Avoid These Travel Rewards Mistakes for Maximum Value and Better Payoffs
In the realm of travel points and miles, hoarding is a common trap that can lead to significant disappointment. The only winning strategy is to adopt an "earning and burning" approach, where you actively use your rewards rather than letting them accumulate indefinitely. With an estimated US$300 billion in unredeemed loyalty program points worldwide, many travelers risk facing sudden devaluations without any prior notice, which can drastically reduce the value of their hard-earned points.
The Perils of Point Hoarding
Over the past decade, loyalty programs have proven to be a terrible long-term investment for those who diligently collect points for future use. If you have been stockpiling travel points, there is nearly a 100 percent chance that you are setting yourself up for disappointment. Devaluations occur when loyalty programs decide to change the cost of redemptions, effectively reducing the value you can unlock with your points. Nearly every change made is not in the consumer's favor, and the worst devaluations often come without warning.
For instance, you might wake up one day to find that the flight or hotel stay you were considering yesterday now costs more points today, through no fault of your own. While some programs provide advance notice, allowing you to lock in redemptions at current levels before inflation hits, many do not, leaving travelers vulnerable to unexpected losses.
The $300-Billion Liability and Corporate Incentives
The rationale behind these devaluations is risk mitigation for loyalty programs. According to the 2025 Point.me Big Business of Points and Miles report, there is an estimated US$300 billion in unredeemed loyalty points sitting on corporate balance sheets globally. This staggering amount represents a significant liability that companies are incentivized to inflate away through devaluations.
A recent example is British Airways Club, which announced in late last year that it would increase award costs starting December 15, 2025. The announcement was straightforward, with no sugar-coating or claims of member feedback; it simply warned that booking the same flights would become more expensive. This resulted in about a 10 percent increase in award pricing across the board. While this was a relatively minor devaluation compared to others, especially in hotel loyalty programs, it still means that a flight that cost 80,000 Avios last year now costs 88,000 Avios.
The Challenge of Dynamic Pricing Models
To complicate matters further, many loyalty programs are adopting dynamic pricing into their structures, making devaluations harder to track. In these models, the cost in points roughly mirrors the cash price, reducing opportunities to extract outsized value from your points. For example, Air Canada Signature Class offers a high-end experience, but under the dynamic pricing model with Aeroplan, the cost of these seats can fluctuate wildly based on market demand.
In dynamic pricing models, there is typically a floor value for redemptions, often displayed as a "starting at" price. Finding a redemption at this level usually means you are getting the best-possible deal, and it is an excellent time to redeem your points. However, there is typically no ceiling value, which is why you might encounter hundreds of thousands of points required for a business-class flight or luxury hotel stay paid for with points.
Strategies for Savvy Travelers
To avoid these pitfalls, savvy travelers should focus on redeeming points promptly rather than hoarding them. Keep an eye on program announcements for potential devaluations and take advantage of advance notices to lock in redemptions. Additionally, understanding dynamic pricing models can help you identify the floor prices before they disappear, maximizing the value of your rewards.
By adopting an "earn and burn" mindset and staying informed about program changes, you can navigate the complexities of travel rewards and ensure a better payoff for your efforts. Remember, in the world of miles and points, proactive use is key to avoiding disappointment and unlocking the full potential of your loyalty program benefits.
