Over the past decade, I’ve taken countless trips and saved thousands of dollars on amazing travel experiences by leveraging airline and hotel credit cards. In that sense, rewards credit cards offer a fantastic value proposition. But there’s a looming possibility that could threaten the value of your hard-earned points at any time: loyalty program devaluations.
Airline and hotel loyalty programs have a history of devaluing their programs with little or no notice. As a result, members often find they don’t have enough points left for the bucket list vacation they’ve been saving up for. It’s an unfortunate situation to be in and one that should happen more often, especially as the travel industry rebounds.
Airlines and hotel chains have relied heavily on selling their loyalty currency in order to stay afloat during the pandemic. Points flooded the market and travel costs rose as rising vaccination rates made it safe to travel again. This means that airlines and hotel brands are preparing for high redemption costs. The best way to alleviate this problem is with a devaluation.
Several loyalty programs have already introduced more reward tables, while others have eliminated them altogether. While there is no way to avoid devaluations, there is a way to protect yourself from them by taking advantage of the right programs. Here are three types of devaluation-proof credit cards that everyone should have in their wallet:
A credit card that allows you to accumulate transferable travel rewards
Credit cards that earn transferable rewards are the most essential type to have if you want to avoid devaluations. These cards allow you to earn loyalty points that you can transfer to more than a dozen airline and hotel partners. Since you’re not tied to a loyalty program and have some flexibility in how you use your points, you’re less likely to face an unannounced devaluation.
For example, Chase Ultimate Rewards is a transfer partner of the following loyalty programs:
- Aer Lingus Aer Club
- Air Canada Aeroplan
- Air France-KLM Flying Blue
- British Airways Executive Club
- Emirates Skywards
- IHG Rewards Club
- Iberia More
- JetBlue TrueBlue
- Marriott Bonvoy
- Singapore KrisFlyer
- Southwest Quick Rewards
- United Mileage Plus
- Virgin Atlantic Aeroclub
- The world of Hyatt
So if Air Canada decides to devalue its rewards chart and increase the number of points required for flights, you don’t have to pay the inflated fare. You can check your Star Alliance United partner’s redemption rates and if they’re lower, you can transfer your Ultimate Rewards to Mileage Plus for better value.
Alternatively, if every loyalty program decides to devalue tomorrow, you have the option of redeeming your points for statement credit or booking travel directly through the Ultimate Rewards travel portal. As a Chase Sapphire Reserve cardholder, your points are worth 1.5 cents each for reservations on the travel portal, while Chase Sapphire Preferred Preferred cardholders get 1.25 cents per point.
If you’re looking for a transferable rewards card, I recommend cards that offer one of the following:
All of these programs have a varied list of travel partners that can provide many transfer options in the event of a devaluation.
Some great starter credit cards for each of these programs include:
A 2% cash back card (or equivalent)
Sometimes cash back is worth more than the points you can earn. This is especially true when it comes to hotel loyalty programs, which have devalued significantly over the past decade. For example, in 2013, Hilton Honors increased the number of points required for premier reward nights from 50,000 to 95,000 points per night, devaluing the value of Hilton Points by nearly half.
Since then, the program has taken a further hit, with Hilton no longer publishing a rewards chart and standard top-tier rewards reportedly starting at 150,000 points per night and increasing with demand.
World of Hyatt recently introduced a new rewards table with peak prices, while Marriott announced higher rewards prices after its merger with Starwood Preferred Guest, eliminating rewards tables altogether in March 2022. In all these cases , points earned by loyal members have become less valuable.
The only way to really protect yourself against a devaluation like this is to earn cash back. With most hotel currencies valued at 0.5-1.7 cents per point, placing your expenses on a 2% cashback card might be more rewarding and convenient. There are no restrictions on redeeming Cash Back or concerns about Reward inventory. If a program devalues, it will make no difference as spot prices are not affected.
As a bonus, many cash back cards have no annual fee and some even allow you to convert your cash back rewards into points. From March 28, 2022, the Citi® Double Cash card will no longer earn cash back, but Citi ThankYou points (at the same rate): 1 point per dollar when you make a purchase and 1 point per dollar when you refund it. So the Citi Double Cash will soon be a Citi ThankYou points card like the Citi Premier, with the caveat that you can convert those points to cash, as always.
The Chase Freedom Unlimited earns 1.5% cash back on all spend and up to 5% back in select spend categories. Again, you can convert these rewards into Chase Ultimate Rewards points if you have another card in your wallet that earns these rewards (e.g. Chase Sapphire Preferred or Sapphire Reserve).
The Capital One Venture and Capital One Venture X Rewards credit cards are also solid options as they earn 2x miles on all purchases. The Venture X also earns 5X miles on flights booked through Capital One Travel and 10X on hotels and rental cars booked through the portal. Not only can these rewards be converted into cash back, but you can also transfer them to various airline and hotel transfer partners at a 1:1 ratio or redeem them for statement credits on travel purchases. It’s about as resistant to devaluation as loyalty programs.
Hotel credit card with annual free nights benefit
Hotel loyalty programs and co-branded credit cards are far from devaluation proof. However, they do offer a perk that could mitigate devaluations: annual free night awards. When hotels increase reward redemption rates, annual free night rewards given to credit cardholders help achieve top reward nights.
For example, in 2017 Hilton Honors removed its rewards chart entirely, officially moving to dynamic pricing. That means there’s no telling if the points you’ve saved up for that bucket list vacation will actually be enough. An unrestricted free night reward takes some of the guesswork out of that dilemma.
Here are all the hotel credit cards that offer annual unlimited free night rewards when you renew your credit card:
Outside of the Hilton portfolio, there are three hotel chains that offer credit cards with free night rewards. Granted, these free nights are much more restricted, but if you’re loyal to one of these brands, you can still get a lot of value out of them:
The bottom line
Loyalty program devaluations are inevitable, but by diversifying your points portfolio and focusing on flexible rewards, you can minimize the damage to your bottom line. Diversity is especially important and the old adage “Don’t put all your eggs in one basket” is especially true. With plenty of transferable and cash back rewards, you won’t be as negatively impacted if one or more of your favorite programs devalue their currency.