It might not seem like it but now is one the best times to use your points and redeem them on flights and hotels. Yeah we see incredibly low fares too but if you've got some points and miles in your credit card and loyalty programs now is a great time to use them.
Just how lucrative are the redemption deals now? I recently just booked a Cebu Pacific flight from Cebu to Tokyo on 20 GetGo points roundtrip!
Here is a screenshot just in case you don't believe me.
Let's do a little math just to see how good of a value this booking is. I used my Citi PremierMiles credit card and transferred my miles to GetGo. The earn rate of the Citi PremierMiles is every ₱30 spend earns you 1 mile. Transfer ratio is also 1:1 (Only until December 20, 2020). Click here to see the upcoming changes to the Citi PremierMiles card.
The 20 GetGo points is literally just ₱600 worth of credit card spend. If I paid for those exact flights with cash it would total ₱18,000 (including taxes). I paid ₱3,000 in taxes and fees. That means I ended up getting a value of ₱750 per point on this particular redemption. WILD
Why are loyalty programs offering such amazing deals now?
Aside from the obvious reason of the pandemic screwing over the travel industry making them desperate, to truly understand why we see these deals right now we have to know how these loyalty programs work and earn a profit.
Airline loyalty programs sell points to credit card companies and shops. People are then incentivised to use the credit cards and collect points. Once someone has enough points they use those points to redeem flights or other goods.
Airlines make a profit when they sell those points for more than it costs to redeem them. These points are strong sources of income and has been helping airlines stay alive during this pandemic.
Points that aren't redeemed or that expire still end up looking like a liability on the balance sheet. Thats why we've seen amazing deals right now so they can clear that backlog.
Aside from the backlog people are still spending on everyday things during the pandemic such as groceries, medicine, ordering take out etc. With people not redeeming their points because of Covid that backlog is continuing to pile up.
Airline and hotel loyalty programs have been quite generous recently. Several airlines and hotels have removed points expiry, extended validity of elite member status, lowered qualifying requirements to move up on the status ladder.
Cathay Pacific's Asiamiles recently removed expiry of miles starting January 1, 2021 as long there is account activity every 18 months. Hyatt's World of Hyatt recently lowered the requirement to move up on elite status by 50%. These are just a couple of examples but almost all major airline and hotel chain have some kind of promotion currently running.
Bottomline
If you can find an amazing deal like I did and you're confident about flying in the near future you can definitely get some great savings. Aside from seeing a great redemption deal, double check on what it would cost to actually book the flight with cash. Sometimes the cash price is so low that it won't make sense to redeem with your points and you'll be better off paying for the flight in cash.
Just make sure you double check the cancellation and rebooking policies as most are now flexible but not all. The last thing we want is wasting money on silly fine print mistakes.
Pro tip: Remember you always get more value for your points when redeeming for flights instead of items!
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