In travel hacking, no mile or point is created equal. Each person assigns a slightly different value to certain airline miles or hotel points. When you’re starting out, it is difficult to figure out how much value every point is worth.
There are a few different types of rewards/miles/points that can be earned:
- Travel Credit Miles
- Airline Miles
- Hotel Points
- Transferable Points
As you start getting more in travel hacking, you’ll develop your own perceived value for a certain type of mile/point. For instance, I value points that give me flexibility. Therefore, I assign a higher value to points that can be transferred to different loyalty programs.
Side Note: The worst miles/points are the ones you don’t or can’t use. That is why I think it is very important to have a general plan when accumulating certain points.
Alright so back to the different types of points.
It is pretty much exactly what it sounds like: you get cash back for the purchases you make. This is pretty much like a rebate. Some of the notable cashback credit cards are: Discover IT Card, Citi DoubleCash, and AMEX Blue Cash.
Take for instance, the Citi DoubleCash card, which gives you 1% back when you buy something and another 1% when you pay off your credit card balance. This means you’re effectively getting 2% back for every purchase you make. Spending $100? You’ll get $2 back. This isn’t bad considering that if you were to use a debit card, you’d get nothing back.
Travel hacking doesn’t really focus on cashback cards, but remember cash is king. In other words, if you can save using your cashback card, these savings can always be used to fund your travel excursions. After all, not everything can be paid with via miles/points.
Travel Credit Miles
There are a few different cards out there that earn miles/points that you can redeem for travel credit. Some of the notable cards are: Barclay Arrival Plus, CapitalOne Venture, Discover IT Miles, and Bank of America Travel Rewards. These miles/points are a lot like cashback. However, instead of just receiving statement credits like cashback cards, you can only redeem these points against travel expenses.
For instance, let’s say you have 20,000 Barclay Arrival Miles. You spend $200 on a hotel room and put that on your Barclay Arrival Plus card. When that hotel charge posts, you can redeem those 20,000 miles for a $200 statement credit to cover the cost of your hotel room.
These cards are great for travel incidentals that can’t be covered by points or miles. They are also great for if you find a really cheap fare and would rather book the flight on cash instead of points.
These are the miles that people often refer to as frequent flyer miles. The miles can be earned a few different ways. First and foremost though, you must have a frequent flyer account with the specific airline that you’re looking to earn miles on. You can earn the miles through paying for an airline ticket and actually flying. You can also earn miles through credit card spending and sign up bonuses. Some examples of cards that earn airline miles are: Citi AAdvantage Executive, Chase United MileagePlus Explorer, Bank of America Alaska, and American Express Gold Delta.
Every airline has a different award chart for redeeming your miles. For instance, it costs 25,000 American AAdvantage miles to fly round-trip to any of the 48 continental United States, no matter what the cost of the ticket is. This varies depending on the airlines. However, keep in mind that some airlines only release a certain amount of award tickets per flight. Once those award tickets are gone you may not be able to book a specific flight.
Other airlines, such as Southwest and JetBlue, use a revenue-award system. The way their miles work is that when the price of the flight goes up, the amount of miles needed goes up and vice versa. For instance, if a one way ticket costs $200 it might cost 12,500 miles. If that flight drops in price to $150, it might cost 9,375 miles.
Hotel points are very similar to airline miles in that you can earn them via credit cards or actually staying at a hotel. Just like airline loyalty programs, hotels have their own award charts. You also earn a certain amount of points for paid hotel stays. Most hotel loyalty programs assign a “category” to a specific hotel. Each category costs a different amount of hotel points. Some examples of hotel credit cards are: Chase Hyatt Reserve, Chase IHG, American Express Hilton HHonors, American Express Starwood Preferred Guest.
For instance, Hyatt has 7 different categories. Category 7s are the nicest, most desirable hotels and then Category 1s are usually in less desirable locations. A Category 1 will only cost you 5,000 points per night, but a Category 7 will cost you 35,000 points per night.
There are four programs that have truly transferable points:
- Chase Ultimate Rewards (UR)
- American Express Membership Rewards (MR)
- Citi Thank You Points (TYP)
- Starwood Preferred Guest (SPG)
I will spend a complete post going into detail about transferable points since they are one of the most valuable types of points you can earn in my opinion.
Hopefully this post gives you an idea of the various types of points/miles that you can earn. Remember every mile/point is different and unique. Earning 100,000 Arrival Miles is worth $1,000 is travel credits. Compare that to 100,000 AAdvantage miles, which can be worth anywhere from $1,200 to $3,000 depending on how you redeem them. Then there’s 100,000 IHG points is worth roughly around $450-550. It is important to be aware of your redemption options since this dictates the value of a given miles/point.
In my opinion, the best way to start to get accustomed to what points are worth is to plan a vacation. Plan a vacation as if you were paying everything with cash. Then, look at how much those same flights and hotel rooms would cost you on points. You can then take the amount you would have paid in cash divided by the amount of points you would need, which will provide you with your value per point.
Also, keep in mind that airlines and hotels are constantly devaluing their points. In other words, they are making changes to their award charts so that it might cost you more points for a particular flight or hotel. Therefore, it is not smart to bank your points and not spend them. There’s a phrase in the travel hacking community, “Earn and Burn”. This means you should be earning points and using them. The only reason to save points is if you are saving up for a particular route, but even then you are susceptible to award devaluations. Miles and points should not be viewed as an investment. Much like a car, the value of miles/points is always depreciating.