Rewards aren't always best: 4 times I book a paid rate instead of redeeming points or miles

Unless you're earning more points and miles than you can redeem on the trips you want, part of your booking process is deciding whether to redeem rewards or book a paid rate. After all, you'll want to save your points and miles for when they provide the most value.

My husband and I travel full time as digital nomads, so we can't cover all our trip expenses with points and miles. As such, we frequently must decide when to book paid stays and flights and when to redeem points or miles.

You can use TPG's valuations and awards-versus-cash calculator to decide when booking a paid rate is mathematically better. But, as you'll learn in this article, sometimes the decision may involve more than just comparing your redemption rate and our valuations.

In this article, I'll discuss four times when we usually book a paid rate instead of redeeming points or miles. For each situation, I'll provide some examples of recent bookings and discuss why we decided to book a paid rate instead of redeeming rewards.

To use a credit card perk

We have over 60 rewards credit cards, and many provide statement credits on select travel purchases. These statement credits can be valuable, but you'll usually need to book paid travel to use them.

For example, we each have the Hilton Honors American Express Aspire Card (see rates and fees) so we each get up to $50 in statement credits each calendar quarter when we use our Hilton Aspire cards for airfare purchases made directly with an airline, through amextravel.com or the Amex Travel App™. So, we each book at least one flight with our Hilton Aspire cards each quarter to use this credit.

A few days ago, we booked $97-per-person Malaysia Airlines flight from Singapore to Kuala Lumpur, Malaysia, to use this Hilton Aspire credit, and earlier this year, we booked $93 LATAM flights from Cartagena to Bogota in Colombia to utilize this credit. In both cases, we could have redeemed points or miles. But since we would have gotten less than a cent per point or mile doing so, we decided it was a good time to use these credits.

Meanwhile, statement credits such as the up-to-$50-per-quarter Hilton statement credit for eligible purchases made directly with a property in the Hilton portfolio on The Business Platinum Card® from American Express and the up to $200 in statement credits semiannually for eligible purchases made directly with participating Hilton resorts on the Hilton Honors Aspire Card are ocassionally the reason I book a paid Hilton stay. Note that a Hilton for Business program membership is required (enrollment is required for select benefits).

I paid for most of a three-night stay at the Hilton Cartagena Hotel this spring using the Hilton Aspire resort credit and Business Platinum quarterly Hilton credit, and I applied another quarterly Hilton credit to a one-night stay at the Hampton by Hilton Munich City Center East.

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Related: How to claim missing Amex statement credits

The paid option is significantly more appealing

You can't book every flight or hotel with points or miles, especially at a good rate. So, when we needed to fly from Dublin to Prague this spring for a friend's wedding, we had two primary options: Redeem miles for a connecting Oneworld or Star Alliance itinerary or book a paid nonstop Ryanair flight.

Many award travelers would have just booked the connecting flight to avoid Ryanair. But we compared the two options and found booking a Ryanair bundle that included a carry-on, a checked bag and extra-legroom seats for each of us provided the best value. We had a good flight and got to our destination quickly.

Sometimes, award availability isn't there on the flight you want. Malaysia Airlines flies a nonstop flight from Kuala Lumpur to Male in the Maldives, and award space never opened up for the date we wanted to book. So, about a week before our desired departure date, we snagged a paid fare on the flight. We could have redeemed points for a booking through a credit card portal, but I'd rather save my transferable points and miles for more valuable redemptions.

Some flights and hotels also aren't bookable through major loyalty programs. And even if you can redeem credit card rewards when booking through the issuer's portal, doing so usually won't provide outsize value. For example, if you want to book a seaplane between Vancouver and Seattle, you'll almost certainly need to book a paid rate with the operating airline.

Related: Airline credit cards vs. travel credit cards: Which are best?

Award costs are high

We'll often book paid nights or stays when award rates are exceptionally high. For example, while Niseko, Japan, offers several points hotels, none of them are ever available at what we consider to be reasonable award rates during ski season. So, we avoid the expensive award stay and instead choose a local property we can book through AAdvantage Hotels to earn additional Loyalty Points.

Some destinations also have higher award rates than we want to pay. This is sometimes a result of dynamic award pricing that follows high paid rates, but it is also frequently a result of a destination not having many limited-service properties. For example, Corfu, Greece, has plenty of resorts you can book with points, but few, if any, limited-service properties in the hotel loyalty programs we use. So, we often book paid stays at properties outside our primary loyalty programs in these destinations.

You'll also find disproportionately high award rates on some flights. For example, consider these two flights. You can book either flight for $252 in economy, but the award rates are drastically different.

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This difference makes booking the earlier flight a good redemption, and the later flight a poor redemption. If you book the earlier flight, you'd get 3.29 cents per mile, while the later flight would only give you 1.01 cents per mile. So, if you want to fly on the later flight, you'd want to book a paid rate (or hope the award rate drops) if your goal is to maximize your rewards.

Related: 10 mistakes to avoid when redeeming airline points and miles

Paid rates unlock a valuable promotion

We also often book a paid rate when a valuable promotion makes it worthwhile. For example, we increased our redemption threshold earlier this year during a IHG promotion for double elite nights that required paid nights. During this promotion, we booked paid stays at IHG properties unless we got 1.5 cents per point or higher when redeeming IHG points.

Similarly, although you can redeem IHG points for stays at some of the best Six Senses properties, we've booked paid rates for all three of our Six Senses stays. After all, you usually won't get a high redemption rate when redeeming IHG points for Six Senses stays. Plus, you can often book lucrative paid packages through Six Senses that include valuable perks such as up to 40% off room rates, half-board and discounted seaplane transfers.

Some flight promotions also require paid flights. For example, I spent about $2,800 on flights to complete the Turkish Airlines "6 Continents" challenge and earned 1 million miles. Awards flights weren't eligible for this challenge, so I needed to book paid flights to complete it and earn the 1 million Turkish miles.

Related: My 4 top travel credit cards — and how they elevate my trips

Bottom line

Unless you have more points and miles than you can use on the trips you want to take, you'll need to decide when to redeem points and miles and when to book a paid rate. You don't want to unnecessarily hoard your points and miles, as devaluations can occur. But it's smart to consider your redemption rate and many other aspects I discuss in this article when deciding whether to redeem your rewards for a specific stay or flight.