The Shrinking Power of Your Points
If it feels like your points don't go as far as they used to, you’re not imagining it. This phenomenon, known as “point devaluation,” is the loyalty program equivalent of inflation. In simple terms, the airline, hotel, or bank that issues the points increases
the number of points required to book the same reward, be it a flight, a hotel room, or a gift card. This can happen in several ways. The most direct method is raising the price on an award chart. A flight that cost 25,000 miles last year might suddenly cost 35,000 this year. Another, more subtle approach is the widespread adoption of “dynamic pricing.” Instead of a fixed award chart, the number of points needed for a flight fluctuates constantly based on demand, time of booking, and other algorithmic factors, much like cash fares. This makes it harder to predict how much a trip will cost in points and often results in higher redemption rates.
Why Devaluations Are Accelerating
Loyalty programs are big business. For major airlines, these programs are sometimes valued more highly than their actual flight operations. However, the billions of unredeemed points sitting in customer accounts represent a massive liability on a company's balance sheet. To manage this, companies have a strong incentive to get those points off their books. Devaluing points is an effective way to do this, as it reduces the future cost of honouring those redemptions. Furthermore, the post-pandemic travel boom created a surge in demand that has not let up. With more people willing to pay cash for flights and hotels, companies have less need to offer valuable award seats to fill them. Some experts also point to external economic factors, like changes in credit card interchange fees, which can reduce the revenue that funds these loyalty programs, putting further pressure on their value.
The Strategic Shift to 'Earn and Burn'
Faced with the reality that points are a depreciating asset, savvy consumers are abandoning the old strategy of hoarding for a future dream trip. Instead, they are adopting an “earn and burn” philosophy. The logic is simple: use your points as quickly as you earn them to lock in their current value. Waiting a year or two to book a trip could mean your points balance will cover significantly less than it does today. Booking travel immediately, or at least for the near future, protects you from surprise devaluations that can be announced with little to no warning. This represents a fundamental change in how people view loyalty rewards—not as a long-term savings account, but as a short-term voucher to be used before it expires or diminishes in value. This approach prioritizes securing a tangible reward now over the risk of holding out for a potentially more valuable, but uncertain, reward later.
How to Protect Your Points Portfolio
While you can't stop devaluations, you can adjust your strategy to minimize their impact. The first step is to always have a specific travel goal in mind. Collecting points without a purpose makes you more likely to hoard them. Secondly, prioritize earning flexible, transferable points from bank programs over airline- or hotel-specific currencies. These points can be moved to various partners, giving you more options and protecting you if one program devalues its currency. Before you transfer points, always check the redemption value to ensure you're getting a good deal. Finally, embrace the “earn and burn” mindset. Don't let a massive balance sit idle for years. Regularly audit your points and make plans to use them. While it might seem counterintuitive, the best way to get value from your points in today's landscape is to get rid of them by booking a trip you're excited about.
