United devaluation shows value of transferable points

Earlier this week, United Airlines announced that it was getting rid of its award chart. But, it also shows the value of transferable points.

Airlines and hotels can do whatever they want with their points and miles. There are very few laws regulating the rules around them. The consumer has very little protection.

What does this devaluation mean exactly?

United currently publishes a set amounts of miles for different flights. See the below example:

Example United Award Chart

 Saver Award (o/w)
Economy/Business Class
Everyday Award (o/w)
Economy/Business Class
Domestic USA (<700 miles)10,000/25,00032,500/50,000
Domestic USA12,500/25,00032,500,50,000
Mainland USA to Hawaii22,500/40,00045,000/90,000
Mainland USA to Europe30,000/60,00070,000/155,000
Mainland USA to South Asia 40,000/75,00090,000/180,000
Mainland USA to Australia/New Zealand40,000/80,000100,000/200,000

(Please note this is an incomplete award chart. Other destinations and exceptions exist)

Essentially this award chart is giving you the price for the different types of flights. However, with this announcement, United will join Delta as the first major carrier without a set award chart. They are going to dynamically price awards. Translation: Make award tickets more expensive.

It’ll most likely get more expensive to fly United Polaris with the devaluation. Photo by United.

In order to please consumers, United also announced the elimination of the close-in booking fee and cheaper redemptions for short-haul flights. But, for the majority of travelers collecting points and miles, it’s now going to get more expensive to fly on United Airlines.

What’s the lesson here?

I don’t want to dwell too much on this specific situation, but it’s a perfect example of the “danger” of collecting points or miles of one airline or hotel chain.

For folks that have been accumulating United miles for years, this is a rude awakening. Someone with 70,000 miles in their account who wanted to take a flight from the US to Europe might have to change their plans dependent on the new dynamic pricing.

My sister-in-law, and Everyday Points and Miles contributor, Jenny Terry just redeemed a good stash of United miles to get to Thailand – thats most likely going to be more expensive moving forward.

There’s an easy way around this, though…

Earn. Transferable. Points.

We’ve written extensively about this in our Beginner’s Guide and also in our post talking about the reason to start with a transferable point card that earns Chase Ultimate Rewards or American Express Membership Rewards.

Earn. Transferable. Points.

1. Transferable points can be used in different ways

Points like Ultimate Rewards and Membership Rewards can be used in many different ways. Because you can transfer these points to different airline or hotel partners, you can redeem them in a plethora of different ways. You can also redeem transferable points through travel portals.

2. They don’t lose as much value

As United just taught us, airline miles are vulnerable to sudden devaluations. Points and miles will always lose value over time, but transferable points will devalue less because of the many ways to use them. All of your eggs won’t be in one basket!

3. They earn better bonuses

For the most part, airline and hotel credit cards will only earn a single point per dollar on everyday purchases which isn’t an efficient way to accumulate points. Yes, there are outliers, but typically it’s more lucrative to use transferable point cards for everyday spending.

The transferrable points cards from ChaseAmerican Express and Capital One all have bonus categories. This means that the everyday person, someone who is not spending a ton of money on hotels and airlines, is going to earn more points with these cards because they’re getting bonuses when they spend at gas stations, restaurants, and grocery stores.

Having cards that earn bonuses on everyday spending categories is the best way to earn points and miles quickly without traveling.

4. Multiple cards can earn the same point currency

Getting a family of transferrable points credit cards can also increase your point totals.

When everyday people do spend money, we need to be strategic about which card we use to make sure we’re earning the maximum number of points possible. Focusing on one type of “currency” allows us to earn enough to redeem more quickly. I would rather have 50,000 Chase Ultimate Rewards than 25,000 United miles and 25,000 Marriott Rewards points.

By strategically using multiple credit cards with different bonus categories, I can exponentially grow my stash of points. The best way to do this is with the Chase Trifecta, but there are also ways to do it with American Express.

Final Thoughts

Many writers are acting like the world is ending with this devaluation.

If you have a ton of United miles, it’s not ideal, but it’s a learnable experience about the value of transferable points.

If you’ve read my 2019 Points and Miles Goals, you’ll notice that I don’t have too much stock in any one airline or hotel. The only exception is Alaska Airlines – but I’ve earned almost all of those miles through flying, not spending on the Alaska Air Visa Signature Card.

Diversify your points and miles don’t hold too much stock in any one airline or hotel chain.

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