United Airlines just announced a major devaluation of their MileagePlus program. The number of miles needed for awards tickets to international destinations is going up sharply, and the price of awards for travel on partners is increasing dramatically. In some cases, the number of miles required is increasing by nearly double!
This comes on the heels of a large, but slightly less painful devaluation of both Delta miles and points with Southwest Airlines. Industry analysts now expect American and US Airways to follow suit.
So how should credit card users handle these developments?
1. Stay flexible. As always, the best strategy is to invest your loyalty in credit cards that offer points flexible mileage transfer programs. This means that the points you earn can be transferred to one of several different airlines, which can then be redeemed for travel on their partners. The three main flexible point transfer systems are Starwood Preferred Guest, Chase Ultimate Rewards, and American Express Membership Rewards.
So for example, someone who has been saving Ultimate Rewards points for an award on United (an Ultimate Rewards transfer partner), may now wish to consider utilizing one of their other transfer partners, such as British Airways, in the wake of United’s devaluation.
2. Earn and burn. Cardholders should never try to horde miles for award trips in the distant future. Airlines will inevitably continue to devalue their miles, and credit card holder should spend them as quickly as possible.
3. Consider the increased earning opportunities. Although airline miles are becoming less valuable to redeem, they are also becoming more easy to earn. Credit cards now commonly offer 2x-5x rewards on various categories of spending. For instance, the Chase Sapphire Preferred offers 3x rewards on travel booked through Chase, plus another 7% annual bonus, for an effective 3.21%. In addition, the Chase Ink Bold and Ink Plus cards continue to offer 5x rewards at office supply supply stores and on telecommunications services.
4. Spend miles before they are devalued. United miles can be redeemed at their old rates before February 1st for flights up to 330 days in advance. The changes to the Delta chart are effective for travel after June 1, 2014, and the Southwest Airlines Rapid Rewards program changes are in effect for tickets booked after March 31st. So spend your rewards before then.
Credit card users can still travel for free, but they will have to become more clever, or work a little harder to do so.