4 Lessons From my Credit Card Points & Miles Journey

I
signed
up.
Since
then,
I’ve
spent
hundreds
of
hours
reading
websites
devoted
to
travel
hacking
and
credit
card
points
miles,
as
well
as
listening
to
podcasts
about
the
topic.
I’ve
learned
a
lot
of
lessons,
a
few
of
them
the
hard
way.

Points
and
miles
can
be
a
powerful
tool
that
consumers
can
use
to
reduce
the
cost
of
travel,
but
it’s
not
a
strategy
that’s
a
slam
dunk
for
everyone.

Here
are
four
things
to
consider
before
jumping
into
credit
card
rewards.

1)
There’s
No
Such
Thing
as
a
Free
Flight

While
some
in
the
points
and
miles
hobby
refer
to
any
flights
or
hotel
stays
funded
by
points
or
miles
as
“free”,
I
don’t
see
it
that
way.
When
you’re
spending
pounds
or
points,
you’re
giving
something
up.
Your
hotel
or
airline
points
might
seem
like
they
came
to
you
at
no
cost,
but
that’s
not
the
case.

Consider
this
example:

An
airline
credit
card
gives
you
one
airline
mile
for
every
pound
you
charge
using
that
card.
There
are
multiple
free
(that
is,
no
annual
fee)
credit
cards
that
provide
a
2%
rebate
on
all
purchases,
in
the
form
of
actual
cash,
which
means
there
is
an
opportunity
cost
to
acquiring
miles
on
an
airline
credit
card.

In
this
case,
1
airline
mile
=
2p.
As
such,
a
“free”
flight
that
you
redeemed
30,000
airline
miles
for
actually
costs
£600,
as
that
was
the
opportunity
cost
of
acquiring
those
miles.
That
£600
flight
could
be
an
excellent
deal
if
the
cash
price
of
the
ticket
was
a
multiple
of
£600,
but
it
certainly
wasn’t
free.

2)
Points
and
Miles
Can
Be
Offset
by
Fees
and
Charges

The
biggest
caveat
to
all
of
this
is
the
monetary
value
of
the
points
and
miles
earned
as
credit
card
rewards
can
easily
be
offset
by
late
fees
and
interest
charges.

If,
because
of
an
inconsistent
income
stream,
you
tend
to
carry
credit
card
balances
or
you’re
not
in
a
position
to
pay
off
your
credit
cards
each
month,
the
downside
may
be
far
greater
than
the
potential
upside.
Racking
up
credit
card
debt
and
paying
interest
and
fees
is
a
suboptimal
strategy.

There’s
also
the
possibility
that
the
“reward”
aspect
of
the
points
and
miles
game
leads
you
to
spend
money
you
wouldn’t
have
otherwise
spent
(I
always
remind
myself
the
rebate
on
anything
that
I
don’t
buy
is
100%).

3)
Optimising
Your
Spending
for
Rewards
is
Draining

Maximising
your
return
from
your
credit
card
spending,
in
the
form
of
points,
miles,
or
cash
back,
requires
a
fair
amount
of
mental
energy
as
you
juggle
a
wallet
(or
a
proverbial
sock
drawer)
full
of
different
credit
cards.

A
few
years
back,
in
a
podcast
interview
in
which
he
expressed
scepticism
at
the
whole
idea
of
the
points
and
miles
hobby,
financial
journalist
Felix
Salmon
referred
to
this
extra
mental
effort –
which
credit
card
do
I
use
for
each
purchase? –
as
an
added
“cognitive
load”
for
consumers.
That
phrase
has
stuck
with
me
ever
since.
In
my
email
exchanges
with
a
fellow
points
and
miles
enthusiast,
we
frequently
ask
ourselves
if
certain
points-maximising
strategies
are
worth
the
cognitive
load
they
entail.

4)
Credit
Card
Rewards
May
Lead
to
‘Lifestyle
Inflation’

Finally,
there’s
the
issue
of
lifestyle
inflation.
While
this
generally
refers
to our
tendency
to
inflate
our
lifestyle
as
our
income
rises,
it
can
also
occur
because
of
points
and
miles.

On
paper,
the
judicious
use
of
points
and
miles
is
a
way
for
consumers
to
save
money
on
travel
they
would
have
paid
cash
for.
In
practice,
based
on
both
my
own
experiences
and
what
I’ve
seen
within
the
points
and
miles
online
community,
lifestyle
inflation
appears
far
more
common
than
actual
“savings”.

Which
makes
sense.
After
all,
If
you’re
sitting
on
a
stash
of
airline
miles,
booking
a
flight
with
them
still seems free,
even
when
you
understand
the
math
behind
it
all.
Further,
when
booking
a
flight
with
points,
you
might
be
more
likely
to
spend
more
of
them
to
fly
premium
economy
or
business
class
than
you
would
if
you
had
to
pay
the
difference
in
actual
cash.
Ditto
for
booking
a
hotel
suite
instead
of
the
standard
room.

Many
points
and
miles
enthusiasts
are
up-front
about
this
aspect
and
explicitly
state
they
participate
in
the
hobby
precisely
for
these
reasons:
to
be
able
to
travel
more
frequently
and
in
a
more
luxurious
way
than
they’d
be
able
(or
willing)
to
do
if
they
were
paying
out
of
pocket
for
each
airline
ticket
and
hotel
stay.
This
is
an
absolutely
legitimate
approach,
but
recognise
that
if
you
go
down
that
road,
you’re
not
likely
to
actually
reduce
your
spending.

What’s
Next
For
Points
and
Miles?

Over
the
past
decade,
I’ve
paid
for
a
lot
of
my
family’s
travel
using
points
and
miles.
But
I
have
to
admit
I
haven’t
tracked
it
closely
enough
that
I
can
point
to
a
specific
pounds-and-pence
amount
of
savings.
And
there
has
definitely
been
at
least
some
lifestyle
inflation,
as
we’ve
made
a
few
trips
we
probably
wouldn’t
have
made
if
we
were
paying
cash.

In
further
articles,
I’ll
explore
the
mechanics
of
all
of
this:
how
and
why
credit
card
issuers
offer
these
rewards
and
how
rewards
programs
have
become
part
of
the
business
model
of
airlines.
I’ll
also
highlight
some
of
my
favourite
points
and
miles
case
studies.

This
article
was
originally
published
on
our
US
homepage
and
has
been
re-edited
and
adapted
to
make
it
suitable
for
UK
audiences

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