Rewards options when you have too many points


Personal Finance Writer
Rewards expert who writes the “Cashing In” reader Q&A column for

Banks cracking down on reward card applications

If you have been gathering reward points from credit cards
for a number of years, you might find yourself with a lot of points – but no
idea how to spend them.

Recently, received a question from one of
our readers, Sharon, who wrote: “I have saved up 200,000 points. I am retired
and have never used any of the points. Should I just keep saving or do
something with them?”

It’s easy to deride Sharon’s dilemma as a
#FirstWorldProblem, but it’s one that is probably common. A lot of times, we
fall into the trap of seeing an appealing offer – such as a valuable sign-up bonus
or a card with big bonuses for spending in certain categories – and race ahead
to claim the points without thinking through how we might use them.

It can be a good problem to have. Accumulating points is
aspirational, and you can imagine the possibilities in your head – similar to
thinking about what you would do if you won the lottery. Hundreds of thousands
of points can go a long way. And you’re not the only one. There’s a lot of
hoarding going on.

American Airlines, for instance, estimated that at the end
of 2016, the value of unused frequent-flyer miles sitting in its customers’
accounts was worth $669 million of travel.

Get to know your points

If you’re faced with an abundance of reward points in your
accounts, keep these things in mind: 

Understand the
rewards when signing up for a card
You don’t have to know how to spend
every single point when you apply for a rewards card. But if you don’t have a
specific goal in mind, then you will want to ensure you will be able to
use your points in a way you find appealing.

Or make sure the points are
flexible enough to appeal to you. You wouldn’t want to sign up for a credit
card that gives you Southwest Airlines frequent-flyer miles if Southwest
doesn’t fly anywhere near where you live, for instance.

Points tend to
become less valuable over time
Hanging onto reward points isn’t like
having money in the stock market, which is unpredictable in the short run and
tends to go up over time. It’s more like sticking cash under your mattress: It
won’t buy as much in the future.

Travel providers such as hotels and airlines
continually adjust their loyalty programs, and they tend to move toward
requiring more points than in the past, not fewer.

Don’t assume heirs
can inherit unused points
Forgive me if it is morbid to point this out,
but if you have accumulated a lot of points, it’s not a given that your
next-of-kin will be able to use them should something unfortunate happen to

Most rewards programs are vague
about what happens to points when a member dies
, although in practice many
will go ahead and transfer the balance. 

It’s OK to keep
points in reserve
Financial advisers often recommend that people keep an
emergency cash reserve to guard against unexpected expenses or drops in income,
and the same idea can apply to reward points.

Having points that can be used
for travel means you can make decisions more spontaneously and attend family
events that arise on short notice. Cashing in airline miles for travel at the
last minute can be a good deal because those fares tend to be expensive.

Best strategy for using points

Personally, I favor an rewards approach that uses points regularly,
keeps some in reserve and continues to add points through new cards and
everyday spending. Everybody has different comfort levels of how many points is
too few or too many.

Using points for travel tends to offer the best value, but
if you find yourself with too many points, you can often redeem them for cash
or merchandise (at a lower value). Some points are more flexible than others.
It all depends on what type of points you have and what kind of rewards you

If I were you, I’d start drawing up plans to take a trip
using some of the miles but not all of them. With 200,000 points, the
possibilities of where to go are limited only by your imagination. 

 See related: 5 steps to get your rewards in order for the new year, Should you use card rewards to pay down debt?

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