How is that for a click-bait title?
So, if you are an obsessed miles and points hobbyist, you’ve probably read these two posts:
“Don’t save your money. Spend it as fast as you can.” Can you imagine anyone giving that advice? And, if they did, would you listen to them? No way (a quote from the beginning of the post). Basically, devaluations happen, but opportunities will always present themselves. I do like the term “opportunistic hoarding.” Was it perhaps inspired by my post “The opportunist, the hoarder and the survivalist”?
And here is the rebuttal from The Free-quent Flyer (with a The):
“Keep an emergency stockpile if you must, but don’t second guess yourself when redeeming any and all excess points you earn — that’s literally what they’re there for!” (also a quote from the article). For the record: I do not agree with the name-calling in the post, though it’s made in passing. I still feel it’s a good read, which is why I’m linking to it.
So, who is right?
Actually, both are. Say what? Well, if I’m being honest, I think Free-quent Flyer won this battle, but only when it comes to my family situation. You see, the biggest determination here IMO is how much money you have in your savings account. Those who have hundreds of thousands of dollars either invested in stocks or mutual funds can afford to be picky about their CPM/CPP (cent per mile/point).
For the rest of us mere mortals, using loyalty currency becomes much more of a no-brainer. I’m not talking about taking trips like there is no tomorrow, but rather regular vacations you would plan anyway, with an occasional impulse weekend getaway thrown in here and there (just because you can).
We are relatively low on savings at the moment, and have some significant bills coming up within the next few months. If I needed to buy airline tickets right now and could redeem my miles for as little as 1 CPM, I would. With my AAdvantage miles, I would be shooting for 1.1 CPM just because that’s how much I paid for them back in the day. So, getting this return would allow me to at least break even. I’ll be honest, if I could go back in time, I probably would pass on this very speculative purchase.
However, if I had a lot of money saved up and no major (cash) expenses coming up in a near future, I would be much more picky about my CPM. Because Frequent Miler is right: There will always be sweet spots in airline and hotel programs. So if you are rolling in dough (kind of), by all means, pay cash and wait for an opportunity to let your miles and points live up to their full potential.
But I’m burning my stash on mediocre redemptions.
P.S. Please, read the comment from Erik, he makes some good points.