OH NOES!!!!!: Forbes has a big scoop:
Many people who have attempted to utilize frequent-flier miles to obtain free or upgraded travel in the past few years, and who had also done so years earlier, have experienced tremendous inflation. Even in situations in which point requirements for a specific flight have not officially inflated – that is, prices expressed in terms of miles needed have not officially risen – the addition of fuel surcharges, cash co-pays for upgrades, “premium” mile requirements for specific fares, and other fees and/or extra-point-requirements have become commonplace, dramatically reducing the de-facto buying power of frequent-flier miles.
Well, duh. Points in any loyalty program will ultimately lose value, and there are two reasons why:
- Inflation of the underlying currency. Rewards are often given in the form of x points for every y dollar spent. We know the dollar experiences inflation, so obviously the points have to experience inflation as well, otherwise the cost of issuing them would be come prohibitive.
- Inflation induced by excessive supply of rewards points. Sometimes the marketing department finds they can goose short term results in whatever metric they’re being measured on by making points easier to get. This results in a nice window of opportunity where points are plentiful and reward costs are relatively low. Until its recent devaluation, Hilton HHonors was in this zone.
Inflation is just one of the rules of the game, and you take it into account when you play. The author of the article does have some good advice:
One important lesson for the future – the points in frequent traveler accounts do not earn interest or dividends, but they do lose value to inflation. Banking points over time is likely a losing proposition. Keep this in mind when deciding whether to spend points or dollars on a specific trip. Even if the point-price seems a bit high relative to the cash cost, it may pay to save and invest your money, and to spend your points.
Not only that, but when you set out to earn points in any reward program, you should have a specific goal in mind. Points are nice, but they don’t do you any good just sitting there and they’re more likely to get used if you know exactly what you’re going to do. If you sign up for a credit card bonus, have a clear idea of exactly what those points will be used for.
SIGH: A sad story out of California:
On the morning of Dec. 19, 2012, in a Torrance courtroom, Larry Delassus‘ heart stopped as he watched his attorney argue his negligence and discrimination case against banking behemoth Wells Fargo.
His death came more than two years after Wells Fargo mistakenly mixed up hisHermosa Beach address with that of a neighbor in the same condo complex. The bank’s typo led Wells Fargo to demand that Delassus pay $13,361.90 — two years of late property taxes the bank said it had paid on his behalf in order to keep his Wells Fargo mortgage afloat.
But Delassus, a quiet man who suffered from the rare blood-clot disorder Budd-Chiari syndrome and was often hospitalized, didn’t owe a penny in taxes.
One of his neighbors, whose condo “parcel number” was two digits different from Delassus’, owed the back taxes.
In a series of painfully tragic events, Wells Fargo relied on its typographical error to double Delassus’ mortgage — from $1,237.69 to $2,429.13 — as its way of recouping the $13,361.90 in taxes Delassus didn’t owe. Delassus, a retiree living on a $1,655 check, couldn’t meet the mysteriously increased mortgage. He stopped paying, and soon was far behind on his mortgage.
Delassus and his attorney did not discover until May 2010 that a mis-entered number had dragged Delassus into this spiral. As court documents obtained by L.A. Weeklyshow, after admitting its error, Wells Fargo foreclosed on Delassus anyway and sold his condo.
The systems set up by banks are, in some cases, inhumane in the sense that they are set up to run without an actual human being thinking about what’s going on. Those of us who sign up for credit card bonuses exploit this fact for our own benefit, but unfortunately people like Delassus–through no fault of their own–suffer if they get on the wrong side of a financial behemoth.
BOGO AT STARBUCKS / BARNES & NOBLE: Here’s a printable coupon good for buy one, get one free Starbucks espresso beverage at Barnes & Noble. And here’s $10 off $30 at Kohl’s (requires a mobile device). (H/T: Slickdeals)
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