Cashing Out Points Is No Longer Despised
As time goes on things evolve, it is only natural. What once was unheard of becomes popular, and vice versa. Things are destined to evolve and change as circumstances dictate it. We have seen it play out exactly this way in the miles and points space too. What once was taboo, frowned upon and even chastised, is now openly accepted and applauded. I am talking about cashing out points and focusing on cash back instead of earning points solely for travel.
How Dare You Cash Out Your Points! They Are Worth More For Travel
In the past anytime someone mentioned turning transferable currencies etc. into cash, or gift cards, in a Facebook group or in the comments of a post people ran as quick as they could to burn them alive. Here are the types of comments you would normally see:
- How dare you consider cashing out your points, are you new here?
- Don’t you know they are worth a ton more if you use them for travel, especially if you fly in business or first class internationally.
- Only an idiot would cash out points!
Well, I guess I am now an idiot. I shared my recent round of applications a few weeks back and it was completely focused on cash back earning. Even more than that, I burned my points empire down a few times last year, took the money and ran. And you know what, no one thought much of it. Many celebrated it even. My how things have changed.
The Shift Started Even Before Recent Events
It is easy to say this is because of the pandemic and because people are sitting on stockpiles of miles and points. That has played some role for sure but I saw the changes start even before then. One of Benjy’s first articles was about how he was cashing out Ultimate Rewards at 1 cent per piece. I told him to be prepared for the trolling and hate that was sure to come, but it never did. Many admitted that they had been doing the same for some time now. It was an eye opening revelation for sure, and I was surprised that so many had started to embrace it. A small sect of the miles and points world at the time, but larger than I had expected.
It is true that shortly after the pandemic hit the thought of cashing out points was kind of flipped on its head. With people stuck with massive balances, reduced income and no way to travel the acceptance grew. Throw in the fact that loyalty programs have continued to devalue their currencies and the difference in value between travel and cash has been muddied quite a bit. It is clear that programs are looking to lock in the value of their currencies to a static number that eliminates the opportunities for outsized value. They want points to be fixed to the cash price essentially.
To go along with all of that programs have made cashing out more attractive. New options like Pay Yourself Back have increased the pay out for each points. Banks, like Citi, have made it easier than ever to turn your points into cold hard cash as well.
Cashing Out Points – Final Thoughts
When you mix all of these up you come to the conclusion that, in many instances, the value of travel vs cash is pretty dang even. The real feather in the cap, though, is that cash comes with a lot less restrictions. Because of that a shift more and more people have realized that cash can play a large roll in their miles and points Swiss army knife. The fact that you don’t need to spend hours searching for saver space is the cherry on top!
Have you started to focus more on cash back or become more willing to turn transferrable currencies into money? Let me know in the comments.
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There’s a number of other factors involved in the cash v. points decision: Do you MS, just how big is your points stash, do you have lots of miles as well, what value are you getting from turning points into miles, are your earnings keeping up with proposed cashouts, are you cash rich compared to points, etc..
I’m comparatively cash poor and points rich, don’t MS, earn around a million points or the equivalent in major currencies every year, use the points for premium cabin long haul flights and accompanying hotels, have around 1.5 million each (in different programs) miles and transferrable currencies. That’s a lot but as an example a family trip to Asia for 4 in business class with hotels makes a hell of a dent in a hurry so I just don’t have enough to cash out into… well, cash. For those who are in different circumstances and have lots of points to convert to cash – props!
Very true Christian so many factors to consider. Your earn and burn rate being the most important of those for sure.
With the rising cost of airline tickets, points and miles will still continue to play a role…maybe not as big as in the past, but they still have their place.
For my situation, the biggest devaluation seems to be coming from transferrable currency, more specially, Membership Rewards. With lots of airlines not opening up saver space, having a stash of AA, Delta, and United miles come in handy.
The hobby taught most of us early on that transferrable currency was the way to go. I still believe that to an extent…just not nearly as much as when I entered this hobby many years ago.
I can still move around the world with AA but the days of being able to flank to Avios to do it seems to be drying up. The same for Delta…with a stash of SkyMiles I do some things that I can’t with Virgin Atlantic. Same to be said with Life Miles/Aeroplan as it relates to United. It’s getting to the point that one may be better off with program specific currency than transferrable. Yea, there’s risk of devaluation but that exist regardless of the manner in which you go about this hobby.
It used to be that transferrable currency kinda provided a shield from devaluation to an extent…now it’s the transferrable currency that is lacking as more programs are opening space to their own currency rather than their alliance partners. There are a lot of days where 15-25K AA miles via a web special is much better than trying to 4x your way to a $500 ticket at 1.1cpp (MR).
I do a lot more cash back than I have in previous years but I still collect a fair amount of points and miles…it’s just more program specific rather than being all in on transferrable currency.
I’m sure many folks would disagree with me and that’s okay but I find MR points to be my least valuable transferrable currency. With Chase having PYB (and Hyatt) and Citi letting most cash out TYPs at 1cpp…it’s only Amex where I have to carry a hefty AF via the Schwab Platinum, play silly monthly credit games to justify the cost, and all of that just to cash out at 1.1cpp.
I’d rather pick up a no AF Citi Rewards+ and at least get 1.1cpp on the first 100k redeemed each year. Sure it’s less than what you can do with MR points but with TYPs I don’t have to carry high AF fee cards to generate points (Amex Gold and Green) just to cash out via another high AF card (Schwab Platinum).
Thinking of just earning cash back, I’d take the Citi Premier, Double Cash, and Rewards+ set up which is a much better (and cheaper) set up over any Amex combination in my opinion…and you’re only spending $95 annually to cover a nice spread of categories…all uncapped. With Amex you’re at $1,095 for a Green, Gold, and Schwab Platinum.
Some great points and I do think with domestic carriers abandoning award charts and playing games even when it is saver space they have nuked partnership values a bit for sure. That in turn has brought down the value of transferrable currencies.
I think miles and points will always have a place they just are not the end all be all they were 5-6 years ago because of the move to static values tied to the cash price loyalty programs are trying to achieve.
Mark, in my opinion, when (not if) Amex turns off the printing press of MR points, it’s going to be a HUGE eye opener for those who are fairly new to this hobby. These 100k+ signup bonuses with extra on grocery or dining, and the bonus upgrade offers can’t and won’t last forever.
When 4x goes back to being the norm and the crazy AU and upgrade/downgrade game comes to a halt, it’s going to hit some folks like a sack of bricks to an unexpecting face.
You know it’s bad when just last week I couldn’t hardly find any U space on AA, economy on Delta via VA yielded better results than when searching the same on AA. But United, those jokers make it hard to find any domestic first class space. They’re pricing at 25.6k…just enough to keep the seat from going saver.
But it’s their sandbox and their rules, our job is to win in spite of them.
Domestic flight and hotel prices are insane right now and finding availability is a huge pain for sure. Hopefully as people get back to international travel that calms down. I am not sure if airlines add back all the routes they took away to be honest.
Some people also seem to be doing a 180 on travel portal bookings, specifically with the venture x card…
I still think portals have way too many hassles personally to use them. I would rather book direct and cash out the points at the same rate elsewhere to avoid the middle man. In the past portals offered a bonus for using but now they are equal to cashing out for every currency so they are pretty much useless imo.
Go ahead and cash-out points if you must but at least make sure you’re getting at least 1 cent/mile in value for them. I couldn’t stand it when a family member got all excited redeeming MR for something at Amazon “because it was free”. At $0.007/mile it was a complete waste of points. That 80K award for a domestic flight is OK if the cash cost of that ticket is around $1K.
Very true – that always kills me. Especially with Ultimate Rewards where you could just cash it out at a penny each and then pay for the thing and come out way ahead.
There has and always will be a diverse set of reasons why some people will scoff at redeeming miles for cash, and others find that cash is king. It’s always about personal utility. As they say, one person’s trash is another person’s treasure. One may find it a complete waste of miles to redeem 25K or even 40K points for a flight in economy from LAX-SFO, but there may be reasons for that only the owner of the points can justify.
In the end, the ease of earning points in the last few years have made this calculus easier for everyone to get points. And many people don’t have the tolerance to make the effort to to maximize value.
It has gotten a ton easier to rack up points, and they have lost value. I think both those play a role in people starting to shift their thinking.
It’s about time! I’ve always been in the minority of followers who come here for the deals I can turn into cash. My travel is never by air and frequently involves no hotel chains so points are only useful as cash. I got roasted once for saying MR points are the least valuable and by extension that the BfB is a sock drawer card. There are no nuances, restrictions or black out dates to cash. Every penny is worth a penny!
MR points are great for international flights. If that isn’t your go to then I think the Schwab cash out is the next best option. Amex has made earning them so easy that I think I value them a lot less than I used to simply because I know I can replenish them fairly quickly.
What if someone has (say) 25+ million points in the bag and is unlikely to ever need another airline point the rest of one’s life? Like that guy who earned 40 million points and wrote that book. Additional airline points provide no value to this person. Let’s assume the same for hotels. For such a (lucky) person, cash back would seem to be the only strategy providing value. Nick over at FM has touted cash is king and there’s a strong argument for some.
To be fair I have to say Benjy was years ahead of everyone else in the blogosphere on this front.