The earn and burn fallacy. Shall we give hoarding and cherry picking a try instead?

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“Don’t save your money. Spend it as fast as you can.” Can you imagine anyone giving that advice? And, if they did, would you listen to them? No way.

What if the types of things you would blow your money on were likely to become more expensive next year? Doesn’t it make sense to spend all of your money now on concerts, restaurants, clothes, whatever, since it will all likely become more expensive next year? Sure you could save your money and earn a piddling interest rate, but price increases are likely to far outpace your meager returns. Go for it now! Spend it all!

Of course, the above is terrible advice. Everyone knows that the prudent thing to do is to save money for future needs. However, when it comes to miles and points, conventional wisdom says the opposite…

This post was originally published in October 2015 and was strewn with examples that no longer make sense today. I’ve updated this post with modern examples, but most of the text remains unchanged.

Conventional wisdom in the miles & points world tells us that we should “earn and burn”. That is, we should spend our points and miles quickly after earning them because award prices are likely to increase in the future. Isn’t that similar to the poor advice suggested above?

The advice to “earn and burn” has become so ingrained into the miles & points culture that it is seemingly never questioned. I think it’s time to question it!

Devaluations happen

The driver behind the “earn and burn” advice is the expectation of devaluations. There’s no question that points and miles frequently devalue in a number of ways. Here are a few examples:

  • Loyalty programs change their award charts to make awards more expensive. In the first few months of 2024, for example, ANA and Turkish greatly increased award prices. And Alaska Airlines completely changed its award charts. With the latter, for example, first class awards flying Qantas from Los Angeles to Sydney jumped from 70,000 to a whopping 130,000 Alaska miles; and business class awards flying Cathay Pacific from JFK to Sydney jumped from 55,000 to 130,000 Alaska miles.
  • Loyalty programs abandon award charts and stealthily increase award prices. Very few hotel programs still have award charts at all. And it’s becoming more and more common for airlines to abandon their charts. Once the award charts are gone, it becomes very easy and very common for these programs to increase award prices regularly without notice.
  • Loyalty programs add new categories. Hotel chains sometimes add new top tier categories to their award charts and they stick their most expensive hotels into those categories. Of course, they charge more points for free nights in those categories. For example, when Hyatt first partnered with SLH (Small Luxury Hotels of the World) they added a new top-tier category 8 for the most expensive SLH properties. Since then, they’ve moved more and more Hyatt properties into that new top category. And now their partnership with SLH is history.
  • Loyalty programs move hotels to different categories. This happens all the time. Hotels that were category 4 are moved to category 5 or 6. As a result, award stays become more expensive and category-limited free night certificates become less valuable. Some hotels do move down in category, but somehow there always seem to be far fewer hotels moving down than up. Hyatt’s 2024 category shuffling, for example, had 137 properties going up at least one category and only 46 properties going down.

Miles and points enthusiasts get burned by devaluations like those described above. They feel like they’ve been slapped in the face by the same companies that they’ve been so loyal to. That promised dream vacation will now cost 30% more, 50% more, maybe even 100% more than before.

So, the advice makes sense, right? Spend your points and miles before the next devaluation or else you’ll get burned too!

Deals remain

One thing often overlooked by conventional wisdomers is that amidst the wreckage of even the most severe devaluations there are often bright spots. Some deals remain intact or, often, new deals appear. Here are a few examples:

  • Yes, ANA increased many award prices with their 2024 devaluation, but they didn’t change their Star Alliance Round the World award pricing! That Round the World award chart was and still is ANA’s best deal, bar none.
  • Turkish’s 2024 devaluation was particularly rough, but their best sweet-spot is still a fantastic sweet-spot: you can still use Turkish miles to fly all the way across the country (including to Hawaii or Alaska) for a shockingly low price. Previously one-way across the country cost 7,500 miles, but now it costs 10,000 miles. Yes, the price went up, but it’s still a fantastic deal.
  • With Alaska’s new unified award charts, many new sweet-spots appeared including 4,500 miles short distance awards, and 45K business class awards between the US east coast and Europe. Tim detailed the ups and downs here: New Alaska Award Chart — Winners, Losers and Sweet Spots.

After each of the devaluations described above, opportunities remained for getting similar or even better value today than before.

Revaluations happen too

No, it’s not nearly as common as devaluations, but sometimes points increase in value. Really. Here are a few recent examples:

Opportunity knocks. Are you ready?

I won’t question the conventional wisdom that says that, on average, the value of points and miles decreases over time (due to devaluations like those described above). But, it is also true that every now and then unforeseen opportunities arise. And, often, the only way to take advantage of them is to have points ready for action.

One example happened in 2022 when United had wide-open business-class awards available to many far flung locations for only 60,000 miles per person. That deal died quickly, but thanks to my already having a large stash of United miles, we were able to secure a dream trip to New Zealand for the exact dates we wanted to go.

When short-lived deals like this arise, only those with a stash of miles (or transferable points) can take advantage of them.

Opportunistic hoarding and cherry picking your currency

My general approach to earning points and miles is to go for the low hanging fruit. What, there’s a 200K offer for Membership Rewards points? Great, sign me up! Ink cards are offering great welcome bonuses and great referral bonuses? Awesome, it’s time for my family to do round-robin referrals. There’s an opportunity to do something good for the world and buy miles at a ridiculously low price? I’m in!

This scattershot approach to earning points and miles leads to a nice result. When it comes time to plan a trip, I have the luxury of using whichever points currency is most valuable for that situation.

I’ll often use Qatar Avios, for example, to book short non-stop flights or JetBlue Mint. I’ll use Air Canada Aeroplan miles or Avianca LifeMiles to book Star Alliance flights. I’ll use Air France / KLM Flying Blue miles for most SkyTeam flights.

When looking for hotels, I’ll try first to identify where I want to stay. If it’s a chain hotel, I’ll see if award space is available and a good deal. If so, I’ll use the corresponding points from Marriott, Hilton, Hyatt, IHG, Wyndham, Choice Privileges, etc. If it’s not one of the those chains, is it affiliated with something like Small Luxury Hotels of the World, Preferred Hotels & Resorts, or Leading Hotels of the World? In order, those hotels may be bookable with Hilton points, Choice Privileges points, or Citi ThankYou points transferred to Leaders Club points. If I’m looking at a vacation rental, maybe I can use my Wyndham points to book it through Vacasa or Cottages.com. If the hotel is in Amex’s Fine Hotels & Resorts collection, maybe I can get $200 back by booking with my Platinum card.

On average, I believe that hoarding and cherry picking results in better value from your points than earning and burning even with devaluations taken into account.

Safe-ish investments

There’s no question that some points and miles are safer investments than others.  Transferable points programs carry the least risk. If one transfer partner devalues, then there should still be plenty of others to fall back to. I’ll happily earn and hoard Chase Ultimate Rewards, Amex Membership Rewards, Citi ThankYou Rewards, etc. all day long.

At the other end of the spectrum are the points that expire with no way of keeping them alive other than spending them. ANA miles, for example, expire after a set amount of time regardless of whether you have new activity in your account. In such cases, I would be willing to redeem these points for less than their top value just to ensure that some value is received. This becomes especially true as the expiration date nears.

What if the opportunities stop?

Some will say “No, Greg, you should earn and burn now because opportunities for earning and burning may all go away in the future”. Hmmm. Yes, I can imagine a day when all of the easy opportunities for earning points goes away. Certainly card issuers have made it harder and harder over time to earn welcome bonuses for the same cards over and over. I don’t think it’s remotely likely but maybe there will come a time where they all decide that the costs of providing big bonuses isn’t worth the gain.

What about “burning” opportunities? Will they all go away? Sure, many programs will continue to devalue, but I have a hard time imagining a future where none of the loyalty programs will offer outsized rewards. Whenever airlines and hotels have excess capacity, they have the opportunity to foster brand loyalty cheaply. Why would they all stop doing that?

I think its very unlikely, but if we see a day where earning points and miles in large quantities has become almost impossible, then what? I expect that the point hoarders will be very happy that they didn’t earn and burn!

The case for “earn and burn”

There is at least one situation in which I’d argue in favor of the “earn and burn” strategy…

Some people save up for years for the perfect trip that never happens. There’s too much to do. The kids are too small. The kids are in school. There’s not enough time. Whatever.

Don’t be that person. As I proved a number of years ago (see: “One day in Beijing. Fewer words, more photos”), you don’t need to wait for the perfect opportunity. You can get a lot of enjoyment from very short trips.

People get stuck thinking that there’s no point in going to this or that far away place unless they can spend weeks exploring. When are you ever going to have weeks to spare? Instead, I think that a much better approach is to go while you can, and realize that you can always go back.

Points and miles make it possible to fit travel into the nooks and crannies of your schedule. If it takes an “earn and burn” mentality to get you to actually do it, then that, in my mind, is a good thing.

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Julie

For me, the earn and burn strategy is a bit of a moot point. I’m in this hobby because I love to travel and it lets me travel more often, more luxuriously snd much less expensively. That said, I’m already traveling as much as I possibly can in between other life commitments (work, kids’ school schedules, elderly parents, extended family get-togethers, etc). I would love to have “burned” more points through the years on rewards that have since increased in price, but those would have required sacrificing a different trip or missing my son’s baseball tournament etc etc. Instead I have a very large stash available to use now and in the future, on top of a multitude of wonderful memories from the points already burned.

One other point I don’t see addressed much is the phenomenon of diminishing returns on travel. I’ve noticed the more trips I try to cram into a year, the less we look forward to them and enjoy and appreciate each one. When you’re going somewhere every couple months you start to take it for granted and it can even feel like work-often I don’t have time to research activities beforehand so I end wasting some of the trip trying to book last-minute activities, read restaurant reviews, etc. We had a multi-month travel drought due to our oldest starting college and a family wedding on our only shared break. I noticed we all savored the 2 trips we took this summer much more than any of the 5-6 trips per year we had typically taken in the past.

Roamingredcoat

re: What if the opportunities stop?
Seems doubtful outside of major legislation efforts on interchange. With the loyalty programs becoming more valuable than the core business in many cases and leveraged for financing it’s hard to see it unraveling.

re: Opportunistic hoarding v earn & burn
I’d think the trade-off on point value for flexibility, optionality v. opportunity cost of using cash instead of investing plots like an S curve. Couple thousand points holds relatively low value since it hasn’t hurdled into level of useful redemption, tens of thousands you’re in the maximizable zone of point usability while minimizing opportunity cost, but into the hundreds of thousands and beyond flattens out as it doesn’t achieve what the tens of thousands could achieve and the majority are limited to only exercising redemption opportunities a few times a year. 2-3x the numbers if a family, but likely flatten the curve once 4x+ as getting 4 seats or 4+ people into a property become prohibitive.

JohnB

Earn and burn is a concept created by the original miles and points bloggers to push their credit card referral links. That is what pushes that concept! It’s an old concept that really doesn’t address the limitations of getting SUBs nowadays.

For me, I accumulate flexible points any way I can, constantly. But I only use my points for premium awards overseas. Domestically, I buy airline tickets. For hotels, I am a free agent, only using hotel points for expensive stays. If the hotel night costs less than $150, I use cash. But if the stay is 4 or 5 nights, I may use points for getting that extra night free. Cents per point really does not come into play for me, because I use my points for mostly high cost travel.

Grant

I understand the premise of the argument against earn and burn but comparing it to financial advice doesn’t make sense: points don’t create more points through investment. You’re not accruing interest/compounding investments with points like you can with cash. There are many more cases of points being worth less over time than cases of positive value changes over time (something like SLH joining Hilton notwithstanding)

Stookey

I’m currently sitting on roughly 7 million points and miles. There are several reasons for this, but mostly because I can. I’ve identified the easiest ways to earn in each of the programs which matter to me. While there is a fractional opportunity cost involved, it’s less than Starbucks money and I make my own coffee at home. I simply don’t compare points and miles to cash, like many here try to do. In my careers, I’ve never been compensated with points and miles. To me, this is strictly a hobby which allows me to indulge in some amazing experiences. Some people collect baseball or stamps. They go to conventions and swap meets to make deals and meet people who are similarly interested. They brag on their collections and sometimes score major wins, but few of them compare what they do to a prudent financial plan. That simply isn’t the purpose of the game. When I travel, I travel with confidence knowing that if disaster strikes or plans change, I’m well positioned to recover from the consequences using my hoard of points and miles. Because of the knowledge I’ve gained in this hobby, that rarely happens. Sometimes mob mentality becomes standard advice. “Churn and burn” sounds trendy and clever, so people love saying it. For me, I much prefer the “Save and savor” style of travel hacking. I am completely detached from any moral qualms about dying without a points and miles inheritance plan. That was never a consideration. I travel as much as I like in the fashion which I enjoy. I’ll still have plenty of points and miles to do this the day before I die, along the satisfaction that I enjoyed innumerable places and people along the way. In the meantime, I won’t waste a minute belaboring and pondering who would benefit the day after I’m dead. Kinda spoils the magic.

Frank

I am not very different from you, Stookey. To me this is a hobby with great rewards. I have been in this game for about 12 years in a serious way. In the 1990s I amassed 3 million AA miles without flying a mile. I will most likely never use all my stash of miles and points, but I do give to my family whatever they need and will leave them whatever they can use once I am unable to travel. I too have millions of airmiles (7) and Transferrable Points (7) as well as Hotel points (3). If I had to use Frequent Miler’s Reasonable Redemption Values it would all add up to over $200K.

But I don’t value them that way.as I can’t sell them. I can easily cash out the bank points for 1 cent each but I won’t do that. My whole goal was to fly in Business Class for the cost of an Economy ticket. Then I got carried away and took advantage of my good credit to leverage card bonuses in 2-player mode (sometimes 5-player). And after all this what has happened to my credit score? It went up!

I am not a big earner nor a big spender – I am a saver. I agree with you that these miles and points give me the flexibility to go anywhere I like and not have to worry about a return flight or finding a hotel. I travel out of season anyway to avoid crowds. We (player 2 and I) have 52 credit cards at this moment. I try to maximize everything just because that’s the game.. Most of the miles/points come from bonuses which cost me on average < 20 cents per point/mile.

I also mitigate the costs by moving my IRAs from one institution to another as often as I can which generates far more than the cost of these points – that’s my justification as it covers all my annual fees. So, there is a lot of work to this hobby, but less that the quilters I know. I also use Doctor of Credit for checking/savings account bonuses.

I like The Frequent Miler as I consider it the best site for this game – hat tip to you, Greg. I recommend it to everyone I know.

Louise Farrenc

Frank, can you clarify what you mean by moving IRA’s and how that relates to the points hobby?

Frank

It doesn’t directly relate. But I consider this part of “the game”. With so many credit cards the annual fees are very high – in my case, just over $20,000 a year right now if I add up all the fees on the cards I hold (with P2). But most of that is refunded by jumping through hoops (for example, the $695 for each Amex Platinum card can be covered by the various rebates they offer). I pay Chase the most because they don’t have decent rebates but their cards are the best. Is it my fault that a bank will allow me to have 7 of the same card at the same time, getting a megabonus for each? Or a certain bank that allowed me to get 3 of the same card in one month with a 100K bonus (plus a referral bonus for P2) each and no annual fee? It does help to have a business.

So I look for ways to cover these costs and one is to move investment accounts from E*Trade to Merrill Lynch to Chase and so on, each time getting a bonus. Right now I have an offer of $1000 for moving one IRA from E*Trade to Merrill Lynch and leaving it there for 6 months at which point I will move the funds elsewhere for another bonus.. It’s a no-brainer except right now the stock market is pretty volatile and so I am waiting a while. It’s fine for long term investments but I also do a lot of trading. The last time I checked I earned over $7,000 in one year from these bonuses. Then there are the Bank savings and checking bonuses but these are often taxable and a bit of a hassle. I do about 6 of these a year. The latest was the $325 bonus at Wells Fargo, but it’s much more of a hassle with places like these and I’ll get a 1099. See Doctor of Credit for all of these bonusses. .

I admit this is all time-consuming. But one can just cherry pick and grab some easy bonuses.

I also have a philosophy on this: Everyone in a transaction must get something out of it: If I score a big bonus from a bank for “spending” on a credit card then the bank must get something for it or else they will stop doing this. Unfortunately the ones who are paying the price for this game between me and “The Banks” are the people who carry a balance on a credit card.

Paul Davis

Are you my long lost brother? We have about the same number of points and the same attitude.

justin

This is crazy, you’re most likely going to go to the grave one day with points to do something for $1000 plus, this is the other “thing” that benefits them, they get to keep those. . . it’s not like your investment account at least going to your heirs.
You never know when you’re going to stop being able to travel due to new job constraints, prison, a felon, whatever, you just need to use points whenever you can. Hoarding is never smart.

Grant

I agree with your closing arguments. If you like a place, you can always go back. There are very few trips that would qualify as “once in a lifetime”. I kinda like that miles and points devalue over time, because it forces you to redeem your miles and points now, instead of hoarding them for years (and maybe not taking the trip).

DAVID

Way too much thought put into this. When I see a good ability to earn points, I take it. When I need to spend, I see what I have available. If it becomes worth less, so be it.

Only real decision is whether to try to stay under 5/24. I have been unable to do that ever since 5/24 became a thing.

Chad Dankbutt

Don’t save your money. Spend it as fast as you can.” Can you imagine anyone giving that advice? And, if they did, would you listen to them? No way.
——-
It makes perfect sense for places where inflation is rampant or governments are unstable and you’re not sure they’re even going to be a thing in a few years. If you are earning Argentine pesos you absolutely want to spend or convert them immediately.

As we can’t invest miles and changing them into something else is very limited it absolutely makes sense to burn them. They’re closer to pesos than dollars

Lee

Newbies: Forget about all the stuff about valuation for a minute as well as the trip you’re planning for “someday.” Imagine that, out of the blue, a friend tells you they are getting married and the wedding is in . . . Spain. Or, out of the blue, a friend invites you to join them on a trip to . . . Greece. You don’t have the cash but you do have the points and your life will be richer for it. Points held in reserve afford spontaneity. These are actual stories within my family. When it happens for you, perhaps you will remember it was Greg’s advice that afforded you the opportunity and thank him.

Last edited 3 months ago by Lee
andrew

People call it devaluation, I call it inflation. Years ago a 100,000 SUB was awesome, now it’s expected. Everyone downplays the increase earning potential and focuses on the increase in redemption costs.

For the last 10 years I have averaged 300,000 miles earned per year just in SUB. This is despite the increased difficulty that has been imposed by 5/24, once in a lifetime and other restrictions. It is getting more difficult to get approved but the earning per SUB is higher. Just look at Ink cards.

My advice is always work towards a SUB and spend on trips you want or wouldn’t take otherwise. Don’t worry about devaluation, diversify. Building a stash of miles also helps when you have 2,3 or 4 people that need to travel. It is different for a single person vs a family.

usernamechuck

I think they’re just ying and yang. You want to efficiently use points to travel / save money. That’s the whole game. If you save save save points, waiting for the perfect use, it’s inefficient because points are sitting there losing value. If you spend everything like there’s no tomorrow, that’s inefficient because you may be unable to go where you want to go to (without paying cash) or your only choice may be a suboptimal redemption. So Gary’s approach isn’t much different than yours, if you figure that the points parade will continue. And if you’ve got a family of four, of course you need a lot more points per trip so you definitionally need to save a bit more before you travel.

But the other thing, which Nick has noted, is that the ability to cash out some kinds of points also changes the equation (by making it less carefree). When you choose to use your URs at Hyatt, it may be an efficient / awesome redemption, but are you weighing it against the cost? Do you ever say: I wish I had taken that $80 and put it in bitcoin rather than staying at that cat2 Hyatt? If you have an Army, it’s tempting to invade Ukraine. If you have a fast car, it’s tempting to do formula one down the highway. If you have a zillion points, it’s tempting to go to Zanzibar. But it may not always be fulfilling to do those things, even if you can do them with ease.

If it’s about efficiency, I suppose the greatest inefficiency would be using points to take trips just because we can, while neglecting other parts of life. (Which I am probably doing as I write this comment!)

Miguel

As others have noted, cash and points are different in that cash can be invested and outpace inflation, whereas points are ultimately depreciating assets. That being said, it does make sense to only spend them on travel you really enjoy where you’re getting outsized value. Earning anc hoarding points at a high rate within a 1-2 year time frame can mean the difference between a “budget” points vacation vs. a “first class” points vacation, which may end up being more enjoyable and more memorable. Ultimately, the individual has to decide what will bring him or her the most fulfillment from their investment of time and earning strategy.

Mantis

Timely repost, and amazing that the fundamentals of the game haven’t really changed much. I didn’t sift through 5 year old comments, but I think it’s important to note that the obvious reason you don’t earn and burn cash is because cash can be invested (not just “saved”), and if done properly will increase in spending power in the future. Miles and points, outside of a few specific exceptions, that is the opposite case. They predictably lose value over time. And remember, you’re not capturing the full deval of points/miles if you’re just looking at cpp, because currency is also devaling (inflation). It’s what can 100k miles get you now vs. a X years ago that matters.

So I’m in favor of earning and burning, so long as it furthers your life enjoyment and fulfillment. No reason to burn miles just for the sake of not running afoul of internet experts, making bad redemptions for poor value, using up your PTO prematurely, spending too much on other travel expenses, etc. My approach is I want to keep a certain minimum level available across many currencies for close in bookings, but if the balances get too high, I look to either cash them out (really only applies to Amex MR) or de-prioritize earning them over others. The higher the balance, the less each incremental point is worth to you (utility theory in economics).

[…] quickly as you can for fear of a future devaluation, I’ve agreed with Greg’s rationale behind hoarding and cherry picking in order to get maximum value from your points. If I feel fairly confident in my ability to […]