There are two primary schools of thought for how to use points you earn through churning and MS (unless you thrive in the chaotic evil sector and use your points for luggage and gift cards) – travel and cash back.

Those that found this hobby through the Redventures/Boarding Area content machine, reddit etc are probably more interested in traveling for free. Meanwhile, those that landed here from FIRE blogs and other personal finance adjacent spaces were seeking an additional income stream.

For those that stick with it and gain some experience, I’d guess that both groups gravitate towards using points for travel. Regardless of how much MR and UR are worth cashed out, it’s really hard to go back to turning right on the jet bridge once you’ve experienced lie flat business class, especially long haul.

But for those that scale up and move beyond just chasing a SUB every few months, there’s just no way to realistically use all your points for travel (unless you are a family of 6 willing to pay Delta’s ask for long haul J).

I’ve found that the group targeting travel can occasionally be condescending towards the cashback group on the grounds that chasing cashback isn’t as much fun as travel (which is maybe true in a vacuum, but there’s so many reasons people don’t travel) and the return isn’t the same as chasing outsize redemption value.

I hate to break it to everyone that thinks they’re playing the game better because they primarily redeem for travel – it’s all the exact same thing.

I won’t bother rehashing the same argument against using cents per point as a metric outside of noting that your ANA F flight via VS isn’t 20cpp because ANA is charging $20k unless you were going to pay that price anyway, and nobody that would do that is reading this post. Assigning a realistic value of what you’d pay cash for that same flight – say $1,500 or $2,000 – still yields a respectable 1.5 or 2cpp.

The real reason I’m saying it’s all the same is because it is – there is a very real opportunity cost associated with using points, and there are plenty of scenarios where you should book with cash instead of points, even if you have them readily available.

The Opportunity Cost of Using Points

Let’s start with the concept of marooned points and closed wall ecosystems. Unless it is a very unpopular program, all airline and hotel points have value. There are many places online where you can find a market for the entirety of what Awardwallet says you have stashed away.

It’s tempting to say you are making booking decisions based on it not being a flexible currency, but you always have the ability to turn those miles into money.

Here’s my real life example – I recently spent 200k AS miles to fly me and P2 to Australia in business class on Singapore Airlines. An intermediate churner would say that’s a great redemption, because AS miles can’t be cashed out in a straightforward way and you’re using a non flexible currency.

While I’d agree that it was a great redemption because it fit our exact plans and saved us a 19 hour slog in economy, there was an opportunity cost associated with using points, and it wasn’t cheap. Now that MR to HA to AS transfers are dead, AS miles are more scarce, and those 200k miles had a value not too far from what SQ was asking for one person on the route. We did not get this for free – we got it for half off.

I’m not saying not to use your points for travel – being able to travel around the world to do the things I’m passionate about has changed my life so much for the better. I’m just arguing that the team travel folks may have something to learn from everyone pursuing cashback.

On the other side of the coin, you should consider how buying points and certs and using points as a cash equivalent could make sense over other options.

Here’s a couple examples:

• You want to stay at the Waldorf Astoria in Cabo San Lucas, and you’ve found 3 nights with standard availability. It costs 150k Hilton points per night, and the cash price is $1500 per night, yielding a high 1cpp for Hilton. By transferring ~225k points from Amex at a 2:1 transfer rate, you’re getting a very solid 2cpp. You’re all set, right?
  • Here’s another idea. The going rate for a close-in Hilton free night certificate is around $450. You could spend around $1,350 and get the same stay. And how many MR would you need to cash out to get that $1,350? Only 100k if you’re bargaining right.
• You want to fly round trip to Amsterdam from the US on KLM, and you got lucky and found 50k saver fares for business class via Flying Blue (albeit with $350 total of carrier imposed surcharges). You have an Amex Business Platinum with 150k MRs to book. That’s a no brainer right?
  • It turns out this fare is on sale for $2,000 cash. Instead of transferring 100k MRs to Flying Blue and paying the $350 of surcharges, you could instead elect to use the Business Platinum’s 35% rebate on MR bookings for premium cabin fares and pay an effective cash rate of $1,300. This would save you money on the surcharges and allow you to pocket a nice stash of miles from the paid fare.

Again, I blow a ton of points on travel without thinking about it. All I’m advocating for is some more understanding of why cashing out often makes sense, even if it’s less sexy than transferring for a saver fare. And that the deeper you get, the closer you may find yourself to choosing to pay cash.