The Points Whisperer
The Points Whisperer

Frequent flyer points: what to do with yours

Frequent flyer points have delivered holiday savings for decades, and while many flights are grounded right now, patient travellers will be rewarded.

It may be tempting to spend accumulated points on gift cards, toasters or other items from reward program online stores, but points specialists say this delivers a poor bang for your buck.

Using points to redeem flights can deliver up to 10 times the value of spending them on a gift card.

The CEO of iFLYflat, Steve Hui, says when a frequent flyer point is used for buying a gift card it's worth half a cent. However, for an economy flight the value is 1.2c and for business class flights it soars to between 3c and 5c.

"With gift vouchers and other stuff you are just not going to get any value," Hui says.

"You might be tempted because you have heaps of points, but if you hold back you will be rewarded with flights in the future."

iFLYflat CEO Steve Hui says credit card spending boosts reward points. Picture: Sam Ruttyn
iFLYflat CEO Steve Hui says credit card spending boosts reward points. Picture: Sam Ruttyn

Hui says our closed international border means most travellers are avoiding booking overseas flights but have still been earning points with reward credit cards.

Booming online shopping during the pandemic has turbocharged some points balances as consumers used credit cards for more purchases.

Hui says a potential risk with hoarding points is they may lose some value if Qantas and other airlines increase ticket prices and adjust reward redemptions in the future.

However, his advice for frequent flyer points is to "hold onto them".

"You know travel will resume and when it does you will be glad you have got the points to pay for it."

Thechampagnemile.com.au founder Adele Eliseo says some travellers are speculating on possible international flights from late 2021, while others want to redeem points at home.

"One of the best ways for Qantas Frequent Flyers to use points in this way is via Qantas Hotels accommodation bookings," Eliseo says.

"Qantas has increased the redemption value here by offering a 20 per cent reduction in the number of points required for Qantas Hotels bookings made by 31 December 2020."

Eliseo says gift cards and reward store purchases offer the worst redemption value.

"As an example, Qantas Frequent Flyer members can extract a value of 0.58c per point when redeeming for vouchers from David Jones and Myer," she says.

Thechampagnemile.com.au’s Adele Eliseo says points deliver the best value on flight rewards.
Thechampagnemile.com.au’s Adele Eliseo says points deliver the best value on flight rewards.

"Consumers can extract 0.79c value per Qantas Point when redeeming points for spending with Qantas Hotels until 31 December."

Virgin's Velocity rewards program continues under new ownership but its rewards are struggling to remain relevant, Eliseo says.

"Redemption partnerships with overseas airlines continue to be on pause, and Virgin Australia has removed a number of destinations from its domestic network," she says.

Eliseo says a current Velocity deal offering a 30 per cent points discount on Virgin Australia business class flights has "questionable value".

"All Virgin Australia lounges remain closed indefinitely, and hot meals are no longer being served in business class so, essentially, you're just paying for a bit more space," she says.

 

MAXIMISE REWARD POINTS

• Look for ways to double-up your points, such as using a rewards credit card when shopping at retailers that also offer rewards.

• Seek a card with benefits - such as travel credits - that offset the annual cost of the program.

• Avoid reward cards if you are not paying them off every month - because the interest cost will outweigh any benefits.

• If you hold a premium credit card and are unable to access benefits because of COVID-19, speak with the card provider as some are extending benefits such as lounge access or waiving fees.

Originally published as Frequent flyer points: what to do with yours



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