Collecting loyalty points such as frequent flyer miles and credit card rewards can help you net a variety of perks, from free products to exclusive discounts to premium member tiers. But in many cases, the value of loyalty points is diminishing, making it harder to reach those goals.
And that’s led to “spaving,” which could be costing you thousands if you’re not careful.
Don’t miss
- I’m 49 years old and have nothing saved for retirement — what should I do? Don’t panic. Here are 5 of the easiest ways you can catch up (and fast)
- You’re probably already overpaying for this 1 ‘must-have’ expense — and thanks to Trump’s tariffs, your monthly bill could soar even higher. Here’s how 2 minutes can protect your wallet right now
- Gain potential quarterly income through this $1B private real estate fund — even if you’re not a millionaire. Here’s how to get started with as little as $10
Points aren’t as generous as they used to be, according to a Bloomberg report, citing examples such as hotels.com, which cut the value of its loyalty program from 10% of money spent to 2%. In other words, you now have to spend more money to unlock status or save more points to book a flight. And it can be addictive.
“Once you get status and see what that unlocks, like extra baggage allowance, that can be a really nice feeling and it creates emotional attachment to airlines,” Nick Ewen, senior editorial director at the website The Points Guy, told Bloomberg.
This has led to “spaving,” a concept where you spend more to save more. But in some cases, those savings are an illusion — yet companies still gain the benefits of customer loyalty while gleaning valuable data about your behaviors and habits.
What exactly is spaving?
Spaving tactics encourage you to spend more than you had originally intended so you can “save” money down the road. This is how many loyalty programs work, where you accumulate points that you can later redeem for rewards, discounts and other perks — like free flights or hotel rooms.
But there are other forms of spaving, too. For instance, you might buy multiple items to get a discount — buy two t-shirts and get one free! — even though you only need one. Or you buy more items than you need to “unlock” free shipping. Or, you book with a certain airline or hotel to get the points, even if it’s not the best price (or even the best alternative).
But if you end up spending $50 more than you planned to unlock free shipping from an online retailer — and avoid a $10 shipping fee — then you haven’t really saved that $10.
So why do so many of us still continue to spend more to save more? Spaving by its very nature is addictive, like receiving a treat (points) for a certain behavior (staying loyal to a company). Even if the reward isn’t that great — or not as great as it used to be — you want to keep accumulating points to reach that end “goal,” regardless of whether it makes financial sense.
Marketers fuel this behavior by creating a sense of urgency with limited-time deals and, in some cases, with rewards that have an expiration date. Some may also engage in what could be considered unfair practices, such as devaluing rewards you’ve already earned.
Indeed, this led to a probe into airline points, dynamic pricing and hidden fees last year by the U.S. Department of Transportation (USDOT).
“Points systems like frequent flyer miles and credit card rewards have become such a meaningful part of our economy that many Americans view their rewards points balances as part of their savings,” said then-U.S. Transportation Secretary Pete Buttigieg in a statement.
For example, the “true dollar value of rewards is hidden or unpredictable,” according to the USDOT statement, making it easier for airlines to devalue rewards without detection. “Hiding the dollar value makes it harder to compare the redemption price against the cash price across different rewards.”
Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says this 7-step plan ‘works every single time’ to kill debt, get rich in America — and that ‘anyone’ can do it
How spaving is quietly wrecking your budget
The downside to spaving is that you often end up spending more than you intended and buying items you don’t need to “save” money. This can derail your savings goals and lead to cash flow problems or maxed-out credit cards. Plus, when you buy more than you need, there are hidden costs to that clutter, from duplicate purchases to storage costs.
So if you have a spaving habit, how can you make sure it’s not wrecking your budget? First off, it helps to have a budget — and to stick with it. Try not to fall prey to limited-time deals (unless it’s something you really, really need) and ask yourself if you’d buy that particular item if you weren’t getting rewarded for it.
If you find you’re easily tempted, delete shopping apps on your phone — or, at the very least, turn off push notifications and unsubscribe from newsletters so you don’t experience FOMO (the fear of missing out). Avoid storing your payment details on online shopping sites; if you have to take the time to type in a credit card number, you may think twice before buying.
Before you buy, try to calculate the cash value of a deal. Many loyalty programs make this difficult — hence, the USDOT probe — but it can help you figure out if a deal is really a deal. For example, if a round-trip flight will cost you either $500 or 20,000 points, divide the cash price by the number of points to understand the value per point. In this case, it would be 2.5 cents per point.
Perhaps this is why loyalty is now in flux. The Marigold 2025 Consumer Trends Index, based on responses from more than 10,000 Americans, found that 75% of U.S. consumers will pay more for brands they trust, yet 36% have already jumped ship in the past year. “To win them back,” the report notes, “brands must deliver better loyalty programs.”
As Ewen points out in the Bloomberg article, consumers who want to avoid the pitfalls of spaving should instead be “program-agnostic, book the best ticket that is convenient and affordable and not be too loyal to any one company.”
What to read next
- Don’t have the cash to pay Uncle Sam in 2025? You may already be eligible for a ‘streamlined’ handshake with the IRS — here’s how it works and how it can potentially save you thousands
- Robert Kiyosaki warns of a ‘Greater Depression’ coming to the US — with millions of Americans going poor. But he says these 2 ‘easy-money’ assets will bring in ‘great wealth’. How to get in now
- Here are 5 ‘must have’ items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you?
This article provides information only and should not be construed as advice. It is provided without warranty of any kind.
