Why you should always use your loyalty points as soon as possible

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    Travelling business class or staying at a luxury hotel for next to nothing is attainable if you’re using one of the best travel credit cards in Canada. The process is simple, take advantage of sign up bonuses and earn rates. Once you have enough points, use them on your dream vacation.

    The problem is, to get those high-value redemptions, you need to save a lot of points. For some people, that won’t be an issue, but for most of the public, it could take years or decades before they’ve saved enough for something worthwhile.

    Having a big bank of points definitely gives you some bragging rights, but hanging on them for too long could cost you. Here’s why you should always use your loyalty points as soon as possible.

    Points can be devalued

    There’s nothing wrong with sitting on your points, but you need to be aware that there’s always a possibility that your points can be devalued. For example, it’s not that difficult for an airline program such as Aeroplan or Air Miles to increase the number of points to redeem a flight. 

    Another example is with Marriott Bonvoy, every hotel is assigned a category number. The number of points required for a free night depends on that category and the season. If you didn’t know, Marriott hotel categories can change every year so that hotel you’ve been eyeing could all of a sudden cost more if you don’t book it soon.

    It’s not like these changes happen overnight. Loyalty programs will give you a few months of notice so you can make some reservations in advance, but timing and availability may not work out.

    There’s usually an expiry date

    Just about every reward program has an expiry date, which you need to be aware of. Depending on the program, if there’s no account activity for 12-24 months, your points will be removed. 

    It’s pretty easy to keep things active since you can just earn, redeem or donate some points, but that only works for people who are on top of their loyalty programs. People lose their points all the time, and they can be near impossible to get back. All those years of saving would have been for nothing.

    For this reason, many people prefer to collect bank travel loyalty points such as American Express Membership Rewards, RBC Rewards, Scotia Rewards and TD Rewards. As long as you have an account in good standing with them, your points won’t expire.

    You could pass away

    Some people prefer to save their points for their entire life so they can use them to travel for free when they retire. Unfortunately, life doesn’t always go according to plan. There’s a possibility that you pass away before you get a chance to use your points. Depending on the loyalty program, you may be able to pass on your points to a family member or friend, but that’s not something you should be excited about.

    Instead of having these dreams of living life in retirement, have one or two goals in mind that are much more attainable such as flying first class on Emirates or taking an epic trip through Thailand. Once you have enough points, book a flight right away.

    Some offers are limited 

    A lot of credit cards and loyalty programs give you benefits that are available for a limited time. Why wait to use your points or miles when you can combine them with offers that are readily available to you now?

    For example, about twice a year, WestJet Rewards members get $50 WestJet dollars deposited into their account for free. The catch is, you must use those dollars within a timeframe or you’ll lose them. If you already held the WestJet RBC World Elite Mastercard, you could combine this deal with your free annual companion voucher for a fair amount of savings.

    The Marriott Bonvoy American Express gives you an annual free night voucher that’s good for any room worth up to 35,000 points. Letting that expire is just not a good use of your benefits.

    Then there’s the American Express Platinum Card, which comes with an annual travel credit of $200. Why save your points when you can combine them with that credit every year? Not doing so is like giving up free money.

    Your points have a real value

    Collecting points with a specific goal in mind is an excellent use of your points, but sitting on them just for the sake of hoarding represents an opportunity cost. What do I mean by that? Well, depending on the loyalty program you’re with, and what you can do with your points, you’re basically sitting on a pile of cash.

    Let’s say you’re saving for a business class flight to Asia that costs 150,000 Aeroplan Miles but has a real value of $6,000. Your points would be worth 4 cents each. However, you also travel within North American regularly where 25,000 Miles gets you an economy flight worth $500 (or 2 cents each). Clearly, the trip to Asia is a better value, but how long would you have to wait before you had enough miles for it?

    Using your miles or points for something that you can use immediately is often worth your while since there can always be a devaluation to your points later. The money you save can be used on the vacation you’re taking, on household expenses, or put away in a high interest savings account.

    Final thoughts

    Saving your points for a few years is fine. Heck, saving for a decade probably wouldn’t be a big deal if you’re going for that big prize. That said, I wouldn’t recommend hanging onto your points for as long as possible with no real goal in mind. Use them when you can so you can actually enjoy what you’ve earned.

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