One pet peeve I’ve heard from others is that travel is free if you use points or miles to pay for your trip. It’s not free at all because of real or opportunity cost.

Having Points Makes Aspirational Experiences Attainable

Being in the points and miles hobby is enrichening and can make experiences that are otherwise out-of-reach attainable. Would I be willing to shell out tens of thousands of dollars to fly the family in business class around the world for a simple vacation? It’s very unlikely. There are a lot of things I could do with my money and shelling out that much for a short vacation might not make as much economical sense as doing something a bit closer to home. I might decide that it’s better to put that money into more fun at the destination itself than the journey to get there.

What about points and miles? What you might find is the price of that same flight is now much less expensive, enabling you the ability to feel comfortable with upgrading your travel (both the journey and the destination) at a more reasonable price. Award programs that have a fixed price for points will be difficult to capture that outsized value to make the price more reasonable. But programs that still maintain award charts offer that ability.

Suddenly, by having points in the right programs, you could take that bucket list trip you’ve always wanted and it’s attainable just because points have more it more affordable.

But Remember: Points Aren’t Free

Do I book a trip using cash or using points? It’s a certainly valid question. If you’ve been in the hobby for a while, you’re going to encounter this same question. And guess what? You’re going to start thinking “well I normally get 2 cents per point when redeeming _____ points, and I’m not getting that value on this redemption, so I am tempted to pay cash and save my points”. Congratulations! You just realized that there is an opportunity cost to points. There are times when you would prefer to hold points and use cash knowing that there is a better use of those points. Thus points are a currency and can hold value. That value is going to vary wildly by program and person (all point valuations are subjective).

Now, I’m sure some people would say they have more miles than they know what to do with them because of travel or because of large sums of business spend on credit cards. I’d say that’s certainly a problem most of us would love to have. If you’re getting your points through credit card spend and have too many to use, I’d say you should probably get a cash back card and that you’re not optimizing your return (if you don’t want cash back and prefer points, then–ha!–you too are putting value into points).

Devaluations Exist

Let’s try a proof by contradiction. Let’s assume points are free. If points are free, then they have no value. If they have no value, they most certainly can’t be devalued, where they are worth less than they did before. But that can’t be the case because almost every points blogger loves to talk about which points program went through a devaluation and generally talked about how unreasonable the changes were. Therefore, since devaluations exist, points must have value. Q.E.D.

What About Credit Card Sign-Up Bonuses?

We’ve all seen those credit card bonuses that attempt to entice you with a juicy number of points for opening a card, paying an annual fee, and spending some amount of money to meet the minimum spend requirement. Do those count as free? Nope. I’m assuming of course that in meeting the minimum spend requirements that you’re not spending above your means (otherwise you can absolutely add that cost to the price you’re paying for the miles). In an absolute sense, you’re just acquiring those points very cheaply (paying the annual fee).

But there’s also the concept of opportunity cost that can make things a bit muddy. What if instead of signing up for that credit card bonus that gives 75,000 points in whatever program, you instead could have signed up for a card that earns $750 in cash? If you still chose the points, that means that your preferences said you’d rather forgo the $750 in cash for 75,000 points, or said differently those 75,000 points cost you a potential $750 in cash. It’s not free.

You Might Just Find Cash is the Better Value

Honestly, don’t feel bad when you get to the point where you feel that paying for a trip with cash is the better value. It’s a rite of passage in this hobby when you get experienced enough to know that sometimes actually paying for cash is the better deal. We did it on a cheap roundtrip fare out of Europe to enable us to come back to Europe at a later date at a relatively cheap price. Honestly, if we had continued plans to always originate in Europe, we would have continued it several more times. It felt like such a good deal to get a reasonable rate for business class travel nonstop to the West Coast of the USA from Europe. It was so much of a good rate that we decided it was better to pay cash than to use points.

It’s inevitable that you’ll come to the realization that there are times when it’s better to use cash if you haven’t yet done it, but remember–

• Everyone’s valuation of points will be different
• Each program will command a different estimate for the value of points
• Your value of points might change over time

But one thing you’ll never hear me say is that I earned a lot of “free” travel just for signing up for the right credit cards. Personally, I think that’s a lot of bologna.

Do you disagree that points have no value?