When you invest, you expect to be told to diversify.
You intentionally hedge your investments in such a way that you’ll get some value from a down market and some value from an strong market. We do this in investing by buying different types of stocks and investing over a period of time (dollar cost averaging).
However, when you’re collecting miles, it is important to diversify (unless there is a specific trip you are saving for).
In an effort to practice what I’m preaching, right now I decided not to transfer any American Express Rewards points to Continental before the September 30th deadline. The biggest reason is that I want the flexibility and benefit of diversification. That obviously would not have been possible if I transferred my miles to Continental.
4 Reasons to Diversify Your Stash of Frequent Flyer Miles
1. You’ll have a broader range of reward redemption opportunities. For example, if you want to fly one way, you’d better hope you have miles with an airline that allows one way reward redemptions. If you want to fly to Australia, you’ll want to have miles with airlines with more frequent availability. If you want to book within 7 days, you’ll want to have some Delta miles so you can avoid paying any fees.
The obvious exception is someone who has a specific vacation in mind. In that case, focusing all of your earning opportunities towards one program to help you get the necessary miles makes sense.
2. You’ll be able to hedge against award chart changes.
I feel for folks who transferred miles in mass to the British Airways program only to find out they are changing their award chart.
Still, there is a certainty to the fact that award charts will change.
In fact, one of the biggest reasons why I didn’t transfer my miles was I’m interested in having some Aeroplan miles, and they just changed their award chart. I could be wrong, but I’d assume any changes to the award chart are further in the future than closer.
3. You’ll have the opportunity to avoid fuel surcharges.
As part of having a broader range of redemption opportunities, you’ll be able to be selective about which airlines to fly on designated routes. Thus, you can also hedge against changes in surcharges. With Aeroplan, if you book with Air Canada, you’ll pay a fuel surcharge. If you book with another partner, you won’t.
For an upcoming trip to Europe, we paid about $125 per person in taxes and fees when using our AAdvantage points. The exact same itinerary with British Airways would have cost over $500 in taxes and fees.
4. You’ll have the necessary flexibility.
Sometimes you simply don’t know where you want to go. However, by the time you figure it out, you might not be able to find seat availability on your airline of preference. At least if you have miles across programs, you’ll be able to make alternative arrangements.
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About Craig Ford
