Diversify Your Points Portfolio

I have consistently preached diversification and I thought it was about time to revisit this topic. There are many reasons why it is a good idea to diversify your points portfolio, but first, I will list the reason why it is a bad idea not to pool your points:

• What happens when you are hit with a major devaluation to the only program that you are collecting points with? For example, the hard earned points that you thought were worth maybe 1.5 cent per $1 spent is now only worth 1.2 cent per dollar instead, that would be a 20% drop in value, which happens all the time. How would you feel with a 20% drop in your salary?
• What happens if the program gets discontinued? Then you will need to redeem your points as soon as possible. That is never a fun thing to do.
• What happens if there are blackout dates? Then you are out of luck and will have to pay for something that you could have gotten with points instead.

As a result of these negatives consequences, many people will avoid loyalty programs all together because:

• It is not worth the trouble.
• Do not collect enough points to make it worth while.
• It is too time-consuming to keep track.

Personally, here’s why those issues do not apply to me:

• It is worth the trouble for me because I have experienced the rewards that come with it and the rewards always outweigh the troubles.
• It is very easy to collect points, even if you are not a big spender, if you learn all the various ways to earn points.
• Though it may be time-consuming, the time is well spent for me because it is pretty much like making money. You earn points that can be used for things that you were going to pay with in cash anyway. And we need to work for the cash to pay for things anyway. Points is just another form of currency essentially. It allows you to acquire products or services.

For those of you who are interested in the points game, you will want to ensure that you understand the benefits of diversification.

Diversification allows you to take advantage of more bonus offers and promotions that can help you rack up your points so much faster, to help you get that much closer to your goals. Speaking of goals, be sure to read Pointshogger 101 if you are just getting started with the points game or even just need a brush up.

A diversified portfolio of points gives you more options on what you can do. I have a points account with at least one airline from each major airline alliance; thus, giving me access to as many reward flights as possible. Furthermore, whenever I do need to pay for a flight, I do not have to worry about being loyal to one airline (because I am not pooling all my points to only one account). This way, I can take advantage of the cheapest flight to pay with cash and then bank my points to the appropriate airline. Keep in mind that whenever you flight with an airline who is a member of an alliance, you can bank your points to any of the airlines within that alliance. It is actually such an amazing benefit to customers.

One of the best ways to diversify your portfolio is to have transferable points, such as American Express Membership Rewards, Starwood Preferred Guest Starpoints  and RBC Rewards. All of these loyalty programs allow you great flexibility to transfer to another loyalty programs at a very reasonable rate and sometimes even very generous rates. I would keep my points in the transferable format until I need to transfer or transfer during a transfer bonus offer.

If you really want to maximize your points, then diversification is the key. But if you do not want the hassle, then at least pool your points so you still have some points, which is better than none.