Now is the time to redeem points for flights

Frances Meredith of Raleigh, N.C., used a branded American Airlines credit card for everything from groceries to medical expenses during the pandemic, piling up points with nowhere to spend them. That meant she had plenty to redeem when her family of four decided it was time for a winter getaway to Miami.

Although the seats were pricey at 50,000 points each, Meredith, an internist, was excited to save money by using her rewards balance.

"It was easy. There were lots of seats," she said.

As travelers return to the skies, many, like Meredith, have amassed larger than usual totals in airline and credit card rewards programs. And they are starting to spend them. Several factors make now the time to cash in points.

More flexibility. Flights booked with points on the major U.S. carriers are fully refundable. That means if you need to cancel the trip, all your points and any associated fees will be returned without any penalties. Tickets bought for cash, in contrast, typically offer a credit for a future flight.

Better now than later. Many travelers are sitting on larger-than-ever point balances, both because they haven't been redeeming their points and because they've been adding to the pile over the last two years with credit card purchases tied to airline loyalty accounts. According to a study by ValuePenguin and OnPoint Loyalty, the five largest airline loyalty programs — Delta Air Lines' SkyMiles, American Airlines' AAdvantage, United Airlines' MileagePlus, Southwest Airlines' Rapid Rewards and JetBlue's TrueBlue — ended 2020 with $27.5 billion in liabilities, up $2.9 billion from 2019. Customers earned about half as many points in 2020 as they did the previous year, and redeemed just 10% of their available points compared to 30% the previous year.

The most important reason to use points now is that they may have less buying power over the coming years, said Jamie Larounis, who writes about loyalty programs on his travel website, the Forward Cabin. Airline and hotel points are like currencies owned by companies, and those companies can value their currencies however they like by changing the cost of redemption. Helane Becker, an airline analyst at the investment bank, Cowen, said airlines have devalued points multiple times over the past few years and she expects that practice to continue.

More places to go. Travel itself is less daunting now with more countries eliminating COVID-19 testing for vaccinated passengers. London, one of the most popular destinations for U.S. travelers, dropped its testing requirement on Feb. 11. Thailand, Vietnam, Australia and other countries are opening up to tourists.

Take time to search for the best deal. Redeeming points to capture the most value can take some sleuthing. For example, at the time of this writing, a business class flight on Delta from New York to Paris costs 320,000 SkyMiles points on a randomly selected day in March, but a similar flight on Air France costs only 75,000 miles plus $213 with Air France's Flying Blue loyalty program. American Express, Citi, Chase and Capital One have partnerships with Air France, so their customers with membership rewards points could transfer them to Air France, making the cost just a fraction of the Delta ticket.