On Tuesday, Greg over at Frequent Miler wrote a defense of hoarding miles and points. He's wrong, but to understand why he's wrong, you have to understand his argument.
Frequent Miler thinks the problem with hoarding is devaluations
In setting up his argument, Greg says the reason people recommend burning miles and points aggressively is out of fear of devaluations:
"There’s no question that points and miles frequently devalue in a number of ways: Loyalty programs change their award charts to make awards more expensive..Loyalty programs add new categories...Loyalty programs move hotels to different categories...Loyalty programs go revenue based...Loyalty programs change the rules..."
In this telling, innocent readers are redeeming their points too aggressively, missing out on occasional flash sales and keeping their balances too low to ever take advantage of the remaining award chart sweet spots.
If devaluations were the problem with hoarding, Greg would be right
Currently, up and down Hyatt's award chart Hyatt Gold Passport points are consistently worth well over a cent each. The Park Hyatt Paris-Vendôme costs 30,000 Gold Passport points or $993 next summer (3.3 cents per point) while the Hyatt Place Greenville/Haywood (South Carolina) costs 5,000 Gold Passport points or $171 on the same date (3.4 cents per point).
Hyatt could literally double the points cost of both properties and we'd still be better off transferring Ultimate Rewards points over to Hyatt than redeeming the same points for cash — not that I'm trying to give Hyatt any ideas!
If you manufacture your points cheaply enough, then it will take many years of devaluations before you'd need to worry about a significant effect on your earning calculus.
Greg's aphorisms have nothing to do with hoarding
Greg's proposed alternative to earning and burning points aggressively is "opportunistic hoarding:" signing up for the most lucrative credit card offers, manufacturing spend in the most lucrative bonus categories, and enjoying the luxury of flexibility when he ultimately begins planning a trip.
Sounds pretty good, right?
It sounds good because Greg chose to defend what is very close to a truism: "earn points cheaply and redeem them dearly!"
The problem with hoarding is that it's expensive
If Greg wants to actually defend hoarding, he needs to defend something more controversial. If hoarding means anything, it means paying with cash instead of points, despite having enough points in your account to pay for your trips.
A corollary of this might be making a cash-and-points redemption instead of a points-only redemption in order to "stretch" your points further, for example when given the option to buy Avios for 1.3 cents each while making economy award reservations.
Framed this way, the problem with hoarding is obvious: it's expensive!
In a world of unlimited cash, of course, this wouldn't be a problem. But in a world of unlimited cash, I hope you would have better things to do with your time than obsessing over miles and points!
Ostensibly, the reason we play this game, whether you're just starting out applying for a few credit cards per year or you're manufacturing hundreds of thousands of points per month, is to save money on travel. You might be trying to save money on trips you were already planning to take, or be planning trips you could never have imagined being able to afford in your previous life. But the object of the game is the same: end up with more money in your bank account than you would if you had to pay your travel providers in cash.
When you hoard miles and points, that fundamental logic break down: you start treating your rewards currencies as a retirement account and spending money that you could actually be saving for retirement!
Of course it's possible to redeem too aggressively
You can imagine, of course, someone so intent on redeeming their miles and points that they end up costing themselves more money in the long term. A 50,000-mile "Standard" award on United today is two 25,000-mile awards tomorrow, if you're able to plan ahead and hunt for award space, while if your account is empty and you have to pay cash for the two tickets tomorrow, you've cost yourself real money.
Don't do that.
If anything, the conventional wisdom is to save up miles and points for the "perfect" redemption
Ultimately, Greg's argument has a flaw at its inception: he thinks people tend to err on the side of redeeming miles and points, and I think the opposite is true.
When Thought Leaders In Travel are hounding their readers never to miss a limited time opportunity:
And rich weirdos are urging readers to buy United miles at outrageous out-of-pocket cost:
It makes no sense to me to assert that the number one problem facing the community is rewards currency balances being kept dangerously low by our eagerness to redeem points. Surely, the opposite is more likely.
Once you've earned miles and points, it's too late to start assigning some theoretical value to them; their value is only realized when you redeem them, and it's the value of those actual redemptions that should guide you when deciding whether to continue earning more of a given rewards currency.
Keep an emergency stockpile if you must, but don't second guess yourself when redeeming any and all excess points you earn — that's literally what they're there for!