Don’t hoard your miles and points!

Don’t hoard your miles and points!

The Chase Sapphire Reserve has quickly become one of the most popular credit cards of all time, so much that Chase actually ran out of metal cards.

And now that many people’s 100,000-point Ultimate Rewards bonuses have started to post, I’ve talked to many people who are treating this like some untouchable emergency reserve (no pun intended), only to be used for the absolute best travel experiences, and paying cash for everything else.

The thing is, these 100,000+ points (currently worth $1,500 in travel) are not like putting $1,500 in a savings account, the value of which will grow slowly over time, or an investment account, the value of which will likely grow relatively quickly over time, with the potential for losing value. The value of these 100,000 points will only decrease the longer you hold off on using them.

Why? Because unlike in a savings account, when $1,500 is worth $1,500 no matter whom you bank with, the value of your points is determined by the company issuing them, in this case Chase.

So right now, while each point is worth 1.5 cents when redeemed for travel, Chase could easily decide at any point that they are worth 1.3 cents when redeemed for travel, which would instantly decrease the value of your 100,000 points by $200. If this sounds familiar, it’s because Citi recently made similar changes to its competitor Citi Prestige card, decreasing the value of points redeemed for American Airlines flights from 1.6 cents per point to 1.25 cents per point. Thankfully, they gave almost a year’s advance notice when doing so, but companies are not always as generous when making changes, such as when Alaska Airlines overnight raised the price to redeem MileagePlan miles for first class flights on Emirates.

Furthermore, with Chase announcing that they lost $200 million in profit due to Chase Sapphire Reserve signups, some analysts are already speculating that this is a sign that it is not sustainable for Chase financially.

But furthermore, even if Chase keeps the value of their Ultimate Rewards points for Reserve cardholders at 1.5 cents per point when redeemed for travel, there’s no guarantee that its transfer partners won’t make a change to their chart.

Right now 100,000 points transferred to United could get you four roundtrip nonstop flights between the East Coast and West Coast, at 25,000 per roundtrip flight. But United could suddenly decide to raise that to 35,000 per roundtrip flight, meaning that those 100,000 points wouldn’t even get you three flights anymore. Or maybe United doesn’t change the price of its awards, but rather negotiates a 5:4 transfer ratio instead of 1:1, meaning that 100,000 Ultimate Rewards gets you 80,000 United MileagePlus miles instead of 100,000.

Another popular redemption is transferring to Singapore Airlines for their amazing first-class Suites product, which tend to run for just under 100,000 KrisFlyer miles (which can also be transferred 1:1 from Ultimate Rewards) one-way plus taxes and fees. But it’s also one of the hardest awards to find availability on. And Singapore could also take the route of Air France at any point, deciding to no longer allow award redemptions for their first-class product anymore.

So while I know it’s tempting to save up your points for an “aspirational” flight or redemption (no doubt made popular by all the bloggers talking about such flights), the reality is that by the time you have the chance to use them that way, they might no longer be worth as much (or even be able to be used in that way).

In other words, if you have a chance to use your points (within reason obviously), just use them.

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