Making "Cents" Out of Points for Budget Travelers

Posts in category Guides

Is it a Good Idea to Buy Points?

Apr26th
2013 Leave a Comment Written by Ken

I was watching the TV show Undercover Boss the other day and they profiled Diamond Resorts International. They sell timeshares. In one part of the episode, the owner of the company was at a call center where he discovered his employees were not being properly trained. One caller didn’t have enough points in their account to reserve a room and the phone agent didn’t offer the customer the opportunity to buy additional points so they could complete their reservation. This made me wonder how many people actually buy points, and to what extent.

Let’s use Hyatt Gold Passport (HGP) points as an example. At face value, you can buy 1,000 HGP points for $24. In other words, you’re buying points at 2.4 cents each. The problem with that is that redemption values with Hyatt typically fall between 1.5 to 1.8 cents per point. Using the low end of that spectrum, you’re losing 0.9 cents per point, or $9 per 1,000 HGP points. This represents a loss of 37.5% on your $24 investment. If you’re less than 1,000 points shy of booking your reservation and it’s for a special occasion, then chalk it up to an opportunity cost and go for it.

On the flip side, if you’re short several thousand points, then you’re really pushing it. As the cost of points increases, the gap between paying for the points or simply paying out of pocket for the room decreases. Let’s say you need 4,000 points. That costs $96. How much does the room cost? Ninety-six dollars is probably a pretty significant portion of your room rate. Factor in the 37.5% loss and you’re probably going to be better off just paying out of pocket for that one extra night.

All hotel loyalty programs will overcharge you when you buy points directly so in general, it’s not really worth buying points. Every once in awhile you might see a sale on points but the higher savings threshold will only be available at larger volumes. If you can buy the points for less than their standard redemption value, then you should consider it if you have the disposable income. Otherwise, save your money.

 

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Interesting Ways to Use Your Expiring Airline Miles

Apr24th
2013 Leave a Comment Written by Ken

Based on my last blog post about my experience transferring some expiring Hawaiian Airlines Miles to my Hilton HHonors account, I received a request to write a similar article about ways to utilize infrequently used airline miles in other programs. In this blog post I’ll share some of the more notable and/or unique ways you can redeem some of your unused/expiring airline miles. Whether this is good value or not is another story. But hey, if your points and miles are expiring, any kind of value is better than nothing, right?

Hawaiian Airlines (HawaiianMiles)

HawaiianMiles

We already know Hilton HHonors is a transfer partner so I won’t go into detail about that. So now that it’s spring, and summer is fast approaching, are you in the market for new sunglasses? You can redeem 25,000 HawaiianMiles for a Maui Jim gift card that is good “for any one style of Maui Jim Sunglasses, inclusive of taxes and fees.” The quoted text is direct from the terms of the offer. For what it’s worth, I have a pair of Maui Jim Sport sunglasses. They are lightweight, comfortable and do a great job blocking out the glare.

American Airlines (AAdvantage)

The AAdvantage program doesn’t have any offers quite as useful as converting miles to Hilton HHonors points or getting a slick pair of sunglasses, but you do have the option of using miles to “purchase” Admiral’s Club membership. The amount of miles you pay is related to your status in the AAdvantage program.

Admirals Club Membership

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Buying Perks and Mid-level Elite Status with Credit Cards

Apr3rd
2013 Leave a Comment Written by Ken

Most major hotel chains now have co-branded credit cards that come with some intriguing benefits and in some cases, a bump in status for the respective loyalty program. Having the credit card is nice alternative to putting in the time and money to actually stay at the hotel. However, those benefits don’t come free. Most of these co-branded credit cards come with an annual fee. I was always told to get credit cards that have no annual fee, and I did at first. Now most of my cards have annual fees. It really comes down to whether or not the benefits you receive are worth paying the fee.

Here’s a look at some of the credit cards available to you along with the annual fee, benefits, and some insight as to whether or not this card is worth having.

Hilton HHonors American Express and Hilton HHonors Citi Reserve

The Hilton HHonors credit cards from American Express come in two flavors; The no-fee version and the annual fee version, the Surpass card ($75 annual fee). Here are some benefits that both cards have in common:

  • Complimentary Silver VIP status in the Hilton HHonors program
  •  Achieve Gold VIP status when you spend $20,000 on the credit card in a calendar year
  • Access to AXON and GLON discount codes that give you discounts on reward redemptions

For a $75 annual fee, the Surpass card gives you more points per dollar for when you actually stay at Hilton family hotels plus complimentary Gold status for the first year of card membership. You’ll also be able to get Diamond status if you spend $40,000 in a calendar year.

The Citi Reserve card comes with a $95 annual fee but, unlike the Surpass card, you get Gold status for as long as you have the credit card.

Analysis

With Hilton HHonors Gold status, some of the notable perks are room upgrades, free breakfast and free internet. Of the three credit cards, your best bet is the Citi Reserve card because you get Gold status for as long you keep the card. Consider the alternative where you earn Gold the old fashioned way; head in bed. You’d have to actually stay a minimum of 20 stays, which could easily be over $2,000. I could do a lot with $1,900 in savings. I’m sure you could too!

If the AMEX cards and the AXON discounts tickle your fancy, I’d recommend starting withe Surpass card to get Gold status for the first year. The $75 fee is worth it for Gold status. To avoid paying another fee, you can always downgrade your card to the no-fee version before your fees are due.

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American Express, Hilton HHonors, Hyatt Gold Passport, Hyatt VISA, Marriott, SPG    , , , , , ,

The Realities of Traveling With Points and Miles

Feb13th
2013 Leave a Comment Written by Ken

I just read an article where the author explained how he was able to take a “free” vacation to Japan by using points and miles. This is the ultimate goal that points/miles hoarders are working towards. I’ve read a few of these articles over the last few months, especially as this activity becomes more popular. The majority of the articles make it sound really easy. In reality, this game isn’t for everyone and really should be approached with caution. What I write next is not meant to criticize the author in anyway. He simply shared his experience and I’ll use his article as a reference to explain some of the details that aren’t always mentioned.

First let’s talk about signing up for new credit cards. Probably the most frequently asked question is about how a new credit card will impact someone’s credit score. It’s a given that you will incur some type of hit to your credit score when you apply for new credit. But what about after you get the credit card? Here are a few other insights and things to be aware of before jumping into the credit card game:

  • It helps to have excellent credit AND pay your credit card in full each month.  If you have a high credit score, you have the ability to absorb the hit from a few credit card applications. With a low credit score, banks won’t be willing to extend any credit to you so not only will you be denied, you’ll also take the hit to your credit score. To get the most out of rewards credit cards, users should pay off their balances in full each month to avoid paying interest charges. If you carry a balance, the interest you accrue will negate the value of your points/miles and you would be putting yourself further in debt.

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Try Status Matching To a New Hotel Program Before It’s Too Late

Jan16th
2013 Leave a Comment Written by Ken

As you already know by reading some of my previous posts, I didn’t re-qualify for Hyatt Diamond status in 2013. I put in 16 stays; nine short of re-qualification. Most hotel programs give you a couple of months of grace period before stripping you of your perks and with just about a month and a half before I lose mine, I’m wondering what my next move will be. The one thing I know for sure is that I want to make the best use of my Diamond status before it leaves. But when I say that, I’m not necessarily referring to putting in some stays and enjoying the perks.

The other day I was trying to plan out a weekend staycation and stumbled across a Kimpton hotel that I found appealing. After looking at the amenities and the accommodations, I went looking for more info on their loyalty program, InTouch. I found their program pretty intriguing. Just having the membership gives you a $10 credit for the mini-bar and free wi-fi. With programs like Hilton HHonors and Hyatt Gold Passport, free wi-fi is a perk that you have to work for.

Elite status in the InTouch program is called Inner Circle, which requires 15 stays or 45 nights in a calendar year. After doing some digging, I found out that Kimpton offers a status match to Inner Circle, provided you have elite status elsewhere. I haven’t contacted Kimpton yet, but with 16 stays under my belt in 2012 and an expiring elite status, this looks like a good opportunity to eek some additional value out of my status.

Are you losing your status? Would this strategy work for you? Have a look at your travel plans for the year and see if you can make it work. It doesn’t hurt to try. Good luck!

Hilton HHonors, Hyatt    , , , , , ,

Reminder: Keep Checking Your Hotel Reservations For Price Drops

Apr6th
2012 Leave a Comment Written by Ken

In case you don’t already do this, I highly recommend that you continue to check rates for your hotel on your travel dates even after you’ve made your reservation.  It’s possible that the great rate you got could go even lower and we all love to save money, don’t we? I’ve never seen a hotel that won’t let you modify your reservation to get the lower price.

To really get a feel for this, take mental or written notes when you’re first planning your itinerary. Check both weekday and weekend rates on random dates throughout the year so you have an idea of the price range at each particular hotel. When you eventually make your reservation, you’ll know whether or not you  have any wiggle room in looking out for a price drop.

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Maximizing ROI – Multiple Credit Cards vs. One Credit Card

Mar5th
2012 Leave a Comment Written by Ken

Milepoint member Dangjr213 asks the question, “What is your primary credit card?” The most popular strategy, according to the responses, is to spread the spend across different cards depending on what the purchase is going to be. I do the same thing. But are we really maximizing our return on investment this way?

Obviously when you spend on the card that offers the most points, you’ll get more overall points. At the same time, spreading the spend means you’re not getting as many points in your preferred program, whether it be points, miles or cash back. So should you continue to spread your spend around or concentrate it on one card? I created two charts to compare the differences. The example credit cards are the Chase Sapphire Preferred and the Costco American Express.

Both cards offer 1% cash back on everyday spend and 2% cash back on travel and dining. The only difference is that the Costco card offers 3% cash back on gas. Note that Costco only accepts American Express, debit cards and cash.

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American Express, Chase Credit Cards    , ,
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