Too many people want to save up their points for some unknown far away trip. They just fall in love with the idea of earning a ton of points and going on some type of big trip in the future. They really don’t have a plan though. As a result, they lose focus and don’t even know what they are doing and why they are doing it. I’ve seen this many times on social media so when you are starting out, you need to develop a plan. Now that’s not to say that you can’t modify things as life happens but you should at least have some type of plan even if it changes.
For example, don’t just earn points for the sake of earning points. Understand where you want to go and what you need to get yourself there. Then you need to figure out what type of sign up bonuses (SUBs) you can expect and what type of credit card spending you can do in a given time frame. Here’s an example using completely made up numbers. You want to spend 5 days in Bali at a nice resort and you’ll need flights to get there. You check some hotel availability and find that you’ll need 150,000 X points on average (with X points being a pretend program). Award flights for one person are 80,000 X miles. You then sign up for the X card with a 90,000 sign up bonus. You can also sign up for another version of the X card that has a 20,000 sign up bonus. The spending required for those are $4,000 and $500 respectively.
Now it’s time for some math. Assuming you’ll earn 1.5 X points per dollar spent, you’ll get 6,750 X points ($4000 plus $500 x 1.5) just for meeting the required spend on top of the 110,000 sign up bonuses. So in just a few months, you are at 116,750 of the 230,000 X points you’ll need; more than halfway there! You are 113,250 points shy of your goal. Again assuming 1.5 X points per dollar spent, you can calculate what you need to spend to get there. If you divide 113,250 by 1.5, you’ll get 75,500. For many people, that could be a ton of money especially if they don’t make that in a year.
At this point you have a few different options. You can wait however many years to get there, find something more affordable or you can apply for more sign up bonuses or find ways to increase your points per dollar spent. Only you can decide what makes sense for your situation but waiting four or five years to hit a goal is usually a losing proposition. A dollar today is worth more than a dollar a year from now. Travel points are no different. The trip that requires 230,000 X points today may cost more a few years from now. Travel points are pretty much always going down in value over time.
Here’s a dramatic yet real example. In March of 2023, Hyatt announced that a number of hotels would have valuations changes. Surprisingly, a few actually came down in value which you don’t see very often although none of them were incredibly dramatic. What was dramatic were the increases. Several hotels doubled. So if you needed 150,000 points to spend a week at one of those hotels, you’ll now need 300,000! Crazy huh? Now that doesn’t happen very often but it obviously can happen.
So the odds are that the redemption values you see today are roughly the same as they’ll be in a year but they will likely be higher several years from now. Thus, you need to have a plan, earn the miles and then burn them (i.e. use them) in a reasonable amount of time.