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Cashing Out vs Hoarding Points: Knowing When To Hold Them & When To Fold Them

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How To Redeem

How To Redeem?  Establishing Your Points and Miles Redemption Strategy

No, 2020 was definitely not the Year of Travel.  Shocker.  In its place, though, 2020 leaned more towards being a Year of Earning.  For many of us, lots of earning.  Extra point opportunities were coming at us from all directions, from increased welcome offers, to short-term unlimited bonus earning and longer periods of inflated category rates.  Not in recent memory have there been so many opportunities to earn points and miles with minimal effort.  It’s been easy to overly busy oneself with earning at the expense of not redeeming enough of those same currencies.  And we don’t truly benefit from this hobby until we actually redeem.   From my perspective, we don’t talk enough about how to redeem.  How much should you hoard?  How much should you redeem?  What’s a good balance? Does there need to be a balance?  I’ll set the stage for the discussion followed by the cases for hoarding, cashing out, and my current strategy.

Setting a Foundation for How to Redeem

I’ve previously described how important it is to identify your goals, travel-related and otherwise, prior to earning and redeeming points and miles.  After I’ve established those goals, I collect and redeem the currencies that enable me to accomplish them.  I consistently follow this philosophy and encourage others to do the same.  This process naturally leads to big picture thoughts and long-term decision making.  Realistically, though, I know that many just want to get on with collecting points and decide later on how to use them (whether I agree with that method or not).  And often, events occur (pandemic or otherwise) that prevent all of us from redeeming in the timeframe we hope.  Feeling “stuck” with a rewards currency isn’t fun.  Regardless, we all can still actively control our rewards currencies.  How?  By each of us having a tailored strategy for cashing out and hoarding.

How To Redeem

The Case for Cashing Out

For the purposes of this article, I define cashing out points and miles as the following:

  • Redeeming points or miles for cash funds transferred to a bank account
  • Redeeming points or miles for gift cards used to defray normal living expenses.  This includes redeeming for travel gift cards that you would use during normal travel in the future.

With this in mind, let’s jump into some primary reasons to cash out points.  By cashing out, you are:

  • Immediately benefitting from the cash or gift cards when used.
  • More capable of tailoring your redemptions to your unique lifestyle.  Essentially, you are closer to customizing your own travel rewards program.
  • Mitigating against future points devaluation.
  • Creating a perpetual points earning opportunity.  The cash rewards you use earns more rewards (via credit card spend, travel loyalty programs, etc) which can be cashed out again.  Rinse and repeat.
  • Able to obtain superior rates/discounts by booking with cash rather than points currencies.
  • Taking advantage of temporary bonus value of points by cashing out (Chase’s Pay Yourself Back is one example).
How To Redeem
HIlton Honors – my favorite hotel points currency to hoard!

The Case for Hoarding

In our hobby’s context, I define hoarding as amassing large virtual piles of points and/or miles at a rate clearly outpacing one’s redemption rate.  What are some reasons to hoard points and miles?  By hoarding, you are:

  • Maintaining the ability to redeem at potentially high valuations easily greater than cash out rates.
  • Amassing large amounts of a given currency, allowing for long-term redemptions for “free” travel.
  • Keeping the focus on travel rewards, oftentimes the most fun part of our hobby.
  • Leaving your options open with the respective company and their loyalty program for unique or new redemption opportunities.

What to Do?

Again, I highly recommend establishing your goals to determine how to optimally earn and redeem points and miles.  Your goals will then highly inform which currencies to save up and which to cash out (if any).  Otherwise, establish near-term principles for your earning and redeeming.  If you won’t be traveling for the foreseeable future, look more at the benefits of cashing out and other non-travel related redemptions.  A near-term cashout redemption may make sense.  For more active travelers currently, are you planning to use your rewards to decrease the cost of travel?  Why or why not?  Is it better to use those points now or later in your situation?  Take the time to thoughtfully consider why you are earning the rewards currencies you are involved with.  On the redemption side, is it really worth sitting on those currencies without redeeming long-term?

Without thoughtfully considering each currency we earn and how we redeem them, what are we actually accomplishing?  Identify your principles, then actively earn and redeem.  Don’t let all of the bonus earning and limited-time offers distract you from your principles.  Without principles, we are risking time, effort, and money by collecting a wide swath of potentially low value, and maybe unredeemable, points and miles currencies.

How To Redeem
From a miles perspective, I focus on hoarding domestic airline currencies.

What I Do, For What It’s Worth

For my situation, I try to maintain a balance of cashing out and hoarding.  The scales may tip more heavily in one direction depending on my changing situation.  I highly value making my own travel decisions without the unnecessary influence of programs, so cashing out the major bank points currencies is a no-brainer for me.  I have done this with Amex and Chase for years, and I did so increasingly with Citi last year.  My one exception currently is a big Disney World redemption with Citi’s Cruise and Tours department prior to the Premier’s 25% point devaluation in April.  Overall, my long-term spend strategy at scale is primarily focused on bank point programs.

But free flights and hotel rooms for the rest of my life is another huge principle in my redemption strategy.  Of course, I want to leverage hotel and airline programs’ currencies to accomplish this feat.  I focus my earning on high-return, low spend opportunities here – primarily via new card welcome offers and infrequent bonus earning opportunities.

When our travel picks up more, I will naturally look at replenishing the points currencies I consume most.  Hilton Honors is the biggest one for me – I always want and need more of these points.

How To Redeem – Conclusion

In the hobby, always be cognizant of what you are doing and why you are doing it.  This may sound obvious, but so much in our hobby can take our focus off seemingly basic thought.  Actually, one word sums up this article – THINK.  When that devaluation or other program “bad news” inevitably arrives, you can take peace by knowing you followed your principles/goals.  On the flip side, you can be pleasantly surprised by the good news that comes along the way, too.  Your goals and principles can always change based on your changing life seasons or unexpected events occurring.  What are the principles that drive you in deciding when, where, and how to redeem?

Disclosure: Miles to Memories has partnered with CardRatings for our coverage of credit card products. Miles to Memories and CardRatings may receive a commission from card issuers.

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Benjy Harmon
Benjy Harmon
Benjy focuses on the intersection of points, travel, and financial independence (FI). An experienced world traveler, husband, and father, he currently roams throughout the USA close to expense-free. Benjy enjoys helping others achieve their FI and travel goals.

Responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.


  1. I had 271K chase points sitting….

    I cashed them out and bought crypto. Already up 20 percent with that money and up 6x on my money prior to that. A year from now I’ll either regret cashing out my points even though we can’t travel anyway or I’m gonna be real happy I did and have a lot more money haha

    • Will,

      But you could’ve held the points to maybe go to the Maldives in three years, on the chance of getting an upgraded suite! 😉

      Seriously, yours is a great example. You got value out of your points now, and their value effectively appreciated with the cashout and investment. I talk more about that in this article.

  2. I have been a hoarder for a while. I am now retired and 2020 was to be a year lots of travel abroad. So much for those plans. Hopefully 2021.

  3. I used some AMEX MRs to get $600 in Home Depot gift cards to replace my Mom’s gas stove. She needed it and I’m not traveling anytime soon, so…..

    • Glen,

      Well done! Great near term redemption, especially considering the circumstances. Indeed, points aren’t worth anything until they are used.

  4. I appreciate each side of this story. For me, I am blessed, and have no need for the cash from points. Additionally, I don’t need another income stream that makes my taxes even higher than they are. Trumps tax changes hurt me.

    Also, with so many of the traditional MS “known” opportunities gone, sitting on points is not such a bad idea right now. Just waiting on a vaccine to go, go, go.


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