Avoid this Common Points and Miles Mistake
Stacking up balances in rewards accounts can be satisfying. I definitely understand that; hoarding particular rewards currencies in certain situations is something I still do. Over time, though, the jollies from growing rewards account balances can normalize. Larger balances can turn into a source of comfort, all the while sitting there unused. And the relationship can go to unhealthy places – one where certain individuals feel an arbitrary need to maintain rewards account balances for no specific reason. Today, I’m reflecting on this common points and miles mistake.
Rewards Accounts Versus Bank Accounts
Similar to cash money, with more points comes more flexibility. But unlike what’s in our bank accounts, rewards don’t appreciate while sitting there. They don’t really stay the same, either – or we shouldn’t assume that, at least. Over time, rewards value depreciates. And let’s remember points aren’t actually worth anything until they are finally used.
Of course, it’s easier for some to earn rewards at scale than others. Hoarding here and there can make sense based on the opportunity. I’m referring to situations that only present two options: earning a rewards currency or earning nothing. Of course, something is better than nothing.
And for others with limited earning opportunities, actively using entire rewards account balances isn’t exactly attractive. But remember that a rewards account balance isn’t a reflection of an individual’s financial situation. A zero balance doesn’t mean you can’t pay your bills; it just means you can’t book a “free” trip right now. But perceived scarcity can cloud judgment here.
How Scarce Are Rewards, Really?
Seeing a point balance go from several digits to a zero can feel jarring. Returning to that level might seem like a big climb. But in my experience, points, miles, and other rewards balances reliably grow faster than I perceive. The various banks and loyalty programs provide us so many options for earning more rewards. In this way, your stay at zero is fleeting. You’re always burning, but you’re also always earning.
Goals Are the Guide
Before collecting rewards currencies, define and prioritize your goals, travel-related and otherwise. What are you trying to accomplish? Looking for extra cash? Wanting to travel more cheaply? Map your rewards earnings to your primary goals so that you can actively, routinely redeem rewards to zero.
Of course, individuals aren’t perfect. Perhaps you didn’t set your goals upfront and/or you have a bunch of unused rewards accounts. Articulate your goals (better late than never), adapt, and overcome. Quit earning rewards currencies you don’t use and focus on ones you can. Find ways to zero out your moldy balances in more creative ways, perhaps bringing trusted friends and family into the fold.
Celebrate!
In my view, earning points and promptly zeroing out rewards balances is a cause for celebration. That means I’ve picked up rewards and fully realized their maximum value aligned to my goals at that particular time. Rinse and repeat.
Does that mean I’ll miss out on other redemptions? Perhaps, but I don’t care, since they weren’t as important to me, anyway. I think unnecessarily retaining balances leads to endless handwringing, superfluous analysis, and inevitable devaluation. I’d rather be earning, redeeming, and starting over.
A Common Points and Miles Mistake – Conclusion
I’m not covering everything here, but that’s not the point. I think it’s healthy to start a conversation on various points and travel hobby misconceptions. This “minimum balance” conundrum is one I hear often.
Of course, I’m not saying people should redeem everything ASAP all the time. Many aspirational award stays requiring significant point totals. Earning that many points can take time in these situations. On the flip side, don’t fall in love with your point balances.
Instead, I encourage everyone to embrace zero a bit more. You’ll be surprised how often it makes sense – and cents!
