Frequent fliers – take note. Your rewards are on the line as major airline Delta overhauls the way that they measure and award miles to their rewards members. The airline recently announced that it would be changing the rules for how rewards miles are doled out to its members. Whereas before, miles were awarded based on the physical length of the journey, Delta will now award miles based on the dollar amount of the ticket.
So for example, say you buy an $800 discounted flight from SF to Europe and purchase it 4 months in advance… you’ll fly quite a few miles at a low cost. Based on the previous system, you would look forward to accumulating a decent amount of rewards miles based on the trip. But with Delta’s new program in place, your rewards will only reflect your $800 ticket price tag, meaning the person flying first class from San Francisco to L.A. with the $1,300 ticket they bought the day before (high cost, fewer miles) will receive more rewards than you.
The move ultimately favors frequent fliers who aren’t as concerned with the cost (or who pay business or first class prices) and regularly jet to various cities. To those who bide their time and find the lowest priced flight when they visit their relatives or friends twice a year? The switch will seriously limit the number of miles you can accumulate. If you were counting on collecting miles to pay for your vacation in two years, you might need to reassess.
Beware of the Debt Trap
The change is reminiscent of the “spend more get more” model that’s often seen in the rewards programs attached to credit cards. It’s dangerous territory for anyone who wants to see travel benefits but charges up a credit card to do so. Yes – the lure of a free flight is certainly tempting, but is it entirely worth the splurge of money spent on various flights in order to receive the benefits?
Unless you’re already laying down big bucks for travel costs, probably not. Instead, you can plot out the alternatives to racking up debt on your frequent flier credit card and exploring other options to pursue your travel dreams.
How you can ensure a financially secure trip
1. Set a goal and a budget
The best way to enjoy a trip or vacation without the financial strain is to make a budget and follow a saving/spending plan. That requires setting a longer term goal and assigning your saving milestones in order to achieve it. Ideally, you still want to seek out the cheaper flights as you plan your trip since they’ll ultimately cost you less money than if you spend big on more flights in order to accumulate more miles. If you’ve previously relied on the old system (racking up miles based on destination), it’s time to really weigh the ultimate cost of continuing to buy into a rewards plan that requires you to spend more!
For the travelista on a budget, check out our tips on how to afford travel when you’re on a budget.
2. Be smart about collecting your rewards
If you do choose to open up a credit card to benefit on the rewards, you have to be organized in your approach. In order to avoid paying interest fees, you’ll want to pay off your balance each month. Using e-mail alerts, balancing your budget each month, and setting up automatic payments are all great ways to keep in touch with your finances and stay on top of your credit cards. Remember, the alternative to a loosely followed payoff plan is debt!
To see the pros and cons of opening up a credit card for rewards, check out our debate on “Why You Should Open Up a Credit Card For Rewards” and “Why You Shouldn’t Open Up a Credit Card For Rewards.”
3. Few can game the system – don’t put yourself at risk
Google “frequent flier tips and tricks” and you’ll probably get hundreds of posts documenting success. While it’s definitely possible to collect rewards based on your traveling habits, it’s still not a guarantee. You have to be diligent in the way that you plan your repayment and also make sure that you don’t get yourself into a financial situation that puts you into debt. Before you go full force into any rewards program, it’s always advisable to honestly assess whether you can stick to a payoff plan and evaluate whether the benefits are really worth the effort.
Do you use rewards for your travel expenses? Ever faced financial challenges by doing so?
Image credit: Blue Pylons