US$1t unused credit card points risk losing redemption value

Tribuescape says airlines and hotels can expire balances or change redemption rules without warning.

Unused travel credit card loyalty points are becoming a consumer finance issue as airlines and hotel groups retain control over balances that can lose value through expiry, redemption changes and limited transfer rights, according to Ingrid Picard, Founder and Managing Director at Tribuescape.

Globally, nearly US$1t in unused credit card loyalty points is sitting across airline and hotel programmes. In APAC alone, the loyalty market is worth close to US$36b and is projected to reach US$60b by 2029. More than 900 million passengers are enrolled in at least one airline programme.

Picard said loyalty programmes now operate like large monetary systems because companies issue points, hold unused balances and benefit when customers do not redeem them quickly. “Loyalty points have become one of the biggest financial systems most people ignore in APAC,” she said. She compared airlines and hotel groups to “a mini central bank.”

Consumers can lose value when points sit idle or redemption rules change. Picard gave the example of 1 million points worth around US$20,000 today. If that amount compounded at 6%, it could reach US$27,000 in five years and around US$32,000 at 10%. Unlike cash, however, loyalty points usually cannot be freely traded or exchanged.

Picard warned that airlines and hotel groups can devalue balances or change redemption terms without warning. As balances grow larger, they are also becoming relevant in tax matters, divorce proceedings and estate planning.

“Treat your point like a perishable inventory, not savings,” she said.

AI tools could change how travellers and businesses assess loyalty balances by estimating cash value faster and comparing redemption options in real time. Picard said travellers may increasingly rely on AI to decide whether to pay with cash or points, whilst accountants, lawyers and advisers may need better valuation methods for settlements and financial reporting.

For Picard, loyalty points are shifting from a marketing reward into an asset class that travellers and businesses will need to manage more actively.