The busiest travel days of the season are quickly approaching, and if you’re planning a trip during the holidays this year, it can pay to book sooner rather than later.
“You have got to do it as early as possible,” says Jason Steele, director of credit card content at Money. Even now, he says, prices have already increased: “You still might have some availability but at higher prices.”
One way to help offset high travel costs is using any accumulated points and miles from loyalty programs to book airline tickets and hotel stays. But you’ll have to decide if you’re willing to sacrifice some of the potential value of your rewards — since they may not go as far during peak travel times as they would otherwise. The choice can depend on your budget, how many points and miles you’ve accumulated, and how flexible your travel plans are.
“I think there’s this logic sometimes that you shouldn’t use your points for miles unless it’s for the best value,” says Chris Dong, a reporter at The Points Guy (which is owned by Red Ventures, like NextAdvisor). “But it’s really such a subjective decision. People should use their miles when it makes the most sense for them.”
Here’s how you can decide if it makes sense to cash in your points and miles during peak travel times this holiday season:
The Value of Points and Miles
Credit card issuers, airlines, and hotels offer points and miles as a type of rewards currency — and it’s often hard to put an exact value on them.
The value of a point or mile is determined by how much something you can buy with points would cost in cash. But there’s no fixed value across rewards programs, and what your points are worth can change with time and other factors.
Still, some rewards are worth more than others. Points and miles from a credit card issuer’s rewards program — such as Amex Membership Rewards or Chase Ultimate Rewards — will typically be worth more than points or miles issued by an airline or hotel, because they offer flexible rewards.
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Travel is generally the most valuable way to redeem your flexible rewards, either directly through the credit card issuer’s travel portal for a fixed rate, or by transferring them to travel partners. With the latter option, you can compare prices across airlines and hotels to find the best value for your points for your specific travel plans.
According to our current calculations, United Airlines MilagePlus miles are worth 1.6 cents each; American Airlines AAdvantage miles are worth 1.4 cents each; Delta SkyMiles are worth 1.2 cents each; and Southwest Rapid Rewards points are worth 1.3 cents each.
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Should You Use Your Points or Miles During Peak Holiday Travel Times?
It’s difficult to get the best value for your points and miles during peak holiday travel times because prices are generally higher than usual — so your rewards may not go as far compared to off-peak days.
“You’ll probably be more limited in terms of your options when redeeming your miles or points, and then you might have to spend more miles for that specific timeframe,” says Dong.
But he also says it can make sense if you’re not fussed about getting the most value for your points and miles and simply want to save money on travel.
“If you’re not a frequent traveler and you have a stash of points or miles that you want to use to go visit family for holidays, then by all means,” Dong says. “Even if it’s not the ‘best value,’ using your points and miles is still a way not to spend cash.”
Determining When to Use Points and Miles to Book Travel
Before you book your airfare or hotel, review your holiday travel budget as well as the amount of points and miles you have to redeem. If your budget is tight, it may make more sense to redeem your points or miles — even for a lesser value. But if you don’t have a high enough rewards balance to cover the cost, it may make more sense to pay cash for your trip.
Then, compare cash fares to the redemption value of your points and miles during the times you want to book to help you decide whether it makes sense to use rewards. And don’t forget to look for any blackout dates that might apply — again, the more flexibility you have with your travel plans, the better.
“Using miles is kind of an art and a science,” says Dong. “Flexibility is key.”
Once you know the price of the flight or hotel in both dollars and miles (or points), you can calculate the value of the redemption by dividing the cash price (minus award fees) by the number of points or miles required. Then, you can use that to determine whether you’re getting a good deal.
For example, let’s say you have a stockpile of Delta SkyMiles saved from various spending with your Delta SkyMiles® Platinum American Express Card throughout the year, and you plan to fly round-trip from New York to Los Angeles between Dec. 16 and 27. Here’s how the lowest fare option in miles compares to cash prices for the same flight:
Subtracting the $12 award fee, the value of your SkyMiles for a main cabin ticket on this flight would be about 1.2 cents per mile, which is in line with our valuation for Delta miles. That means this flight is a solid deal.
But this is just one example from one rewards program. Your value will differ based on the loyalty program you choose, and if you convert rewards from another program first (if you transfer Amex Membership Rewards points to Delta SkyMiles, for example). What’s more, timing can make the biggest difference of all — you should expect both cash and award fares to rise the longer you wait.
Find the right combination of redemption value and cost that works for your budget. Even if you’re not getting the best value, redeeming points and miles for expensive holiday travel can still help you save. You can also be strategic with how you book your travel. For example, if there are cheap flights for your destination but high hotel rates, consider paying cash for your flight and using your points to cover your room. If the opposite is true, you may choose to pay cash for your hotel stay and redeem miles to cover your flight.
Knowing when and how to use your points and miles can help you save on your next trip, but the high cost of holiday travel can make it tricky to get the best value.
If your budget is tight and you’ve accumulated a large number of points or miles, consider redeeming them to save on travel this holiday season. But if you’d rather save your rewards to maximize future redemption value, or you can’t find decent award availability at a reasonable price, you may instead want to save your points and miles for another trip and pay for your upcoming holiday travel with cash.