For anyone that travels, be it once a year or weekly, points are a free perk that you can turn into free flights, hotel nights, experiences, and even just cold hard cash!
Post Contents:
Airline Programs
Hotel Programs
Credit Cards - Types of Cards
Credit Cards - Earning and Redemption Strategies
Credit Cards - Earning Bonuses
Airline Programs
Pretty much all airlines globally have frequent flyer programs that are free to join. Even if you only fly once a year, your points will continue to accumulate and you might be able to get a free flight in the future. Unfortunately, the days of earning points based on distance flown are over. Today, it all comes down to dollars spent - more dollars = more points.
While most programs will advertise no black-out dates, this has been replaced with dynamic pricing. In other words, popular flight dates (like holidays) will be more expensive in cash and thus cost more points as well.
If you do any international travel, you might want to pay attention to the various airline groups which allow you to earn points on an airline different than the one you are actually flying. For example, if you live in the US and go on a vacation to Germany you might take a flight on Lufthansa (LH) metal. Since LH and United Airlines (UA) are both part of the Star Alliance, you might choose to credit your LH flight to your UA account since you are likely to fly more frequently on UA metal in the US.
When booking a flight on Lufthansa, I always credit to my United MileagePlus number
If you fly enough to reach status with an airline, you'll typically get an additional bonus on the points that you earn. Again, you'll want to pay attention to the airline groups since your activity on a partner airline can be credited to your home airline. Many times those extra flights overseas have pushed me to the next status level.
One important note is that many programs have a policy that your points will expire without any activity for a certain period (typically 24-36 months). Usually, any activity will restart this expiration period so even if you don't plan to fly you can usually make a small purchase through the program's shopping website which will reset the clock on the expiration of your points! I've redeemed as few as 500 points on a magazine subscription in order to extend the expiration of my points.
Hotel Programs
While the airline industry is much more consolidated than the hotel industry, there are still many global hotel chains that have programs which are free to join. If you are based on the US, you are probably most familiar with Marriott, Hilton, Hyatt, and IHG although you may not be as familiar with the numerous brands under each group.
Like airlines, you'll earn points based on the dollars you spend. If you have status, the higher the status, the higher the points earning bonus.
In many of the large hotel groups, hotels are priced by categories, which helps make the cost in points a bit more predictable than airlines. You can look up the award chart to know how many points a specific hotel will cost based on the category and whether your travel dates are peak or off-peak. These charts can allow you to book hotels for a standard price in points even though the rooms might be going for much more money in cash. For example, I booked the Ritz Kyoto for 60,000 points per night in June 2019 without even realizing that the G20 summit was happening in Osaka at the same time. In cash, the same room would have cost over $2,000 per night.
Marriott's published award chart
Like airline programs, most hotel programs have a policy that your points will expire without any activity for a certain period (typically 24-36 months).
Credit Cards
For the slightly more serious points enthusiast, credit cards are an incredibly versatile way to turn your everyday spending into free travel. Almost every credit card out there has some kind of points or cash back earning, even free cards.
Types of Cards
Free cards will of course have the lowest earnings and typically will earn you 1 cent or 1 point per dollar spent. Even as a very frequent traveler, I have a few free cards in my arsenal. For example, my Discover card offers 5% cash back on rotating categories every 3 months. Usually, in December the bonus category includes Amazon, which is a great 5% cash back on all my Christmas shopping.
Mid-range cards will typically have an annual fee of $95. The earnings will typically be slightly more than the free versions, but it's also important to make note of additional perks. For example, the Marriott Bonvoy Boundless card gives you a free night every year, which is easily worth at least $95.
Premium cards will typically have an annual fee of $450+. At first glance, it might seem ridiculously expensive for a credit card, but it's important to understand all of the perks and how your spending habits match up. Let's take a look at one of the most popular premium cards, the Chase Sapphire Reserve which has an annual fee of $550:
$300 travel credit annually, so if you travel at least once a year (including Ubers) this effectively takes your annual fee down to $250
3X points on travel spending and restaurants. If you spend $8,333 on travel and restaurants in a year, you'll earn 25,000 points which can be redeemed for straight statement credit of $250 (1 cent per point).
50% bonus when points are redeemed for travel through Chases's online portal. If you spend $5,555 on travel and restaurants in a year, you'll earn 16,666 points which can be redeemed for $250 worth of travel via the portal.
Travel insurance, vehicle rental insurance, extended warranty coverage and more. Car rental coverage can often cost several hundred dollars for a week-long rental. By taking advantage of the vehicle coverage included with the credit card, you can forego the rental agency's expensive coverage.
Credit Card Earning and Redemption Strategies
Analyzing your regular spending, as well as your goals is critical to build the right credit card strategy for you. If you are someone whose home is near an American Airlines hub, it's probably not going to make sense for you to get a United Airlines credit card.
When it comes to redemptions, you should also think about what you want to do. I've heard stories of people who have cashed in all of their points and used that money for a down payment on a house. Personally, my goal is to use my points on travel experiences that I would never pay for in cash.
Transfer Partners - One of the best ways to get the biggest value return on your points is through travel partners. Each program is different and can yield a better return on your points for the exact same flight or hotel. For example, I was able to book a roundtrip first class ticket from the US to Japan on ANA metal by transferring 120,000 Citi points to Virgin Atlantic. I could also have transferred points from Chase to United directly, but this exact same flight would have cost 240,000 United points.
Travel Portal - Many premium travel cards have an online portal where you can get a bonus on your points. For example, with the Chase Sapphire Reserve, you will get a 50% bonus when booking through the Chase travel portal, meaning that 1 point is worth 1.5 cents. I often use this when I'm staying at off brand hotels (when booking through this portal, you cannot earn towards hotel status).
Gift Cards - Typically, I won't use points which can be transferred to travel partners for gift cards. However, I have redeemed points from some of my other cards for gift cards. If I know I'm going to spend this money anyway, I'll check what gift cards are available and sometimes I can get up to a 25% bonus.
Shopping Portals - Many credit cards will have different options for you to redeem your points when shopping online. I have never seen a scenario where this is worth it and I would say you are usually better off just trading your points for a statement credit.
Earning Bonuses
Sign-Up Bonuses - For anyone looking to boost their points banks, credit card sign-up bonuses are a great way to do just that, especially if you know you will have some larger expenses coming up. Often, credit cards will have offers where you get a certain amount of bonus points if you spend a certain amount of money within a certain time period after opening the card. To maximize these bonuses, always keep an eye out on promotions where the sign-up bonus is increased temporarily.
Referral Bonuses - If you have friends or family that are planning to sign up for a new credit card that you already have, make sure to check if there is a referral bonus offered. If they are going to sign up for the credit card anyway, why not get an added bonus out of it?
Shopping Portals - Many airline and hotel programs will have shopping portals which can get you bonus points from shopping you would have done anyway. Simply go to the program's shopping portal and search for the store you want to shop at. If they have a partnership, click through and once you make a purchase you should get some bonus points.
In Summary
Sign up for all free points programs - they are free!
Pay attention to partnerships
Build your credit card strategy
Redeem your points for whatever best fits your goals
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