Credit Card Tips
Points and Miles Primer: The Pros and Cons of Credit Card Travel Rewards
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Following a multi-year pause, travel has been booming this past year as we all make up for lost time. With the summer season really heating up, millions of Americans are likely looking to take a vacation. Meanwhile, some may be contemplating how they can make those excursions more affordable… or perhaps wondering how they can experience some of the luxury travels they’ve seen on Instagram. This is where points and miles such as those earned as credit card rewards may just come in handy.
On the surface, credit card points and miles may seem straightforward enough: make purchases, earn rewards, and travel. In reality, there’s a bit more to know if you really want to get the best value — not to mention a few downsides to be aware of. With that. in mind, let’s take a look at some credit card points and miles basics, including pros, cons, card options, and tips to know.
Benefits and Drawbacks of Credit Card Points and Miles
The Good
Free travel
Obviously, one of the best perks of earning points and miles is that you can redeem these rewards for free travel. Whether this means cashing in your points for a memorable vacation or tapping your reserve to subsidize a last-minute emergency trip, chances are you’ll be able to fly to and/or stay at your destination while paying almost nothing. Note: as we’ll discuss later in this post, there are a few ways to make sure you’re getting the best value for your redemption, making your free travels even better.
Can supplement loyalty rewards
Another benefit is that, in some cases, the points and miles you score from credit cards may be combined with those you earn from an airline or hotel’s own loyalty program. For example, I often earn miles from flying my airline of choice Delta but also have the option of converting my American Express Membership Rewards Points into Delta SkyMiles (among many other airline and hotel currencies). Because of this, I can attain mileage milestones faster and enjoy the perks of my loyalty sooner.
Enable aspirational travel experiences
Have you ever looked at a first class airline ticket and thought, “It’s nice… but there’s no way I’m paying that price?” Well, this is another area where points and miles can come in handy.
Since these currencies are often obtained as rewards just for making purchases you’d (hopefully) be making anyway, it might make sense to some consumers to redeem points for things they wouldn’t pay cash for. In this way, you can turn your everyday purchases into once-in-a-lifetime travel experiences. What’s more, in some cases, you may be able to find “sweet spot” redemption deals that actually give you great value on even the most exorbitant of travel products.
The Less than Good
No set value
Perhaps the largest downside to collecting points and miles is that there are rarely set values to these points — and, even if there is, this value is subject to change. Look no further than some recent headlines about certain hotels and airline brands devaluing their points by increasing the number of points you need for certain redemptions.
What’s more, these changes can be made without notice, which could really throw a wrench in your plans if these devaluations hit just before you’re ready to cash in. While some changes are more dramatic than others, this is still a very real risk when it comes to travel currencies, so be ready to roll with the punches.
Diversified programs may make redemptions difficult
One issue that credit card enthusiasts may run into as they expand their card line-up is that by diversifying the types of points and miles they’re earning, they may not be accruing enough of any one currency to make a redemption. This is especially possible if you’re not necessarily loyal to any one brand.
That said, there are some overlapping travel partners between some of the key players such as American Express, Chase, Citi, and others. Therefore, it may be worth taking a closer look at these lists ahead of time and being strategic with which currencies you collect.
May only be redeemed for travel
While free travel is great, there may be times when consumers would prefer to redeem their points and miles for other things. To be fair, in some cases, this is actually possible as card issuers and even travel brands allow points to be redeemed for cash, gift cards, Amazon purchases, etc.
The real problem is that these redemptions may not give you anywhere near the same amount of value as you would get had you used them for travel purchases instead. Ultimately, if you suspect that you might not always want to utilize your rewards for travel, you may want to look for cashback credit card options instead.
Award bookings may be limited
Finally (and frustratingly), there may be times when you go to redeem your points/miles for a flight only to find that there’s nothing available. Oh, there may be plenty of seats available to those paying cash, but airlines may limit the number of awards bookings. Thus, if you have your heart set on a certain trip, you may want to begin checking availability early and often.
Tips for Getting Started and Getting the Most From Points and Miles
A Few Credit Card Options
The Platinum Card from American Express
Seeing as I’m a Platinum card member myself, I feel compelled to mention it first in this line-up of travel cards. Despite that bias, I think that it also deserves to go first because, in addition to its point-earning potential, the Amex Platinum features plenty of travel perks that can come in handy even when you’re not on an award travel booking.
For example, the card includes one of the best airline lounge line-ups, featuring Amex’s own Centurion Lounges as well as Delta SkyClubs (when you’re flying Delta), more than 1,200 lounges via Priority Pass, and more. Cardholders also enjoy complimentary Gold status with Hilton and Marriott Bonvoy, which I’ve found to be useful as well.
And while it comes at a cost of $695 a year, it does include several credits that can help offset that fee. Just to name a few, the $189 annual credit for CLEAR can help you get through airport security faster, the $200 in credits ($15 a month plus an extra $20 in December) for Uber can be used on rides or Uber Eats orders, the $200 in airline incidental credits could come in handy for buying food on flights (among other uses), the $200 in annual credits for the Amex Fine Hotels & Resorts or Hotel Collection stays is great for checking out gorgeous proprieties while enjoying special perks, and the $240 in digital entertainment credits ($20 a month) are nice even when you’re not traveling.
Turning to the Platinum card’s points program, it earns Membership Rewards points that can then be transferred to a number of hotel and airline brands. Speaking of airlines and hotels, you’ll earn 5x points when booking flights directly through an airline or via Amex Travel, 5x points when booking prepaid hotel stays via Amex Travel, and 1x points on all other purchases.
Meanwhile, if you want to earn Membership Rewards points even faster, you might also consider adding the American Express Gold Card to the mix, which earns 4x points at restaurants and 4x points at U.S. supermarkets. Between the two, I believe you can quickly rack up points and use them for all kinds of luxury travel redemptions and more.
Chase Sapphire Reserve
For as popular as the Platinum Card is, the Chase Sapphire Reserve may just have it beat (depending on who you ask, of course). Like other travel cards, the Sapphire Reserve offers airport lounge access via Priority Pass in addition to other perks.
It also maintains a strong set of multipliers, including 3x points on dining and 3x points on all travel purchases in addition to 1x points on everything else. What’s more, these Chase Ultimate Rewards points can be redeemed at a rate of 1.5¢ each when used to book travel via the Chase Ultimate Rewards portal. Alternatively, the bank does have numerous transfer partners available as well.
The Sapphire Reserve does have a $550 annual fee. But, this is offset by credits, including the remarkably easy to use $300 per year travel credit that will automatically be applied to eligible purchases. For those reasons and many more, it’s easy to see why the Chase Sapphire Reserve has been a favorite among many travelers.
Discover the Best Travel Rewards Credit Cards
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Capital One Venture
If you’re looking for a points and miles card that’s a bit simpler — and less expensive — the Capital One Venture may be the solution. Not only does the card earn 2x miles on everything you buy but those points can also be redeemed for any travel purchase.
On top of that, Capital One does maintain a stable of travel partners that cardholders can transfer their points to. In fact, the company recently enhanced some transfer rates while adding new partners as well. Meanwhile, the card’s reasonable $95 annual fee may just make it an attractive option for those who want to get started with points and miles as painlessly as possible.
If you want to add a little luxury, there’s also now the Venture X. This one carries a $395 annual fee, but that’s easily offset by the $300 in annual statement credits toward travel booking made using Capital One Travel. The Venture X also includes a Priority Pass Select for lounge access and gets you into Capital One’s new line of lounges — the first of which is now open at DFW. All in all, this new version of the card has been a big hit and serves as a great alternative to the more expensive cards above.
Bilt Mastercard
The Bilt Mastercard isn’t exactly what I’d consider a “travel card” but it does have some interesting travel aspects — and one major superpower. Starting with its travel bonafides, it offers 1:1 points transfers to a number of airline and hotel brands, including American Airlines, United Airlines, Air Canada, Virgin Atlantic, Air France/KLM, IHG, Hyatt, and more.
Alternatively, customers can redeem Bilt points at a value of 1.25¢ each via the Bilt Travel portal. What’s more, each Rent Day (the 1st of the month), Bilt has new offers for cardholders and Bilt Members. Past promotions have included status match challenges, point transfer bonuses, Lyft credits, and more — but you never know what the next Rent Day will bring.
As for what makes the Bilt Mastercard truly unique is that it allows cardholders to earn points on rent. What’s more, thanks to their unique system, these rent payments can be made without incurring any fees. In addition to earning 1x on rent, the card also earns 3x on dining and 2x on select travel. Even better, these categories (except for rent) double on Rent Day, so you can 6x on dining and 4x on select travel on the 1st of each month.
I should also mention that the Bilt Mastercard carries no annual fee. So, it can always be paired with one of the more luxurious travel cards we’ve discussed. Honestly, if you’re a renter like I am, I think Bilt is one of the most interesting cards on the market right now and could be worth a closer look.
Additional Tips
Research transfer partner options
As I mentioned earlier, several credit card issuers maintain partnerships with travel brands, allowing cardholders to transfer their points and convert them to another loyalty currency. In some cases, these transfers may occur at a rate of 1:1, although it will certainly vary by brand.
However, while this may seem straightforward enough, simply transferring points to the airline you want to fly may not actually be the best move. Instead, you’ll want to do some research to see if there may be alternative booking options that present better value.
Quite honestly, this is a bit more complicated than the scope of this post. Because of this, I’d recommend checking out YouTubers like Ask Sebby or forums such as FlyerTalk that can provide more insight. That said, the main thing to know is that various airlines have partnerships or alliances with each other that result in code-share flights.
In turn, you may find that booking a Delta flight via AirFrance is a better use of points than directly redeeming SkyMiles (note: this is just a theoretical scenario and not an example or a recommendation). Again, I realize this may sound complicated now but, with a little research and patience, you may be able to score some truly impressive deals.
In recent years, there have also been various tools that have popped up to help people book award travel. One of them is Point.Me. Incidentally, the aforementioned Bilt platform has a Point.Me feature built in, allowing members to search award travel flights — although this is limited to Bilt transfer partner airlines. Meanwhile, those who aren’t Bilt users or want access to the full version of the tool can currently subscribe for $129 a year or $12 a month.
Keep your points on your card until you’re ready to redeem
As you do earn points and miles on your credit card, you may be tempted to start transferring them over to your carrier or hotel chain of choice right away. However, this is not advised for a few reasons.
First, these loyalty currencies are subject to devaluation — well, technically so are your credit card points, but it’s easier for airline or hotel points to fall in value than it is for your credit card rewards to do so.
Second, while your credit card points are unlikely to expire (although you may want to double check that), once they’re transferred, they may be susceptible to expiration depending on the brand program’s terms. Plus, as I mentioned above, you may end up getting greater value booking through a partner airline than through the carrier you want to fly. Therefore, it’s often better to leave your points where they are until you’re ready to make an actual redemption.
As travel not only resumes but booms, more and more people are hoping to experience things they’ve never had the chance to before. Thus, it’s no wonder that the credit card points and miles hobby has been growing as well. By being aware of the pros and cons, picking the right cards for you, and doing a little extra research in order to get the most for your money points, you might be able to return to the sky in style or visit more places for less money. Happy travels!
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