Is This The Golden Age of Reward Travel?

Travel
1

As I write this in 2017, a new United reward devaluation is set to occur. Over the years, each travel reward program has devalued their points on a regular basis. The number of trips you could do with points 10 years ago is much less than the number of trips you could do today and this will likely continue.

However, the earning rate of points has seemed to stay the same. Chase UR, for example, gives 1% to 5% of your credit card spend into UR, which you can then convert into whichever of the travel points you want. However, that conversion rate has not increased over time to compensate for devaluation of the underlying points.

Similar to every other credit card earning program. Southwest gives 1% to 2% on spend in Southwest points on the Chase credit card but those points are worth less as time goes on, which means the value of the credit card has diminished over time.

I have really enjoyed paying little to nothing for travel over the last decade. And I am not one to game CC signup points. I have legitimately received travel points from business travel, and still have a large pool remaining, but over time with more and more devaluations, I wonder what the future holds. Will we look back at the period from about 2010 to 2020 as the era of great reward travel deals? And if so, is there anything we can do about it?

At some point does it make sense to cash out travel points for gift cards? Southwest lets you transfer points to Amazon GC at a 1 to 1 cent ratio. Given Southwest points are worth about 2 cents for travel currently, it’s a bad deal, but eventually they’ll be worth less and less and presumably will sever the Amazon GC washout option, at least at the current rate.

1 Like
2

I agree it’s the golden age, although maybe towards the tail end. It’s the banks have made it possible, along with maybe the durbin amendment that made pins on prepaids mandatory.

Information spreads much faster now, so the sweet spots of any programs get written about and killed easily. Umm, thanks Brian Kelly? They do devalue quicker, but it is also much, much easier to earn them.

Southwest? Flying is always superior. They’re worth ~1.43 towards travel. Maybe a little higher on sub $150 fares.

You could sell them, but there’s not much of a market for them since the average ticket price is so low. Maybe just offer them at 1.2 or so for tickets for friends/family?

1 Like
3

if MMS, TPG and rest of these spoonfeeding “travel” experts stop posting shit 24/7, it might last a bit or really I would hope bank stop paying referrals. Nothing last forever, grab whatever you can and run which reminds me of burning my remaining UA for SE asia sweet spots before it become expensive to travel on thai airways.

1 Like
4

I think the real golden age is when promotions come along to buy miles in size at sub one cent, like the US Airways trackitback promo, or the Pudding Cups. Yes, they cost money, but you can do it all in one shot, without any MS legwork or bank AA.

For instance, I bought about 1.4 million US for about $10,000, less whatever pocket change I got from reselling the stickers. That was about 11 trips US-Asia in first class.

3 Likes
5

Can you explain this one? Does this refer to MS so you can more easily MS via buying prepaid cards and get points on CC spend? If so, how does the PIN thing work? I just started doing light MS and I didn’t get a PIN on the Visa prepaid Debit Card.

6

Before the legislation, one time load prepaid cards like from a drugstore or a grocer didn’t have pins and had to be processed as signature credit,

Pin setup varies by issuer, Some assign one, The most popular ones take the first attempt and make that your pin. It’s in the instructions,

1 Like
8

And how exactly do the PINs help with travel rewards? I assume MS is involved and somehow MSing with a PIN-based card is easier but I don’t understand the connection.

9

Prepaid cards with pin made MS much cheaper.

10

I’m going to doubt it will be cyclical. There’s greater consolidation in the travel world. SPG merged with Marriott. United merged with Continental. American merged with US Airways. Frequent Reward programs are solely a created as a marketing program to attempt to drive consumers to stick with a certain brand. As brands consolidate into fewer and fewer, there’s less reasons to bother with such programs.

I can see a world in 10 years where no FF programs exist at all. The true problem is government regulation. The intuitive answer here is that lack of government regulation allows mergers and consolidation. The true answer is that excessive regulation is what prevents new entrants into the marketplace, thus regulations destroy competition.

1 Like
11

Flexibility is definitely key, You need to be able to book either 330 days or 2 days in advance for the best redemptions. And midweek.

It is a crime how poor domestic availability is these days, especially on AA. It amounts to a stealth devaluation if long haul biz is available but you can’t find domestic connecting flights.

12

You could say it’s the golden age of earning miles and the dark ages of award redemptions.

1 Like
13

Sorry, still not following. What methods of draining prepaid GCs exist if the card has a PIN? Is it running it through a payment processor at a reduced transaction fee rate for debit cards?

14

You can buy a money order with a pin. You can’t without a pin.

2 Likes
15

This.

16

Also Bluebird and Serve if you haven’t been banned.

17

We are on the tail end of the golden age. I think the true golden age was 2010-2015.

After we use the last remaining 40,000 points my wife banked in her Air France Flying Blue account from work travel that ended two years ago, we will likely be done with frequent flyer program redemptions and will use only credit card travel portal redemptions for travel. Credit card points (UR, TY, MR) are much easier to earn, less restrictive for redemptions, and there are fewer devaluations. It just doesn’t seem like its worth keeping up with all the individual brand’s programs anymore. Sure, once we have a trip decided on, I will look to see if transferring points to a program is worth it, but I have stopped getting and using cards that earn directly into them anymore.

1 Like
18

Agree. If you’re a plan-ahead traveler, sale fares bought with bank points are often a better cpm (cents per mile) than airline redemptions.

1 Like
19

[quote=“meed18, post:17, topic:1796”]
Credit card points (UR, TY, MR) are much easier to earn, less restrictive for redemptions, and there are fewer devaluations. It just doesn’t seem like its worth keeping up with all the individual brand’s programs anymore.[/quote]

Generally speaking, I think this is a strong argument. Two things to add:

-Some programs with high value aren’t easily convertible from bank points. I’m thinking of Alaska airlines and Wyndham rewards (especially for their cash + points program.

-Some programs offer a nice bump with status (even though many status levels are overrated). Again, Alaska is good example, with exceptional benefits for MVP Gold and higher, and Hyatt offers an impressive package for its top tier members. To the extent that earning travel vendor points (vs bank points) can help attain these levels, that can be an issue.

1 Like
20

And whether you value the change flexibility of awards vs discount paid tickets. Smart to always consider both. I suspect for the typical working person that has to schedule a vacation in advance, the lack of change flexibility on paid tickets isn’t as much of an issue. Especially without status since free changes are rare anyway.

21

Add in I would bet that “the other airlines” will likely follow Delta’s model of essentially hiding what a flight would cost in airline miles (supposedly tied to the flight’s cost), so much harder to plan. It may take a couple/few years…but “I feel it in me bones!!”

I agree, there won’t be any “cyclical”. The big thing is airlines are devaluing b/c there are BILLIONS (if not trillions?) of unused miles out there and w/ all their profitability from bag fees, X fees, Y fees, and yet to be named fees, it will hit their bottom line…so you see AA essentially making them worthless or extremely difficult to use, delta charging up the butt for them and United still doing their steady devals every 2-ish years.

That said, you see the BANKS, who buy miles from the airlines for the CC incentives, have no reason to increase the # of miles they give on their cards, short those ‘specialty’ cards where they are trying to steal mkt share from another bank (CSP, anyone?). But those are relatively short-lived, while on many other cards where the ppl getting those CCs aren’t “prime cardholders” (i.e. profitable) those cards won’t, generally, have great sign-up bonuses. That said, the business cards best offers have climbed a bit (chase ink/bold cards), but again are short-lived too.

Add in the DRASTIC increase in # of miles for biz (relative to coach) and then the 3x+ increase of F to Coach…well, another ‘hidden’ devaluation, well, the golden age of redemptions, if not over, is closing FAST. If you’re a Coach guy…well, so far it hasn’t hurt THAT badly…

One story I’ll relate is when United and Chase were in a “Oh no you’re not!” game…was when United was (did, but retracted) their domestic flights increasing from 25k miles RT…Chase said “you’re devaluing OUR miles and OUR commercials saying we’re giving you TWO free flights (for 50k signups)”. Anyways, United balked, but slashed elsewhere. In short, it’s only a matter of time before more devals come and it gets worse and worse.

-2 cents

1 Like