No, You Don’t Own Your Frequent Flyer Miles…Wait, What?

If you’re feeling flush with points, you’re not alone. Over the last year, everyone’s balances swelled to new maximums. Credit cards were—and still are—offering best ever bonuses to new cardholders and travel companies offered promotional earnings rates for anyone willing to leave home.

At the same time, consumers were earning, not burning. Instead of spending miles and points to fund travel, anyone lucky enough to still have a stable income was collecting points on credit card purchases for everything from home improvement to Amazon deliveries.

Now, we’re all rich in points. Or are we?

Did You Really Earn Those Miles?

After sitting for 14 hours in economy on your way to Seoul, it probably feels like you earned your miles. When you spend weeks away from your home and family on a business trip, I’m sure it felt like you earned those points. And when you purposely chose to put all your credit card spending on a travel card you paid an annual fee for, it probably feels like you earned those miles, too.

But here’s the thing: Frequent flyer accounts aren’t banks that are safeguarding your rewards until you choose to use them. They are loyalty programs with a made-up currency designed for the business to win. Anytime it looks like they might lose, they can simply change the rules.

I’ll bet you haven’t read your frequent flyer contract since the day you accepted the terms and conditions. In fact, I’ll bet you haven’t read it at all, so I’ll cut to the chase: Your miles aren’t really your miles. As it turns out, loyalty programs have all the power.

Pay attention the terms and conditions of any program and you’ll see what I mean:

“The [MileagePlus] Program is offered at the discretion of United and United has the right to terminate the Program, in whole or in part, or to change the Rules, benefits, conditions of participation, Premier (and/or Million Miler) qualification criteria or mileage levels, in whole or in part, at any time, with or without notice, even though changes may affect the value of Premier (and/or Million Miler) status levels, benefits, mileage or certificates already accumulated.”

They don’t even try to hide this within legalese: They can change the rules and benefits at any time, with or without notice, even if that impacts the value of the rewards you’ve already earned. Ouch.

But let’s not pick on United. Other airlines are just as harsh. In fact, American Airlines makes it very clear that you have zero control over your miles:

“…the accumulation of mileage credit does not entitle members to any vested rights with respect to such mileage credits, awards or program benefits.”

Every other airline and hotel program has similar terms and conditions and before you ask, many credit card rewards programs do, too.

3 Scenarios That Prove You Don’t Control Your Own Miles

Airlines Can Devalue Their Rewards at Any Time

Right now, we’re in the “Roaring ‘20s” of travel rewards. Most people have high balances and travel demand is about to soar. Those are major liabilities on the balance sheet, as far as loyalty programs are concerned. Devaluations are likely to follow, something that happens on a regular basis and often with little (or no) notice.

Expedia Rewards Points were one of the most recent program to devalue, with major changes in March 2021. The hard-earned points that members accumulated can no longer be used for free flights. As if that isn’t frustrating enough, they also slashed a valuable benefit when using points for hotel stays. You’ll no longer get double value when choosing one of their selected “VIP” properties.

Other programs devalue more stealthily. Rather than changing the rules altogether, they may just remove rewards from inventory. Hotels will re-categorize individual properties to charge higher prices without officially changing the overall award chart. Several airlines have removed award charts altogether and switched to “dynamic pricing”, where award prices fluctuate—sometimes rising to astronomical levels.

How to Avoid This: Don’t hoard your points. Saving up for a special goal is normal, but saving for trips five years into the future is overkill. If you have more points than you can feasibly use in the near future, start looking for new ways to use them. If you’re earning on credit cards, you may want to switch to a cash back card (at least temporarily) so your rewards have a stable value. Or you might consider using features like Pay Yourself Back from Chase to turn some of your points into rewards you can use right away.

If A Program Goes Out of Business, Your Points May Disappear

While this isn’t particularly common, if an airline or other business liquidates, your miles will go with it. When the program ceases to exist, your rewards are worthless—immediately. It’s far more common for programs to file for bankruptcy, though, which means they may restructure but won’t hit zero. Another more common outcome is being acquired by a competitor, in which case your miles will most likely be converted for use under the new program.

Like everything in life, there’s always an exception to the rule. India’s Jet Airways went out of business in 2019 but the rewards program spun off as a separate entity. While redemption options changed, members held onto their miles and were able to choose rewards from the new program.

Situations like this can be difficult to predict, so it’s worth keeping this in the back of your head but not losing sleep over it. Your best bet is to follow any news around mergers and acquisitions so you don’t miss any important updates about what your points are worth.

How to Avoid This: Collecting points in flexible programs is one of the best ways to protect yourself. Transferable programs, like Chase Ultimate Rewards or Amex Membership Rewards, allow you to move points into numerous airlines or to redeem for gift cards or as cash back. If one airline program goes out of business, you’ll still have several others to choose from. Just like devaluations, using your miles as soon as you have a good redemption option is another way to mitigate this risk.

You Can Be Shut Down if Airlines Think You’re Gaming the System

One of the other most common reasons people lose access to their rewards balances is because the program shuts them down. Nearly every program makes it clear that they expect you to play by the rules. Marriott Bonvoy lists so many possible reasons for canceling a member’s account that it covers nearly a whole page, including vague terms like acting “in an appropriate manner.”

In 2020, American Airlines shut down accounts from customers who circumvented rules by opening co-branded credit cards with promotional offers targeted to other individuals. The system allowed the welcome bonus miles to post but a manual review uncovered the scheme. Members who were involved had their accounts closed and forfeited hundreds of thousands of miles.

Customers earning points through normal, everyday activities should have nothing to worry about. Issues arise when you take advantage of loopholes, system glitches or all-out fraud. If you’re acting in a way that’s technically allowed but not in the way a promotion was intended, be aware you’re putting your account at risk. Programs can essentially close an account for any reason so it’s to your benefit to stay within their good graces.

How to Avoid This: Stay away from any ethically-gray areas. If there are opportunities to earn miles that are not in the spirit of a promotion, there’s always a chance a program could put your account under review. If it feels sketchy, it probably is.

Bottom Line

Unfortunately, you don’t have as much control over the miles and points you’ve painstakingly saved and tracked as you may have thought. Loyalty programs are the ones who determine what your miles are worth (and if you can use them at all). That doesn’t mean rewards programs are worthless or that you should forego them entirely. As long as you’re coloring within the lines and spending your points as you earn them, there’s still plenty of value to be found.

More From Advisor

The views and opinions expressed herein are the views and opinions of the author and do not necessarily reflect those of Nasdaq, Inc.

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