Here's how to spend them.

Airline Points
Credit: Oliver Munday

Plenty of travelers are under the misconception that saving points—like saving money—is a wise idea. But there’s a big downside to socking away miles: they lose value dramatically over time, thanks to constantly changing program rules. On February 2, for example, British Airways will increase the price of short-haul award tickets in the U.S. from 4,500 to 7,500 miles one-way. Voilà: your points just became worth 40 percent less. To dodge devaluation:

Rightsize your emergency fund.

Unless you’re saving up for something specific, hang on to only enough points for a reward you’re likely to use in the next year. A last-minute round-trip domestic flight on United, for example, can generally be picked up for 50,000 miles; a night at the Westin New York Grand Central is 12,000 points.

Appraise your assets.

Maybe you’re reluctant to spend your points because you’re concerned that you’re not maximizing their value—that if you swap them for a weekend away, you’ll miss out on a longer, more luxurious stay. “The key to understanding whether or not an award is a good value is to know what you would be willing to pay out of pocket for the ticket,” says Gary Leff, author of the popular frequent-flier blog View from the Wing. “If you’re getting several cents of value out of the miles that you spend, you’ve done well.”

For example, if you find a ticket for 25,000 miles that would normally cost $700, that’s the equivalent of 2.3 cents a mile—a pretty good deal. But if the seat would typically be $200, each mile is worth a skimpy 0.8 cents. (If you want to check the value of your stash, the Points Guy website issues monthly valuations for airline and hotel points.)

Get a bargain by spending big.

The good news if you’ve been hoarding: the best values for award bookings tend to be on luxury products. A business-class ticket from San Francisco to London on American, for instance, costs 100,000 miles, while in cash it would be more than $6,000— you’re getting about 6 cents a mile. Book far enough in advance, and you can jet from San Francisco to Singapore in one of Singapore Airlines’ suites for around 70,000 miles. On the hotel front, a night at the Ritz-Carlton in Half Moon Bay, near San Francisco, runs $565, or 60,000 points.