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Getting started with points, miles and credit cards to travel
Using points and miles instead of cash to pay for flights and hotels sounds like a dream come true for any frequent (or even semifrequent) traveler. Actually taking your first steps into this hobby, however, can feel daunting.
It’s easy to put off using the points and miles you’ve accumulated, since the ways to redeem them can feel overwhelming.
There are innumerable guides out there about credit cards, earning and redeeming points and miles, maximizing award travel and more. Trying to digest it all is a great way to burn out as a beginner and turn yourself off from ever actually getting into points and miles.
That’s where this guide from The Points Guy comes in. If all you know about award travel is that you can use credit card rewards to book travel, you’re in the right place. Keep reading to find out everything you need to know to get started, so you can get your feet wet without diving in headfirst.
What are points and miles?
You’ve probably heard of points and miles, but what are they exactly? Points and miles are types of reward currencies offered by many credit cards. The only difference between a “point” and a “mile” is in the name, but they function the same.
Airline award tickets and hotel award nights each cost a certain number of these points or miles.
If you have enough rewards to cover the cost, you can redeem them for flight tickets and hotel nights without paying the full cash price (though you’ll usually still pay taxes and fees). When you do this, the ticket you receive or the hotel night you book is referred to as an award ticket or award night.
For example, you could book a one-way flight on American Airlines from New York City to Miami for 9,500 miles and $5.60 in taxes and fees.
Points and miles enthusiasts often use the term “transferable rewards” when discussing award travel. Major credit card issuers, such as Chase, American Express, Citi and Capital One, offer cardholders the ability to earn points or miles via their credit cards that can be sent to their airline and hotel partners.
Not all points and miles work this way. You can also earn rewards directly with airlines and hotels, but these currencies are typically tied to a single program. In most cases, they can’t be transferred to other brands in the same flexible way as credit card points and miles.
Why points and miles are worth caring about
When you ask an award travel enthusiast why they do it, a likely answer you’ll receive is: “Because without points and miles, I wouldn’t be able to afford to travel as I do.”
Multinight stays in higher-end hotels or business-class flights often cost thousands of dollars. Points and miles allow you to experience them without paying much, if anything at all, out of pocket.
Even if you prefer to travel in economy class and stay in budget hotels, points and miles can save you a lot of cash. Paying just a few dollars in taxes and fees for a one-way domestic flight, for example, is a world away from paying a few hundred dollars for the same ticket.
How to earn points and miles
The easiest and most efficient way to earn points and miles is through credit card spending. You’ll earn the most rewards at once from earning a welcome bonus.
Issuers offer welcome bonuses on their credit cards to encourage new applications. For the majority of cards, you’ll need to spend a certain amount of money in a certain time frame to earn the welcome offer.
After earning a card’s welcome bonus, you can continue to earn more points or miles by spending on your card. Each card earns points or miles at a different rate, so it’s important to pick one that matches your spending habits.
You can also earn airline points and miles and hotel points by spending with that airline or hotel brand. Earning airline or hotel rewards through your spending is a great way to supplement what you earn from credit card welcome bonuses and spending, so you should learn how this works for your chosen airline’s or hotel’s loyalty program.
Finally, it’s worth noting that shopping portals and issuer offers can also net you extra rewards. For example, you can opt to earn American Express Membership Rewards points (if you hold a Membership Rewards-earning card) or Bilt Points through Rakuten.
Individual airlines and credit cards also offer shopping portals with elevated earning rates, as long as you shop through their links.
Issuers often offer bonus rewards for purchases made with select merchants, such as through Amex Offers or Chase Offers. You need to opt in to these offers manually, so make sure to check your account regularly for new options.
How to redeem points and miles
Once you have a good stash of points or miles on hand, it’s time to redeem them for part or all of a trip. If the rewards you’ve earned are directly from an issuer, your best bet is to transfer them to one of that issuer’s travel partners.
Issuers don’t have the same exact transfer partners, so make sure to do your research before investing in earning points or miles from a certain bank.
Let’s use Citi as an example. Say you earned a welcome offer on a Citi ThankYou Rewards earning credit card. You could transfer these bonus points to one of Citi’s 21 transfer partners, such as American Airlines AAdvantage.
Once you’ve transferred your points to AAdvantage, they’ll turn into AAdvantage miles. When you find a preferred flight that costs the same number of miles that you have (or fewer), you can redeem the miles in your AAdvantage account.
Transfers like this are always one-way, so you should wait until you have a specific redemption in mind before transferring.
If you’ve earned points or miles from an airline or hotel co-branded card, you won’t need to worry about transferring the miles to use them effectively.
Instead, you can skip straight to finding a flight or hotel booking that fits in your rewards budget.
The process of finding a great award flight or hotel stay is the most complicated part of the points and miles hobby, but there are various tools and apps that can help in your search.
If transferring points and miles feels too complicated at this stage, no need to worry. You can always redeem your points or miles through the issuer’s travel portal. This usually won’t give you as much value as transferring them, but sometimes simplicity is better than anything else.
What are points and miles worth?
Valuations can provide a snapshot of how much points and miles are worth across major airline, hotel and credit card loyalty programs.
As always, there’s no one-size-fits-all answer. The value you get from your points and miles depends on how you redeem them, but valuations can give you a realistic target when planning your travel.
Transferable currencies continue to deliver some of the strongest value, generally landing around 1.6 to 2.2 cents per point or mile, while most airline points and miles fall in the 1.1 to 1.6 cents range. Hotel points tend to come in lower, often under 1 cent apiece, though programs like World of Hyatt still stand out.
Bottom line
Award travel can be intimidating, but it isn’t difficult to get into once you understand a few key fundamentals, whether it’s how to pick the right credit cards for your spending, issuer transfer partners or how to redeem rewards for maximum value.
And before you know it, you’ll be enjoying your first lie-flat business-class seat or checking into an incredible luxury hotel that would’ve cost you thousands out of pocket without the help of points and miles.
Editor’s note: This content is accurate as of the posting date. Offers are subject to change.
This story was produced by The Points Guy and reviewed and distributed by Stacker.
