Between rising costs caused by inflation and increasing demand, the upcoming holiday travel season promises to be busy — and expensive. You might find that even the most budget-friendly destinations are suddenly out of your price range. It’s a tough time economically, but luckily, consumers have some recourse.

For starters, you can significantly reduce your holiday travel expenses by utilizing loyalty points from rewards credit cards. A recent Bankrate survey found that 22 percent of holiday travelers are doing just that: paying for their travel with rewards points.

The catch? You’ll want to plan early, since you won’t be alone in utilizing this strategy, and award space may be limited.

If you haven’t booked your travel already, all is not lost. You can still save substantially by using points for holiday travel. Here are some strategies to help you pull it off.

Timing is key

Every year, the holiday shopping season starts earlier and earlier. But when it comes to booking holiday travel, there’s truly no such thing as “too early.” If you’re looking to travel over Thanksgiving or Christmas, you’ll want to start as soon as possible.

Most airline loyalty programs open up their award calendars at least 330 days out. This is important for holiday bookings, since demand goes through the roof. The earlier you book, the higher your chances of finding saver award space.

If that’s proving to be difficult, try checking award space closer to departure. Not everyone is booking their holiday travel a year in advance and those who have might cancel. Also, several airlines release award space closer to departure. Alitalia and Luftha, for example, typically open up premium space two weeks before departure. So, if you’re just now planning your holiday trip, you might still succeed in securing your travel plans now.

If you can’t find saver-level award space using miles, consider using bank rewards instead. These rewards programs all allow you to redeem points for direct travel bookings:

If you don’t already have a credit card that earns flexible rewards, consider applying for a card before the holidays.

With the Capital One Venture Rewards Credit Card, you can even pay for your travel now and then use miles to offset the cost up to 90 days later. By then, you’ll hopefully have met the spending requirement and earned enough miles to cover the cost.

When to use points for holiday travel

Using points for holiday travel is a great value proposition because airfare and hotels are more expensive than usual. However, you might find cheap deals if you’re flying on a low-cost airline or traveling to destinations where travel demand is low.

Consider how much points are worth when deciding whether to use points or pay cash. Simply divide the cost of travel by the number of points required to determine the redemption rate. Redeeming points makes sense if it’s at or above that valuation.

If the redemption rate somehow falls below the valuation, consider paying cash instead. For example, United offers $240 round-trip fares between San Francisco (SFO) and Maui (OGG) through the end of the year, including over Thanksgiving.

The mileage rate for these flights comes to under 22,000 round-trip. That gives you a redemption rate of 1.09 cents per mile. Bankrate values United miles at 1.1 cents each, so you might be better off paying cash and saving your United miles.

Alternatively, you can redeem Capital One miles at one cent each or book travel through the Chase Ultimate Rewards Travel portal. If you have a Chase Sapphire Reserve® card, your points are worth 1.5 cents each, requiring just 16,000 Ultimate Rewards points.

Best loyalty programs for holiday travel

The best loyalty programs for holiday travel include transferable rewards, like Amex Membership Rewards, Capital One Venture miles, Chase Ultimate Rewards and Citi ThankYou points.

Transferable rewards provide ultimate flexibility, which you need when booking holiday travel. You can transfer miles to over a dozen loyalty programs or redeem them towards travel bookings for at least one cent per point.

If airlines or hotels limit award inventory, you can simply book your trip with a credit card and then redeem points at a fixed rate. With the Chase Sapphire Reserve®, for example, your points are worth 1.5 cents each through the Ultimate Rewards portal. That’s around how much most airline miles are worth, making this an excellent redemption option.

Aside from transferable points, you might find great deals with Delta SkyMiles by checking the SkyMiles Deals page. Plan ahead and you’ll find domestic fares as low as 4,000 miles each way. That’s pretty tough to beat, considering most airlines charge at least 12,500 miles for a one-way domestic award ticket.

Lastly, you can utilize airline companion passes to redeem fewer points and save money on holiday travel. The Southwest Companion Pass is the best deal in travel, since it allows you to fly a designated companion for just the cost of award taxes and fees. With award prices skyrocketing during the holidays, you’ll appreciate the ability to save 50 percent when traveling as a pair.

If you don’t have enough time to earn the Southwest Companion Pass before the holiday travel season, the Alaska Airlines Famous Companion Fare is a great alternative. You can get one by applying for and meeting the spending requirement on an Alaska Airlines Visa® credit card or Alaska Airlines Visa® Business credit card. With this benefit, you can book a companion’s flight from $122 ($99 fare plus taxes and fees from $23). No blackout dates apply, making this a perfect money-saving tool during the busy holiday season.

The Alaska Airlines Visa® credit card information was updated on March 3, 2023.

The bottom line

Holiday travel can be expensive, regardless of whether you’re using points or paying cash. As with anything, you can substantially reduce the cost by either booking in advance or looking for last-minute deals.

Thanks to special award sales and accessible companion passes, you don’t have to shell out tons of points or pay substantial cash markups. Simply do your due diligence about your options and make educated decisions about the best way to redeem your travel rewards, and you’ll get value from your points.