Do you travel often?
One of the best reasons for using a credit card while you travel is to take advantage/rack up credit card travel points. The more you spend, the cheaper it is to book flights and hotels. By carrying a travel rewards card, you are earning as you’d normally do so for other cards, but you accumulate points that can be redeemed for big savings. The price difference between redeemed points booking versus retail bookings can be in the thousands!
However, not all travel credit cards are created equal. You’ve probably heard about these reward programs, but it gets lost a bunch of jargon (Earn 15,000 points on sign-up!), especially with the number of airlines, hotels, and credit card brands competing for your attention. In this article, we’ll demystify the process by looking at three different types of credit cards that offer travel rewards.
Credit Card Travel Points Explained
If you’re using credit cards to earn travel points and miles, there are three basic types of credit cards with options to choose from:
- Fixed value points
- Transferable points
- Co-branded points
Let’s take a look how each type works.
Fixed Value Points
Fixed value points are the most common credit card reward and are easy to understand. Every point you earn has a cash value. For instance, each CapitalOne point equals a cent. Earning 10,000 points is $100 towards any flight or hotel (with restrictions based on the issuer/brand’s participating businesses). In essence, they function like cash.
Additionally, with fixed value points, you earn frequent-flier miles on every flight you book, which can earn perks at the airport, like access VIP lounges or being bumped up to first-class.
Transferable points are earned in an account as you pay for purchases. Those points can then be redeemed at participating airlines and hotels that participate in the credit card’s points program. As an example, the AmEx Membership Rewards program gives you the option to transfer your points between these 16 airlines and 4 hotels:
- Air Canada
- Air France/KLM Flying Blue
- All Nippon Airlines
- British Airways
- Cathay Pacific
- El Al
- Hawaiian Airlines
- Singapore Airlines
- Virgin America
- Virgin Atlantic
- Best Western
- Choice Privileges
Transferable points give you the flexibility to use your points where they can get the most value. Once you’ve transferred the points/miles, you can then redeem the points for flights or rooms depending on the rules of each airline/hotel.
Most airline awards aren’t set to the value of ticket—they’re often lower. This can help you book expensive flights at a lower cost than you would have by booking with cash or credit. Credit-savvy individuals often take advantage of this discount by working the system in their favor.
Co-branded cards, like the Citi AAdvantage Visa card, are similar to fixed point cards. Simply make purchases with your credit card and your points are directly deposited into a particular account, which can be redeemed through American Airlines (and participating affiliates).
Travel rewards from co-branded cards are typically straight-forward for those that remain loyal to certain brands of airlines and hotels. However, fixed value points versus transferable points require some consideration when selecting a card with these travel rewards.
Types of Travel Points Compared
At first glance, it seems that fixed-value points programs are the way to go. After all, you know exactly how many miles you’ll receive because of the fixed rate—1 point = $.01. Each flight booked earns miles, which go towards future flights. Simple, no?
However, transferable points offer more value because you can use them effectively by enrolling in airline and hotel loyalty programs, which offer bookings below their retail value. If you are looking to get a $3,000 first-class flight from New York to Paris, you would need 70,000 points—or $700 in purchases using an American Express Membership Rewards program card. For a fixed value card, you’d have to spend nearly $300,000 (remember, 1 point = $.01) to pay for that same flight. Quite a big difference!
While this is a huge value, a big difference between using fixed rate points and transferable points is that you earn miles and elite status when you redeem fixed value points. In essence, the credit card company buys the flight for you, seeing it as a regular ticket purchased by a travel agent. Transferable points, on the other hand, are transferred into the airline’s own frequent flyer program. If an award isn’t offered for a particular program, you’re out of luck.
Transferring Points Between Programs
One interesting thing about credit card travel rewards is that competing companies tend to work together to ensure that your points are not lost when you open a new travel credit card. If you’ve decided to change your credit card issuer or bank, (i.e. Chase to AmEx) your fixed value points will transfer in most cases.
How Sift Can Help You Earn Travel Points
If you’re interested in finding out more about how Sift can help you take advantage of travel rewards for specific cards, click on the following:
- Am Ex Blue Cash Everyday benefits
- Capital One Platinum perks
- Capital One Venture perks
- Chase Freedom perks
- Chase Sapphire perks
- Chase Slate perks
- Discover It perks
- Journey Student Rewards by Capital One perks
Starting earning today by downloading the app: https://sift.app.link/iOSApptwr