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I'll admit that I am about to contradict something you've likely seen me write on AwardWallet quite a few times. In general, I (and most of us in the points and miles hobby) am a fan of new ways to redeem points. However, I'm only a fan if it provides a new, potentially valuable way of redeeming your points.
Being able to redeem points in new ways isn't always a good thing. Just look at how many times we've written something akin to “you can now redeem your points for x, but you shouldn't.”
Recent data proves that the sheer number of ways to redeem your points has increased recently. That's true not just for flexible points — where you expect varied ways to redeem — but even airline miles that you can now redeem for ski passes or rides to the airport.
Here's why more ways to redeem points isn't always good news.
Evidence of More Ways To Redeem Points
Just to ensure we're clear there are far more ways to redeem points now than there were last year, all you need to do is check page 5 of the iSeatz report on credit card reward program trends. Here, you'll find an analysis of 25 bank rewards programs and the types of redemptions they offer for travel and lifestyle categories.
And here's the key for reading that chart:
Look at the number of spots marked with symbols indicating a new redemption within the past year. It's impressive.
Why This Isn't All Good News
Here comes the contradictory part. New redemptions aren't necessarily good news because many of these redemptions provide poor value.
Don't get me wrong. I don't expect everyone to maximize every mile. The person redeeming Delta SkyMiles at sub-optimal rates to visit family at Christmas is happy with the redemption. I'm not talking about these types of redemptions.
However, many of the “there's a new way to use points” announcements often provide less value than what that program already offers.
Here's a perfect example: In late 2023, Citi launched the ability to use your points at Dollar General. The redemption rate fetches 0.8¢ per point at the register.
However, Citi already had options for redeeming points at 1¢ each for a check in the mail or a statement credit against purchases. Thus, cardholders already had the option to swipe their card at Dollar General, earn points on the purchase, and then use their points to cover that purchase — at better rates.
In cases like this, new redemption options aren't meaningful if the value is worse than what you could already do.
Where an increase in options becomes meaningful is when you gain ways to use points that you couldn't before. Redeeming points for concert or sports tickets or in a food delivery app at fair value would be novel. It also would provide good value if the redemption value is worth it to the cardholder — and isn't worse than what you could already get.
Where you won't find value is in redeeming points at a lower value than you'd find with current options. We consistently encourage people to “do the math” to see what value they're getting for their points.
Sometimes, that math can be difficult, such as trying to figure out if x number of points is “worth it” for a once-in-a-lifetime experience that you can't buy with cash — just bid on with points. Is that a valuable use of points? It can be. It just depends on how much you value those points.
In general, though, you should always pause before redeeming your points for the new, shiny option. The same goes for any smart approach to finances. Can you use your points in a more valuable way? With most of these new redemption options, the answer is “yes.”
Bottom Line
There are many ways to use your points, and the number of redemption options will likely continue to increase. When new, valuable options launch, we get excited. But when new, poor-value options launch, we at AwardWallet will be here to encourage you away from those redemptions.
Having many new options for using your points shouldn't be confused with having new options that are good.
If history is any judge, we'll probably have to write another “you can redeem points for x now, but you shouldn't” post in the near future.
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Thank you for the reality check about all the new and evolving points redemption choices out there. Two thoughts:
1) The loyalty program participant (that’s us) should always have a plan for why we accumulate points, what the end game (and plan) is for using them. In that light, a new use for points should affect that plan only if either it is a better value way to our end use for the points, or if other changes in our life make us re-think our points and miles strategy, including the effects of all these new uses. In my own case, changes in my life to make short and medium distance trips more practical in my schedule, along with the rise of “dynamic award pricing” which now favors better value for short and medium distance redemptions even in premium cabins – have led to a fundamental shift in my points and miles strategy, which for years was all about (many memorable) first and business class redemptions “across the big pond”.
2) A big challenge with “doing the math” is situations like JetBlue (and maybe other fixed-value reward programs) – transferring points to JetBlue versus using credit card points to buy JetBlue tickets via the bank’s travel service. Yes, the traveler might earn some airline points back by going through the bank if “doing the math” says to do that, on account of the bank effectively buying the ticket for cash. But some of us as a rule buy our airline tickets, including award tickets, directly from the airlines, due to additional leverage or at least communication ability buying direct (or via airline partners) gives the traveler in the event things “go south”. Which, of course, NEVER happens when traveling, right??? And now, as Award Wallet has reported in other posts, American Airlines seems to be leading the way with their latest program changes to favor those who book direct over those who book through the banks. Other airlines might follow suit..