As you might know I think very highly of the Ultimate Rewards (UR) program. In fact I even call their collective UR earning cards to be the Ultimate Wombo Combo. Yet, I ended up cashing out over 180k UR points and I don’t regret it one bit. Meanwhile, I am currently hoarding the less valued MR and TYP points. Right now, this whole scenario probably makes very little sense to you but when put in a specific set of parameters, cashing out those UR points was the most ideal thing to do. So, now you may ask, “what were these parameters?
Abundance of points across various programs
I’ve fair amount of point spread across various programs like United, BA, IHG, Carlson, Hilton, etc. I am not the type who burns big so these points should last me for a while. As such, at the moment, I do not need UR for travel.
UR is easy to earn
I claim that I don’t need UR at the moment but what if I needed it? Since I have several cards that earn various UR points, it is rather easy for me to regain UR points. More importantly, my mom is 1/24 (1 stands for CSR I got for her) and my SO is 0/24, so should we need UR, they will be readily available to us. As a matter of fact, the 100k UR from CSR will most likely go towards some urgent tickets 6-7 months down the road.
UR is easy to cash out; TYP and MR not so much
By this point you know I cashed out UR but at the same time you know I’m hoarding TY and MR points. It probably makes no sense considering I myself value TY and MR points beneath UR points. But there is some underlying thought process here:
- I don’t want to cash out MR at anything lower than 1:1 cash. Obviously, the only choice now is getting Schwab Platinum card and cashing out at 1.25 cpp. Until then MR will act as backup for my existing frequent flyer (FF) points.
- Since I pay rent using AT&T Access More credit card and hold Forward as well as Prestige, I am able to collect fair amount of TYP rather quick. In turn, I can redeem them at 1.33-1.6 cpp towards air ticket. I have debated burning TYP towards my student loan but thus far I have kept hoarding them for possible AA tickets.
Paying student loan and the opportunity cost of holding onto UR
The cat is out of the box – I used UR to pay off my loan. I could have just said “I paid loan” and ended the article but I thought I would add above points to address some reasons for cashing out UR, TY, or even MR points. There is one key point I still have to make – holding onto UR and not using them is an opportunity cost. If you think about UR as cash, this cash could be used to reduce a portion of your loan or perhaps you could use it towards an investment. In other words, should you choose to let UR points sit idle for years and not do anything with them, you are losing the opportunity of earning $ through investments. Additonally, the you are also depriving yourself from the oppurtunity of knocking down your loan by couple of hundreds and thus reducing amount of interest you acquire over time.
Closing Remark
It is up to each individual to decide what works for them. Just because UR points are generally considered to be 2 cpp does not mean you should never cash them out. Your case is unique on its own and you should use your own judgement to figure out what to do with your points. For instance, even if you have loan, it might make sense for YOU to keep UR for travel and only pay minimums on loan. As always, YMMV.
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