Why I Almost Never Use Travel Points to Book Domestic Flights

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I've booked several flights recently, as the last half of this year is turning out to be a busy travel period for me. Even though I have a healthy balance of points available on my travel credit cards, I've been paying for domestic flights in cash.

That might not seem like it makes much sense. Normally, it's a good idea to use your travel points when possible to save yourself money. But there are also times when it pays to be a bit more selective in how you redeem your rewards. Here's why I've been saving mine.

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Middling value on award airfare

The reason I haven't been using my credit card points for domestic flights comes back to value, or in this case, lack of value.

Before you book travel in points or miles, it's wise to calculate how much value you're getting. To do so, divide the cash price of the purchase by the price in rewards. For example, if a $300 airline ticket costs 30,000 miles, then you'd be getting a value of $0.01 per mile.

Lately, most of the award tickets I've found on domestic flights offer about $0.01 per mile in value. That's on the low side, as I usually like to get at least $0.015 or $0.02 with my travel rewards. Even when there has been a better value available, it's not always a better deal after taking other airline's prices into account.

For example, I was looking for a flight to New York, and I found one with a stop that I could book for either 60,000 miles or $920. That's a value of about $0.015 per mile, which is reasonable. But then I saw that another airline was offering a nonstop flight for $619. If I can book a flight for that amount, I'm not going to spend 60,000 miles.

Saving points for better opportunities

So, why wouldn't I want to spend 60,000 miles to effectively save $619? Even though it's always nice to save money on travel, I knew I could get much more value if I used those rewards for something different.

Most of the travel points I earn are transferable. They're part of major credit card rewards programs, such as Chase Ultimate Rewards and American Express Membership Rewards. With these types of points, you can transfer them to a number of different airline and hotel partners. That gives you a lot of options, and the value you get will depend entirely on what you book.

Take those points that I didn't use for a flight. Instead, I decided to use them to book a Hyatt hotel where a $909-per-night room goes for 29,000 points. That's over $0.03 per point in value - - far more than I would've gotten with any of the flights I was looking at.

Deciding when to redeem your travel rewards

I get that you probably don't want to be constantly second-guessing yourself before redeeming points from your credit cards. And as long as you're saving money with them, it's hard to really go wrong.

However, when the value of your travel rewards depends on how you use them, there are a few things I'd suggest to try and get the best deal.

First, learn about the different ways you can use your rewards. Whether they're American Express Membership Rewards points, United miles, or some other currency, get an idea of the redemption options and their respective values.

Also, take your future travel plans into account as you decide when to use your rewards. As a general rule, you save more money when you use rewards for more expensive travel purchases. For example, an award ticket on an international flight is usually a better way to maximize your miles than an award ticket on a domestic flight.

If you're planning any big trips, consider hanging on to travel points for the areas where they could go further. In my case, that meant paying for some domestic flights out of pocket and saving my points for the more costly expenses, like a hotel in New York and international airfare.

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We're firm believers in the Golden Rule, which is why editorial opinions are ours alone and have not been previously reviewed, approved, or endorsed by included advertisers. The Ascent does not cover all offers on the market. Editorial content from The Ascent is separate from The Motley Fool editorial content and is created by a different analyst team.American Express is an advertising partner of The Ascent, a Motley Fool company. JPMorgan Chase is an advertising partner of The Ascent, a Motley Fool company. Lyle Daly has no position in any of the stocks mentioned. The Motley Fool recommends Hyatt Hotels and JPMorgan Chase. The Motley Fool has a disclosure policy.

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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