The Cost of Accumulating and Hoarding Points

People who rigorously follow this hobby tend to accumulate a lot of points. The obviously and often the easiest way is through signup bonuses but many manage to accumulate hundreds of thousands of points through manufactured spending or the good old mileage run. There are many many articles that teach you how to optimize signup bonus, (well, because that’s where the affiliate money is) but we don’t seem to talk about the cost of hoarding points as much.

Everyone wants to earn lots of people and some want to earn it as fast as they possibly can through signup bonus. It isn’t uncommon for people, particularly beginners, to get 50 cards in in two year time span. But this may eventually come at a cost of a ban hammer from various banks. For example, both Chase and Citi have axed accounts after seeing for too many new accounts and inquires on a credit report. Chase will eventually let you back in (speculation: 2 years) like they did me but Citi seems to treat it like any other ban, i.e. lifetime ban. So yes, in the process of accumulating points quick, you may just have eliminated credit card options from one of the major bank….for the rest of your life.

Then there is also the group of people who just keep hoarding points because they think they will use it someday. They keep applying for hotel and airline cards even if they have no vacation plans for the next four years. Some keep accumulating points so they can go on a vacation with their unborn child. But when is hoarding too much? At what point do we account for the fact that the non-cashable hotel and airline points tend to be worth less valuable as time goes by? At some point we also need to say that signup bonuses for various cards have only gone up so it is really sensible to get them now sit on the points for several years?

If you look at Amex Hilton’s historic offer chat by USCCG you will notice that the signup bonus has increased enormously since its early days. For example, those who applied for “best offer” for said card in 2015 got less than 50k offer while those who applied for best offer in 2019 got 100k points. And if someone waited till now then they had the potential to get 150k bonus. Admittingly, there was a twice in a lifetime opportunity to cash out Hilton points at 0.5 ccp in 2018 so those who applied for Hilton cards back then and managed to cash out did pretty good regardless.

Anyway the the question is – if you can only get some brand’s card “once in your lifetime” and you’ve no plan on using said brand for next X years (maybe because they don’t serve your current location or maybe they don’t serve in the destinations you are interested in travelling for next Y years), is it even worth accumulating points for said brand just because it is currently at its all time high offer? Maybe it is if that is one of your few options left? Maybe you want to get it now any try to sneak around “once in a lifetime” rule later?

Now let’s talk about points that are cash equivalent, for example UR, MR, and TY points. I strongly urge readers to periodically burn Citi and Amex points as you can lose it all in case of a shutdown anyway. Further, if you’ve a huge stash of points just sitting idle for years it is doing nothing but collecting dust while the cash equivalent of it could be earning 3% interest in the likes of Porte and HMB. Now, it is worth pointing out that during the pandemic (more or less once in a lifetime event) I have been zeroing out my UR balance through grocery spend (currently 1.5 cpp) and I plan to save/invest an equivalent amount elsewhere.

Speaking of investment, I think that is something a lot of people (not everyone) ought to do. One of the things I wish I did sooner was get deeper into stocks trading. I never felt that my primary job gave me enough room to invest in stocks and I only started putting few thousand dollars in the market after I picked up various side jobs. But later I realized that I could have been investing money from this hobby into stocks as well. Obviously not only I did that but I also got into the crypto, the latter of which I’m not doing so hot on. But hey, the experience of it all is worth losing a few hundred dollar I made up through points.

Closing Thoughts

Just some rambling.

P.S. I’m waiting to cash out my southwest points. I hope they allow amazon gift cards again, hopefully once travel opens back up.