I have 1.5 million credit card points. At this stage, should I cash them?


Should you store credit card points?

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Question: I have 1.5 million points on my credit card that I accumulated over 15 years. Should I cash them in or keep accumulating? I use it as an emergency fund.

To respond: Experts say it’s time to use some of these rewards, mostly because they don’t get more valuable over time. “In fact, rewards tend to lose value because banks, airlines and hotels often change the rules and increase the number of points or miles required for a free flight or a free hotel stay. says Ted Rossman, Principal Industry Analyst at CreditCards.com.

These types of devaluations are especially likely as the travel industry continues to recover from COVID. With a glut of points and miles in the system, providers want to liquidate them at ratios that are favorable to them.

“Cash them! Points and miles rarely, if ever, appreciate each other. Credit card companies, as well as airline and hotel loyalty programs, are constantly looking for ways to make their refunds profitable. And that often results in a devaluation,” says Nick Ewen, content director at The Points Guy.

Your emergency fund must be in savings, so cash in on those points smartly

In other words, unlike your 401(k), you don’t want to be a point millionaire. “Look for ways to earn and burn those rewards along the way. It shouldn’t be an emergency fund, you need cash for that,” Rossman says.

But with 1.5 million points accumulated, you have to think about how you use them. “Even though I say it’s good to spend it and bad to hoard it, you don’t want to throw it away either,” Rossman says.

As for how best to use them, Rossman says you should aim to get at least 1 cent per point or mile. “Those 1.5 million points should be worth at least $15,000. If the cash back redemption rate is only 0.5 cents per point, I would avoid redeeming that way,” Rossman says. Depending on the redemption rules for that particular credit card, it might be worth considering liquidating quite a few of those points to create a real emergency fund, but only if you can get at least 1 cent per point or mile. . “Less than that and the math really indicates that you have to travel,” says Rossman.

In general, it is often best to transfer to airlines or hotel partners when available. This is especially true if you know what you’re doing and have the ability to travel on the right dates and play well with partners, to the point where you can earn pennies per point or mile. “Some people get things like an $8,000 first-class international plane ticket for 100,000 points. A more realistic goal might be something between 1.5 and 2 cents a piece,” Rossman says.

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