Points, miles and whether they are worth it

Frequent flyer and hotel loyalty programmes generate an enormous amount of discussion. Whether they are worth engaging with depends on circumstances that are easy to assess.

How the programmes have changed

The significant shift is from distance-based to spending-based earning.

Most major airline programmes now award points based on the fare paid rather than the distance flown, which means a cheap long flight earns little and an expensive short one earns a lot.

Redemption has similarly shifted, with many programmes moving from fixed award charts to dynamic pricing, where the points required track the cash fare.

Which substantially reduces the possibility of outsized value, since the arbitrage that existed under fixed charts has largely closed.

Where value still exists

Several specific cases.

Premium cabin redemptions on partner airlines, where programmes retaining award charts sometimes price long-haul business or first class at a level far below the cash fare.

This is where the largest values are found and it requires research and flexibility.

Transferable points from credit card programmes, which can be moved to whichever airline or hotel programme offers the best redemption for a specific trip.

Flexibility is worth more than commitment to one programme for most people.

Hotel free night certificates, which some cards provide annually and which frequently exceed the card's fee in value.

Status benefits rather than points, which for frequent travellers can be worth more — lounge access, priority boarding, free baggage, upgrades and better service recovery when things go wrong.

Where value does not exist

Honest assessment.

Points earned from occasional travel accumulate too slowly to reach a useful redemption before expiry or devaluation.

Economy redemptions on dynamically priced programmes generally offer poor value per point.

Points spent on merchandise, gift cards or car hire are almost always worse value than travel redemptions.

And chasing status by taking flights or stays that are otherwise unnecessary costs more than the status is worth for almost everyone.

Devaluation

The structural risk.

Programmes change award pricing without notice and generally in one direction.

Which means points held are a depreciating asset, and the practical implication is to earn and spend rather than to accumulate over years.

The exception is a specific saved balance for a known future redemption, and even then the risk is real.

Credit card programmes

Where most points are now earned by most people.

Sign-up bonuses are the largest single source of points for most cardholders, and they are substantial.

The considerations: the annual fee against the benefits actually used, the spending requirement to earn the bonus, and the effect on credit files of multiple applications.

Card benefits beyond points frequently matter more — travel insurance, purchase protection, no foreign transaction fees, lounge access — and are worth valuing separately.

Carrying a balance eliminates any benefit, since interest exceeds any rewards by a wide margin.

The time cost

Rarely counted and substantial.

Optimising loyalty programmes takes research time — award availability, transfer partners, routing rules, promotional periods.

For someone whose time is worth anything, the hours spent may exceed the value obtained unless they enjoy the process.

A great many people do enjoy it, which is a legitimate reason to engage and is different from it being economically rational.

The practical position

For an occasional traveller: hold one card without foreign transaction fees, join the programmes of airlines you actually use, and do not organise travel around points.

For a frequent traveller: concentrate activity where status has genuine value, use transferable points rather than committing to one programme, and treat points as a currency to be spent rather than saved.

For anyone: never buy a flight, a hotel night or a card that would not otherwise make sense in order to earn points, which is where the value is most reliably destroyed.

Expiry

A practical detail that costs people substantial balances.

Most programmes expire points after a period of account inactivity, which varies from a year to several.

Activity generally means any earning or redemption, including a small transaction through a shopping portal or a transfer.

Which means a balance can be preserved indefinitely with a trivial annual transaction, and is lost entirely by doing nothing.

Checking the expiry policy for any programme with a meaningful balance takes minutes.

General information about travel, not financial advice. Programme terms change frequently — check current conditions before making decisions.