WSJ Your Money Briefing - How to Get the Most Out of Those Stockpiled Credit-Card Points or Miles

Episode Date: November 12, 2024

Some credit-card companies estimate that cardholders earned more than $34 billion in travel rewards last year – but many people are unsure how to use them. Wall Street Journal travel reporter Jacob Passy joins host J.R. Whalen to discuss ways to turn those points into your next vacation.  Sign up for the WSJ's free Markets A.M. newsletter.  Learn more about your ad choices. Visit megaphone.fm/adchoices

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of Your Money Briefing. Send us a voice note to ymb at wsj.com or 212-416-3413. And now onto the show. And now onto the show. Here's your money briefing for Tuesday, November 12th. I'm JR Whalen for The Wall Street Journal. Americans amassed more than $34 billion in travel rewards just last year. But many people leave those points and miles unused because they're unsure of how to use all of them.

Travel experts say the first thing to consider is moving them out of your credit card account. Oftentimes airlines will run incentives or deals where they'll give you an extra bonus for transferring your points from like Chase or American Express to them. And so that will make them go even further and will help you make those trips a reality much more easily. We'll talk to Wall Street Journal reporter Jacob Passe about ways to get the most out of travel rewards after the break. Exchanges, the Goldman Sachs podcast featuring exchanges on rates, inflation, and U.S. recession risk.

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People are afraid not to get a good value out of them. There's this idea that you want them to go as far as they possibly can or you have that dream vacation that you're saving up for. A lot of folks will save them up for a rainy day. If you need to fly somewhere last minute, maybe it'll be cheaper to do it if you book with points. But they're not necessarily the best ways of using those points, because, well, you're not using them. What happens to your points if you just

let them sit in the account? It depends. All this varies from program to program. But generally speaking, the points over time are going to lose value. What we've seen in the travel space for years now is that basically there's inflation. So as the cost of travel goes up, so does the cost in points to book that same travel. But with certain programs, you'll also see points potentially expire if you don't use them or if you're not engaging with the program.

So that's something to keep in mind. Those points may not be there in your account if you're not paying attention to those policies. You spoke with executives from rewards websites. What kinds of travel do they recommend people plan if they're going to use points? It can be a bit of anything. There's certain rules of thumb that they abide by. Transatlantic business class flights are going to be the biggest bang for your buck oftentimes. You'll find these like crazy deals on those. But obviously that's not feasible for everyone and not everyone has enough points to put towards something like that.

But really at the end of the day, if you're getting about one and a half to two cents per point, if you're comparing it to the sticker value of the trip that you're planning, that's a good use. Once people decide to book a trip, what's the first thing that travelers should do? They should start off by doing an inventory. You wanna know how many points or miles you have, where you have them.

And again, this is also a good opportunity to do that, kind of check to see how much they're worth and whether any of them are set to expire. If you have a cache of points that are only good for a few more months, you should prioritize those versus something that's not going to expire. Is it cheaper to transfer your credit card points to an airline's frequent flyer program? It often can be. So for starters, the redemption values through the airline airlines own programs can often be better than what you would get if you book through your credit card company's travel portal. Oftentimes airlines will run incentives or deals where they'll give you an extra bonus for transferring your points from like chase or American Express to them and so that will make them go even further and will help you make those trips a reality much more easily. A moment ago you mentioned a rule of thumb is aiming for one and a half to two cents a mile or point spent. If you do use your credit card company's portal, what's the best way to calculate

the most efficient use of your rewards? So there are a lot of sites out there that are similar to something like Kayak or Google Flights, but instead of showing you the results in terms of how much the flight costs in dollars, they will show you flight options or hotel options based on points. And so you can look at those deals and you can see how cheap they are, but it's also good to go to those tried and true sites like Kayak and Google Flights can see how cheap they are, but it's also good to go to those tried and true sites like Kayak and Google Flights, see how much the flight costs in cash, and then compare it to the points value and you can kind of do the simple math to figure out

what it all equates to. Let's say somebody's using 25,000 points for a flight. What kind of math would be involved there? If you're spending about 25,000 points for a flight, that would cost like around $500 in cash. That equates to a value of like two cents per point. Now, if it's 50,000 points for that same flight, that's only about one cent per point. So you can sort of see how that math can work out and how it's easy to calculate. But again, it does take a little bit of research to get there. Then there's the hotel. How should booking

a room fit into your plan to redeem points? Hotels can often be an even better value when you're using your points. You can find some really excellent hotel deals on credit card travel booking portals and also by transferring again those points to the hotel company's own loyalty programs. A lot of the same advice applies. Do your research, look at different travel booking websites to see the rates that are out there, and then find out if there are any deals to be had when you use your points. But also make sure you research the hotel costs either way, even if you're not going to use points, because these days hotel costs are going up, especially in major destinations. We're seeing hotels cost a lot more than they did a few years ago, and because of that you don't want the

hotel to make what was supposed to be a cheap vacation into a huge money pit. So it's good to double check what hotel availability there is and how much those rooms are going to cost before you book the flight. Some people might be getting ready to book holiday travel. What's the best way to use points in that scenario? First off, book it soon if you have not done so already. But especially one thing to keep in mind when you're booking award travel is that airlines don't just let all of their seats necessarily be booked using points.

They will oftentimes reserve a certain number of seats for awards bookings and then after that they need to get the cash for themselves. So there's not going to necessarily be the same sort of availability of seats on planes for awards bookings. And then the other thing to keep in mind is just it's going to cost more in points to book flights during Thanksgiving or Christmas holidays. So keep that in mind when you're pricing things out. Again, there are probably great deals to be had or it can be a really nice way to not spend a little bit of extra money when you're spending lots on presents for everyone. So it can certainly make holiday travel more financially feasible, but it's not foolproof. That's WSJ reporter Jacob Hasse. And that's it for your money briefing.

This episode was produced by Ariana Osborne with supervising producer Melanie Roy. I'm JR Whalen for The Wall Street Journal. Thanks for listening.