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Credit Card Rewards: Is It Better to Use Them or Hold Them?

Sept. 10, 2014
Credit Cards, Rewards Credit Cards
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With all the opportunities for credit card rewards nowadays, is it better to build and hold those credit card rewards, or use them as frequently as possible? There used to be a strong argument toward saving. Recent changes to programs mean it’s time to rethink that strategy.

Rewards inflation

Even up to a few years ago, there was plenty to merit saving up hundreds of thousands of credit card rewards for, say, two first-class airline tickets to Europe and a week’s worth of free lodging.

Then came what might be called “The Great Rewards Hyperinflation.” Airlines and hotels started making it easier and easier to earn rewards miles and points. The result is just like what happens when a government prints more and more currency.

The value of the existing currency is diluted. So the points and miles you have saved up became worth less and less because now everyone could accrue hundreds of thousands of miles and points.

The airlines and hotels knew that if everyone cashed these in at once, they’d lose gazillions of dollars in revenue. At first, they stemmed the tide with reward capacity controls. Then came the reward program devaluations.

And, boy, did those kill the fun for point collectors. Virtually every airline and hotel chain has significantly lowered the value of each reward mile or point. They did this by raising the cost to cash in for a given reward.

Even worse, multiple award tiers with confusing and shifting redemption amounts have been instituted, making it all the more difficult to actually plan out how many points you may need for a given reward.

Use most, save some

Given the devaluation trend, and the fact that these programs make it easy to accrue miles, you have to expect there will be future de-valuations. To that end, it really is not better to build and hold credit card rewards, but instead to use them frequently.

Your long-term strategy may have room for some long-term savings, though. Much of it depends on accruing points in the most flexible program you can find for your needs – ones that permit you to transfer and/or convert points into other programs at roughly the same value.


To the extent you can accrue points in one or two of these types of programs, that’s your best bet. You can build and hold credit card rewards in these two core programs, which spreads out your devaluation risk.

If one program should suddenly devalue, you may not have time to cash in those rewards, but probably have time to act with your other program before they announce a devaluation (which is likely at some point). If you only have one core program, and it devalues, you may be out of luck.

As you look ahead to book trips, you can transfer points to a given airline or hotel for that targeted trip, while continuing to accrue in your two core accounts. This way, you cash in some of your points and aren’t caught holding the bag.

If you keep your next trip or two in mind, you’ll always be on top of what your target goals will be and be able to act on them as necessary.

Traveler image via Shutterstock