The drawbacks of investing in points and miles for the long term

Points and miles enthusiasts beware: your beloved travel rewards are not a long-term investment strategy. In fact, they are almost guaranteed to lose value over time. The recent trend of devaluations in various loyalty programs serves as a stark reminder of this reality.

In the past few years, we’ve witnessed several major devaluations across popular points programs. From American Airlines severing ties with Bilt Rewards to United Airlines increasing award prices to Europe and Asia by up to 122%, the landscape of travel rewards is constantly shifting.

Even transferable currencies like Chase Ultimate Rewards are not immune to devaluations. With partners dropping out and loyalty programs changing their redemption rates, it’s becoming increasingly challenging to maximize the value of your points and miles.

But what about cash? While it may not offer the same allure as free travel, cash remains a stable and reliable form of currency. With inflation rates on the rise, the value of your rewards points is eroding over time. Opting for cash back instead of points could allow you to invest that money for growth, potentially yielding higher returns in the long run.

The key takeaway here is to redeem your points and miles regularly and avoid hoarding them for too long. Diversification is also crucial – consider switching to a cash-back credit card or exploring different loyalty programs to protect your overall mileage balance.

In conclusion, points and miles should be viewed as a means to an end – a way to fund your travels and experiences in the short term. By adopting an “earn and burn” philosophy and staying vigilant against devaluations, you can ensure that your loyalty rewards work for you, not against you.