How many Ultimate Rewards points do you stockpile?

I recently saw Frequent Miler bemoaning his low Ultimate Rewards balances and had to chuckle to myself. Why? Because I do my best to keep my Ultimate Rewards balance at the bare minimum I'm likely to need in the immediate future.

I've written before about periodically redeeming my Ultimate Rewards points for cash. I do so because:

  • Points are worth nothing until they're redeemed;
  • Hyatt and British Airways (and Amtrak) are the only Ultimate Rewards transfer partners with points consistently worth more than 1 cent each to me;
  • Unredeemed points are vulnerable to seizure by Chase;
  • Flows are more important than balances.

I think it might be interesting to focus on that last point for a moment.

Flows versus balances

I have 3 primary methods of earning Ultimate Rewards points:

  • Chase Freedom bonus categories (7,500 Ultimate Rewards points per card, per useful quarter)
  • Chase Ink Plus office supply store purchases (250,000 Ultimate Rewards points per year)
  • Chase Ink Plus gas station purchases (100,000 Ultimate Rewards points per year)

With two Chase Freedom cards and two useful quarters this year (grocery stores in the first quarter and gas station in the third quarter of 2015), I'll earn 380,000 Ultimate Rewards points this year, or roughly 32,000 Ultimate Rewards points per month on average.

That's my flow, and it's the number I think about regularly: managing credit lines, managing liquidation methods, and managing my schedule to make sure I hit my earning targets month-in-and-month-out.

Balances, on the other hand, are only relevant at the moment of redemption. It's very important – essential even – to have a sufficient balance of Ultimate Rewards points at the moment when you need to transfer them to Hyatt, British Airways, Amtrak, or United (if you're a glutton for punishment), or when you need to redeem them for a paid flight or hotel reservation.

But since your balance is just the sum of your flows over time, it's trivial to manage your balance in order to always have the correct number of points at the moment of redemption, when they're actually needed. For that reason, I'm happy to put any excess points to work in my bank account, as cash.

I still stockpile a few Ultimate Rewards points

With that being said, I don't redeem my entire Ultimate Rewards points balance for cash. Obviously I first look ahead and make sure that my incoming points flow really will cover any future redemptions I already have planned. But I additionally keep a reserve of Ultimate Rewards points for unexpected and unplanned redemptions.

I don't think it's absolutely necessary to have such a reserve. After all, I have tens of thousands of US Bank Flexpoints, British Airways Avios, Delta SkyMiles, Hilton HHonors points, and even Marriott Rewards points that I could use to get and stay anywhere in the United States I needed to be particularly quickly. Failing that, I can always charge travel to my Barclaycard Arrival+ card and take up to 120 days to "work it off."

At the end of the day, however, there are reservations that really are made most cheaply with Ultimate Rewards points (for example my $200 flight to Reno).

So I keep a reserve balance of 45,000 Ultimate Rewards points in my Chase Ink Plus account. Here are a few of the potential redemptions that made me arrive at that number:

  • 40,000 Hyatt Gold Passport points: 5 nights at a Category 2 Hyatt;
  • 45,000 Hyatt Gold Passport points: 3 nights at a Category 4 Hyatt;
  • 40,000 Amtrak Guest Rewards points: a Bedroom - Two Zones award;
  • 50,000 United MileagePlus Miles (I already have a small balance): a Standard Award in economy anywhere in the United States;
  • Up to $562.50 in airfare or hotel reservations.

So with a balance of 45,000 Ultimate Rewards points I have a high level of confidence that I'd be able to get and stay anywhere I wanted or needed to be on short notice, regardless of my balances in the other programs I mentioned above. That's my reserve fund.

How many Ultimate Rewards points do you stockpile?

Obviously my calculation is based on variables that are specific to me: I don't have family abroad, so don't need a reserve fund that could take me overseas on short notice, and I'm budgeting for a single traveler, without a spouse or kids I would need to buy additional tickets for. Those expenses would add up fast.

What do my readers think? Do you save up Ultimate Rewards points for specific redemptions? Do you keep some in reserve for unexpected last-minute redemptions? Do you ever redeem them for cash? See you in the comments.