“Save, don’t spend.” It’s classic, common-sense financial advice — but it doesn’t apply to your credit card travel points.

Travel experts say you should spend or redeem your points soon after you earn them, because they lose value over time.¹ If you hang onto your points for years, chasing the idea of a totally free dream vacation, you’re cheating yourself (and it’s possible to lose your rewards altogether.) 

But wait… What about that great feeling you get when you’ve saved enough points or miles to pay for your airfare to Europe or your week in the Caribbean? That’s a thrill you just don’t feel when you redeem your points for a statement credit on a $75 train ticket.

We’ll examine when it makes sense to spend your travel points and when you’re better off saving them. Remember, the best way to protect your vacation — and your precious points! — is to purchase a reliable travel insurance plan. Every year, more than 55 million American travelers trust Allianz Global Assistance to safeguard their trips. Find your plan.

A Quick Guide to Redeeming Credit Card Travel Points

The art of travel hacking — leveraging credit card points and airline miles to score free or extremely cheap trips — is complicated. Plus, airlines, hotel chains and credit cards are constantly changing their rules. If you want to dive deep into travel-hacking strategy, we recommend The Points Guy, Johnny Jet or similar resources.

> Read more: A Beginner’s Guide to Scoring Travel Rewards Points

The short version is that you can sign up for travel rewards credit cards, airline credit cards or hotel loyalty cards to earn miles or points for spending money. Then, you can redeem those points or miles for travel in three ways:

• You can exchange your points for a statement credit toward a travel-related purchase.
• You can use your points to book a flight or hotel stay directly through the credit card’s travel center.
• You can transfer your credit card points to a participating airline, and book directly with them.

How much is a single mile or point worth? “On average, one credit card mile is worth approximately one cent,” says Money Under 30. Yep: one penny. So 10,000 points only equates to $100 in travel savings. That may sound pretty paltry, but it’s a really useful thing to know! That’s because if you see an opportunity to redeem points for a better ratio, such as 1.25 cents or 1.5 cents per mile, you should grab it.

There’s one more important thing to know about redeeming your points: if you must cancel your trip, the airline, credit card or hotel chain likely will charge a redeposit fee. These fees vary, but $100-$150 is common.² Luckily, travel insurance can help! A little-known benefit included in some plans is loyalty program redeposit fee coverage. If you have to redeposit points or miles into your loyalty/frequent flyer account because your trip is canceled or interrupted for a covered reason, and you have this benefit, your insurance will reimburse you for the redeposit fee.

The AllTrips Executive travel insurance plan includes this benefit.

When to Save Your Credit Card Travel Points

Go ahead and hoard those points when…

• You’re planning to book a big trip through your credit card’s travel portal. Some credit card issuers offer a more favorable point redemption rate when you book travel directly through them. If you have a Chase Sapphire card, for example, each point you earn can be worth 1.25 to 1.5 cents when you redeem them through the Chase travel portal.³ So if you have an expensive flight or vacation on the horizon, it might be smart to save up your points and book the trip that way. Some cards may even offer attractive package deals on vacations; with enough points, you can get your airfare and resort stay, all in one.

• You have first-class dreams. Often, you can get a much better point/mile redemption rate for a pricey business-class/first-class ticket, compared to the standard one-cent rate for a domestic fare. One travel hacker explains how he saved his travel points and then transferred them to Korean Air to obtain two first-class tickets to Japan. He paid $33.66 in taxes and fees for each ticket; the total value of both fares was more than $21,000. The value of each credit-card point ended up being around 13.3 cents.

When to Use Your Credit Card Travel Points

You should go ahead and redeem your travel points if:

• You haven’t used your card in a while. Credit card issuers reserve the right to cancel an inactive account. If they do, your travel points will vanish, and the issuer is not obligated to replace them or compensate you for the loss. So if you have a bunch of points from an old card you haven’t used, you should redeem them (or transfer them) before they expire or disappear.

• The annual fee for your credit card outweighs the value of your points. Many travel credit cards waive the annual fee for the first year, but charge you after that. This fee ranges from $69-$95 for everyday cards to as much as $550 for the elite travel cards.⁴ If the rewards you earn from using the card barely offset the annual fee, then it may be time to use your saved points and close the card. (Or, here’s a trick that many travel-card experts use: As soon as the annual fee shows up on your statement, call the credit card issuer and ask for the fee to be waived.)

• Airfare costs are cheap (but rising). If you look at the average cost of airfare over time (adjusted for inflation), you’ll see that it goes through periods of rising and falling. If you snag a good fare for your destination, but you notice that costs are generally going up, then go ahead and redeem your points now.

• You’re carrying a balance. The whole point of accumulating credit card points is to save money. If you’re running up charges on your card to earn points, but you’re not able to pay the bill in full each month, then the interest you’re paying may cancel out the value of your points. It’s time to abandon the quest for points and pay off the card.

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• Credit Card Travel Insurance vs. Allianz Travel Insurance
• A Beginner's Guide to Scoring Travel Reward Points
• Unpacking Travel Loyalty Programs