Like anything, getting started in the points and miles sphere is exciting and inspiring at the beginning of the journey. With all these lucrative credit card rewards offers rampant nowadays, it’s easy to get on the path to your next vacation. Cards are accrued, points acquired, and then it comes to redemption time. Hopefully, you have the right arsenal of points to get to where you want to go, but the stars don’t align every time.
But if you play your cards right, you can avoid this problem entirely. Enter the concept of Currency Dilution. Think of this as spreading your eggs across too many baskets, except in this case we are talking about points.
It’s pretty common to see beginners accrue Delta Skymiles, American Airlines miles and United Airlines miles and then ask the question “can I transfer Delta Skymiles to United Airlines?” The answer is “no,” and it will be for the foreseeable future. Neither airlines nor the banks want to make it that easy for you. Which is why you need to smarten up.
Put simply, Currency Dilution makes your life hard. It can create excess worry: “OMG, all I need are 3K more Skymiles to get this award, but I have no idea how to get them”. Or, even worse, “I thought American Express transferred to United and was banking on those miles to get that award”. Oops.
So without further adieu, I’ll lay out some hints, tips and strategies to make sure these examples aren’t you.
How to Eliminate Currency Dilution in 3 Steps:
- Focus on One or Two Transferrable Currencies
- Pick Two Domestic Airlines of Choice
- If Wanting to Diversify, Focus on Transferrable Currencies with Overlapping Partners
Here is a bit more explanation as to why you should absolutely execute on these three ideas. Frankly, anyone in this game should be thinking about these three steps and taking action against them!
- This is almost a no-brainer, but it needs to be highlighted. Despite cards coming out with lucrative category bonus multipliers, it still doesn’t always make sense to chase these spend multipliers when your primary currency is different than what the new card offers. Always focus on trying to build massive balances in a couple areas, and stop being distracted by shiny objects.
- Despite the fact that elite status isn’t worth much these days, it still makes sense to bank your points across no more than two airline programs. You won’t be earning many points if you don’t fly too often, but it’s still pretty worthless to accrue Delta Skymiles if you primarily redeem through American Airlines or United Airlines. Try to consolidate as much as possible to gather enough points for an award. Kudos if that airline transfers easily from bank points.
- If you are looking into advanced strategies, then this is likely the most important rule in Currency Dilution. Here’s an anecdote for you. Let’s say that you have accrued a bundle of Chase Ultimate Rewards and American Express Membership Rewards. Let’s also say that you are incredibly enticed by Citi’s new category multipliers of 5X dining and travel. At face value 5X beats Chase, but you think that Currency Dilution may hurt you more than harm you. Well, you might be able to have your cake and eat it too in certain circumstances.
To further my example, let’s say that you have 75K Amex MR and are looking to go to Europe next summer with your wife in business class. 75K will get you one ticket, but it won’t get you two! You think Aeroplan might be your best option with Amex, but you can’t accrue enough of those miles with American Express. With the Citi Prestige coming out with a larger bonus, you think that perhaps that might be a smart option to look at. American Express and Citi both transfer over to Avianca, which has a pretty good rate for booking business class awards to Europe, 63K one way to be exact.
Luckily, you believe that the new Citi Prestige will not offer a bonus of less than 50K Thank You Points, so with that and the minimum spend you should easily reach the required 126K miles for the two of you to get to your award. In this case, Currency Dilution is on your side and winning for you! You strategically planned out the best options for your award, and combined different transferrable currencies to reach your goal. Well done, you are an award travel maverick.
That being said, this won’t work in many cases. Let’s take a look at another example, a die-hard United Airlines frequent flier based out of New Jersey. In this case, you bank all your miles to United, and are therefore heavily invested in the Chase Ultimate Rewards program. You’d love to get to Europe just like the earlier example, except signing up and participating in a different transferable currency won’t do you squat since your old faithful United Airlines is only an airline partner of Chase! In this example, you really are shit out of luck if you are short on miles.
Long story short, if you are looking to diversify beyond core transferrable currencies, always make sure that you are signing up for cards and participating in programs that will net you overlapping partners. This will help “top off” awards if you are short a few miles or points in your core program. For advanced travel hackers, this is CRUCIAL to get to where you want to go. And for you beginners, please don’t sign up for every willy-nilly program you see out there. Understand your goals, understand your travel patterns and plan appropriately.