Thursday, April 13, 2006

When To Use Reward / Mileage Points link to this post

Just a friendly reminder, you are looking at an article at the OLD financialfreedumb.com. Click here to read this post at the NEW financialfreedumb.com. This may not always work.

Saving money, understandable. Saving reward points and miles, not. I mean you can earn interest on saving money or investing, but what does holding on to points give to the holder? Nada. Zip. Nothing. So when to use it? How do you maximize the value of each mile or point? Well, with points it's easy to figure out...that is if you use it to redeem gift certificates. Since redeeming points for electronics and other items have varying values, it's more difficult to figure out when you get the most for your points. I typically stay away from non-gift card rewards. I only have experience with Chase's Flexible Rewards and Citi's ThankYou Network. Typically, if you can find a reward where 1 point = 1 cent, then it's a good deal. For example, at the ThankYou Network, you can get a $50 BestBuy gift card for 5,000 points. If you look at a $100 BestBuy gc, it's 10,000 points, so there is no advantage waiting. However, if you get a $25 BestBuy gc, you have to redeem 3,000 points. Not good. With miles, it get a little trickier. You have to take a look at your individual location, your planned destination, your airlines travel rewards, and time of the year, since off-peak and peak seasons can have different mile requirements. The best time to use your miles would generally be when you are traveling the furthest distance between your origin and your destination. For example, if you are California, you can fly to Europe during off-peak for 40,000 miles. Not a bad deal! Now if you are on the east coast, you can fly to Hawaii for 35,000, which is a much better deal than flying to Europe for 40,000 miles. For folks in Hawaii, 40,000 miles will get you a trip to Europe! Pretty awesome deal. Where I run into problems is the fact that I don't use these miles right away, and they end up sitting in my account, accumulating. If it sits there for a few years, then you really start losing value! Why? Because even though you're not getting the most for your miles, they are sitting there doing absolutely nothing. So, the best time to redeem is highly dependent on the situation. That's it for now...


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