Fifty Shades of “Free”

Once upon a time, the word “free” was a popular term describing travel via miles and points. However, over the last few years I’ve seen more and more bloggers pull away from it. And for a good reason. When you shell out $800 per person on a roundtrip airplane transfer  to a Maldives resort, the shoe just doesn’t fit.

I’ve mentioned in the past that one of my biggest pet peeves before I started this blog was overuse of the word “free.” It literally drove me bananas to see extremely expensive trips be described in such a manner. As a middle-class family, if we followed most of this advice, we would be broke within few years with virtually nothing in our retirement accounts.

But has the pendulum swung too far? Is there such a thing as 100% free travel? Actually, I believe that there is. But it does depend on how you define it.

Let’s say someone applies for Chase IHG credit card, collects sign-up bonus and uses 10,000 points on a hotel that happens to be on PointBreaks list. The property is located only one hour away from that person’s house, so no airfare is required. Oh, and the place includes free breakfast.

Our imaginary family is extremely frugal and brings their own sandwiches in a cooler. If afterwards they wanted to say that their trip was 100% free, I would have absolutely no problem with it.

But, you might object, what about cost of gas for the car? Sure, but most families like to drive somewhere on weekends, as in see a movie or go to a state park. But what about opportunity cost of using 10,000 IHG points?

If you’ve been around this hobby for awhile, you know that amount isn’t worth a whole lot. Sure, you can redeem it for 2,000 miles, but that will get you absolutely nothing unless you are topping off your account for an award.

So, I think it’s fair to call this particular trip free, don’t you agree?

Free-ish or deeply discounted

Of course, this was an extreme scenario. Most people will have trips that are free-ish (my term) or deeply discounted. I’ve written about our all-inclusive stay in Jamaica and broke down the expenses, factoring in opportunity cost. It definitely fell into a “deeply discounted” category because we paid significant taxes on award tickets and spent actual cash on IHG promos in order to accumulate the points at a favorable rate.

I’m OK with that because I used to pay cold hard cash for all of our trips, and if this hobby goes away permanently, I’ll focus on finding deals and travel during off-season. With miles and points I don’t have to make those type of choices. As long as there is award availability, we’ll pay the same rate in points  at a beachfront hotel during Memorial Day weekend as we would on a random day in October.

What about flexible points?

As I’ve mentioned earlier in my post, this is something I used to take issue with, especially  when it came to Ultimate Rewards points. After all, you can redeem 1,000 points for $10, so if you transferred  them to a  loyalty program, how could you say your flight/hotel is free? But I honestly think this is the case of semantic difference.

If one finds miles and points hobby, applies for Chase Sapphire Preferred and collects the sign-up  bonus, it’s easy to see why they would use the term “free” when it comes to their award redemptions. After all, if they never came across this information, they would never have the points in the first place. Yes, there is an opportunity cost, but technically, it doesn’t make it any less free.

What about collecting flexible points via everyday spending? This one is a bit different because  most people who have no clue about our hobby get some sort of rewards on their credit cards. Sure, the amount is usually 1% cash back or at best 2%, but the point is, they already get some return on their spending.

In miles and points hobby, there is a danger of getting trapped in a circle of loyalty transfer partners. With Chase UR program it’s usually the trifecta of United/Avios/Hyatt. Most of the time, your return on 1 point will be more than 1 cent, so it does disincentivize  cash redemptions. In turn, it encourages you to travel, which can be a good thing as long as you can afford it.

The trick is to not let miles and points dictate where you go and where you stay. Before I found this hobby I was perfectly fine with a beachfront Holiday Inn property. I’m still fine with it, though I started adding nicer hotels (including Hyatt) into the mix. But it’s important to make sure you really are getting your trip at a deep discount because miles and points can fool you.

It’s easy to look at a sticker price and ignore the fact that there are much cheaper cash alternatives available. That’s why my fancier hotel redemptions are usually covered with certificates that have virtually zero opportunity cost.

If you are a new reader, I would like to encourage you to watch out for lifestyle inflation when it comes to miles and points hobby. If you have a limited amount in savings, you have to be extra vigilant.

There is no question that we are  affected by those we associate with. When you see everyone in the hobby fly to Maldives, it’s only natural that you’ll also start researching a similar trip. It’s no different from real life. If all of your friends buy a big expensive house, chances are, you’ll be under pressure to do the same.

As a miles and points blogger, I can tell you, I’m definitely under pressure to pick a nicer hotel when it comes to my travel choices. Those type of reviews get more page views and can potentially help “sell” premium credit cards. However, I’ve decided from the beginning that I will not let this blog dictate the way I travel. Just like you shouldn’t let your miles and points dictate the way YOU travel.

Click here to view various credit cards and available sign-up bonuses