Why Points and Miles Are the Best Insurance Policy

Oct 26, 2018

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

If you’re booking flights or hotels on a card that offers a bonus for travel purchases like the Chase Sapphire Reserve, you’ll likely have certain kinds of built-in protection if things go wrong. These policies vary by card and by issuer, but generally speaking, they’re limited to flight delay and trip cancellation coverage, and even then they only apply to specified eligible reasons. “Weather and mechanical delays” doesn’t even begin to cover the range of curveballs life can throw at you, whether you’re at home and not expecting to travel or halfway through your vacation.

Of course, when things inevitably get thrown off plan, having a cash buffer is the easiest way to get them back on track. While a main point of travel rewards is to take free (or nearly free) trips with your friends or family members, I’ve found another key benefit to this world. Over the years, I’ve experienced first-hand how points and miles, especially flexible transferable points like Chase Ultimate Rewards and American Express Membership Rewards, can act as a great “insurance” plan when I need them most. Here are a few personal stories from my own travels where my “extra” points really saved the day, along with some general tips for you to do the same.

In This Post

Getting “Walked” From A Dorm

My girlfriend and I spent most of college chasing each other around the world, with one of us studying abroad for a summer or semester and the other coming out to visit. When she got accepted to a five-month program in Sydney, it was my turn to start booking flights. I got incredibly lucky right off the bat: American Airlines had a major fare sale at exactly the same time I had a $500 voucher burning a hole in my pocket. I was able to book a five-day trip from Washington-Reagan (DCA) to Sydney (SYD) for ~$250 out-of-pocket.

In order to stay ahead of the jetlag, we spent our first day moving constantly. After going directly from the airport to Bondi beach, we did the entire 6km walk to Coogee and thus planned to sleep in the next day. However, we were woken up at about 8:00am by a harsh knock on the door of her dorm room. An employee of the dorm calmly but sternly reminded her that they have a zero tolerance guest policy. Never mind the fact that she had a single within the apartment and had cleared my visit with her roommates. I had to leave. The guy even smugly suggested that I decamp to the hotel across the street for the night. No thanks.

Even if it was an accident, the Park Hyatt Sydney was a real treat
Even if it was an accident, the Park Hyatt Sydney was a real treat

Unwilling to let this derail my trip, I grabbed my suitcase and we went to brunch to make a game plan. Sydney is a modern, English-speaking metropolis, but this was one of my first international trips, and there was no one around I could ask for help. All I had at my disposal was a pretty solid stash of Ultimate Rewards points and an IHG free night certificate. In about 15 minutes I transferred some points to Hyatt and booked us one night at the Park Hyatt Sydney and another at the Intercontinental Sydney.

We had an amazing time, obviously, and my girlfriend even got to play tourist in the city she’d been living in for three months. We now have a running joke: when life hands you lemons, check into the Park Hyatt. Guaranteed fix, and it didn’t cost me a penny.

Family Comes First

One of my close friends from home grew up estranged from her father. She had a pretty rough childhood but always tried to make the best of it. We drifted apart a bit once we left for college, but one day I got a call from her saying her dad had turned up in a VA hospital in bad shape. He had days, maybe just hours left, and she desperately wanted one last chance to try to patch things up. She knew nothing about my points hobby but was asking if I had any idea how she could get from Washington, DC to Columbus in the shortest amount of time humanly possible.

Without missing a beat, I whipped out my computer and found her a Southwest flight that left in just two hours. I transferred points instantly from my Chase Sapphire Preferred Card (this was before the Reserve had launched), and she ended up getting a few whole days to spend with her dad. The flight was pretty cheap, no more than ~$200, but even today I regard this as my best redemption ever. Vacations and new experiences are an incredible perk to this hobby, but family comes first, and I was so fortunate to be able to help in this situation.

Always Have a Plan B

Stock traders often talk about hedging their bets, using fancy complex tools like options and derivatives to limit their losses if the market goes haywire. While it’s almost impossible to lose when you’re getting free flights, it never hurts to have a backup plan to protect yourself. This is especially true in the following circumstances:

  1. You need to travel on very specific dates and don’t have any flexibility.
  2. You’re aiming for a hard-to-get award like Singapore Suites or Qantas A380 first class.

After I used up my 5/24 slots with Chase, the next miles I started seriously collecting were (pre-merger) SPG points and Alaska miles. I had my sights set on Cathay Pacific first class for a trip to Thailand, but I needed to leave the US on one or two specific days, and I couldn’t find a single Cathay award seat that worked for me. So I acted like a trader and booked a hedge: for 130,000 United miles locked in an ANA first class flight from Chicago-O’Hare (ORD) to Tokyo-Narita (NRT) with a connecting flight in Thai first class to Bangkok (BKK). This backup plan would get me where I needed to be (and quite comfortably at that, should I need to actually use it).

With only six seats in the first class cabin, Cathay Pacific awards can be tough to find

That didn’t happen, since the award I wanted ended up showing up a week or two before my trip. I paid $100 (as a United Premier Silver member) to cancel my original booking and locked in my ideal routing. If my $11,000+ Cathay Pacific ticket cost me $125 instead of just $25 in taxes, that’s still a pretty good deal in my book. And more importantly, if that award hadn’t opened up, I would’ve still made it to Thailand on time and in style.

This is a strategy I continue to apply with my award bookings whenever possible. For example, Korean Air allows 30-day holds on award tickets, even if you don’t have the miles in your account yet. I’ve been dying to fly the carrier’s 747-8, and I have two first class awards on hold for two different trips while I figure out which one I actually want to take.

Can’t Handle The Heat

The week I spent in Okinawa was incredibly enjoyable except for two pretty major problems. The first (entirely my fault) was that we forgot to rent a car. Naha is a lovely city, but if you’re going to Okinawa to scuba dive, like my girlfriend was, you’ll be making plenty of trips to the north side of the island. And with no public transit outside of Naha and no car of our own, we were easily spending $60-90 each way on cab fares. And then there was the other thing…

I still have a lot of trouble converting between Fahrenheit and Celsius, so when our Airbnb in Okinawa was sweltering hot every day, I didn’t read too much into it. I blamed it on our tropical location in the middle of July and simply turned the air conditioning in our room up as high as it would go. But by the second or third day it was getting pretty unbearable — we even stopped showering in the morning to get out of the house faster.

We finally found the thermostat about halfway through our stay, and I will never forget the number on the display: 43. That’s right; our host had it set to 43 degrees Celsius, or about 110 degrees Fahrenheit. Her English wasn’t great, and even with the help of Google Translate we couldn’t convince her to turn it down to a less sweltering temperature. Airbnb customer support also wasn’t able to help, but we knew we had to get out of there.

The Ritz-Carlton, Okinawa
The Ritz-Carlton, Okinawa. Another one of those “happy accidents”.

As with my experience in Sydney, I wanted to move on as quickly as possible without ruining our trip, so I quickly pulled up my SPG app and looked for hotels on the island. As luck would have it, there was one right near the next day’s dive site: the absolutely stunning Ritz-Carlton Okinawa. I booked us two nights and got right back to enjoying some of the clearest water I’ve ever seen.

Strategies for You to Use

Of course, these stories are all specific to my experiences, but there are a few key takeaways that can help ensure you have this “insurance” policy for your next trip:

  • Transferable points are key: We discuss transferable points here at TPG all the time, and there’s a reason. They allow you incredible flexibility when things go awry. What if I didn’t have Chase points in Sydney? I’m sure I could’ve found an inexpensive hostel miles from my girlfriend’s school, but that would’ve meant money out of my pocket and time away from each other. This type of rewards currency allows you to wait until you’re ready to pull the trigger, and since many Chase and Amex transfers are instantaneous, you hopefully won’t be left waiting.
  • Elite status can help: Another popular topic on this site is elite status. This isn’t just about the first-class upgrades or free breakfasts; it can also involve benefits that are decidedly less glamorous. My lowly United Premier Silver status saved me $25 when I cancelled my award flight on ANA and Thai, but other tiers could’ve provided even greater savings.
  • Last-minute doesn’t have to be expensive: Both of these items (transferable points and elite status) can be particularly valuable when you need to book a last-minute award ticket. Many airlines charge close-in booking fees when you redeem miles just a couple of days or weeks before departure. These are often discounted or waived for travelers with elite status, but transferable points can help even the non-status flyer. For example, if you had both Chase and Amex points and needed a last-minute domestic flight on United, you could transfer your Membership Rewards points to Aeroplan instead of sending Chase points to United. You’ll likely need the same number of miles for the redemption but will save $75 per passenger, since Aeroplan doesn’t charge a close-in booking fee.
  • Find the sweet spot of your account balances: Most of us here at TPG subscribe to an “earn and burn” philosophy when it comes to points and miles to guard against sudden devaluations. However, the only way points and miles can act as an insurance policy is if you actually have them. Try to find the account levels that give you a little cushion without being over-leveraged with one currency. Once again, transferable points are critical in this endeavor (notice a pattern?).

Bottom Line

In the grand scheme of things, most of my stories were minor hiccups that are fun to look back upon and smile. However, this same idea of using travel rewards to minimize your costs for last-minute trips applies to more serious circumstances as well. If there’s an accident or unexpected death or illness in your family, points and miles can help you get where you need to be as fast as possible. Even if your credit card offers a travel insurance policy, there’s always room for “self insuring” with your own loyalty program currencies to protect against the unexpected.

2018 TPG Award Winner: Mid-Tier Card of the Year
Chase Sapphire Preferred® Card



CARD HIGHLIGHTS: 2X points on all travel and dining, points transferrable to over a dozen travel partners

*Bonus value is an estimated value calculated by TPG and not the card issuer. View our latest valuations here.

Apply Now
More Things to Know
  • Earn 60,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $750 toward travel when you redeem through Chase Ultimate Rewards®
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • No foreign transaction fees
Intro APR on Purchases
Regular APR
17.99% - 24.99% Variable
Annual Fee
Balance Transfer Fee
Either $5 or 5% of the amount of each transfer, whichever is greater.
Recommended Credit

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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.