There are three main types of points: (1) airline specific points/miles, (2) bank program points/miles, and (3) transferable points. However, not all points are equal. One Discover IT Mile has a very different valuation than One American Express Membership Rewards point. We have an entire page devoted to the valuation of points because it is very important to consider when figuring out the best card for you.
Airline Specific Miles and Points
Airlines use points and elite status to keep customers loyal, but not all airlines miles are equal. One Alaska airline point is worth almost double a Delta point. You can earn airline points by either: (1) flying with that airline, (2) flying with a partner airline and crediting the flight to that airline, (3) an airline’s credit card, (4) through transferrable points (i.e. Chase Ultimate Rewards points transfer to Singapore Airlines), or (5) shopping portals/partner promotions. For airline credit cards, your points transfer each month after your statement closes. Therefore, you can cancel the airline credit card after your statement closes without forfeiting your points balance.
Before you use your points, consult our “Using Points” guide each major airline or our Destination Guides. Most people don’t realize that you can use one airline’s points on a completely separate airline. For example, you can use American Airlines points to fly on the top airline in the world, Qatar Airways.
Revenue-Based Points Systems- Several Airlines such as Southwest and JetBlue have revenue-based points systems, which means that their points have an average fixed value. Southwest’s points on average are worth about 1.5 cents and JetBlue’s points are worth 1.4 cents. Therefore, focus on finding a cheap cash flight with those programs and use their points (lower the cash price= lower the number of points). The main disadvantage to revenue-based award systems is that after reaching a credit card sign up bonus, you are better off switching your spending to a 2% cashback card (or American Express Blue Business Plus) for non-multiplier spending. For Southwest that means only using their credit card for Southwest flights and for Jetblue that means only using their credit card for JetBlue flights, restaurants, and grocery stores.
Earn and Burn- Airlines routinely devalue their programs without warning, so I advise you adopt an earn and burn strategy. It is an awful feeling when the business class flight you have been planning to use points for doubles in price before you can book it. (e.g., Etihad had an amazing business class redemption on Brussels Airways for only 44,000 points roundtrip. I was waiting on dates for family members and the price doubled to 88,000 points without notice.)
Bank Program Miles and Points
Banks really trick people with these “points” or “miles.” Many banks make it seem like their “miles” are the exact same thing as airline miles, but their “miles” are essentially cashback. Most of the time the value is one cent per point towards travel.
- Bank points are okay if you only want to fly economy, but if you want to do business or first class I would avoid. 350,000 Capital One points translate into only $3,500, which is about 75% of the cost of a roundtrip business class flight from the U.S. to Australia. However, 350,000 American Express Membership Rewards Points equals 3 roundtrip business class tickets (transfer to All Nippon Airways, 115,000 points roundtrip in business).
- Example Cards: US Bank Altitude Reserve (1 point= 1.5 cents), Discover IT Miles, or Bank of America Travel Rewards.
Transferable Points– There are four main transferable points programs: (1) American Express Membership Rewards, (2) Chase Ultimate Rewards, (3) Citi ThankYou Points, and (4) Marriott. The value of these points stays fairly stable since these points can be transferred to 10+ airline partners, one devaluation by an airline won’t have a big effect on the value of the points.
- After you have transferred points, you cannot transfer them back from the airline or partner to the transferable point program.
- Before you close a credit card, with the exception of Marriott, make sure you either: (1) have another active credit card that earns those transferable points (i.e. another Membership Rewards card) or (2) transfer the points before you cancel. If you only have one Membership Rewards card and you cancel that card, all of those points in your account disappear.