Time and time again, I hear people say that they can’t travel because it’s too expensive — or sometimes, more specifically, that they can’t travel internationally because it’s too expensive. Travel doesn’t have to be expensive and international travel doesn’t have to cost more than domestic travel.
An easy was to significantly reduce your travel expenses, most specifically your flight and lodging expenses, is to learn a little bit about frequent flyer programs, hotel points, and bank points. Once you know a little bit about the programs, you can start thinking about where in the world you want to travel and which type of points or miles are best going to serve your needs to get you there.
Let’s look at the four main types of points and miles:
1. Frequent Flyer Miles
Frequent flyer miles are the miles you earn from flying. Most airlines also have a co-branded credit card — like the Citi/AAdvantage Platinum Select Mastercard — that will allow you to earn additional miles with a generous sign-up bonus and by spending on the card (without necessarily spending more than you would). In most cases, airline miles can be redeemed for travel on that airline as well as any partners that airline has.
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Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard®
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$0 first year
$95 after first year |
50,000 American Airlines AAdvantage® bonus miles After $3,000 in purchases in the first 3 months Read Review » |
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Citi® / AAdvantage® Platinum Select® World Elite™ MasterCard® |
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Partners come in two forms: alliance partners and non-alliance partners. Alliance partners are those that are all part of the same alliance. For example, oneworld Alliance consists of American Airlines, British Airways, Cathay Pacific, Finnair and others. Some airlines also have non-alliance partnerships. Alaska Airlines is not part of an alliance but they partner with Delta (SkyTeam Alliance), American Airlines (oneworld Alliance), British Airways (oneworld Alliance), Iceland Air (no alliance), and others.
Tip: The Citi AAdvantage card offers enough American Airlines miles with its sign-up bonus alone for a one-way ticket to Europe or a round-trip ticket to the Caribbean.
2. Hotel Points
Hotel points are the points earned when staying at hotels. Like with airlines, most hotel programs have a co-branded credit — Starwood Preferred Guest Credit Card from American Express, for instance — card that will allow you to earn additional points by spending on your card.
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Starwood Preferred Guest® Credit Card from American Express
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$0 first year
$95 after first year |
25,000 Bonus Starpoints® After you use your new Card to make $3,000 in purchases within the first 3 months Read Review » |
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Starwood Preferred Guest® Credit Card from American Express |
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Tip: The Starwood card offers enough points from its sign-up bonus for three free nights in Cancun or two free nights at the brand new W Las Vegas.
3. Transferable Points Currencies
Chase, American Express, and Citi all have transferable points currencies called Ultimate Rewards, Membership Rewards, and ThankYou Points, respectively. Each program has a list of hotel and airline transfer partners. When you earn points in one of these transferable points currencies, you have a lot of flexibility to transfer your points to different programs. There is one other transferable points currency that is a little confusing – Starwood Preferred Guest points. Starwood Preferred Guest is a hotel loyalty program, but their points are also transferable to a number of different partners.
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Chase Sapphire Preferred® Card
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$0 intro first year
$95 annual fee |
Earn 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That's $625 in travel when you redeem through Chase Ultimate Rewards® Read Review » |
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Chase Sapphire Preferred® Card |
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Tip: By transferring the points from the sign-up bonus for the Chase Sapphire Preferred card to United Airlines, you could have enough points for a round-trip flight to Hawaii.
4. Bank Points
Bank points that are not transferable may be marked as points or may even be marketed as miles, for example Barclaycard Arrival Miles from the Barclaycard Arrival Plus World Elite Mastercard. These points/miles are not airline miles or hotel points and they cannot be transferred to airline or hotel programs like the transferable points currencies. Rather, you are basically earning cash back that is being called “points” or “miles” to get you thinking about travel — and in most cases you get better rates by redeeming these points/miles toward travel purchases.
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Barclaycard Arrival Plus™ World Elite MasterCard®
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$0 first year
$89 after first year |
50,000 bonus miles When you spend $3,000 on purchases in the first 90 days Read Review » |
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Barclaycard Arrival Plus™ World Elite MasterCard® |
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Tip: The sign-up bonus for the Barclaycard Arrival allows you to pay $500 toward you travel purchases including flights, hotels, or rental cars.
This is going to be a bit of a generalization, but I’m going to say that those of you who are relatively or completely new to points and miles should pay attention to Transferable Points Currencies (including SPG points) and Bank points. Once you start to get the hang of it and better determine your needs, you should expand into airline miles and hotel points as you see fit.
Now, how to determine whether transferable currencies or bank points are better? If you’re comfortable with it, dabble in both. Transferable points are better when you have a little bit of flexibility. When transferring to an airline or hotel partner, you need to make sure there is availability, and depending when and where you are looking to travel that can sometimes be an issue, though you will typically be getting more value out of your points when compared to using bank points.
If you’re trying to travel during a busy time of the year (think Christmas, Spring Break) and have little flexibility, that’s where bank points come in. With bank points, you’re not at the mercy of an airline or hotel’s award availability — you simply use your points to pay for a cash ticket. When using bank points you’ll get a fixed value for each point that will usually come to 1.5% to 2% “cash back” when redeemed towards travel.
[Photo: Getty Images]