Credit card users who accumulate airline miles and travel points may find their balances insufficient for summer travel plans, as rising jet fuel costs from the Iran war drive up airfares and baggage fees. The U.S. Labor Department reported that airfares in April were 21% higher than the previous year, compounding typical summer demand increases. Travel experts advise that those hoping to use rewards for specific trips or upgrades may need to pay cash, choose alternative destinations, or fly at off-peak times to maximize value.
Dynamic Pricing Reduces Mileage Value
Most airlines now employ dynamic pricing for award tickets, adjusting points required based on demand, similar to cash fares. This means higher airfares generally translate into needing more miles. Critics, including former Transportation Secretary Pete Buttigieg and U.S. senators, have long criticized airlines for increasing redemption rates and limiting award seat availability. Brian Kelly, founder of The Points Guy, notes that dynamic pricing and higher redemption rates have made it harder to find exceptional deals, but adds that points have not lost value entirely if consumers are strategic.
Earning and Redeeming Miles
Airline loyalty programs offer multiple ways to earn miles, often without expiration. Signing up for a frequent flyer program is free, and members earn miles through flights with the airline or its partners, redeemable for discounts, upgrades, or baggage fee waivers. Higher tiers provide benefits like priority boarding. Co-branded credit cards from banks like Chase and American Express earn miles on everyday purchases. Adam Morvitz, CEO of point.me, recommends using travel rewards cards for regular expenses to accumulate points for future travel.
To offset fuel costs, airlines like United and Delta have raised checked baggage fees to $50 and $45 respectively for domestic flights. However, elite loyalty members and cardholders (e.g., Delta SkyMiles Card or United's Chase card) often enjoy free checked bags, providing summer savings.
Flexible Points and Sign-Up Bonuses
Financial institutions such as American Express, Chase, and Citi offer travel credit cards with flexible points that can be transferred across multiple airline programs. These cards often include perks like lounge access, travel insurance, and TSA PreCheck credits. Morvitz suggests beginners choose flexible points cards over airline-specific ones for greater redemption options. He advises matching cards to spending habits and evaluating annual fees against benefits.
Many banks are offering substantial sign-up bonuses—up to 150,000 points—to new customers who meet spending requirements within three months. Kelly says these bonuses can make trips more affordable. However, consumers must track minimum spending to qualify and leverage category bonuses and shopping portals. Always attach a frequent flyer number to reservations to maximize rewards.
Pay Off Balances to Avoid Interest
The value of travel rewards cards diminishes if users carry a balance, as average credit card interest rates range from 21% to 24%. Carrying a $1,000 balance can erase savings from perks like free checked bags. Morvitz emphasizes that these cards are best for responsible users who treat them like debit cards, spending only what they can afford and paying the full balance monthly.
Hotel Points Also Affected
Hotel rewards are also losing value. Hyatt recently restructured its loyalty program from three to five tiers, with some elite properties costing up to 67% more points. Sally French of NerdWallet advises against hoarding hotel points, as they are rapidly depreciating.
This report includes contributions from Associated Press airlines and travel writer Rio Yamat in Las Vegas.
