Post 6 – Not all Points and Miles are the Same

In today’s ever-changing world of frequent flying and loyalty cards, lots of words are thrown around interchangeably.  Having 10,000 “points” or 15,000 “miles” can sound like a lot, but not all points and miles are created equal.   Marketing departments are paid millions to find ways to earn your loyalty.  In this post, we’ll peel back some of the layers to get at the heart of what’s truly in a “point.”

1. How to choose your best program.
2. Understanding the ins and outs of your program.
3. Earning with program partners and redemption.
4. How to earn apart from flying on planes.
5. The hidden DNA of credit cards.
6. Not all points and miles are the same.
7. Aspirational rewards and good mileage values.
8. Importance of status and elite benefits.
9. Manufactured spend basics
10. Searching for deals. Mistake fares. Mileage runs.
11. HUCA

Worldwide Phenomena

Just about every country in the world has a hotel or airline chain that will offer you frequent traveler benefits.  The programs took off back in the US in the late 70’s and early 80’s, and have grown into a huge cash cow for companies.  By some estimates, there are over 23 TRILLION unused miles and points in customer’s accounts worldwide.  Just put that into perspective for a minute.  That’s enough for over 920,000,000 free flights at the domestic saver level (25,000 miles) in the US alone.  So, if there are so many miles out there, why aren’t more people flying for free?

What’s in a mile anyway?

For the longest time, a mile flown was a mile earned.  This meant that if you flew 2,500 miles in a plane, you would earn 2,500 miles to redeem in your account.  Most awards started at 25,000 miles and would go up accordingly.  Almost like a buy-10-get-1-free program.  Not a bad deal for frequent fliers.  In the past 10-15 years, the frequent flier (FF) game has morphed into something that I don’t think anyone would have predicted when the programs started some thirty years ago.  The top way to earn miles now is via credit cards, with options for dining out, shopping online, renting cars, etc, making their forays into the market.  See our previous posts to find out how we’ve earned our lion’s share of miles.

Credit card companies starting forming loyalties with airlines in order to capture business.  American Airlines went with Citibank, United Airlines went with Chase, and Delta Airlines went with American Express.  The other banks out there (like Capital One for example) didn’t have a direct airline partner, so they came up with their own reward programs (like Venture Miles) to try and capture business.  The problem is that these programs, although they may be called “miles,” are not the same miles and have nothing to do with frequent flier programs.

Caveat Emptor

Buyer beware indeed…

Capital One has a brilliant marketing campaign with Samuel L Jackson and Jennifer Garner purporting the benefits of their “miles” card and how there are no blackout dates, always earning “double miles” on purchases, etc.  But lets not be fooled.  These aren’t miles in the old sense of the word.  These can best be described as points, which are tied to a $.01 per “mile” value.  For example, the website for the Venture Card currently is running a signup promotion that says:

One-time bonus of 40,000 miles—equal to $400 in travel—once you spend $3,000 on purchases within the first 3 months1

And:

Get unlimited 2X miles—that’s 2 miles for every dollar you spend on purchases, every day 

As you can see, their “miles” are really points in disguise at a 1 cent value each.  So this card, in other terms, is a 2% cash back card.  Being that you can redeem your points for flights, car rentals, cruises, etc, you’re really not earning miles and can’t transfer them to any airlines if you wanted to.  So, if you’re into a 2% cash back card, then good for you.  But don’t get sucked into the marketing that this is a airline frequent flier miles credit card.

Different Airlines, Different Programs

In an earlier post we talked about airlines and the different alliances that they form a part of.  While it’s possible to earn miles on airlines partners and redeem on those airline partners, it’s not possible to combine the points between airlines to get one award.  Confused?  Let me break it down.

I get a lot of people asking me how they can use their 8,000 Alaska miles and 4500 American AAdvantage miles to get a 12,500 one-way ticket on American.  It would be like asking how to use your Staples Rewards at Best Buy, it just can’t be done.  Remember that if you’ve got miles building up in one airline’s program, you can’t move those into another airline’s program.

Flexible Points Rewards

There are some point “currencies” out there that will allow you to move points between programs and transfer as needed.  This way you can earn in one program and transfer them among many programs.  There are three main programs, and they’re all based on credit cards.

Membership Rewards, American Express

American Express has many cards that earn Membership Rewards, and among the many options of uses (including cash back and free merchandise) they have many partners both hotels and airlines.  You can see the options listed here.

Chase Ultimate Rewards

Chase has 6 airline partners are 4 hotel partners for transfer.  Their main US partner is United Airlines and one of the best hotel travel partners in my opinion is Hyatt.  United has dozens of partners in the Star Alliance to redeem your miles, and with Hyatt the points required for free nights are low and have good redemption values in major world cities.

Citi Thankyou Points

Citi has three cards that earn points that will transfer to airlines and hotels, those are listed here.  Although there is no current US airline on the list, it’s rumored that American Airlines might be joining this list soon.  They do have good international partners however with lots of options for free flights, if you’re heading outside of the US.

Review

Just like we talked about in the previous posts, make sure to choose your airline/hotel/credit card currency carefully.  It’s important to know which airline you want to fly and where you want to go.  I’m a huge fan of credit card points because of the flexibility that they allow, and then we can decide which airline to transfer the points to and fly for free!  As always, we’re here to help, just leave a comment or shoot us an email.  Good luck!

Which airline or credit card to you earn points with, and which destination would you like to redeem points for?

Author: Jon Nickel-D'Andrea

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