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Thursday, June 20, 2019

“Is it true that you can no longer use British Airways miles to book tickets on American Airlines? “Will I qualify for an American Express bonus offer, if I had the card two years ago?” “Can I still use my Chase points to book a ticket to LA for my nephew?”

It seems like every day brings with it another negative change to the airline and credit card rewards industry and we are often asked whether its time to panic, get rid of all one’s miles and points and find another hobby to pursue.

Before we answer this question and provide direction on the future of the reward’s industry, its important to recap the past twelve months, and using this information, we can paint a picture about where we see the rewards industry will be ten-years down-the-road and how that should pertain to one’s current rewards strategy. Let us begin.

Earning Miles

Airlines used to allow passengers to earn miles based on the number of miles flown on a specific itinerary, so if your flight traveled 2,000 miles you would earn the corresponding number of miles and if you flew 50,000 miles a year, those 50,000 miles would count towards your frequent flyer status. Many people who wished to earn status with specific airlines in order to get free upgrades, and other benefits and perks, would hop on a plane to travel from one location to another, and with which there was a ‘stopover’ at a completely separate location and thus earn additional miles for the entire leg of the trip. However, recently, both Delta and United Airlines changed the way passengers earn and qualify for miles with the more expensive tickets earning a greater number of miles, and the less expensive tickets earning less miles.

Booking Tickets

We have also seen an increase in oversight from the airlines in regards to mileage tickets and transfers, and multiple credit card applications in order to earn those miles. Most recently, Alaska Airlines confiscated tickets that were booked by individuals who had applied for multiple cards or had performed multiple transfers, from a variety of sources.

Applying for Multiple Credit Cards

The credit card companies have begun cracking down as well with Chase stating that anyone who applied for multiple cards over a two-year period (for the purpose of earning miles) would be denied approval for specific Chase credit cards. And prior to Chase’s announcement, American Express announced a change to their bonus offer program for new credit card applications, disallowing individuals from receiving bonus offers for new credit card application bonuses if they received the bonus offer previously, regardless of how long ago it took place.

The changes above were meant to address individuals abusing the system, but there are additional changes as well to consider regarding the longevity of the rewards industry.

Mileage Devaluation

One of the great benefits to using miles for travel was if a mileage ticket was available for a set number of miles, even if it was a last minute ticket, which normally would cost many more dollars to purchase outright, you would be able to book the ticket with the same number of miles it usually costs. When family members of mine had to return from Los Angeles to NYC for a sudden circumstance, and I was about to purchase a ticket for them using miles, the message that flashed on the airline website was “would your like to use 50,000 miles or pay $2,100 for this flight?” Even though it was a last minute ticket that was much more expensive, as long as it was still available using miles, the airline allowed me to book it using the same number of miles.

However in order to address this mileage-to-cash discrepancy, Delta recently implemented a new policy and travelers can no longer book low-level domestic mileage flights less than three weeks before the trip. And this followed British Airways new policy from earlier this year, where they increased mileage ticket prices by as much as 150% on flights from New York to Los Angeles and London, with tickets from Miami and Berlin increasing significantly as well.

Taking all this into account it is obvious there is a new landscape in the rewards industry. Airlines and credit card companies aren’t happy that many people are gaming the system and are cracking down on these abusers. And airlines are trying to be as profitable as ever and this mindset is driving the changes reflected in how many miles are now required for certain destinations and tickets. Keep in mind, the fact that the airlines keep changing how and when individuals can use their miles and points have angered many and have caught the attention of lawmakers, and it remains to be seen whether making these changes, especially without advance notice, is legal or fair. But for responsible individuals who wish to turn their everyday credit card spending into great travel benefits and value, the rewards industry is certainly here to stay. And when you keep in mind the fact that the airlines and credit card companies are ‘giving away’ miles and points when one uses a credit card, this in of itself is enough reason to continue using your credit card to accrue miles and points. Even though they may be worth less than before, have greater restrictions and may be frustrating to use, there is still tremendous upside to earning miles and points to create an alternative revenue stream and get you where you need to go.

By Eli Schreiber, Get Peyd