The one fundamental rule to follow when buying miles or points

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Whether they’re scrabbling around for money when their stock price falls or whether they just want to make some quick and easy cash, a lot of the corporations that operate the big loyalty programs like to run sales on the points and miles they issue.

Some of these sales can offer a very economical way to travel in comfort and are worth investigating, but regardless of how good a sale is, all of them should come with a health warning that everyone should heed.

Note: We’re writing this article so that we can reference it whenever we write about miles and points sales and so that anyone reading this who happens to be new to the miles and points hobby gets an early understanding of why even the best sales should be treated with caution. It may, however, also be a good reminder for the more seasoned miles and points collector.

Each time we write an article highlighting the latest miles or points sale by the likes of Hyatt, Alaska Airlines, or IHG Rewards we find that we have to write the same thing in each article … and at least two or three times just to make sure the point doesn’t get lost.

No one should be buying miles or points without having a short-term use for the currency they’re buying.

One of the big problems with loyalty programs is that they get to write their own rules and, not only are these rules not regulated by any external body, the rules are written to favor the program and not the program member.

What this generally means is that a loyalty program can change the way it operates at very short notice, and even if those changes significantly affect the value of the program’s currency, members of the program have very little recourse.

There are various ways a program can devalue its currency but here are the key ones:

• Increase the cost of award redemptions (British Airways recently did this for a significant number of short-haul flights).
• Significantly limit the opportunities to redeem points economically (essentially Delta’s go-to maneuver whenever possible).
• Eliminate program “sweet spots” (e.g. when Virgin Atlantic removed the option to book one-way Delta One awards between the U.S. and Europe for only 50,000 points + minimal taxes).
• Change the rules surrounding how miles/points can be redeemed (e.g. when American Airlines stopped permitting stopovers on award bookings)
• Remove valuable partners from the program
• Introduce peak/off-peak pricing (like most hotel chains have already done)
• Introduce variable rate pricing linked to the cash cost of the flight or hotel booking

The good news is that while some programs have been known to make near-instant changes to how they operate (e.g. BA & Virgin Atlantic), most programs will give between 4 and 8 weeks’ notice of an upcoming change.

But that’s still often not enough time for someone to use their points economically or to their maximum potential if they don’t have any plans in place.

A rushed use of points usually requires a lot more compromises (timings, destination, length of trip, etc…) than a well-planned use, and can even be more expensive.

If you’re having to use hotel points in a hurry, there’s a good chance that the cost of flights to your chosen destination(s) may be high, and if you’re having to use airline miles/points in a hurry there’s no guarantee that you’ll be able to find awards to wherever it is that you’d like to visit.

For a lot of people, there may also be an issue getting the time off to use the miles and points if the notice period is short.

Buying miles and points with just a “hope” that you’ll find a good use for them somewhere down the line is a fundamentally bad idea.

Every day that passes is a day closer to the next devaluation and, with most loyalty programs, devaluations are a very real fact of life (if you compare the current American Airlines, United Airlines, Marriott, Hyatt, and Hilton loyalty programs to what they looked like just a few years ago, you’ll see what I mean – Delta SkyMiles has been a dumpster fire for as long as we can remember).

In most cases, there’s no way of knowing if/when an airline will open up award space on a flight with enough certainty that it’s worth risking a large purchase of miles or points, and if a hotel isn’t showing award availability for the nights you’re hoping to book, there’s no guarantee that those nights will ever open up (they often don’t).

Planning is key to winning in the miles & points game and without a plan, you’re just taking a gamble in a game that’s rigged to favor the house.

How to buy miles & points

The very best way to make the most of a great miles or points sale is to have an immediate use for whatever currency you buy. That way you’re unlikely to be caught out by any sudden changes to a program and you’re unlikely to get less value out of a currency that you’re buying than you expect to.

Generally, we advise people to follow a simple 5-step plan when considering a miles/points purchase:

1. Verify the cost to buy miles/points
2. Confirm that an award booking for your chosen flight or hotel stay is considerably cheaper than the cash cost of the same/similar booking (if it’s not, there’s no point in buying miles or points).
3. Confirm that award flights or award nights are available to book immediately (do not buy miles or points if they’re not)
4. Buy the miles and points you need
5. Book the award as soon as the points hit your account

Yes, if you’re a veteran of the miles and points game there will be times when it’s acceptable to stock up with some points even if an award isn’t yet available (e.g when you know with reasonable certainty that awards will become available in the very near future) but for most, it’s a very bad idea.

Before you make any kind of miles or points purchase, it’s also a good idea to check that there isn’t another way (a way that doesn’t involve you parting with any money) for you to get the miles or points you need (e.g. by transferring points from a credit card loyalty program or by transferring miles or points from someone else’s account).

Bottom line

Miles and points sales can be incredibly useful, but they’re also a very good way for an inexperienced traveler to lose some money.

Just because someone (like us) says that a miles/points sale offers very good value doesn’t mean that you have to dive in without a solid plan. The next great deal is never more than a few months away, so if you don’t have an immediate use for the currency on sale, why not wait until you’ve thought things through?