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Conventional wisdom in the points and miles game is to “earn and burn”. The idea is to earn enough points for your next trip, spend the points, travel for nearly free, and repeat. There are a few big advantages to this approach. For one, you are almost guaranteed to get good value from your points. Hopefully you’ll know up-front how many points you’ll need and you’ll have a good idea of how much money it will save to use points instead of cash. Another advantage is that this approach protects you from devaluations. Airline and hotel programs regularly change their award charts for the worse or, in the case of hotels, move their best properties up to the next award tier (meaning more points are required for a free night). Changes like these cause a decrease in the value of your banked points since you can no longer get as much from those points. By earning and burning, you can greatly decrease the chance of being left holding many devalued points.
Earning and burning has its virtues, but its not perfect. Suppose, for example, that you need to book a last minute flight. Airlines like to jack up last minute prices to extreme levels. Meanwhile, they tend to open up saver level award space at the same time. When given the choice of booking a $1100 last minute flight vs. a 25,000 mile award, you may wish you had kept some airline miles around, just in case. A more common issue is with award availability. Maybe, for example, you built up enough AA miles for a dream trip to Asia, but then can’t find saver level awards in both directions. You may wish then that you had miles that could be used for Star Alliance or even SkyTeam flights to increase your chance of finding those awards.
Instead of earning and burning, another approach is to earn points, miles, and cash (AKA Penny Points), opportunistically. 100,000 AA miles for signing up for a credit card? Yep, sign me up. Over 20 points per dollar by shopping at Sears through the Southwest Rapid Rewards portal? Cool, I’ll do my online shopping there. 3000 Club Carlson points for a 20 minute survey? OK, why not? 3% cash back plus credit card rewards for buying Amex gift cards? You bet. 5% cash back from buying gift cards at drug stores and grocery stores? Absolutely.
I’m an opportunistic hoarder and I believe it serves me well. When planning trips, I have the luxury of using whichever points are best for the situation at hand. In one trip last year, for example, I had to fly out on an earlier flight than my wife and son. For my outbound flight, I found a great option using AA miles. For their outbound flight, there were great one-way paid options, so I used my Citi ThankYou points for a value of 1.25 cents per point (thanks to my Citi ThankYou Premier card) and they earned Delta Skymiles for that flight. On the return, we traveled together using United miles. We have had similar luck using our hotel points opportunistically. When we have a destination in mind, I use AwardMapper to see which hotels are in the area and how much they cost in points. I then use TripAdvisor to look at reviews. And, finally, I go to the hotel’s website to look for award availability. I always check paid prices too because sometimes my Penny Points give me more value than hotel points. And, of course, there are many more great lodging options available when you’re willing to pay cash.
Another reason I like this approach is for opportunistic travel. I travel regularly, but rarely do I plan way ahead. This past winter was so bitterly cold, for example, that my family took several unplanned trips to warmer areas. In these cases, I always have the luxury of using whichever points work best for the situation. Sometimes I’ll use one type of points for outbound flights and another for the return. Other times, I’ll find good award availability round-trip for one person and I’ll use Penny Points (or ThankYou points) for the others.
Opportunistic point hoarding is not perfect. It does leave you exposed to devaluations. And, the chance that orphaned points in miscellaneous programs will go forever unused is fairly high. Keeping track of my points via Award Wallet helps a lot, but I’m sure I have points today that will never get used. For example, I have no idea what to do with my 6050 Voila hotel rewards, nor do I remember how I got them. To ameliorate this issue, I prefer to build up points in the most flexible points programs: Penny Points (cash), Ultimate Rewards, Membership Rewards, and Starwood Preferred Guest (SPG).
I’m curious to hear from readers. What is your point earning and burning strategy? I don’t think that one is better than another in absolute terms. Instead, I think that opportunistic point hoarding works best for me. What about you?
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Kenny see above
Your response sent me to your blog. Now signed up. What is your nearest airport?
+1 for hoarding. I always cringe when I read the “earn and burn” strategies. Why in the world would I not sign up for 100k credit card offers (with low out of pocket costs) just because I don’t have plans to fly on AA. I agree with the sentiment of mostly everyone here. IMO – the flexibility of have a couple million points vastly outweighs the devaluation proposition. I am fully aware that my points are worth less today than they were yesterday. I really don’t care and have never once stressed about it. In fact, the best way to beat devaluation is to keep looking for opportunities to acquire large chunks of points for minimal cost. It’s a game and I treat it like one.
Wow, it sounds like we all have similar approaches. Maybe those who truly earn and burn are too busy traveling to comment here 🙂
This question reminds me a bit of how a lot of blogs advice newbies to “start with your travel goals” and work towards them, when doing CC apps etc. For my personality, that just doesn’t work. I have a huge list of travel goals, i.e. places I’d be interested in going. So, I tend to go after the unusually high signup bonuses and flexible currencies, and then let my balances guide me to a certain extent. I’m not enough of a planner to being with a goal and then earn points just to reach that destination.
opportunistic hoarding for me
Many thanks for the tip about the “Award Mapper.” Huge time saver…. I had no idea such a tool exists. (It’s also useful in locating hotels by chain — like Club Carlson — the tool on the CC web site is miserably unhelpful. I’d even avoided getting their CC because their own web site had given me woefully incomplete info on their hotels by category. This, so much better! thanks again.)
Rob – Income has nothing to do with anything, you should be using someone else’s money. It’s all about jumping on opportunities.
Seeing a pattern here, yeah me too. About 6-7 mill across everything. Burned 2 mill & still…but it’s great since u can do anything. I love the flexibility it affords me. It’s just a habit – how to earn so much. Pick your methods after testing. Combine several lucrative ones, save time. Low hanging fruit is good.
Rob Black, you just have to diversify and get many games going at once. They will add up faster than you think! Just get into habits with your normal spending, sign up for cards ever 90-120 days rotating for you and wife/others, always use shopping portals, etc… It’s not really that hard. As many bloggers will tell you, USING your miles is much more difficult, especially efficiently. Don’t blow them all on AAnytime awards unless it’s impossible otherwise (but if you’re diversified enough you probably have points in another program and won’t need to complete a trip with AAnytime anyway!). Be flexible on everything you can and use your miles for places that have low level awards available at the time you’re looking to book a trip rather than picking a specific destination over a specific time. Calculate out values of miles and set your own rule as to what you will and won’t redeem at. Same goes for hotels with all of this.
Aloha, Curtis, Paul: the number of miles that you accumulate are in a different world from me. 6-figure income with 790 FICO What am I doing wrong??–it is worth money to find out
I started the year at 1.4mil and have gone on a FC Europe w 14 free Hyatt and Hilton nights and now stand at 2.1 mil mainly due to listening to you……if I listened better I would probably be at 3 mil by now……..my short term goal is 3mil and then maybe I will appreciate Earn and Burn a bit more once I am at that number……..Now I need to get penny points more as I want to open up my lodging options………
We have two kids and another on the way, so I take advantage of opportunities when I can and when I have time to because it takes a lot longer to earn points than it does to plan and execute a trip.