7 Points and Miles Mistakes That Can Cost You
Update: Some offers mentioned below are no longer available – Citi Hilton Honors Reserve Card
One of the keys to a good award travel strategy is avoiding errors that can cost you time, money and points. Today, TPG Senior Points and Miles Correspondent Nick Ewen explains how.
As the saying goes, everyone makes mistakes. This is true with pretty much all aspects of life, but it’s especially applicable to our hobby. Even the most seasoned award traveler can slip up, resulting in missed points or miles, poor redemption values or even an inability to travel. Fortunately, the most common mistakes are easy to avoid, so today I’ll take you through these errors and explain how to make sure you can best take advantage of your points and miles.
Mistake 1: Not signing up for loyalty programs
Have you ever boarded a plane and glanced at a fellow passenger's ticket? If so, you may be surprised when you see that there isn't a frequent flyer number on the boarding pass. I have also regularly heard exchanges like this when checking into hotels:
Front Desk Agent: "Would you like to join our ________ program? You can earn points that can be redeemed for free hotel stays."
Guest: "No thank you."
Hearing these conversations astounds me — it's like they have no idea what they are missing! Back in 2013, TPG commissioned a survey from The Princeton Group to investigate this phenomenon, and he found that only 67% of travelers collect points and miles at all.
I'm sure many are deterred by the complexity of some of these programs, and others feel like they'll never have a high enough balance for a meaningful redemption. However, even the most casual traveler who takes just a few trips a year can earn enough points for a free flight or hotel stay. I will sign up for any and all loyalty programs (even obscure ones like The Cooper Club, which is tied to a specific restaurant about 45 minutes from my house!). I always encourage my friends and family members to do the same. Don't miss out on these points and miles!
Mistake 2: Not putting eligible purchases on a credit card
Another big mistake I frequently see involves everyday purchases. I've been behind countless customers in line at supermarkets or sitting next to numerous diners at restaurants who use a check or cold, hard cash to pay for their purchases. Part of me wants to have my own Points Intervention with them! My mother-in-law is a HUGE offender in this area. A couple of years ago, she and my father-in-law were traveling to London for a few days before a British Isles cruise, and despite a reservation at a Hilton property, she refused to open the Citi Hilton HHonors Reserve Card to get 10 points per dollar, avoid foreign transaction fees and enjoy Gold status. At least I was able to dissuade her from purchasing travelers cheques before she left...
If you want to build up your account balances, one of the quickest (and easiest) ways to do this is through everyday spending. I charge everything I can to credit cards, whether it's a bonus category purchase or just a regular transaction. I tend to avoid swiping my cards at merchants that charge fees for using plastic, though you can certainly do things like pay your taxes or charge college tuition to a card if the points or miles you earn outweigh the fees you'll incur. Just don't follow my mother-in-law's "cash is king" mantra.
That being said, do not fall victim to the next mistake...
Mistake 3: Not paying off your balance in full
This mistake actually topped my list of 10 commandments for credit cards earlier in the year, and for good reason. While incurring small fees for purchases may make sense (especially if you are chasing a sign-up bonus or trying to reach a spending threshold for another bonus), any interest you accrue on a credit card balance will more than cancel out any points or miles you'd earn.
My TPG colleague Jason Steele gave a great overview of how credit card interest charges work last month, but in essence, a card issuer will calculate interest based on your average daily balance. As a result, if you run up a large balance in the first month and don't pay it off in its entirety, you'll still be hit with a large interest payment, even if you pay off a large chunk (or almost all) of that statement balance. So even though you want to earn as many points and miles as possible, be sure to spend within your means so you can pay off the entire balance every month.
Mistake 4: Letting points or miles expire
This mistake also showed up on my 10 commandments list, and it's incredibly important to remember. Airlines and hotels have varied expiration policies, with some as short as 3 months (I'm looking at you, Spirit Airlines!). Fortunately, a few currencies will never expire, notably Delta SkyMiles and JetBlue TrueBlue points; IHG Rewards currently fit in this category, but the program is moving to a 12-month expiration window in May 2016 as part of the recently announced changes.
However, you generally can reset the expiration clock through qualifying activity. I always recommend making at least one purchase per year on all open and active credit cards. For airlines and hotel chains, you don't need to take a paid flight or complete a paid hotel stay; you could use a co-branded credit card, make a purchase through an online shopping portal or even initiate a point/mile transfer from a participating partner.
Another great tool is AwardWallet, which appeared on Jason Steele's list of the best online tools for award travelers. This service allows you to track many of your account balances in one place, and the paid service will actually alert you when you have points or miles that are about to expire. It's a great way for newcomers (or anyone with a busy schedule) to keep tabs on your loyalty program accounts and prevent this mistake from becoming a reality.
Mistake 5: Playing (or not playing) the last-minute availability game
My wife and I are both advanced planners, and I have been known to lock in award flights on the first day the schedule opens for booking. However, many friends and family members are procrastinators; in fact, I just had one friend ask me to help him find two business class seats to Europe on specific dates for next month. You mean a trip during peak season without any flexibility with just a month's notice? Sure! On a related not, I also have a bridge in Brooklyn to sell you ...
Not booking ahead of time, especially when you're traveling to a destination during high season, is a huge mistake that can completely derail your travel plans. If you find availability, don't assume that it will be around forever. Some programs will even allow you to make a reservation when you don't have enough points in your account.
On the flip side, you should also periodically check to make sure that the airline (or hotel chain) hasn't opened up additional availability in the weeks (or days) leading up to your trip. For example, Delta could open up Level 1 space when you had booked a Level 2 award, saving you thousands of miles. Unfortunately, airlines do charge hefty change fees on award tickets, though you may be able to avoid these fees by upgrading to a higher class of service or through elite status (most do not pay change fees). You also may gain additional flexibility when a last-minute schedule change or equipment swap occurs. However, it's up to you to search for this inventory!
Mistake 6: Redeeming points and miles for gift cards or merchandise
Everyone has their own goals when collecting points and miles, and gift cards or merchandise often seem like great ways to redeem them. After all, these cards are basically like cash in your wallet, and getting that free iPad sure feels better than spending hundreds of dollars at Best Buy! However, these tend to be very poor redemptions when compared to the (potentially) more valuable hotel rewards or airline award tickets. At best, you'd be getting 1 cent per point/mile of value, which can pale in comparison to other redemptions.
For example, Hilton HHonors has a shopping mall with a variety of merchandise and gift card options. Maybe you are interested in an Xbox One with Kinect. Unfortunately, that will set you back almost 500,000 Hilton points:
The same model is currently available on Amazon for $469.99, meaning you're getting a pretty terrible redemption value of less than 0.1 cents per point.
Gift cards on the site are slightly better, with $50 gift cards for 25,000 points and $100 gift cards for 50,000 points. Still, this value of 0.2 cents per point is still significantly lower than TPG's most recent valuations, which pegged Hilton points at 0.5 cents apiece.
Mistake 7: Squeezing too much "value" out of a redemption
This final mistake applies to experienced award travelers, and I have been guilty of this myself. Oftentimes, I find that I am chasing a redemption rather than planning a vacation. For example, back in the glorious days of US Airways Dividend Miles, you could book a business-class award ticket from the US to North Asia with a stopover in Europe for just 90,000 miles. I took advantage of this last year, flying from New York to Istanbul to Beijing before returning to New York. However, to "maximize" the value of these miles, I booked the following routing:
- Newark to Oslo (21-hour overnight stopover)
- Oslo to Brussels to Prague (23-hour overnight stopover)
- Prague to Istanbul (3-day stopover)
- Istanbul to Beijing (destination)
- Beijing to Tokyo (17-hour overnight stopover)
- Tokyo to New York-JFK
My goal was to visit as many cities as possible, but it wound up being too much of a whirlwind trip to really enjoy each destination. We were more tired upon arriving back home than we were when we left; not much of a vacation!
The same philosophy holds true when your ideal routing requires additional miles. Sure, we all want to minimize how many miles we spend, but saving 5,000 miles may not be worth it if you wind up adding a connection or a lengthy layover to your trip. This also applies to last-minute trips such as family emergencies. A regular economy award ticket may not be as "valuable" or luxurious as one in Singapore Airlines first class, but if it fits your schedule and keeps money in your pocket, it's a good redemption in my book.
Everyone strives to be as diligent as possible when earning and redeeming points, and hopefully you have avoided some of the more egregious mistakes on this list. In this case, knowledge is half the battle! Be sure to check out my airline mistakes and hotel mistakes posts for additional pitfalls that can impact your ability to redeem your hard-earned points and miles.
What do you think are the biggest mistakes people can make with their points and miles?