Learning from Criminals- how to value points

I’ve been bothered by this for the longest time. But I think we are all screwing up big time when it comes to Credit Card points.  By valuing them high, we are stagnating, and losing real money.  I find it interesting that people (myself included) who have been in ‘the game’ for any length of time stop App-O-Rama’s.  Instead, we always have ‘enough’ miles and points.

My personal strategy is to have all major travel booked 330 days in advance, and on top of that keep pretty lean (but sufficient) points balances for any travel I might want to take.  For us, that tends to look like:

• 100K Ultimate Rewards
• 100K SPG
• 75K Membership Rewards
• 100K AA
• 50-100K BA
• 50-100K other
• Enough Hotel Points for 2 nights each in 2-3 programs (Club Carlson x2 accounts, perhaps a 3rd)

Now I am eyeing up my next card application (singular) and it is looking like the Ritz Carlton 140K signup or the IHG card, I may get both, but that would be a splurge for me.  Basically I need a room for my next trip, Cancun in July (which may turn into Cuba) so I am looking at some points to cover it.

I really don’t think this situation is that unique – nor is the advice (that I have given in the past) that: you should value your URs at 1.X, and SPG at more, and whatnot… that you should never cash in for a penny a point, never take a gift card, or cash in for goods.

Learning from the criminals

Recently, Trevor mentioned that a number of United accounts may have been hacked.  The modus operandi for hackers that break into Frequent Flyer accounts is to cash out as quickly and easily as possible – and they don’t care what value they get from it because it is ‘free’ to them… I discussed this concept earlier in the year when exploring what airline programs and hotel programs have shopping options, the post is here> Frequent Flyer Fraud: How they use your points.

Can we learn from these fraudsters?  They have no emotional attachment to the value of points – they got them from you for free! All they care about is getting value out of them, in anyway they can, and getting more points. We, on the other hand, obsess about getting great performance that we consider cash and points options, paying cash outright, and generally hoard the points until the hackers come along to relieve us of them!

Let’s say I did the same.  If I was to cash in my points balance base (MR,UR,SPG) for a total value of say $2500 today – what would that make me do? Earn more!

It would keep me lean, make me think about this next AOR more aggressively an find a way to not get 1 or 2 hotel cards, but also some more Membership Rewards, Ultimate Rewards and SPG points.  The irony is, we are able to get these points at a price so low its almost like stealing them especially when you think about signup bonuses and maxing AORs out every 91 days.  With a recent 75K Amex Business Gold offer I could gain 85K MR for something between $0 and $100.  If I valued them at a penny each, that’s$750-$850 in profit right there.  But I wouldn’t normally apply for that card, because I have ‘enough’ points, and I am ‘saving them’ for a good value award.

This also manifests itself in the ‘pay points or cash’ quandary we all face.  Ultimately, if you had an infinite amount of points you’d never pay cash.  So the argument only comes into play when your points are finite, and if they are finite, could it be that you just aren’t applying for enough cards, and generating enough spend on them?

Another way to think about it might be to start burning more for First Class… I’ve not done so in the past because I think the value between Business and First for International wasn’t worth it, or from Economy to First domestically. But if I started burning them there, or on gift cards, or toasters, or whatnot… perhaps that would be the motivation to earn some more.  I find the concept very similar to how hard it is to motivate yourself once you hit certain financial goals.

The full lion doesn’t hunt.