Devaluations are Bound to Happen

When I talk to people about earning points, they tend to tell me that they do not earn enough points to get enough value, so they bank all their points into one or very few different programs.

The problem with this approach is that once a devaluation hits or points expire, they get too discouraged to start collecting again. Once example is the Air Miles program. As soon as the 5 year expiry policy was implemented, and the cost of rewards started to increase (even though the earning ratio on credit cards have not improved), the points became much less valuable.

I have always recommended that we diversify our points portfolio to avoid being hit by a devaluation, and to take advantage of different bonus promotions available to us. I use AwardWallet to help me keep track of all my accounts, so has been painless for me.

There are so many different ways to earn points from every day spending. Furthermore, there are so many different ways to keep an account active if you keep track of your points like you keep track of your bank accounts.

To avoid being hit with devaluations, some people prefer getting cash back credit cards. This is probably the better approach (to get a good return) if you do not want to hassle of dealing with points. Here is the list of top cash back credit cards with an annual fee and without. Just remember to do the calculations before determining whether an annual fee or no annual cash back credit card works better for you. If you are a big spender, especially on specific categories, then an annual fee cash back credit card can make more sense.

If you are a fan of collecting points and feel that you can make good use of your points, then I recommend that you diversify. Secondly, I recommend that you earn points on a credit card that gives you the best return that you can get. I like the American Express Gold Card because it gives me 2x the points on gas, groceries, drug store and travel expenses. I value Membership Rewards points at about 2 cent each, so that gives me almost a 4% return on those categories. I generally do not earn less than a 2% return on any of my purchases, unless I am trying to meet a minimum spend requirement to receive a sign up bonus. To do this, I use a combination of credit cards. My default credit card is the Capital One Aspire World Travel MasterCard in case I cannot get better than a 2% return on any other credit card, this gives me essentially (if you redeem for travel) a 2% cash back on all purchases anyway.

The other factor to consider is that I strongly recommend earning transferable points. This way, if you get hit by a devaluation on one program, you always have the option of transferring your points to another program instead. The Starpoints with Starwood Preferred Guest and Membership Rewards with American Express and two of the best transferable points programs out there, giving us more flexibility. For example, I collect Membership Rewards points and when Delta Air Lines was hit with a devaluation, I still have the option of transferring my points to British Airways (or another program) and earn Avios points instead.