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Are Your Credit Card Points Losing Value? How to Beat Points & Miles Inflation
December 12, 2024
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If you’ve ever had the feeling that the trip or gift card you could afford with your credit card points last year is just out of reach this year, you’re not imagining it. Credit card points lose value over time if you’re not careful. It’s often called “points and miles inflation” – the gradual decrease in what your rewards can buy. But don’t worry: you can fight back. In this article, we’ll explain why your points might be worth less now than before, how to tell if it’s happening, and most importantly, how to beat points inflation to make the most of your rewards.
Why Points Lose Value (Devaluation in a Nutshell)
Points and miles are a bit like a currency, but unlike cash, they’re controlled by reward programs that can change the rules at any time. There are a few key reasons your stash might be losing value:
- Program Devaluations: Credit card issuers, airlines, and hotels periodically adjust their reward charts. They might require more points for the same flight or hotel night than before. For example, if an airline raises the cost of a round-trip award ticket from 25,000 miles to 30,000 miles, your existing miles lost value overnight (you need more of them now for the same trip). This happens more often than you’d think – loyalty programs announce such changes almost every year, sometimes with little warning.
- Dynamic Pricing: More programs are moving to “dynamic” reward pricing, meaning the points price is tied to the cash price. If hotel rates or airfares go up (which they do during inflationary times), the points required go up in tandem. So as travel gets more expensive in dollars, it also gets more expensive in points.
- Expiration or Forfeiture: While not exactly inflation, if you let points expire or if you lose them due to account inactivity, their value drops to zero for you. This is just a reminder: always check if your points have an expiration date and what you need to do to keep them active (often just earning or redeeming some points periodically).
- General Inflation: As discussed, if we’re in a period of high economic inflation, the purchasing power of points declines. Some credit card points are effectively fixed to a value (e.g., 1 point = 1 cent in rewards). If 1 cent buys less than it used to, so does 1 point. And travel companies facing higher costs might pass some of that on via higher award prices too.
In short, “points inflation” is real. In fact, loyalty data in recent years shows nearly all major airline and hotel programs have increased award prices or eliminated their cheapest redemption options. It’s like a silent tax on your rewards.
Signs Your Points Have Devalued
How do you know if your points have lost value? Keep an eye out for these signs:
- Rewards cost more: You check a familiar redemption (say, a hotel you booked with points before) and see that it costs more points now. If that’s the case, your points’ value per reward went down.
- Point Value Calculations: Calculate the “cent per point” value. For instance, if a $100 item requires 10,000 points, that’s $0.01 per point. Do this for a few options. If you notice you’re only getting 0.8¢ per point for things that used to fetch 1¢ per point, that’s a devaluation.
- Program announcements: Sometimes you’ll get emails or see news about changes to rewards. Phrases like “we’re updating our awards chart” or “Introducing dynamic rewards” often mean a devaluation (even if they sugarcoat it). Pay attention to these; your points might be less valuable after the change.
Knowing the signs helps because the moment you detect or suspect devaluation, that’s the time to act (redeem, transfer, etc.) before things potentially get worse.
How to Beat Points & Miles Inflation
Now for the good part – what you can do to stay ahead of the game. Here are strategies to ensure you keep getting great value from your rewards:
1. Earn Points Faster (Outrun the Devaluation)
One way to cope with points losing value is to simply earn more of them so you’re always ahead. Use your credit cards strategically to maximize earning: take advantage of bonus categories, welcome bonuses, and referral bonuses. If your points are decreasing in value by ~5% a year (just as an example), and you manage to earn 10% more points this year through smart strategies, you’ve netted out ahead. Pro tip: Use tools like Kudos to never miss an earning opportunity – it will suggest the card that gives the most points for each purchase, effectively boosting your earn rate without extra effort.
2. Redeem Now Rather Than Later
The old adage in travel rewards is “earn and burn.” If you have a significant amount of points, make a plan to use them in the near future for something valuable. Think of it this way: would you rather enjoy a free vacation now, or wait 2 years and maybe enjoy a slightly less impressive vacation because your points lost value? Use your points for goals that matter to you as soon as you have enough. The longer you delay, the higher the chance that airlines/hotels will require more points or that the flight you want will cost more due to dynamic pricing. By redeeming sooner, you lock in today’s rates. Many savvy travelers consistently burn their points on trips each year specifically to avoid the devaluation trap.
3. Reevaluate Your Rewards Strategy Periodically
Set a reminder maybe every 6 months to check in on your points. Where are you accumulating the most? Are those programs still delivering good value? For example, if you’ve been heavy on airline miles for Airline X but they keep devaluing, it might be time to shift focus to another airline or a bank’s flexible points. In high-inflation times, flexibility is key. You might pivot to cards that give you cash back or flexible travel credits if those prove more stable. There’s no one-size-fits-all – the idea is to stay alert and be willing to change your strategy to whatever reward gives you the most bang for your buck (or point).
4. Take Advantage of Inflation Lags
Here’s an insider trick: sometimes, when economic inflation hits, there’s a lag before loyalty programs adjust their reward prices. In that window, points can actually be temporarily more valuable. For instance, say hotel prices in dollars surged this year but HotelBrand hasn’t updated its points chart yet – your points are effectively letting you book at last year’s rate. Seize that moment. Book trips or make redemptions when you notice that cash prices have gone up but the points requirement is still the same. You’re getting a great deal and sidestepping inflation – at least until they catch up and raise the points cost later.
5. Opt for Inflation-Resilient Rewards
Not all rewards are equally affected by inflation. Some credit card rewards come in forms that adjust with inflation. A good example: cash-back that you invest. If you convert credit card rewards into cash and put it in, say, inflation-protected bonds or a high-interest savings account, you’re turning a devaluing currency (points) into something that earns value or keeps up with inflation. Another example: some cards offer merchandise or commodity redemptions (like points for gold coins or something unusual) – those are rare and not typical, but the point is to think outside the box. Even using points for statement credits on bills that are rising (utilities, etc.) is a way to offset inflation directly.
6. Keep an Eye on Fees and Changes
Inflation can also lead banks to adjust annual fees or benefit structures on cards. Make sure your card’s annual fee isn’t quietly eating away at your net reward value. If a card’s fee goes up or you’re not getting as much value as before due to inflation, consider downgrading or switching to a no-annual-fee version. The less drag on your rewards, the better you can come out ahead.
Real-Life Example
Let’s illustrate with a quick story: Jane has 100,000 credit card points in 2022. She considered saving them for a “one day” dream trip. Come 2024, she finds that trip’s flights cost 120,000 points due to airline devaluations and higher fuel costs – her 100k is no longer enough. If Jane had booked in 2022, she’d be flying for free. So what does she do now? Jane pivots: she uses her 100k points for a different vacation (still wonderful), and starts focusing on cash-back cards. She redeems cash back yearly to fund travel. When 2025 rolls around, prices are higher, but Jane has a stash of cash from rewards that actually gained a bit of interest – she’s able to afford her trip. The moral: she beat points inflation by changing strategy and not letting her old points sit until they lost too much value.
Conclusion: Stay One Step Ahead
Credit card points will lose value if left alone – that’s almost a certainty in the current landscape. But you have control here. By understanding the game and using the tactics outlined above, you can stay one (or two) steps ahead. Think of your points as a declining asset and plan accordingly: use them before they lose too much shine, and keep earning in ways that outpace the decline.
At the end of the day, rewards are meant to reward you, not the banks or airlines. Use them smartly, and you’ll get the last laugh against inflation and devaluation. So go ahead – book that trip, cash out that reward, and enjoy the full value of what you’ve earned!
FAQs: Points Value and Inflation
Should I hoard my points for a big goal or use them now?
Generally, use them sooner. Points are a depreciating asset – they rarely get more valuable over time. If you have a big goal in the near-ish future (next year or so), it’s fine to save up. But don’t wait endlessly for a “perfect” redemption; you risk devaluations. It’s often said in the points community: “Earn ’em and burn ’em.”
How often do programs devalue points?
It varies, but many airline and hotel programs adjust their rewards every 1-2 years. Some do minor tweaks annually (like increasing certain award prices by 5-10%). Others make a big change every few years. Credit card point programs tied to airlines/hotels will be affected by those changes. Pure bank points (like Chase/Amex) devalue less frequently, but they can lose value if transfer partners devalue or if the bank changes redemption rates.
What’s the best way to use points during high inflation?
The best way is to use them strategically and promptly. High inflation often means travel and goods cost more, so using points for expensive flights or hotel stays can save you a lot of cash (that’s effectively a huge win for your budget). Also, if your points can cover necessities (via cash back or statement credits), do that to relieve pressure on your finances. Essentially, use points where you would otherwise have to spend the most money – that maximizes their value when money is tight due to inflation.
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