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What is up everyone!!! Welcome back!. Today we’ll discuss the difference between the types of points and “miles” available, their uses and potential value.
So if you’ve just gotten involved with travel hacking, no doubt you may be overwhelmed with all of the information available, the lingo, the tips and tricks and the possibilities that this hobby can give you. But you need to take it one step at a time and truly understand what you’re signing up for, why you’re signing up for it and what you’re earning.
As a quick reminder, don’t forget to leave a comment down below. If you have any points/miles/travel related questions, leave them in the comments section and I’d be happy to answer them.
FIXED VALUE POINTS
The first type of point is set at a fixed value. Cash back cards, like the Discover card, and ones such as the Barclay Arrival Plus card offer such points. With either a cash back card or a fixed value “miles” card, each point or mile earned is worth 1 cent.
So if you’re using a cash back card and you earn 1% for every dollar spent, you’re essentially earning 1 cent per dollar.
The same thing with the Barclay Arrival Plus card. Although you earn 2 “miles” per dollar spent on this card, each mile that you earn from your spending is worth only 1 cent per dollar. So let’s say that you spent $500 on travel with this card. You’d need 50,000 “miles” to wipe out those charges.
Don’t get me wrong, these cards are extremely useful and should have a place in your card portfolio, however they do have their limitations. These types of points are good for wiping out travel related expenses such as tours, Uber/Lyft costs, Airbnb costs, etc. Basically any travel related costs that can’t be covered by regular miles or hotel points.
Related to these types of miles are those that you earn with Southwest Airlines or JetBlue Airlines. While they are airline specific miles, they work the same way as the Arrival Plus miles mentioned above. The number of miles needed for an award flight fluctuates depending on the cash price of the flight. So, the higher the cash price for a flight, the more number of miles you need for that award seat.
AIRLINE MILES
As discussed in our previous video, you can accumulate airline miles and hotel points by first, signing up for their loyalty programs, then applying your loyalty account number to paid flights or hotel stays. You can also link your airline loyalty program to your co-branded credit card to earn miles through credit card spending. For example, you link your Alaska Airlines membership number to your Alaska Airlines credit card in order to earn miles by using your credit card.
These airline specific miles earned are extremely valuable because depending on their award charts, you can easily get over 2 cents per points/mile in value. For airline miles, it doesn’t matter what the cash price is for a flight, if their award calendar shows saver award space, you can use your miles to book an expensive flight. For example, I just booked a business class flight from the US to the Maldives for 70K AA miles one way, per person. Compare that to the cash price of that same flight of $6773, and you get a value of 9.6 cents per mile!! That is insane!
Notice how these airline miles differ to the Southwest or JetBlue points mentioned above. While Southwest/JetBlue award prices depend on the cash price of a ticket, these other airline miles don’t. All that matters is finding award space.
HOTEL POINTS
The same thing applies to your hotel points. If your desired hotel has award space open for the dates you are traveling, then you can use your hotel points to book your hotel stay and get a lot of value out of your points. An example of this would be the Andaz Papagayo Resort in Costa Rica. For 20K Hyatt points per night you can book an incredible stay here, or pay $413 per night in cash. The value per point comes out to be 2.1 cents per dollar.
The thing to keep in mind here is that you need to be extremely flexible on your travel dates in order to score amazing deals like the one I mentioned above. Also, keep in mind that airline miles can only be used with the parent airline, or the airline’s partners. For example, you can’t use American Airline miles to book a flight on Delta. You can, however, use American Airline miles to book a flight on American Airlines, Finnair, Etihad and many more of its partners.
With hotel points, you are stuck using those points with the parent hotel. As an example, let’s say you have a large balance of Hilton points. You can use those points towards hotel stays at any Hilton property, depending on award availability. You can’t use your Hilton points towards a stay at Hyatt though. Which brings us to Marriott Bonvoy points. Those fall into a different category where I’ll discuss more.
FLEXIBLE POINTS
The third, and most valuable type of point, is the flexible or transferable point. These points are your American Express Membership Rewards Points, Chase Ultimate Rewards Points, Citi ThankYou Points, Marriott Bonvoy Points, Capital One Venture Miles and more!
What makes these points so valuable is that you can transfer them to their airline partners. For example, you can transfer your Amex Membership Rewards Points to one of 17 different airlines or 2 different hotel chains! With many of these airlines, you can transfer at a 1:1 ratio. Having options to transfer your points increases your chances to land your desired award flights.
You can still get the same value as with the airline miles/hotel points mentioned above, but now you’re able to pick and choose which available airline you want to transfer to. For example, I can transfer my Amex Membership Rewards points to ANA, and fly roundtrip in business class on Star Alliance partners to Europe or South America for 88K points! Yes, that’s roundtrip! And Yes, I said Star Alliance, which includes United, Avianca, Turkish Airlines and more!
The Marriott Bonvoy points mentioned earlier are special since they are a hotel point, which can be used for hotel stays at Marriott properties, but they can also be transferred to over 40 airline partners, many of them at a 3:1 ratio. The cool thing when transferring Marriott points to airlines in 60K increments is that you get a 25% bonus.
So here’s how the math works…. You transfer 60K Marriott points to American Airlines. That becomes 20K American Airlines miles. On top of that, Marriott gives you a 25% bonus which equals 5K American Airlines miles. So for that 60K Marriott point transfer, you end up with 25K AA miles.
CONCLUSION
I hope this clarifies some confusion about points and miles. With so many points and miles out there, it can be overwhelming to learn at first. All three types are very useful and you can save a lot of money on your trips by using the different types mentioned.
Don’t like reading? Check out the YouTube video.
