Buying points: when it makes sense

My regular readers know I have a pretty straightforward approach to miles and points valuation: the least valuable point is the one you don't use. That's why even though I earn hundreds of thousands of points through credit card signup bonuses and manufactured spending, my points balances are often embarrassingly small. 

A good example of this is my Delta Skymiles account, where I noticed today that I only have about 36,000 Skymiles, not even enough for a coach ticket to Europe! And that's despite the fact that I do about 90% of my paid domestic flying on Delta. How did I end up so Skymiles-broke? Because I aggressively look for opportunities to redeem my Skymiles. In addition to my current 100,000 Skymile business class trip to Prague, in the last few months I've booked a 25,000 Skymile domestic award for Labor Day weekend and a 32,500 Skymile domestic award (outbound low-level leg, inbound medium-level leg). All those tickets offered 1.8+ cents per Skymile, so I didn't think twice about redeeming my Skymiles instead of spending cash.

However, sometimes this puts me in a tough position when a situation comes up where I need more miles or points than I have banked in one program.  For example, on my way back from Prague to the States I planned to stay at the Courtyard Marriott Prague Airport, which is about a 3 minute walk from check-in at Ruzyně (now Václav Havel International Airport), and would let me sleep in the day of my departure. This property is one of the great values in the Marriott system: a Category 2 property, costing just 10,000 Marriott Rewards points per night, that can have a nightly rate of over $150 (although rates are much lower on weekend nights).

Unfortunately, even though in April I received the Chase Marriott Rewards Premier card, I had already used the free night and bonus points at the Courtyard Portland City Center back in July for my brother's wedding. My remaining balance: 6,500 Marriott Rewards points.

Figuring I was getting slightly more than 1.5 cents per point, I transferred 4,000 Ultimate Rewards points from the flexible Ultimate Rewards account I have through my Chase Sapphire Preferred card. And then when I went to book my room, I realized my mistake: Marriott Rewards allows you to buy points at 1.25 cents each: I could have purchased the same 4,000 Marriott Rewards points for just $50, and kept my 4,000 flexible Ultimate Rewards points.

Why was this a mistake? Because flexible Ultimate Rewards points are worth a minimum of 1.25 cents each when used to book paid travel.  When transferred to a program like Amtrak Guest Rewards, where the rewards chart is wildly lucrative, they can be worth from 5 to 6 cents each, and with United or Hyatt they'll usually be worth around 2 cents each.

Instead, I could have paid $50 for 4,000 Marriott Rewards points and emptied my Marriott Rewards account without touching my Ultimate Rewards account. Given the potential value of those Ultimate Rewards points, that was the correct move.