Reward Point Hoarding – Canadians Love ItPosted December 10, 2019 in Credit Card Tips
Do you like to hoard your credit card reward points? You’re not alone. Canadians love earning credit card reward points, but we don’t love to spend them. This sentiment is backed up by a survey by PC Financial Mastercard that shows that cardholders are holding onto an average of $832 in loyalty points. In fact, 3 in 10 said that earning loyalty points is more rewarding than actually redeeming them. What!?
Why do we like hoarding reward points and is it a good idea?
Why Do We Like Hoarding Reward Points?
There are a couple reasons why Canadians like to hoard reward points. The first reason is the appeal of a big redemption later on, and the second is that we belong to so many reward programs these days that it’s tough to keep track of all the points that we have. Let’s take a look at each of them.
If you’re part of a travel reward program, it’s understandable that you’d want to hoard your reward points. It may take you months or even years to earn enough points to redeem. However, before you join a reward program like this, it’s a good idea to do the math ahead of time and determine if it even makes sense to join a program like this based on your spending habits.
For example, if it will take you a 5 years or longer to earn enough points to redeem, it’s probably not worth it. Reward programs are always changing these days. The reward points you worked so hard to earn could be devalued, increasing the amount of points you need to redeem towards what you’re aiming for.
Loyalty programs are everywhere – grocery stores, gas stations, big retail, and the major travel hotels and airlines. One popular redemption strategy is to think of rewards in small chunks. Go for the attainable rewards you can redeem within a year. This does involve a planning strategy for your spending and point accumulation. The point is, getting a $25 gift card is better than waiting a decade for that big trip only to watch your points be devalued by 20% or more.
Is Hoarding Reward Points a Good Idea?
Hoarding reward points is only a good idea if you have a game plan. If you’re hoarding reward points for a dream trip around the world in a decade or longer, you’ll want to be careful. You run the risk of the travel rewards program changing or more likely, your life situation changes.
While there are consumer protections in place, there have been stories of cardholders hoarding travel reward points for a dream trip, only to have them expire a couple months before they were about to use them. Don’t let this happen to you!
Not surprisingly, millennials, who tend to like instant gratification, aren’t a big fan of hoarding reward points. Millennials only tend to carry $197 worth of reward points. Perhaps others could learn a thing or two from them.
The Bottom Line
Hoarding reward points is perfectly fine as long as you have a game plan and understand the risks. If you’re just collecting reward points for the sake of collecting reward points, you’ll probably need to rethink your game plan; otherwise you run the risk of letting your reward points expire or being devalued before you’ve even had a chance to use them.