One flexible trick to beat loyalty program devaluations

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I recently woke to the news that Iberia Airlines had changed the rates for its award tickets, with no advance warning. Rates for economy, premium economy, and business awards are now higher.

Overnight, the airline devalued my significant stash of Iberia Avios — unless I was willing to fly on a basic economy ticket. Not great news for my Madrid-based family of travelers!

Hotels do the same. Take the recent announcement that ​Hilton raised award prices again​. Now, top-tier Hilton hotels can cost up to a jaw-dropping 250,000 points per night. That's a major devaluation for Hilton loyalists looking to stretch their rewards.

Iberia is certainly not the first or the last airline to devalue its points — airlines frequently lower the value of their own miles or points. Or worse, they convert to dynamic pricing, which means you never really know what your points are worth or how many you’ll need for an award.

In fact, most major airlines in the U.S. have done this over the past few years, and it means that, in most cases (especially during peak times), it’s harder to use your points or miles because it takes more of them to fly. Planning travel becomes more challenging because you never really know how much a flight will cost in points, so you can’t work on saving “just the right amount.”

Some hotel loyalty programs, such as Marriott Bonvoy, have also moved to dynamic pricing, so you never really know how much a hotel might cost in points, and it can vary greatly by date.

You’ve probably heard the saying that you shouldn't put all your eggs in one basket, and this absolutely applies to frequent flyer miles and points currencies.

For example, if you only have Delta SkyMiles and Delta suddenly devalues its miles, you’re out of luck. If I’d only focused on Iberia Airlines, I would have been much more upset about the airline’s devaluation.

But since my points currencies are diversified and flexible, I’m on top of the game. If you hold a flexible points currency that allows you to transfer points to numerous airline or hotel partners or book travel via a credit card issuer’s travel portal, you’ve multiplied your options and won’t be completely out of luck when an airline or hotel devalues its points.

Yes, you should still accrue those American Airlines miles when you fly OneWorld and book hotels directly so you’ll get those Hyatt or Hilton points.

But add another step to your loyalty strategy by getting a flexible rewards credit card.

Here are some of the most common flexible points currencies and the cards you can earn them with:

• Amex Membership Rewards points: You can book travel via Amex Travel or transfer Amex rewards to 20 different travel partners, including Emirates, Qatar, Hilton, and Marriott. Earn them with cards like the Amex Platinum or the Amex Gold.
• Capital One miles: These miles transfer to 16 airline loyalty programs, like British Airways Executive Club and Flying Blue, as well as three hotel programs. You can also use Capital One Miles to book travel through Capital One Travel, or wipe travel charges, like flights or hotels, off your statement within 90 days of purchase. Earn them with a card like the Capital One Venture X.
• Chase Ultimate Rewards points: Chase points transfer to 11 airline partners (like United and JetBlue) and three hotel partners: Marriott, Hyatt, and IHG. You can also use them to book travel via Chase Travel. Credit cards such as the Chase Sapphire Preferred and the Chase Sapphire Reserve accrue Ultimate Reward points.
• Citi ThankYou points: With 20 airline and hotel partners, those who earn Citi points have many choices. Just know that transfer ratios vary by specific card and partner. You can also use ThankYou points to book travel via Citi Travel.

Unfortunately, more devaluations will come. All you can do is have a diversified points strategy to stay prepared.