The Downside of Travel Rewards

The Downside of Travel RewardsDespite my revelation on Friday that we’re getting an Platinum Delta SkyMiles Credit Card, I have to admit that I’m not a huge fan of travel-based rewards. This goes for both airline and hotel rewards programs. There are several reasons for this…

Redemption difficulties

First and foremost, it’s often difficult to redeem your rewards even if you’ve saved up a ton of points or miles. In fact, most programs have blackout dates during which you’re not allowed to book flights or rooms.

Beyond this, hotels and airlines both commonly have very restrictive capacity controls, meaning that you have to book very early (often six months or more in advance) in order to find availability.

Free isn’t free

Another problem is that your “free” rewards often aren’t free. While most hotel rewards can be redeemed without charge, it’s common for airlines to charge redemption fees. Moreover, complex itineraries often require a phone call or two, and calling an airline for booking help almost always costs money.

And don’t forget about checked bagged fees… Sure, the ticket might be free (after booking fees), but you’ll pay as much as $50 roundtrip for a single checked bag. Free checked bags is a big part of the reason we’re getting the Platinum Delta SkyMiles Credit Card.

Reward point (or mile) deflation

We’re big fans of Hampton Inn for short stays and Embassy Suites for longer stays. Unfortunately, Hilton recently re-worked their HHonors Rewards Program and dramatically reduced the value of their points.

More specifically, we used to be able to easily find rooms for 7, 500-10, 000 points, they’ve reclassified the vast majority of their properties such that it’s rare to find a room for less than 25k points.

While most airlines have held steady at 25k miles for a free flight, they’ve deflated their points by forcing you to buy your way around a number of restrictions in order to use your points. For example, you can often get around the aforementioned blackout dates and/or seat limitations for 50k miles.

Why bother with travel rewards?

Given all of these limitations, why bother with travel rewards? In our case, we don’t go out of our way to chase them, though we do sign up for the programs where appropriate. We have nothing to lose and might end up snagging some free rooms and/or flights along the way.

In practice, this means that we prefer cash back credit cards over travel credit cards (the Platinum Delta SkyMiles Credit Card notwithstanding), but we certainly won’t turn down points or miles in connection with our travels.

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6 Responses to “The Downside of Travel Rewards”

  1. Anonymous

    I didn’t realize the HHonors program was reworked, thanks for this information.

    One rewards program that has worked well for me has been the Marriott program. I have managed to get rooms at good properties, with flexibility in dates, for a reasonable amount of points.

  2. Anonymous

    I’m currently looking at getting the BLUE SKY Card from AMEX. You get 1 point for every $1 spent. To redeem, you purchase your flight, auto rental, hotel, or other travel related costs. You then request to redeem your points, and they give you a statement credit. Redemption starts at 7,500 points, and that equals $100 credit; so you earn about 1.3%. Looks pretty flexible, and no annual fee, expiration date on points, or limit on points earned. AND NO DEALING WITH BLACKOUT DATES.

  3. Anonymous

    Great article Nickel, however I am not sure if a free plane ticket does feel free when you use your points. Today the points you need just to travel to the next city are increasing all the time and having enough points to travel to another country with the family or partner requires is becoming rediculas. The amount of money you need to spend to build up points could take you several years and if you are using a credit card many people will find the interest that they pay on the card can far out way the cost of a plane ticket, but that is what the companies are hoping for!

  4. Nickel

    Conversely, you can just use your cash back to defray the cost of travel. It’s a different mindset, though, as it still feels like it costs, whereas a “free” plane ticket due to miles actually feels free.

  5. Anonymous

    I totally agree with you Nickel. I think any sort of program that doesn’t give straight up cash back tends to require extra effort. When you sign up they make it sound very sweet and sugar coated, but the reality is that the lack of flexibility makes it really difficult to use.

    The one thing that I think is nice about travel rewards cards is that they can be used as a tool to reduce costs of vacations. Since they aren’t really something that can be budgeted, they are a nice bonus when you do decide to travel.

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