The travel industry has experienced a gigantic upheaval since the onset of COVID-19. Stock markets are down 25-30%, jobless rates have reached unprecedented levels, and airlines have come to a screeching halt.
Since it is unclear when things might return to “normal”, and many can benefit from cash now vs travel later, here are three ways to cash out your points for immediate value.
There is no doubt that the Coronavirus pandemic has had, and will continue to have, a significant impact on the travel industry. My wife and I were in Cape Town when concerns began to ramp up considerably, and thankfully we were able to get on one of the last commercial flights back to the U.S. before South Africa instituted a mandatory 21-day lockdown.
Now safely quarantined at our makeshift home and unable to return to our duty post in Pakistan for the time being, we have been considering what this situation means for future travel. Of course, our mid-May trip to South Korea will no longer be happening – a shame, too, as I had booked us in Etihad’s First Class Apartments to and from Seoul. But what about our airline miles?
The silver lining to a lot of this is that airlines are mostly doing the right thing and offering free refunds and redeposits of redeemed miles, but it’s anyone’s guess when we’ll be able to re-book these trips. However, despite the poor short-term outlook, it would be highly unlikely for the entire travel industry to collapse and for our points balances to go to zero. Because of that, it may be best to wait it out and hold on to your points to use in the future. However, if you’re in a situation where you cannot afford to wait for the industry to recover and need to get value from your points and miles right away, there are ways to do so at a reduced rate.
Other Ways to Use Miles and Points
Until the world recovers from this pandemic and airlines resume normal operations, there will be unpredictable award availability and opportunities to use your hard-earned miles and points. However, if you have been collecting transferable currencies, there are multiple options to cash out.
Be warned, though, that no alternative will provide the potential value that transferring to airline miles and booking award flights. That being said, here are three reasonable ways to cash out your points for immediate value.
All transferable currencies (Chase Ultimate Rewards, Citi ThankYou Points, American Express Membership Rewards, Capital One Miles, Marriott Bonvoy Points) offer some sort of gift card redemption (Note: Capital One’s gift card redemption option is currently (temporarily) suspended). Cashing out points for gift cards to stores where you regularly shop can be a good way to use points in a pinch, especially if there is a discount being offered.
As one example – If you were to redeem points for a Hulu gift card, you could get $25 in credit for 2,250 points — a rate of 1.11 cents per point. If you know you will use the gift card or would like a convenient way to help out a friend or family member using your points, this can be a good option.
Citi and Chase both offer convenient ways to redeem points for a statement credit at the rate of 1 cent per point (with Citi, you must have the Prestige card, otherwise the rate is .5 cents per point). This can be more advantageous than cashing out for gift cards because it is applied directly to your balance without risking loss of the gift card or an orphaned balance. However, if the gift cards are discounted as noted in the examples above, then statement credits are less useful.
Pay With Points
Most transferable currency portals also offer the ability to “Pay With Points” – either by shopping directly through their portal or by using their points with merchants such as Amazon. You can expect about 1 cent per point in valuation when using directly at merchants, and less if buying merchandise through the portal.
For example, using Membership Rewards points at Amazon to buy a pair for Bose Quiet Comfort headphones for $349 would require 49,857 Membership Rewards points or 48,811 (discounted) if bought directly from the Membership Rewards portal. Both options are sub-par, as they offer .07 cents per point or less in value.
What We Are Doing
My wife and I have more than a million points and miles across more than a dozen airline, hotel, and transferable currency programs. If I redeemed them all for cash or statement credits, I might end up with $20,000 or perhaps a bit more. Given the prospect of a strong industry bounce-back, however, I’m holding off on cashing out and instead rolling the dice on future travel. If the possibility exists to get 5-10x the value from these points on trips next year, that is more valuable to me than having a few thousand dollars cash and having to rebuild my balances all over again.
Your situation may be different and an infusion of cash may be just what’s needed to get you through this, and that’s perfectly alright. Miles and points are personal in nature and the only truly bad redemption is no redemption at all (e.g. points expiration). Do what works for you.
This is a strange and stressful time for everyone, especially those who are experiencing significant hardship because of this pandemic. While miles and points should be low on the list of priorities, it is highly likely that the industry will resume normal operations eventually and that they will be eager for our business. Unless you have an urgent need for cash and do not plan to travel any time in the next couple of years, then you should strongly consider holding on to your points and miles for future use. If your situation warrants cashing out, your best option is discounted gift cards that you know you will use or statement credits at 1 cent per point.
Stay safe & healthy!
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