Congratulations, you. Earning points is the binary requirement to being a clever human being in the world today, and since you can legitimately earn them from home without a credit card or any travel – that’s a fair statement. But a new study brought by American Express shows that 86% of people are doing it all wrong, or at least, kinda.
Earners Not Burners
American Express commissioned a survey of spending, giving and other habits in relation to holiday purchases, and the results were overwhelming. 86% of surveyed participants said they would be earning points of some kind (airline, hotel, credit card, cash back etc) but most likely wouldn’t be redeeming any points.
Considering points can be used to cover everything from flights, to hotels, to Amazon shopping bills, which we know you all have, that’s surprising. In terms of best practices, it’s not exactly wise either. Points are not like savings accounts or investment portfolios, which can appreciate over time. In fact, it’s the opposite.
Hot Tip: Spend Your Points
Most loyalty programs have devalued over the last 5 years, and most will do so again in the next five. Every time they do, your airline miles, hotel points or other points currency become worth less – not more. Don’t burn points on things you can easily afford, or don’t need, but don’t sit on them for too long either. Make someones day, or make yours with an overdue vacation.
Here’s more on why credit card points are increasingly valuable.
Taking a brief side tangent, the survey also turned up some good news. Most people surveyed plan to give 10 gifts or more to friends, family and colleagues this year, and an impressive 72% said they plan to donate to charity or causes in some way, shape or form. For gift card fans, 51% of Americans said they get them, so it’s safe to say they’re officially “ok” to give.
Gilbert, I would think this is obvious. Most people that get credit cards to earn sign-up bonuses have normal 8 to 5 jobs! You got to pay those credit card bills when they come due. So while most jobs typically comes with 3-5 weeks of vacation time a year I have a hard time spending earned points on these trips. Quite often flights or hotels aren’t available when I have a specific destination and time frame in mind, or we are visiting family. So I end up accumulating points for the “dream trip” on Emirates first class to the Maldives (isn’t it a waste of points to do anything less, according to most travel bloggers?). Weekend trips to Europe ain’t happening. So right now in accumulation phase. When kids graduate from college, can then enter spend phase. Hopefully points won’t devalue by then.
“…but don’t sit on them for too long either.” Obviously no way to tell how long is to long but if you want to take the dream trip you can’t go on the earn and burn treadmill. You have to cross you fingers and hope they don’t change the rules in the middle of your game.
A few points worth considering:
On last-minute travel: with the craziness and expenses of the holidays, there’s little time or money for it. Besides, you’re probably out of vacation days anyway.
On holiday travel: availability/pricing is ridiculous this late. If you’re traveling on points/miles, those were probably burned a long time ago.
On booking into next year: again, it’s kinda hectic this time of year, with little time left for making plans. And many are unwilling to book until they see how much “damage” the holidays caused. I, for one, don’t trust myself to not go overboard on Black Friday, gifts, outings, etc.
Non-travel redemptions generally represent poor value.
There are also a bazillion earning opportunities this time of year. It’s the best time to earn, not only because of special earning opportunities (shopping portals, etc.), but because there’s a lot of organic spend, making MSRs easy to fulfill.
Finally, rewards cards have risen in popularity and rewards programs are in a race to the bottom in terms of valuations. That means (1) everyone’s earning, (2) many have low balances, (3) many of those that have decent balances are waiting longer and longer to redeem for something worthwhile.
We earn faster than we can burn. But we are still taking a dream trip once a year on points, spending anywhere from 500K-1Million points on a single trip on biz/first flights and 5 star hotels.
Love to hear that BB. Nothing quite like that feeling of splashing out… on points!
I’m not sure the survey means anything. Probably 86% of the time I’m earning and not burning, but when I’m burning, I’m really burning.
This year during that 14%, I’ve burnt 192.5k Avios, 275k Alaska miles, probably close to 500k Hilton points, and around 100k Bonvoy points, as well as small amounts in misc. programs.
I’m on the way home from one of our trips, and will be switching to earning until we have the energy for another trip.