Inflation’s Latest Casualty: Credit Card Points

Estimated reading time: 3 minutes

Silver Lining To Swiping

Credit cards often come with perks. Be it cash-back, loyalty points, or miles, there are plenty of benefits for prospective card holders to choose from.

Last year, Americans amassed more than $34 billion in credit card points, a whopping 70% higher than their 2019 stockpile, according to data from credit card issuers American Express, Capital One, and JPMorgan Chase compiled by the Wall Street Journal.

But are those rewards worth their book value?

Point-less

Inflation has eaten into household budgets across the nation over the past years. And credit card perks are a casualty as well.

Given credit card points have a certain purchasing power assigned to them, they become less valuable as prices go up. And that’s exactly what happened. The longer you sit on your points during high inflation periods, the lower their purchasing power.

A point redeemed through a card issuer’s portal has traditionally been worth about a penny, which has lost about 20% of its purchasing power since 2018, according to WSJ.

At the same time, the points themselves are dropping in value as airlines and hotels are demanding more points for flights and rooms. The average cost of an economy flight purchased by points has risen 19% since 2019, per a  report from travel research company IdeaWorks.

Washington has taken note, and the Department of Transportation is currently investigating how airlines value their points.

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