At work recently someone had left a shoebox filled with probably tens of thousands of Betty Crocker Points. Turns out the program was cancelled on December 15th, 2006, rendering all of those points almost worthless except for a limited-time 10% discount on Cooking.com. That hurts.
Also recently I went to cash in some points at MyPoints for gift cards, and found that a $25 Macaroni Grill gift card that used to cost 3,000 points now costs 3,250 points.
Same thing goes for frequent flyer miles, hotel points, Campbell's soup labels, Box Tops for Education, etc.
These are reasons why I tend to spend reward points sooner rather than later. The deals are a little better if you save up (a $5 gift card costs 750 points while a $10 card costs 1,400 points) but who's to say that those deals will still be there when you acquire those points? The points are nowhere near cash. If things get tight or the company goes under, you get a lot less, or maybe nothing, for your loyalty.
I am with you 100% – Why save up? Take what you have coming. The old – A bird in the hand, is worth 10 in the bush.
This especially irks me for airline miles — I stored a lot of miles up on Alaska Airlines, and it used to be that for 20,000 miles I could almost always get a ticket.
Now it's extremely tough to get a 20,000 mile ticket, but conveniently it's very easy to get a 40,000 mile ticket…
Not only does "inflation" occur, but of course you also don't earn any interest on those reward points.