\n
- \n
- The value of points can increase over time, though it’s very rare<\/li>\n\n\n\n
- The value of points can drop to zero overnight
<\/li>\n<\/ul>\n<\/li>\n\n\n\n - HM Bradley, a once favorite high interest rate account and great rewards earning credit card that was eventually completely devalued is shutting down bank accounts in the next month<\/a>, and credit cards in the next two months. For the time value of points:
\n- \n
- Interest can be considered a form of points, and if it doesn’t pay due to a bank shutdown then its unpaid value can also drop to zero<\/li>\n\n\n\n
- Your opportunity cost for short lived products can be vanish overnight, so the more outsized the value of a product, the more likely it is to revert to the mean<\/a> or to fail
<\/li>\n<\/ul>\n<\/li>\n\n\n\n- Alaska is changing MileagePlan award redemption rates<\/a>. Some of my typical redemptions will go down in price, and others will go up. This is a mixed bag. For today’s discussion:
\n- \n
- A program has multiple aspects, and occasionally different parts of the program have a different devaluation rates<\/li>\n<\/ul>\n<\/li>\n<\/ul>\n\n\n\n
Not only does maximizing the value of your points require burning early and often, but it also necessitates hitting smaller products with outsized value harder than products with average value.<\/p>\n\n\n\n
Revisiting the Time Value of Points<\/h4>\n\n\n\n
With those notes in mind, we can derive an equation for the time value of points. If it doesn’t render correctly in your email client, see the website here.<\/a> (And yes, I’m sorry to put you all through this, but sometimes I
can’t<\/s> won’t<\/a> help myself):<\/p>\n\n\n\nFV = PV \\times (1 + r - (q \\times d) + i)^n \\times (1 - p)<\/span>\n\n\n\nWhere:<\/p>\n\n\n\n
FV<\/em> = future value
PV<\/em> = present value
r<\/em> = any promotional increase of value in a given period
q<\/em> = the probability of a devaluation in a given period
d<\/em> = the rate of devaluation in a program in a period
i<\/em> = interest on points earned in a period (there is a program that does this)
n<\/em> = the period (time)
p<\/em> = the probability a program shutting down and wiping out all value<\/p>\n\n\n\n(Thanks to Jon for noting that the original version of this post lacked a definition for i<\/em>)<\/p>\n\n\n\n
The Point?<\/h4>\n\n\n\n
Is this formula useful? Sort of. It’d be more useful if someone would write a quick calculator web site. Do I actually expect anyone to use this formula? No, not really for anything other than mental gymnastics.<\/p>\n\n\n\n
Points and miles still devalue, and sometimes they devalue a lot. Don’t forget that the second part of this site is titled “And Burn”.<\/p>\n\n\n
\n![\"\"](\"https:\/\/milesearnandburn.com\/wp-content\/uploads\/2023\/11\/image-7.png\")
<\/figure>\n<\/div>\n\n\nPictured, left to right: MEAB with glasses; The entire churning community after this post.<\/p>\n","protected":false},"excerpt":{"rendered":"
News Before we dive back into the time value of points, there are a few relevant and leading news items to discuss: Not only does<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"closed","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_editorskit_title_hidden":false,"_editorskit_reading_time":0,"_editorskit_is_block_options_detached":false,"_editorskit_block_options_position":"{}","footnotes":""},"categories":[64,56],"tags":[],"class_list":["post-8587","post","type-post","status-publish","format-standard","hentry","category-points","category-wisdom"],"_links":{"self":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8587","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/comments?post=8587"}],"version-history":[{"count":10,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8587\/revisions"}],"predecessor-version":[{"id":8600,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/posts\/8587\/revisions\/8600"}],"wp:attachment":[{"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/media?parent=8587"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/categories?post=8587"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/milesearnandburn.com\/index.php\/wp-json\/wp\/v2\/tags?post=8587"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}
- Alaska is changing MileagePlan award redemption rates<\/a>. Some of my typical redemptions will go down in price, and others will go up. This is a mixed bag. For today’s discussion: