(Video) Sunday Reader Question: Points and Friends- How to Handle Reimbursement

by on September 9, 2012 · 25 comments

in Credit Cards, Sunday Reader Questions, Video Blog Post

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This week we have a question from an anonymous reader regarding proper reimbursement for sharing points with friends:

“If you use points to book a flight for you and a friend or a hotel room that a friend shares, what do you think is the appropriate protocol for sharing the cost? For instance, if you book a Starwood hotel with SPG Cash & Points and get $0.04 of value out of each point, would you split the cash paid and charge them a certain amount per point? Flights can also be tricky, especially if paying for the flight with cash would be very expensive.

Perhaps the trickiest situation, though, is when you are awarded free hotels/companion tickets, e.g. Hyatt credit card sign-up bonus or Delta companion ticket. Would you ask the friend to contribute some cash in exchange for them reaping the benefits of your award nights/flights?”

In general, if I cover a hotel room or flight for a friend, I just ask them to cover the taxes/fees and depending on how valuable the trip is, I’ll ask them to get dinner or pay for my tour or something similar. My situation is also unique because I have a ton of miles and points and cherish the time I get to spend with family and friends, but I’m lucky that I have more miles and points than I can personally use.

However, I know my situation is not the same for everyone and I think you bring up a good point. We work hard for our miles and points and contrary to what some people may think – they aren’t free. Whether it’s jumping through hoops or taking a hit on our credit to get that great credit card bonus, there are inherent costs to accruing miles and points. So, I don’t think it’s out of line to ask your friend to chip in if you use miles/points that greatly defer their costs. Here are a couple of my tips:

1) Don’t get greedy. I wouldn’t charge them half of the rack rate of a hotel room, for example. Go with your gut.

2) Don’t charge your friends what you personally value the points at. I would conservatively value the money that your miles/points saved them – especially if you used a currency that you don’t value as much as others.

3) Agree on a fair price before you travel so there aren’t misunderstandings.

4) Don’t feel compelled to use your miles/points for friends. If you aren’t comfortable using your miles/points for your friend, then don’t do it! Instead, give your friend my website and tell them to carry their own weight and build up their own point balances- anyone can do it! “Teach a man to fish and you feed him for a lifetime.”

How do you handle reimbursement when you use your hard earned miles and points for others?

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • Karen B

    Depends for me. If it is a trip with a family member or friend that otherwise could not go Nd I really want them to, I do not ask them for anything. However, if it’s for a trip where they would go regardless, I ask them for what it otherwise would have cost, less a small amount. I also will not do it, if it doesn’t seem like the best use of points. This has worked out well for me.

  • Michael

    I prefer for them just to pick up dinner or a museum pass or something I’d have to shell out for.

  • Sal

    This is a very good question and I’ve run into this situation many times. Recently I had the opportunity to fly to Chicago round trip using only 15k BA Avios points for a flight that cost over $400 if paid with cash. I had 3 friends wanting to come with me. I had enough Ultimate Reward points to transfer to BA to cover the flights of everyone (60k points total) however this would have drained my account. If I didn’t use the points, then they wouldn’t have been able to come because the price of tickets was too high. They all were willing to pay me $150 for the tickets (or only $.01 value per point), but this is a very low value especially when I’m draining all my points. How much is it worth it to me to have them all come with me? I worked extremely hard to earn these points to give them away for next to nothing. Now I feel like every time we travel that my friends will look to me to get them great deals by using my hard earned points. I’ve tried to get them into the points game, but they don’t seem interested.

  • LivelyFL

    I think TPG advice is sound.

  • MichaelJapan

    Same here.

  • Dhurd

    My biggest issue is that many of my friends don’t understand the value of miles/points. I ran into a problem with this a couple years ago that actually ended up costing a friendship. I used Hilton Honor points for four nights at the Conrad Tokyo where room rates start at $500. I didn’t ask anything from my two friends that came with me. I should add that I was in my early 20′s and worked extremely hard for these points (mostly playing bing rewards/ back when you could do this). Anyways when the small bill came for the rollaway bed and some fees they asked for my share and could not fathom why I insisted that they pay. They ended up paying, but I never traveled with them again.

  • Ryan

    Interesting question. Friends and family who know my points habit (er addiction) have asked me many times to ‘buy’ points. I always say I don’t sell, but I have been able to use for others when they were in a bind which is a nice thing to be able to do. I’ve also gone on a several trips with a bunch of friends where the deal was I cover the flights, you split all my other costs (hotel, rental, food) among yourselves. We agree on a reasonable max beforehand and everyone gains. I get a free trip and they go on a trip they otherwise would not have taken.

    Like others said, I always try to get them to get their own points, but few do.

  • Dan

    You’ve actually hit on a problem that I’ve observed, but for which I don’t have a solution. When one tries to do a mix of paid and award tickets, and everybody wants/has to be on the same flight, many times, the cheapest fares and the lowest award tickets aren’t for the same flights. What do you do?

  • Dan

    Many moons ago, there was a “mistake fare” to HNL on NW out of LAX. I got round trip airfare and three nights in a hotel for $300. I wanted my parents to join me, but was willing to part with the miles for one ticket but not two. I worked it out with my dad where I’d give them a ticket, and for the other, he’d pay me what they would have reasonably paid for a revenue ticket.

    More recently, one of my co-workers expressed interest in getting his family of four over to Europe on miles. I told him that he could probably do three tickets on UA via Chase pretty easily, but the fourth may be tough. Since he knows I’m sitting on a large stash of miles (I told him) he inquired if I was willing to part with a ticket’s worth at a price less than what he’d have to pay for a coach ticket.

    I politely declined. I explained to him the opportunity cost of me giving up my miles (I don’t have an endless supply of them) and that say 60k UA miles are worth far more than $600 to me. At the very least, it’s my own coach r/t ticket, and at most, it’s a one-way J ticket to Asia, which is worth far, far more than $600. He understood.

    I like to teach a man how to fish :)

  • Chemist661

    Last year, I had my sister & brother-in-law stay overnight on their way from Australia to Michigan via Los Angeles where we live. They insisted on paying us for the hotel. The rates that night at the decent LAX Hotels (Starwood, Hilton, Marriott, etc) were almost $200/night so we used my wife’s Starwood points. The Sheraton Gateway was closest to the terminals and only cost 4000 Starwood pts. Even the low level motels (Motel 6) was north of $80/night so we charged them less ($80) what the cheapest motel cost for that night which was $80+.

    They were very happy to have stayed at a very nice hotel for less than the price of the cheapest motel.

  • lam

    I am planning a trip on points with a friend. I think I will ask them to pay the fees associated with the ticket + some sum probably $100. This will be a economy ticket to Asia. Then for the hotels I hope to stay with SPG cash + points so I will probably ask them to contribute some of the cash. I probably would not take this trip by myself so I feel the points I use are the cost for me to travel with someone.

  • PJ

    A friend indeed is a friend who never tries to make a $ when helping out a friend in need.
    My friend , my wife and I are attending a wedding in Maui leaving from LAX. This is ONE best opportuntity to enjoy Avios LAX OGG round trip non stop cost 25K avios and $5.00. Of course we are booked on it .

    Our friend just got her Amex Gold Business card. While waiting to ring in 75K for 10K spend , she is NOT allowed to borrow MR points to capture the 40% transfer .

    My proposals:

    I can advance the 25K avios ( ~18K MRs with 40 % transfer bonus until Sep 27) and book the flights for her; and Her ways to pay back:

    a. she can seize another trasnfer bonus after she has the MR points and transfer ~25K avios back to my BA FF account ; even without bonus, all she has to do to to trasnfer 25K MRs to my BA account . However the truth is this 40 % on going is NOT going to be the last one .

    b. I think 18,000 Sapphire Ultimate Rewards points is as good as 18K , that is her second option. 18000= $180 to some old fashioned 1 point one penny taker..

    Btw, if any of you trusted ones is holding a elite status in Star Alliance, say Platinum Premier with UA.
    A good friend wont mind letting you transfer yout Chase UR into his/her FF and reservations be booked out there. Hope you can envision how often you can save a bundle of change fees miles redeposit fees.. My understadning is as long as an elite member is NOT profiting on the process and NOT on an ongoing basis. he/she is NOT violating the terms and conditions.

  • PJ

    Last year, Sheraton Gateway LAX costed only 3K or 4K on weekdays before the upgrade ; now 7K

  • PJ

    hmmm i was ready to trade now 18K CHase UR= 25K avios = 18K AMex MR when the 40% trasnfer is going on so far in the last 12 months 3 times at 50% bonus now 40% until Sep 27.

    Not a chance I would transfer UR to avios at 1 to 1 as long as I can fall back on Amex trasnfer bonus.

    Btw, I do transfer UR to Southwest with 1 to 1 ratio after my fa,ily already exhuasted 150K from 3 new card sign on goodies.

  • PJ

    hmmm Did I bump into you at the Sheraton Lobby? Before the upgrade ( thanks for TPG’s alert) I also booked 2 weekend nights for 6 months to let my daughter fly down from SF monthly on weekends for 3K per night… now 7K per night and no break for weekends.

    I did not win the Sheraton contest…. welllllll wellll too cheap but real

  • PJ

    i saw on the web they were bidding 1.57 cents per Chase UR .

    I bet somebody is packaging the bought points to “manufacture” a business upgrade with upgradable economy tickets.

    yes 1.57 looks high when you can fly r/t coast ot coast for less than $300 with another 6K miles earned on paid ticket.. However, there are often days a r/t nonstop coast -coast costs more than $500.

  • RakSiam

    I think your last comment is very interesting. Sort of like teaching some one to fish instead of just giving them a fish. People are happy to enjoy the fruits of your “labor” but aren’t interested in doing any work themselves. In the end I suppose what matters is how much you want to provide for your friends.

  • Guest

    Tried this on a recent trip to Cancun. We paid for five nights at the Hyatt Regency, and only asked that they paid for dinner. Needless to say, they took us to a taco stand each night (costing them about $4). Any time I mentioned about going somewhere nicer, they said “why, these tacos are so good and they are cheap”. From now on, I try to just give them a really good deal (1 cent per mile). It’s too bad when people don’t appreciate how much of a good deal you are giving them.

  • Clare

    My friends are not into collecting points. When I travel with them, each person buys his/her own plane ticket. If I’m sharing a room that has been booked totally on points, I just contribute it, since I would have occupied the room anyway at the same cost. If I’m booking a room on points and cash, we split the cash portion 50/50. If the room has been paid for totally in cash and I’ve done the booking, we split the cost 50/50 and I keep the points . All this has been agreed on beforehand. So far that has worked out well for me.

  • Lickthestein

    You people need to stop talking to real life non-internet friends about miles/points. It should be entirely a surprise gift or none at all. Playing games with cpm/you buy dinner/etc is more hassle than it’s worth.

  • Tracy Soldan

    I have yet to provide an award flight to someone else. However, I attend fan club conventions several times a year and regularly share my room (typically paid for with points) with other club members who would not otherwise be able to afford attending. My standard terms are, “Contributions graciously accepted but not required.”

    Some of my guests have insisted on paying me something, others have taken me to dinner, and some have not been able to offer anything beyond heartfelt thanks and a promise to put me up if I’m ever in their neck of the woods. Each is fine in my book.

  • BobChi

    I would treat the person once and offer to teach them how to play the game. If they chose not to, I would expect them to pay their own way in the future, whether with a flight, sharing half the cost of the room, etc. I find my friends spectacularly indifferent to all of this. They marvel at the trips I can take, but when I offer to show them how, they just aren’t interested in going to any effort.

  • BobChi

    We go on different flights if necessary. If everyone’s an adult, it’s no big deal today when everyone has cell phones. Twenty-five years ago, I might have hesitated for fear of maybe having trouble finding each other later, or learning what happened in case of some flight irregularity, but today that’s really not an issue. It may take a little coordination at the airport at the other end.

  • Bmbcgo-chat

    Completely agree, I’ve had friends who I’ve tried to help get credit cards, etc., and they never do. I’ve then had an occasion where a trip comes up and they want to go, and don’t want to spend the money, and expect me to let them share my room, and I say no way.

  • JS

    IMO, don’t use points on friends/family unless they are gifts. Feels awkward to charge them.

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