Yesterday, PerkStreet Financial pulled the plug on its rewards program, without any warning. In doing so they confiscated all rewards that were in people’s accounts and simply shut them down. This is a stark reminder that whilst I do view points and miles as assets, they do not come with the same consumer protections as FDIC Insured Savings.
This might be a good time to review your current points and miles balances and start running them down, cashing in when you can. I think that the big programs, such as the major airlines and hotels are a lot safer than smaller programs, but you simply never know what might happen.
A massive devaluation is not unlike Cancelling All Reward Balances
If you have a large number of Rewards somewhere, even if they might be in a stable seeming location all that the airline or hotel partner needs to do is devalue their rewards without notification, if you are stuck with a large number of them they can lose massive amounts of value overnight – from the Rewards Program perspective this is a sure fire way to reduce their liability. A bird in the hand is worth two in the bush.
Personally, I try to keep low balances on my rewards accounts, sometimes too low meaning I need to suck it up in coach when I fly, however, I would rather have enough miles set aside from the next 12 months of trips, plus a small buffer for emergency flights and last minute getaways than large 6-7 figure balances. As soon as I have my emergency levels topped up I revert to earning Cash Back from my Fidelity Amex, which I cash out monthly as soon as the rewards post to my account.
How many frequent flyer miles do you have, and how many should you have?
I suggest that you take this week to review all your various programs, and see what might be running high and could be cashed in, either by booking flights, hotels or perhaps even getting statement credits or gift cards in order to trim your balances down and control your risk exposure.
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