a math degree to figure out what’s going on here. Common sense will tell you these travel companies aren’t stupid. They are in the business to make money. Do you honestly think they are going to be selling one dollar bills for 80 cents? That’s not how this works. But again, people fall for this because they don’t understand math. They fall for these gimmicks such as points sales and miles accelerators. I’ll show you why this doesn’t make sense and the rare times it does.
But before we get into that, it’s important to remember that you always have to do the math to figure out the cents per point (or mile). In order to do this, you need to know a few numbers: the total cash price, the total number of points or miles needed to book the travel and the average value of those points or miles. This last part is where people get tripped up.
50,000 points with company A1 may be worth a lot more than 80,000 points with company B2. This defies logic for many people and the travel companies know this. You have to always convert those points to cent per point (mile). So if the points for A1 are worth 0.02 cpp and the points for B2 are worth 0.005 cpp, the it would take 200,000 points for B2 to equal the 50,000 points for A1. See why the math matters?
Why doesn’t it make sense to buy points?
As previously indicated, the simple answer is math. These companies are selling points and miles at a higher rate than you’re able to redeem them at. Remember, just because something is labeled as a sale doesn’t mean that you are getting something at a discount. Consider this example, if you buy 50,000 miles you’ll get 30,000 miles for free. Wow, what a deal and it’ll only set you back $1,600. If you actually do the math, you’ll see that you are buying these miles at 2 cents per mile. If the average redemption rate for those miles is 1.5 cents per mile, you are basically paying $1 for 75 cents. Makes no sense right?
Point and miles can get devalued
Just because your hotel points or airline miles are worth X cents per point/mile today do not mean that they will be worth that much tomorrow. In 2023, Hyatt adjusted the points needed to book hundreds of hotels. While some actually went down, a number of them went up. The worst part was that some of the all inclusive hotels had a massive increase in points per night. If you are just looking to book random Hyatt hotels, your points are fine. If you were saving your points to go one a big vacation to a fancy all inclusive resort, the value of your points pretty much got cut in half. Ouch. Also in 2023, United increased the miles needed for many international flights. In September of 2023, Delta completely revamped their entire program upsetting just about every Delta loyalist. While Hyatt and Delta at least gave some type of advanced warning, United just sprung this one everyone out of nowhere.
There was nothing special about 2023. This will keep happening. Just like a dollar will be worth less tomorrow than it is today, so too will points and miles decrease in value as time goes on. Thus, buying points and miles today with the hopes to use them later is a really bad gamble.
Hotel points and miles are limited
If you buy airline miles, you can use them for that airline. If you buy hotel points, you can use them for that hotel. As I’ve already demonstrated, it doesn’t make sense to limit yourself to one specific company because that company can turn around and screw over everyone and there is nothing you can do about it. That’s why travel hackers focus on a flexible points currency such as Chase Ultimate Rewards, American Express Membership Rewards and others. These points are flexible because you can transfer them to several hotel and airline programs. So if one company announces a big devaluation, you can still use your points with one of the other travel programs that have a better valuation. Look at it this way. You have 100,000 X points. You can transfer them to companies 1 through 10. Company 1 announces a big devaluation making it not worth pursuing anymore. With X points, you still have companies 2 through 10. That’s the power of a flexible points currency.
When should you buy points and miles?
There are a handful of times when it may make sense to buy miles or points but those are very limited. The first rule is that you must have an immediate use for the miles or points. And when I say immediate, I mean now. Not next month or even next week. Right away. This will help prevent you from getting screwed by a devaluation.
This might seem obvious but I’ve learned that I shouldn’t consider that anything to be obvious. You must know exactly what you are going to book and confirm that it is available. Don’t make any assumptions. Don’t assume that the hotel or flight that was available yesterday is available today. Once you buy those points or miles, they are stuck there in your account. So you only want to buy them when you know exactly what you are looking to book.
There are three primary scenarios where buying miles may make sense.
Scenario 1 – international first class or business class flights
There are some international flights in first class or business class that have absurdly high cash prices. I mean over $10,000. Sometimes the award space will price out at over 3 cents per miles or even better. Let’s assume you find a great deal and you can get 4 cents. Here’s what that would look like. Cash price all in would be $10,000 for round trip. It would take 250,000 miles to book that trip. You can buy 250,000 miles for 2 cents per point which would cost you $5,000. So you are saving $5,000 on that ticket. Of course, this only makes sense if that cash price makes sense to you.
Note that with dynamic pricing, this isn’t something that is always easy to find.
Scenario 2 – Using points to save money on the cash price of a hotel
This is somewhat similar to scenario 1 but it doesn’t have to be something expensive. In this scenario we are looking to book a hotel and pay cash. However, you notice that you can get a good redemption. Let’s assume you value World of Hyatt points at 2cpp. The hotel you want to book requires 10,000 points. The cash price is $230 which is a recent real world example. You can buy 10,000 points for $180. So this one is easy right? You’re saving $50. You can scale this out but the rate remains the same; you’re buying points at 1.8 cpp.
The issue here is that most people who would have the wherewithal to do this would have enough points where they would just take the good redemption since that’s kind of the whole point here in the first place right? Thus, I don’t know how often this would really be an issue but the math clearly checks out if paying for cash works for you.
One situation that makes sense would be where you are saving your points for a very large redemption and every single point counts. It would be nice to get 2.5 cpp at a Hyatt Place for 5 nights but the problem there is that it would eat up 25,000 points. That could take you a while to recover and you want to book this big redemption next month. Thus, instead of using your points, you buy those points and save over $100 on the cash price. Not sure how often that is going to come up but it would certainly make sense.
*Resort fees – what’s nice about points is that you save on those pesky resort fees. These fees may not be included in the total fee on some sites to be sure to add them back into the total price. Hyatt is good with showing you the total price on their website though.
Scenario 3 – topping up your points to book award space
For this scenario, it doesn’t matter whether this is a hotel or flight. You found a great redemption at this resort you’ve been wanting to stay it. It’s 300,000 points but you only have 280,000. No matter what you do, it’ll take you at best weeks to get those 20,000 points. By then this award space will likely be gone. What to do? You can buy those 20,000 points to fill the gap. Even if you are buying those points at 2.3 cents per point, you are still getting a good redemption.
I doubt we need to do much math here since this type of redemption is going to be one of those things you’ve been really looking forward to and the good redemption rate on the booking itself not to mention the lost opportunity outweighs the cost of the points but let’s do the math anyway in case that sort of things is important to you.
The cash price of the hotel is $9,000. The award space costs 300,000 points (.03 cpp). You have 280,000 points. You spend $500 for 20,000 points. I’m using a higher number than what would be typical to show you how the math would still work if these points were expensive. It’s also easy to use round numbers.
You have to subtract the $500 from the $9,000 as you are now only saving $8,500. This brings that the 300,000 redemption from 0.03 cpp to 028 cpp. Hey, that’s still a good redemption! It sucks that you had to spend $500 but that’s a heck of a lot better than spending $9,000.
Conclusion
If you go into a t-shirt shop in just about any touristy area, you’ll see that they’re having a big sale. You know, the same sale they are having every single day. It’s just a gimmick. Sales of points and miles are almost always the same thing. A total gimmick. Of course, there are rare occasions where this could make sense but show me 100 travel hackers and I’ll show you less than 5 people that have bought points. There just reaches a point where if you actually know what you are doing, you’ll probably be in a good enough situation that it wouldn’t make sense to buy points.
Next steps
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