It’s been one year since I wrote my initial post on miles and points, and a good bit has changed in the last year – such as:
*Delta has switched to a revenue based mileage earning system. That is, you earn miles based on what your ticket costs, not how far you travel. This is a much bigger difference than it may sound like for frequent flyers. There is also much speculation that they will change to a revenue based redemption system in the not too distant future (e.g., every Delta mile is worth 1 cent).
*United gutted its award chart for all of its partners and increased the prices of United award flights as well. United used to be one of my favorite miles, but they’re right in the middle of the pack now.
*United also followed Delta’s lead in changing to a revenue based mileage earning system. This leaves only American Airlines as the sole major airline on which you earn miles based on how far you fly. Many speculate AA will follow the other two majors at some point.
*Speaking of American, AA and US Airways have merged. This places US Airways in the One World alliance.
*Hyatt added a new top award category for its best properties and increased prices across all categories. This resulted in a 50% increase in award prices for most of Hyatt’s nicest properties. That said, Hyatt was due for an adjustment. Overall, it was not awful (see Hilton for an awful hotel point devaluation).
*Citi’s Thank You Points now transfer to several airlines (previously, they were just cash equivalent points).
So with all of that combined with questions I’ve received over e-mail, I figured it was time to update my take on points miles. My original post still has lots of good info I will not cover here, so be sure to read that in combination with this post.
Takeaways from all the changes:
*Transferrable points are generally the best. If a program devalues its award chart, you just avoid transferring points to that hotel/airline.
*Don’t hoard your points and miles. Use them. Points/miles will always decrease in value. This can be true even in the case of cash equivalent points (Southwest airlines and Citi both reduced the cash equivalent value of points.)
*Speaking of cashback equivalent points – they can be a compelling option for many people.
In terms of my favorite points, Starwood Preferred Guest (“SPG”) points are still my favorite. SPG points transfer to my two favorite airlines at the moment. Chase Ultimate Rewards have gone down a notch with the United and Hyatt devaluations. Now I probably place them on par (or slightly below) AMEX Membership Rewards points. Citi Thank You points have improved with the addition of airline transfer partners, but they are still behind the other major transferrable points.
What cards/points should I get?
I’ve been asked this by a lot of people…and the answer is it depends – sorry, I have to put the law degree to use somehow. But honestly, it depends on what your travel goals are.
First you need to determine if you want cash equivalent points or true miles/transferrable points.
If you want to redeem for domestic flights in coach class, it is hard to beat a cash back equivalent card. Most domestic round trip economy awards are 25,000 miles. If you had earned 25,000 Barclay Arrival points (worth 2.2 cents a piece) instead, you could pay for a $550 cash ticket. $550 will cover the vast majority of flights, you don’t have to worry about airline allegiance or award availability (which is huge), plus you’ll earn miles for taking the flight. I’d also say that you’ll be better off with cash back equivalent points for domestic first class awards, which usually price out at 50,000 miles round trip. I’d take my odds with $1100 everyday over trying to find award availability.
International coach/economy class travel – I’m still taking cash back over miles/points. You might get slightly better value from miles, but then you have to deal with award availability…which is a pain in the ass.
International Business – give me points/miles. When booking international business, you can generally get 4 to 5 cents per mile out of your miles, which easily beats 2.2% cash back.
International First Class – miles/points in a landslide over cash back equivalent cards. Though, I will say that international first class awards have gotten to be pretty difficult to book. Some programs only release award space to its own program’s members. This is what makes SPG points so valuable because they transfer to almost all airlines – allowing you to take advantage of increased award availability.
If you are not sure how you want to redeem your points, I’d lean to accumulating a good transferrable point. All of the transferrable points can also be redeemed as cash when booking flights. The values are not quite as good, but they are pretty decent (Ultimate Rewards and Thank You Points = 1.25 cents/point, SPG is roughly 1.3 cents/point, Membership Rewards is 1 cent/point).
The next thing you need to determine is how many cards you want to use/keep track of.
If you only want to use one card and know that you want to travel domestically (or don’t feel like dealing with award availability), I’d recommend the Barclay Arrival Card which earns 1 point per dollar and every point is worth 2.2 cents (after point rebate). Another option that literally just came out is the no Annual Fee Citi Double Cash card that gives 2% cash back.
If you only want to use one card and are either unsure of how you want to redeem your points or want international awards, my recommendation right now would be the American Express Everyday Preferred. If used 30 times a month or more, you get 4.5 Membership Reward Points per dollar spent at grocery stores, 3 points per dollar at gas stations, and 1.5 points per dollar everywhere else. Plus you get AMEX customer service, which is better than the other banks. Another option to consider if you know you want to redeem for international first class is the SPG card.
If you want to deal with multiple cards, I’d look at adding some Chase cards to the mix. The Chase Ink bold gets 5 points per dollar on cable, cell, and office spending and 2 points per dollar at hotels and gas stations. The no annual fee Sapphire gets 2 points per dollar at restaurants, and the no annual fee Freedom has rotating 5 point bonus categories. Some other cards to consider are the Amex Premier Rewards Gold, Amex SPG, and some of the Citi Thank You Cards. If anyone else out there is lucky enough to hold a Citi Forward card, hold onto it. You get 5 points per dollar at Amazon and Restaurants, which can now be transferred to airline miles…Really, you can go crazy maximizing cards/spend category bonuses.
All that said, the best way to earn miles by far is still to sign up for cards and get the sign up bonus. If you are really serious about accumulating miles, that is how to do it.
One type of card you’ll notice I didn’t mention is any type of airline specific card. That was intentional. You are almost always better of spending on one of the transferrable cards than the airline card. Still, you may want to hold the airline card for the perks.
Hotels…If you want to redeem for hotel, I’d pick either Chase Ultimate Rewards or Amex SPG. But, you generally get more bang for your buck redeeming points for airfare – though there are exceptions.
Meeting Minimum Spend for Sign Up Bonuses
If you’re sold on signing up for credit cards but don’t think you can meet all the minimum spends, you can use some tricks to help you.
This is as good of a place as any to mention it…Signing up for credit cards is only for the financially organized and disciplined. If you are not, you can get yourself in to serious trouble. It is not worth it. Back to meeting minimum spend…
The easiest way to boost your spend is through Amazon Payments. 2 people (spouses, friends you trust, etc.) can send $1000 back and forth to each other by credit card fee free. That is potentially $2000 a month in spend for a husband/wife. We’ve been doing this for years.
Another easy trick is to pay your mortgage, car payment, or student loans through Chargesmart. It is not free (usually it costs about 2 cents per dollar), but it is definitely worth it if you need to meet minimum spends.
And it gets a lot more complicated…Flyertalk has a whole forum dedicated to manufactured spending – i.e., creating spending on credit cards witout actually having to spend money.
The bottom line is that meeting minimum spends for sign up bonuses should not stop you from signing up for credit cards.
Some additional links/tips to help with booking award flights
I won’t rehash much of what I said in my original post on booking flights, but two big things to remember are to search for awards segment by segment and that knowing which routes have award availability is a big help.
Airline Route Mapper is still a favorite program of mine for determining who flies what routes (and alliances, etc.). Two similar internet sites that have come out are OpenFlights and FlightConnections.
Ben at One Mile at a Time recently wrote another good post on booking award flights. Hack My Trip (which is another good site) wrote a good piece as well (and another) on booking award flights. They also wrote excellent pieces on which routes generally have award availability for the different regions – South America, Oceania, Asia, and Europe.
So that’s my updated take on miles/points and an attempt to address some of the questions I’ve gotten. As always, I’m still willing to help further.