What happens to my points during a devaluation?

At a glance#

What a devaluation is#

A devaluation is a worsening of a programme’s redemption terms. The same award then costs more miles, or it is no longer bookable at all. The balance stays the same; its purchasing power does not.

Economically that is a partial loss with no transaction behind it. Nobody takes anything away, the price of the goods rises, and because the goods are available in only one currency, there is no alternative market. That is precisely what separates a mile from a bank balance.

Meeting the term for the first time, most people read it as an exception or as a mistake by the programme. It is neither. A devaluation is a built-in valve, and that difference matters for every collecting strategy.

The forms a devaluation takes#

A price rise in the chart#

The classic form: the programme publishes a new award chart in which individual zones or cabins cost more. It is the most honest variant, because it stays lookupable and the before and after comparison is in the open.

Typically the rise is not spread evenly. Expensive cabins on popular long-haul routes climb sharply, unattractive zones stay put, and the average across all zones conceals the very movement that hits collectors. Your own route tells you more than the press release, and with two destinations in mind each needs checking separately, because the same announcement can be irrelevant for one and expensive for the other.

The move to dynamic pricing#

The most common form is not a price rise at all but a change of system. The programme replaces the chart with a coupling to the cash fare, and with it disappear the cheap outliers a chart inevitably contains.

The switch is almost always announced as an improvement, and in one respect the claim holds: more seats become redeemable, because every seat receives a price. What disappears is the ability to redeem a given route below what the market charges for it. The mechanism is set out in why the same award costs twice as much tomorrow.

For collectors the dynamic coupling is particularly unpleasant, because it does not act once. A raised chart is a step; a dynamic coupling is a continuous adjustment that can never again be read off a single number.

The quiet variants#

Not every devaluation is called one. Four variants act like a price rise without any price going up.

Worsened transfer ratios. When one to one becomes five to four, the count arriving in the target programme falls without the award becoming more expensive.

Higher co-payments. Rising surcharges lower the value per mile because they raise the amount paid despite the redemption.

Tighter availability. Shrinking the inventory makes the published price theoretical. The chart still holds, and nobody finds a seat.

Dropped partners. When a partner leaves, its award prices go with it, along with the routes that made the programme interesting in the first place.

How much notice is customary#

Very little, as a rule. Programmes frequently publish new prices on the day they take effect, occasionally with a few days’ lead, and in individual cases retroactively for bookings made after a date already past. The absence of notice is the norm, and any collecting strategy that relies on a warning relies on something that mostly does not come.

Where a notice period exists, it sits in the programme terms, not in law. The section on changes to the award chart says where you stand, and it is worth reading before saving up, not after.

Worked example: what a balance loses#

The account in this example holds 200,000 miles. The award in question costs 100,000 miles before the devaluation and 130,000 after, while the cash fare stays at 2,600 USD.

The drop in value per mile is the point of the exercise. The loss occurs with no movement on the account at all, purely through a change on the other side, and anybody who has run that calculation once looks at a large balance differently.

The loss on the balance explains why experienced collectors talk about holding time, not balances. An account emptied twice a year meets half a devaluation on average; an account growing for three years meets all of them.

Why programmes devalue#

Two reasons work together. Both are economic, and neither is malicious.

Miles are a liability. A programme issuing miles promises a future service and has to carry it on the balance sheet. When circulation grows faster than redemptions, that liability grows, and a price rise reduces it without any payment.

Circulation grows faster than supply. Miles today are created mostly through card spending, far less through flying. The number of seats does not grow with it, and at some point demand no longer fits the stock.

A system that issues more miles than it has seats needs a valve, and devaluation is that valve. Treating a programme as a savings product misunderstands the direction of the system. Booked awards are spared, balances carry the full risk, and the sober response is to hold little, redeem promptly and keep points flexible for as long as possible.

When it is not worth protecting against#

Effort spent on devaluation risk is misplaced in these cases:

• Small balances. Holding a few thousand miles means losing little. The time spent watching costs more than the exposure.
• Bank points with no transfer planned. While points sit flexible, a single airline’s devaluation does not touch them. Only the transfer commits them.
• Without a concrete trip. Panic redemptions produce bad bookings. A weak redemption made out of fear costs more than the devaluation it was meant to avoid.
• Programmes you are leaving anyway. Somebody who will not use the programme again needs a date to spend the remainder, not a strategy.
• Prompt redemption as a habit. Redeeming soon after earning needs no further protection. Short holding time is the protection, and it costs nothing.

What to do once it is announced#

Once a devaluation is fixed, hours or days remain. Three steps in this order extract what can be extracted and prevent the classic panic booking.

First, check existing plans. Anybody with a trip in mind searches the award now and books it at old prices. That is the one case where haste is justified, because the deadline meets a decision that was pending anyway.

Second, assess the balance. An account with a few tens of thousands of miles loses little in a zone increase. Somebody who saved towards an expensive cabin checks whether the award is still bookable at old prices, with flexible dates if necessary.

Third, transfer nothing new. Bank points stay flexible and are immune to this particular devaluation. Pushing them into the devaluing programme now is the most expensive possible response, and it happens constantly. Why the transfer is final is set out in how a points transfer works.

What does not help in that situation is outrage in forums. The terms permit the change, and the time is better spent on a booking than on a complaint.

How programmes word their announcements#

Announcements follow recognisable patterns, and knowing them saves guessing at what is being said.

The improvement with a footnote. The text leads with benefits, more availability or simpler rules, and mentions new prices in a subordinate clause. The benefit is real and so is the increase.

The effective date without a chart. New prices apply from a date, the chart follows later. For collectors that is the worst case, because it forces a decision before the numbers are known.

The switch as modernisation. Prices are not mentioned at all, only a new system. What it means for the mileage price becomes visible in the first search after the effective date.

Devaluation and expiry are not the same#

Two terms get confused constantly, and the consequences differ.

A devaluation raises the price of the award. The miles stay in the account, they simply buy less. The defence is prompt redemption and a low balance.

Expiry deletes the miles. The account is empty regardless of what an award costs. The defence is activity on the account, and the rules for it are in do miles expire.

Confusing the two means applying the wrong remedy: a small activity booking never protects against a price rise, and fast spending does not protect an account closed for inactivity.

The most common mistakes#

• Treating miles as savings. Miles are a claim against a programme entitled to change the terms unilaterally.
• Waiting for an announcement. Customary notice is zero, so the wait is for something that mostly does not come.
• Reading the average instead of your own route. Rises are targeted, and the mean conceals them.
• Watching only the chart. Transfer ratios, surcharges and availability act the same way without any price rising.
• Redeeming in panic after an announcement. A bad redemption costs more than the devaluation, and the arithmetic in what a point is actually worth belongs before the booking.
• Transferring bank points too early. Flexible points are the best protection there is, and the transfer gives it up, as how a points transfer works shows.

What a devaluation teaches#

Every devaluation carries information about the programme, and that is worth more than the outrage. Three questions repay the effort afterwards.

Where did prices rise? Programmes raise prices where demand exists. Seeing which zones and cabins became more expensive shows where the programme will stay expensive.

How was it communicated? A programme that raises prices without notice will do it again. The manner of the announcement predicts future behaviour more reliably than any loyalty language in the marketing.

What stayed untouched? The corners left alone are the interesting ones, because demand there is low and redemptions stay good for a while.

Answering those three questions after every devaluation produces, within a couple of years, a sound picture of which programme suits which kind of trip, and it needs no recommendation from outside.

Related topics#

• What a point is actually worth
• Why the same award costs twice as much tomorrow
• Do miles expire, and how do you stop it?
• How a points transfer works
• How award availability is steered
• When is collecting points not worth the effort?
• What happens to my miles if the airline stops flying?