Chase Archives - Page 2 of 4

Jun 22 2017

How to save money on Disney tickets and hotels using points

It’s great travel hacking together with friends, especially when it comes to workshopping ideas. For ideas on how to save money on Disney, I always find myself working with Robert Dwyer, who put me onto the idea of using Thank You Points to book a Disney cruise. We’ve been chatting about upcoming trips and wanted to figure out whether you can use points for Disney tickets and hotels. Turns out, you can, sometimes for a big savings. Note, this post may be too in the weeds for some, so e-mail me if you have questions!

Before I get to my research, let me answer some questions or comments I know I’ll get. First of all, you definitely can get more “value” out of your points. If you use your Ultimate Rewards points to book Lufthansa first class, you can come out ahead in terms of raw cent per point value.

Did you know you can use points for Disney tickets and hotels? You can save lots of money by paying for a Disney vacation with points not cash, here's how. — A trip to Disney can be expensive, but you can pay with points instead of cash if you’d like

But as Bob constantly reminds me (and I think he stole it from Milenomics), book the trips you want to take. Or in the case of families, book the trip your family wants to take. “Value” is a spectrum that takes into account monetary value and entertainment value by the end user (i.e., your kids and loved ones).

Secondly, I may hear comments that transferable point currencies have “better” uses. They most certainly do. But some people sit on seven figures worth of miles and points (like business road warriors). Sometimes you just want to burn points. And, most importantly, using points for Disney tickets and hotels saves you from using cash – which theoretically should help your financial future in the long run (see my discussion with Noah from Money Metagame on the podcast).

Alright, let’s take a look at how to use points for your Disney vacation. TL;DR – Chase Sapphire Reserve gets you the best value. If you’d like the quick version on how to use Chase points, see this guide I wrote on using your Chase points for Disney tickets!

The basics: book through travel concierge

So before I get to brass tacks and numbers, let’s take a look at the basics in theory. There are three major transferable currencies: American Express Membership Rewards (MR), Citi Thank You Points (TYP), and Chase Ultimate Rewards (UR). Each currency can be transferred to airline partners for the aforementioned “better value.”

However, you can also use each currency to book travel. When booking airfare, you get a minimum of 1 cent per point with all these currencies. So a $200 plane ticket costs 20,000 points.

In addition to booking airfare, which can be done online, you can also call the number on the back of your card and ask to book a vacation package using points (or cash if you prefer). This gets you transferred to a department that can put together a Disney vacation for you. As long as you have the right type of credit card, you can pay for part or all of this vacation with points. The devil is in the details: depending on your card you can get different value for your points.

So let’s take a look at which card issuer gets you the most value for your points when redeeming for Disney hotel and ticket packages. I’ll first go through a case study, what the vacation package costs in cash from Disney, and then I’ll show how much it costs in each of the three point currencies.

Case study – Family Suite at Disney’s Art of Animation with 4 day base tickets (2 adults, 2 kids)

For my case study, I picked a random 5 night family suite stay in August at Disney’s Art of Animation for two adults and two children (3-9). I added 4 day base tickets to that (no park hopper). Here’s the breakdown in costs.

As a package: $3199.11

A la carte: $1745.15 (room) + $1448.40 (tickets) = $3193.55 <= tricky Disney!

A la carte: $1745.15 (room) + $1303.56 (4 day tickets but must visit each of the four parks once) = $3048.71

$3000+ is a lot of cash to lay out for a five night vacation, even if it’s a family suite at Art of Animation. So let’s take a look at what it’d cost if booked in points, starting from “worst” value and ending with the “best”. (In quotes because you need to factor in how many of each currency you have, opportunity cost, etc. etc.

Buy Disney tickets and hotel packages using AMEX Membership Rewards (OK)

All American Express Membership Rewards cards, even the no annual fee ones, allow you to use points to pay for your travel. The problem is, the most you can get is 1 cent per point when redeeming for airfare (plus the 50% rebate with the Business Platinum). Making things worse, you get even less than that when booking for other types of travel, like Disney.

To book a Disney vacation package, call the number of the back of your card and say you want to redeem points for travel. If asked, specifically try to get transferred over to cruises and vacation packages (they generally go together). Then feed the agent your dates and type of ticket desired. They will quote you a price in dollars and in points (if you ask for the latter).

I poked around this page from AMEX and found that the most you can get for points redeemed towards vacation packages is 0.7 cents per point.

AMEX wanted to charge $3199.11 in cash. A rate of 0.7 cents per point means the vacation costs ~450,000 Membership Rewards points. If you compare that with the ability to cash out your Membership Rewards as gift cards for one cent per point or for airfare, you might consider calling that $4500. Unless you’re swimming in MR, I prefer the other options.

Buy Disney tickets and hotel packages using Citi Thank You Points (Better)

Since I only have the Citi Prestige and Preferred, I can only get 1 cent per point for non-air travel at the most. Like AMEX, I called the number on the back of my card and said I wanted to book a hotel vacation package with points. If you hold the Citi Prestige, make sure you say “with points”, otherwise they’ll send you to the cash booking agents (incorrectly assuming you want to use your fourth night free).

Citi also quoted me $3199.11 (the same as the Disney package and AMEX), so using Thank You Points would cost me 319,911 points. Better, since you’re getting the same value you could get for gift cards. But you’d still get less value than you could get for airfare (about $4000).

Now I couldn’t confirm this because I no longer hold the card, but I’m guessing like with my cruise deposit, Thank You Premier holders can get 1.25 cents per point. That means if you hold a Premier card, you can book this hotel room and ticket package for 255,929 points. Now we’re talking, since the equivalent in airfare would only be $3199.11.

Buy Disney tickets and hotel packages using Chase Ultimate Rewards (Best)

So I went through the same song and dance with the Chase phone agent, though I should note I spent the least time on hold with them. Chase offered the same Art of Animation room/ticket package for $3251.31 (sorta weird that it’s a shade more).

However, if you have the Chase Sapphire Reserve, you get to apply the 1.5 cents per point valuation when booking this package. That means that Reserve cardholders would only need to pay 216,754 points for this package. That could get you the same value in airfare, but if you redeemed for cash, that many points would only get you $2167.54. So in that sense you can “save” the most this way.

I also checked Port Orleans: Riverside. Again, Chase charged slightly more ($2875 vs. $2867 that Disney wanted), but again you could get the 1.5 cents per point with the Reserve so it would cost 191,667 points.

If you are an Ink or Sapphire Preferred holder, you can get 1.25 cents per point when booking these packages.

Can you buy tickets without the hotel?

One thing to note: you can save a lot (cash OR points) by staying off Disney property. So if it were possible to use points to buy tickets alone, that would be huge.

AMEX and Citi flat out told me this was impossible, but it seems like Chase is a YMMV situation. A phone agent told both Robert and myself that we had to book hotel and tickets together. However, one of the CSR agents I have been e-mailing with quoted me $1450 for tickets (same as Disney a la carte) OR 99,666 points. Two other people have told me they’ve been successful buying tickets using points from Chase, so it seems like a YMMV situation but one worth checking out.

How to decide whether to pay with points or cash

Like I said at the top, I’m sure some people say they would never use their points for this purpose. I can see how people might see this as an extreme version of buying magazines with your miles. Let me offer a couple of counterpoints to this logic.

First of all, when people rave about how transferable point currencies are great because they are so flexible, this is that flexibility in action. Points are not cash. While MR, TYP, and UR all can be redeemed for cash or cash equivalents, in many instances you can likely get more value out of using points this way.

Secondly, these points currencies are valuable but that doesn’t mean using them this way is a waste. Take Chase Sapphire Reserve as an example. Yes, you could use 200K points to book $3000 worth of flights. But, um, what’s the difference between that and using it to book $3000 worth of Disney? Take the trips you want to take!

You could also use those 200K points to more or less book one round trip seat in Lufthansa first class. That indeed would cost like $10,000, but you’d be flying alone without your family. I’m not saying that’s not a good use of your points, all I’m pointing out is that value is in the eye of the beholder. With Chase Ultimate Rewards, there’s so much value to be had that sometimes it’s tough to decide how to use your points. Just make sure you use them!

To me, it comes down to this. Cash can be used for other things. You’ve earned these points to (most likely) save money on your travel. If you use them this way, you’re fulfilling that goal.

Final Thoughts

Membership Rewards, Thank You Points, and Ultimate Rewards points can all be used to book your Disney vacation. They give you the chance to save cash by leveraging your point balances to pay Disney’s prices. These redemptions won’t be for everyone. Still, consider them if you’re trying to cut down cash costs on your Disney trips. And in many cases, Chase Ultimate Rewards comes out as the clear winner.

I still need to try a few things out. Does adding airfare to an AMEX or Citi booking unlock the 50% rebate (AMEX business platinum) or the 1.25 cpp (Citi Prestige)? Or does the airfare get added separately? Also, can you use this for packages in other Disney properties, like Hong Kong or Paris?

What are your experiences with booking Disney vacations using points? Hit up the comments and share your stories.

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Can’t get enough Disney? Check out our Disney planning podcast, Disney Deciphered (latest episode embedded below)!

Apr 25 2017

Chase Sapphire Reserve for Dummies

I came up with a brilliant idea the other day. Write about a credit card almost half a year after everyone stopped hyping it! People will love it! Joking aside, a friend of mine, who will remain unnamed to protect her innocence, apparently did not know the Chase Sapphire Reserve offered a Global Entry credit. So she stood in line for forty five minutes watching her parents breeze through TSA Precheck. A lot of people who signed up for the Chase Sapphire Reserve have dipped their toes into the miles and points game for the first time with this good card for beginners.

If you’re one of those beginners (aka one of my tens of real life Facebook friends), here’s how to get the most Chase Sapphire Reserve value. If you’re one of the many experienced hobbyists who reads this blog, feel free to tell me why my advice is terrible!

Consider this a rough guideline of benefits you should take advantage in the first year of card membership. I’ve semi-ranked these benefits in order of importance, though of course I’m subjective and you need to adjust to your own life situations. Also, I’m assuming this may be your first foray into the miles and points world. Remember, the card carries a $450 annual fee that gets charged within the first month or two of card membership, so your goal should be to make that fee “worth it”. Hope this helps you to do that!

Meet the minimum spending towards the sign up bonus

When the Chase Sapphire Reserve first hit, everyone frothed at the mouth at the huge sign up bonus. While the bonus decreased to 50,000 points after $4,000 in spending, the card still presents a lot of value for beginners. So make it a priority to focus on spending that $4,000 in three months. Hopefully someone has told you to make sure you pay your balance off in full. If you’re getting charged interest you’re basically negating all the value you would get!

I’m not going to tell you how to spend $4,000, but you probably had a plan going in. When I first started out I usually signed up for a new card when I knew I might have a big purchase coming up (insurance payment, vacation, etc.). That’s a good way to bang out a chunk of the minimum spend. Anyway, make sure you have a plan for this first that doesn’t require you buying a bunch of crap you don’t need!

Use your $300 travel credit

I’m assuming you got this card to make traveling a little cheaper. So make sure you use the card to pay for travel expenses. The first $300 will be reimbursed. Chase applies the travel category pretty liberally, meaning you can get this credit for plane tickets, trains, hotels, even taxis and subways in some cases. You don’t have to worry about the credit, it gets automatically applied, usually within a couple of days.

To check how much of the credit you’ve used, navigate to the Ultimate Rewards page of your online account at chase.com. Here you can check your balance information and how much of the travel credit you’ve received.

Here's a guide to help you get the maximum Chase Sapphire Reserve value if you're one of the many new people to get this card. — 31 points only? Gotta work harder

Use the card overseas (no foreign transaction fee)

If you travel overseas, make sure you use the Reserve to pay for stuff. It doesn’t charge a foreign transaction fee which means you don’t get charged extra. Just make sure to pay in the local currency otherwise you’ll get charged a mostly hidden fee. Part of your annual fee goes into eliminating the foreign transaction fee. Take advantage of it!

Sign up for Global Entry and get TSA Precheck

Global Entry enables you to get through customs quickly, and the Chase Sapphire Reserve offers a $100 credit for the application fee. But a lot of people plan to stay domestically for the travel. They then assume that Global Entry has no use to them but don’t realize that it also qualifies you for TSA Precheck. Or some people think going into the airport for an interview presents too much of a hassle.

So let’s ask a question, an honest one. What will be more of a hassle for you in the next 5 years? (That’s how long Global Entry lasts). Going to the airport for the interview, or taking out your laptop and taking off your shoes every time you fly. Not to mention the aforementioned line! If going to the airport really hassles you more, then I guess pass on Global Entry. (Or if you live in stupid Boston which has no interview availability for the next 500 years).

If you have trouble finding an interview, you can schedule at airports other than your home airport. I wasn’t joking about Boston’s availability, but I scheduled for Newark which tends to have a lot of space. Though you have to go to Newark…

Use the Chase Sapphire Reserve for your rental car

The Chase Sapphire Reserve (man I’ve typed that so many times imagine if I sold cards!) helps rent cars in multiple ways. First, you can get Avis Preferred and National Emerald, which mostly helps you cut lines. That matters in airports like MCO. Secondly, you can use the Reserve’s discount rate to get 25-30% off your rental reservation. Finally, Chase Sapphire Reserve offers primary car rental insurance.

That means if you get into an accident, Chase Sapphire Reserve covers you first. If that’s not enough, then you go to your regular auto insurance policy. (Cards that offer secondary insurance are the opposite.) So unless you visit excluded countries (Ireland and a few others), you can happily waive the collision damage waiver companies want to charge you.

Fall back on other coverages when necessary

I’m not going to go through all the benefits, you can find them here. I will point out that the Chase Sapphire Reserve offers Trip Cancellation/Interruption insurance, Lost Baggage insurance, Baggage Delay insurance, Roadside Assistance, and various emergency insurances when traveling. If you’re new to miles and points, just put everything on this card – you might be protected and not even know it. If something goes wrong, it’s more than possible the Reserve has you covered. You can check out Free-quent Flyer’s experience with the Preferred trip deal coverage here, Reserve coverage is equal or better. (He also describes trip delay insurance here.)

Enroll in Priority Pass

Priority Pass is a decent, but not great lounge benefit. Still, you might get access to lounges in a few places (I think I’ve used it…twice?). You get two companions to go in with you so that’s nice too. You need to activate this. The easiest way? Go to this page, then click on “Learn More” under Lounge Access. Login and it’ll bring you to the page below, click activate now, profit.

Transfer points to partners or use to pay for travel?

To me, you can get the most value out of your points by transferring to partners like Hyatt, United, or Korean Air. For example, if you can rent a $500 room for 25,000 points transferred to Hyatt, you get a value of 2 cents per point.

But maybe you don’t define value in fancy hotel rooms or first class flights (I don’t think everyone should). Then you can use the Chase Travel portal to book flights for a value of 1.5 cents per point. That means your 50,000 point sign up bonus is worth $750 towards travel. Families on a tight budget should definitely consider this, though you might want to avoid booking hotels through the portal.

Most important rule? Use your points. You can’t take them with you and there usually isn’t a good reason to hoard them. They’re worth nothing until you redeem them, so just use them in any way that makes travel less expensive for you and your family.

Final Thoughts

Hopefully this gives a good overview of the benefits you can get with the Chase Sapphire Reserve. It’s a great card and I’m likely to keep it next year (though I’ve canceled/downgraded a bunch of cards since I realized how much I was paying in annual fees!). I’m fairly certain I can squeeze $150 of value out of it (after you subtract out the $300 airline credit).

So, were there any great benefits I missed? Let me know!

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Apr 21 2017

Resolution and update on my friend’s Chase travel concierge fail

I wrote yesterday (or two days ago? All messed up from Hong Kong time) about how the Chase travel concierge kinda sorta screwed my friend and his family out of a hotel room. Well I’ve got some updates, including what we think happened, how he was compensated, etc. It was getting too long to update the original post so I just decided to start a new post. Here’s what I’ve learned.

Quick recap

To quickly recap the original situation, my friend and his family of 5 (one baby) made a reservation through the Chase Sapphire Reserve portal for a suite at Homewood Suites in Williamsburg. They showed up the first night and Homewood Suites had no record of the reservation.

They checked in for one night, were told by Chase that they would be reimbursed, and then were later told by a second rep that they would NOT be reimbursed. They also had to move hotels on the second night of their trip due to the Homewood Suites being full – a standard smoking room to add insult to injury.

Since I posted, a room opened up back at the Homewood Suites so they moved back because they needed the space and clean air for the baby. They originally redeemed about 50,000 points for a $762 four night reservation.

What we think happened in terms of the reservation being missing

My friend and I think we’ve pieced together what’s happened, but I’d love to hear if this makes sense given what you all know about how Chase travel works and your own experiences.

It seems that Chase travel uses Expedia for their bookings. Yup, a third company is involved. Apparently Expedia faxes their hotel confirmations but this hotel in Williamsburg doesn’t have a functioning fax machine. My friend said the manager at the hotel told him that this happened to a few more reservations over the last few days.

So yeah, maybe Expedia should start using that popular new technology e-mail. Also, to avoid this happening, please remember to call the hotel to confirm your reservation.

Another wrinkle in all this is some info from this Flyertalk thread which indicates that sometimes hotels don’t receive the confirmation until 24 hours before. That seems a little bit last minute to me. Also, I should note that a bunch of people commented with similar “lost reservation” datapoints.

How customer service handled things

Just wanted to make a couple notes on the customer service here. It seems like the first Chase rep my friend spoke to did her best to rectify the situation. She asked to speak to the hotel manager, promised to compensate for that first night (I think it was pretty late already), and overall seemed very helpful.

The manager at the Homewood Suites also seemed like he did his job well – although he had to deliver the bad news that there was no room for nights 2-4, he did call other hotels in the area trying to find them a place to sleep (a suite specifically).

Chase CSR 2, who refused to listen to Chase CSR 1’s phone call, did a terrible job customer service wise. Again, we are talking about a Chase Sapphire Reserve cardholder. If a customer spends $450 a year on an annual fee, I expect them to be treated with respect and for CSRs to be going out of their way to help.

Finally, Chase reached out to me on Twitter offering to help, so good on them for that. I’ve heard nothing from Hilton, so take that for what it’s worth.

Chase’s resolution and compensation

Ultimately, a Chase rep called my friend about two days after the first night. They confirmed that they will pay for that first night and they will also refund all the points from the reservation plus an extra 5,000 for compensation.

One thing I find interesting is that the two Chase reps who confirmed that he would be reimbursed for the first night stated that it would happen “because they listened to the recording.” They didn’t say for the inconvenience or anything like that. Giving them the benefit of the doubt, they possibly felt that the original rep had already stated that. Being cynical – did that first rep screw up giving him compensation for that first night? I’ve reached out to Chase for comment.

IF the cynical view is true, that super sucks. So a Chase Sapphire Reserve $450 annual fee payer shows up at a hotel with the reservation bricked and is just s.o.l.? That seems…bad. Hoping I get to delete these sentences after clarification. Update: They won’t comment since it’s not my reservation.

Should he have asked for more compensation?

So do you think he should have asked for more compensation? For reference, he originally budgeted out $600 for four hotel nights. He used 50,000 Ultimate Rewards points instead. Subtracting out the cost of the first night, he will end up spending $578 on hotel. He also missed one night of free dinner at Homewood Suites due to having to live in that other hotel.

My gut feeling is that he didn’t get enough. Whether Hilton, Expedia, or Chase screwed up, I believe the whole point of a concierge is to figure out what happened and make the customer whole accordingly. Plus, 5,000 points won’t make up for the stress and hassle my friend had to put his wife and kids through.

Ultimately, he said they’ve been enjoying their vacation because “thankfully my kids are low maintenance.” But this is the kind of potential nightmare scenario that a $450 annual fee should severely mitigate; in his case, I’m not sure Chase did enough.

Update, 5/4 – after messaging Chase four times, they gave him another 5000 points. “I think they just gave them to me to get rid of me.” It shouldn’t come to that, in my opinion.

Your thoughts? If you’ve had similar experiences with Chase or other card issuers, what did you receive for compensation?

Featured image courtesy of Pixabay

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Apr 20 2017

Chase travel concierge put my friend in a horrible situation

I’ve spoken a few times about how important staying in suites can be for families. Anyway, a buddy of mine shared a story with me about a Chase Travel concierge fail that really turned into a bit of a nightmare situation. I’m not sure if Chase can be blamed for the situation itself, but I’m 100% sure it can be blamed for some parts of its response. I’ll update this post as the situation gets (hopefully) resolved.

Update: I posted about the resolution and compensation here.

Now the Chase Sapphire Reserve deservedly gets a lot of good press. Getting 1.5 cents per point for travel can really make travel possible for families on a budget, so my friend used it for his trip for a family of 5 to Williamsburg. Now like I said, suites are important for families – they’re even more important for families of that size.

He booked a four night stay and received this confirmation:

Now that looks pretty solid to me. But, you guessed it, you won’t believe what happened next.

No room at the inn

When my buddy showed up at the Homewood Suites, they told him he didn’t have a reservation. I’ll let him pick up the story from here, paraphrased for grammar and clarity:

“Yeah I received my confirmation number from chase and everything. But the hotel had no record… The first rep I spoke with told me that the hotel had one night available and to go ahead and check in and that Chase would pay for it and that Chase would figure reservations out for me.”

OK, so Chase representative one seems to be doing a good job taking control of the situation. While my friend didn’t get an explanation for why things broke down, at least they promised to accommodate him. Now, again, for a family of five, this situation is far from ideal – they were going to have to move the next day, but at least they had a place to stay for the night and Chase offered to pay for it. I’m assuming they offered to refund the points too, which were a significant amount:

A bad customer service representative

Now at this point, many people would probably just let things lie for the night and figure things out in the morning. I personally would not be able to do that – I’d be too stressed out not knowing where I’m going to stay for night 2. My friend apparently felt the same way because he called back a few hours after checking in. Again, in his words:

“So I check in and call Chase back several hours later to check the status. This second rep confirms that the hotel has no space for us for the remaining nights. I ask her about Chase paying for the first night because the previous rep had made the offer. This second rep flat out refuses saying that it wasn’t Chase’s fault so she isn’t giving me anything, even after I said that it was already promised to me by the first rep.

The Chase travel concierge is supposed to make life easier, but put my friend in a really difficult situation. This type of thing shouldn't happen! — Chase not doing a great job with this for my friend right now (Photo Credit | Pixabay)

“I ask her to listen to the recording and to look at the notes. The second rep does nothing and puts me on hold for 10 minutes. She kept blaming the hotel and said wouldn’t transfer me to anyone else, basically accusing me of lying about the first night being paid for.”

OK, so people might disagree, but to me this is ridiculous. The whole reason they record these calls is for situations like this. That’s what bailed me out of my Thank You points snafu a few months back. Also, regardless of whether this is Chase or the hotel’s fault (unclear to me), if you’re going to have a premium card with an annual fee of $450, then your travel concierge better work on making the customer whole in situations like this. Especially when it’s within reason, like one hotel night for less than $200.

A frustrating resolution

So I don’t believe you should have to do this with a premium card like Chase Sapphire Reserve’s concierge, but at this point my friend did the right thing and hung up. I’ll let him finish the story:

“I hung up and called back to speak with someone else who looked back at the recording and confirmed the free night. The second rep wouldn’t even go back to the recording. But now all suites in the area are booked and we are all in one standard room that’s smoking.”

That totally sucks. Again, to me the point of having a premium card is to avoid travel stress. If you’re in a smaller room than you were expecting, and one that is a smoking room to boot (why do these still exist), that is the opposite of decreasing stress.

Let’s recap here. Family of five, the youngest a toddler, books hotel through Chase and receives confirmation. Shows up at hotel, no record of confirmation. Chase offers to pay for one night before they have to relocate due to no room at the hotel. Then second Chase rep reneges on offer and essentially questions customer’s integrity (at least that’s how he felt). Family eventually needs to relocate into a standard sized, smoking room at a different hotel. As of right now, family has received no offer of compensation for their troubles.

What I hope happens next

I have no delusions of grandeur, this is a small blog, but I hope someone at Chase reads this. I recognize that everyone can have bad days so I’ll give CSR 2 some leeway, but I believe Chase should have been going out of their way to make my friend whole.

Now I’m not a “ask for compensation for every little thing like a seat not reclining” type of person, but I think my friend should receive compensation for this. If it’s Chase’s fault, they should compensate above and beyond the one hotel night and the returned points. If it’s Hilton’s fault, they should compensate as well. I believe that the Chase concierge should at least work to figure out what happened.

Now my friend wanted to see me type this up for two reasons:

Has anything similar happened to anyone working with Chase travel concierge before?
What do you think is fair compensation for this situation, if any?
He now feels hesitant to book anything with Chase travel, including airline tickets. Fair or unfair?

So I’ll end things there – do you think Chase (or Hilton) did my friend wrong? What could he have done differently? (Oh, on that point, I’d say he could have called the hotel to confirm before arrival, though I don’t think you should have to do that.) Your thoughts and comments would be much appreciated. Let’s keep it civil – I know these things can sometimes get people heated.

And Chase or Hilton – please make my friend whole and I’m happy to update this post accordingly. Both these companies have done very well by me in the past and I’m hoping they do the same for him.

Update: Obviously one way to avoid this happening is to call the hotel to confirm your reservation. One problem, according to this Flyertalk thread, is that the reservation sometimes doesn’t load until 24 hours before check in!

Update 2: The original hotel had a room open up so they moved out of the smoky room and back to the original hotel.

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Feb 13 2016

How much would I pay for an Ultimate Reward point?

Free-quent Flyer kicked off an interesting discussion on Twitter the other day:

@FreequentFlyr perhaps $300
— Saverocity (@Saverocity) February 4, 2016

It’s something that we brought up on Episode 23 of the Saverocity Observation Deck last week. As Matt explained on the podcast, his answer wasn’t to troll (well, mostly); he was saying that if you need a certain amount to complete a redemption then the amount you are willing to pay goes way up. I agree with Matt, but I’ve been thinking about something else he said on the podcast all week.

I said that I would probably speculatively buy UR points at anything less than 1 cent per point as long as it didn’t require me changing out of my pajamas. Matt countered with this point (paraphrased) – “if you’re getting enough value out of it, shouldn’t you be willing to pay more than one cent per point? One cent is just the absolute minimum you can get in return.”

His reason for this is what he calls the “double pivot” – aka the two places where you can use miles and points to save money on travel. The first pivot is in the acquisition of miles and points, which I admittedly am not that great at. The second pivot is maximizing the value out of the miles and points you earn, which I have a much better eye for.

So I’ve been spending the last week mulling over how much would I pay for an Ultimate Reward point? This is especially apropos considering the news that Chase is going all DEFCON 2 about credit card stuff – if I’m not gonna be able to bank Hyatt free nights or United miles via credit card bonuses, how much am I willing to pay for them?

Here are the things I have been thinking about – written both so I can clarify my own thinking and also to hopefully spur others to come up with their own evaluations as well!

Factor 1 – What are my travel goals?

I’m on record saying that my goal isn’t to “fly for free.” My family would set aside money to travel every year even if we were paying cash. For me, the goal is to use miles and points to either

a) save money

b) make travel more comfortable

c) both

I am not against spending money. But if I can save a little money or use the same amount of money to fly in business class, I’m all for it. This affects how much I am willing to pay per point because I can think of the money I pay for UR points as paid upgrades on economy tickets if I’d like (in the case of airlines) or think of it as subsidizing more expensive hotel rooms (Hyatt).

Factor 2 – What am I really going to use the points for?

All of the valuations out there take into account all of the transfer partners, but my personal reality is that I only really use two of them regularly: United and Hyatt. So when figuring out how much I’d be willing to pay for these points all that matters is how much value I can get at United and Hyatt.

Would I redeem for Korean or Singapore? I wish, but with a family of four I’m probably not gonna get four first class tickets on either of those airlines (well, maybe Korean). Though if that were my goal (and I was confident in the availability), that would skyrocket the price I’d be willing to pay…to a certain extent.

Factor 3 – How much would I be willing to pay for travel out of pocket in the first place?

Dia recently wrote a post about how she’s stalking Gwen Stefani or something like that. She makes a great point which is she would never pay $2500/night for a room in the first place. (I think later on Twitter she confirmed that her price point would be $300/night max or something? Don’t quote me on that).

When I first got into this game, I used to be suckered into that kind of thinking – “aw snap I got a $10K first class Lufthansa ticket for free baybee!” But that’s not really the case, and it’s even less the case when you are looking to spend money for points outside of credit card bonuses (which, again, bye bye Chase). So the question is, how much would I really be willing to spend?

For a hotel room for 4, maybe $300/night now max? For roundtrip tickets to Europe in the summer during school vacation, $1200? For roundtrip tickets to Asia over Christmas, $1800? Those are obviously moving targets, but those are targets that matter when I’m thinking about how much I’ll spend on points, because that brings up:

Factor 4 – How much value can I redeem the points for?

My valuations of how much UR points are worth are variable to my own tastes, needs, and current opinions. So the question for me is how much can I personally redeem the points for at this particular point in time.

As Matt says, if you’re good at finding saver award space, you might be able to redeem for a much better value. But that value for me has to be in line with how much I’m willing to pay for the travel in cash.

As an example, we’re going to Aruba where the going rate for the Hyatt is $500/night when we are there. That’s a bit steep for us, but using cash and points, we are paying $150 out of pocket and 12,500 Ultimate Rewards points. (As an aside, when booking hotels, you might want to check FQF’s imputed redemption values first but that’s a whole other ball of wax). Ignoring points we would have earned paying $500 cash for simplicity (though we would not have stayed at that hotel at that rate), I’m getting a value of about 2.8 cents per point. So if I got those points for anything less than that I’m winning, right?

It’s easy to think that, but in my personal case, that would be wrong. Remember, I said that I only wanted to pay $300 for a hotel room. Since I confirmed a Diamond Suite upgrade, let’s bump that up to $350 (if they offered me a suite twice the size for $50/night I’d probably take it). If I paid, say, 2 cents per Ultimate Reward point, I’m a loser in this scenario. 12,500 points would have cost me $250 putting my total cost for the room at $400 – above the threshold I’d be willing to pay in cash.

While that might seem simple to some, it’s something I find it’s easy for me to forget in the “excitement” of a deal.

Factor 5 – What are the odds I’ll be able to redeem these points at a price I’m happy with?

Having points is great, having points that you are having trouble redeeming is not. For hotels, while cash and points is preferred, you can always book a room completely on points at the Hyatt if there is a room available (hence the necessity of the imputed redemption value table). For airlines, saver award space isn’t necessarily easy to find. While I’m generally confident in my ability to find some, the reality is it’s not totally in my control.

So even if I think points are worth buying at, say, 1.5 cents per point, I think if there is difficulty to redeem them that has to take some of the shine off. Even Hyatt takes away some value just because the hotel doesn’t have as large of a footprint around the globe.

Putting it all together

Bringing it back to the beginning – I think I’m still only comfortable buying at around 1 cent per point. Then if I’m “buying” a business class ticket to Asia it’s costing me $1600, which is what I’m okay with but not thrilled about. If I’m redeeming for Hyatt, I’m usually winning, and if I’m redeeming for coach I’m probably winning again. But the lack of a large Hyatt footprint and the difficulty in finding four saver awards severely diminishes that. If I’m booking standard awards in the future then I probably need to get my Ultimate Rewards points at less than 1 cent per point.

Gun to my head, I probably am comfortable paying a little more than 1 cent per point, but the 1 cent value is easy because I can do all of the math in my head. So while I was convinced sticking to 1 cent per point was wrong on the podcast, I think a week of reflection has made me come back to that price point. I’m sure Matt will point out why I’m mistaken about that soon enough. 🙂

Final Thoughts

I’m sure a lot of you out there have factored in all these things when evaluating the price point you are willing to manufacture points at. Like I said, manufacturing isn’t my forte. Still, I found this a useful exercise, and one that I can revisit regularly (with all currencies) to make sure I’m not fooling myself. I’d love to hear how everyone else thinks about/calculates these things, so tell me why I’m dumb!