When it comes to buying points and miles, there are several rules that can make the process easier and more lucrative. In addition, these rules can increase the usefulness of your purchases, making using them much more lucrative than if you have no defined strategy when it comes to purchasing points and miles. So, what are some of the best rules to make your points and miles purchases lucrative?
The Golden Rule: Buying Points Speculatively is a Bad Idea
You see a deal for a program that is outstanding and incredible. Immediately, the following conversation happens in your head.
“Wow, I have never seen a bonus so high. The per-point value is incredible.”
“Yes, but I don’t have any upcoming travel plans for which I can use these points.”
“But Look at the deal, it’s amazing; surely I will find something to use these points for in the future. This deal is too good to miss out on.”
The next thing you know, your points balance is several hundred thousand up, and your credit card balance is several thousand dollars down, and you feel happy. You have just scored a phenomenal deal and cannot wait to use them for some stunning redemptions.
Fast-forward one year, and you have a big problem. In a few months, your huge balance of points and miles will expire, and your travel plans will not allow you to use them. Alternatively, you have woken up to an email about a huge program devaluation, and the points balance you were banking on is now worth 30% less in terms of travel. In fact, the devaluation is so bad that you don’t have enough points to book the awards you planned, and now you have to pay cash or buy even more points.
Finally, the program announces that it is terminating a partnership in which you were planning on using your points. Now, you are in deep trouble. You have no avenue to use your points, and thousands of dollars are tied up and unusable.
The key here is to never speculate and buying points that way, no matter how good the deal is not worth it. Only buy points in a program you are 100% sure will use most of them within the year.
Points Accounts Are Not Savings Accounts
Since we have paid a lot of money for our points and miles, we tend to view them like money and try to save them up so we always have a healthy balance of points. Psychologically, we like to have a balance of points and miles, just in case. On the same principle, you have some cash saved up for a rainy day.
If you had $1,000 in your checking account and could buy something for $999, you would never do it. Since nobody wants to have a $1 bank balance. We approach points with the same ideas since they work well with money. Many people with a balance of 100,000 points will opt not to book an excellent award for 90,000 points. Since this would obviously deplete your balance by “too much.”
As a rule, points, and miles are there to be earned and burned. You are far better off burning through your points balances and bringing them down than building them up for your next award. You should avoid keeping large balances of points since it can be risky. Focus on reaching a travel rewards goal, redeeming your points, and starting again.
Always Buy Points During A Promotion
If you look at almost every single loyalty program all bar, a few will have points and miles sales promotions. As such, you should always aim to buy points and miles during one of these sales. These will take one of two forms.
Receive a bonus when you purchase points. This type of tiered promotion will give you a number of bonus points when buying points and miles with the promotion. The percentage of bonus on offer varies from program to program. Some offering as little as 30% while others can give you as much as 140%. Make sure to research past promotions to learn whether the bonus they are offering is good. And if it is a regular occurrence. Ultimately, it may be worth waiting for the next offer if you do not need the points, as this is a regular promo.
The second type of promotion is a discount on buying points. These do not give you bonus points but offer a percentage discount. Depending on the program, discounts will vary from 20% to 50%. In addition, many programs have a tiered discount structure. This gives you a greater discount the greater number of points you buy. Like the bonus promotions, do your research to ensure the discount is reasonable compared to historical data, and it is not too common.
Use The Right Card to Maximize Your Rewards When Buying Points
One of the biggest goals of any travel rewards strategy is to maximize the points and miles returns on every dollar you spend on any item. This also applies when you are making points purchases. Initially, you may think that the best credit card to use to purchase Point and Miles in ACME program is an ACME co-brand credit card. While this use of a travel rewards co-brand credit card is true, in some instances, it is not the norm. In fact, in many cases, you will earn a measly 1X.
This is because most point purchase transactions are not processed directly by either an airline or hotel program. As a result, the transaction is not processed as a direct purchase with them, making it ineligible for any points bonus.
Almost every major points purchase is processed by points.com, which does not let you earn any spending category bonus. If this is the case with the program you are purchasing points from. Then your best choice is to use a card optimized for everyday spending and cashback to make your purchase. This way, you will get the highest possible travel rewards for your spending.
The best way to determine who is processing your transaction is to have a look at the URL or offer page. If the URL starts with Points.com or you see the words powered by Points.com. Then you know that this purchase is processed by them, and you should select your purchase card accordingly.
Final Thoughts
Ultimately, buying points and miles can be very lucrative and help you achieve some stunning travel goals at a fraction of the cost of paying cash. The downside is that you have to tie up cash in points and miles and take the risk of devaluations and plan changes.
That said, if you are very careful and strategic with your planning, then you can make purchasing points and miles work for you. However, you should always make sure to tick all your checkboxes before committing to any points purchase. Once it is complete, you are stuck with them until you use them or they expire.
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