What Are Points and Miles and How Can They Maximize Your Travel?

You might be wondering what all the fuss is about when it comes to points and miles. Let’s break down the basics so you can start maximizing your travel without breaking the budget.

What Are Points and Miles?

In the world of travel rewards, understanding points and miles can be a game changer for anyone looking to make the most of their vacation budget. Picture this: every time you swipe a credit card, you’re adding points or miles to your travel fund.

Points, Miles and Loyalty Programs

Points and miles are rewards from credit cards and loyalty programs based on spending. Loyalty programs are created by airlines, hotels, and credit card companies to encourage repeat business. You can think of these points and miles as a form of currency. With award travel, you use this currency to “pay” for travel expenses. Both points and miles can be redeemed for flights, hotel stays, and other travel-related costs.

Points are generally linked to credit card rewards or services like hotel stays. For instance, if you say “yes” to that overpriced latte, you’re adding points to your travel fund to be used for future travel. In contrast, miles are usually associated with airline programs and are primarily earned through flights or by spending on an airline credit card. Each loyalty program has specific rules regarding how points or miles can be earned and redeemed.

Points and Miles Valuation

Different types of points and miles currencies offer various redemption options, leading to significant differences in their value depending on how they are used. Generally, points classified as transferable points—which allow you the flexibility to switch between loyalty programs—are valued the highest.

Transferable Points

Chase Ultimate Rewards, Amex Membership Rewards, and Citi ThankYou Points are all transferable currencies. Curveball: Capital One Miles are also transferable currencies. These cards offer transferable currency, which means that the points can be transferred to various airline and hotel partners.

Credit card companies often offer transfer bonuses where instead of points transferring one-for-one, you get an increased transfer ratio usually ranging from 20% to 40%. It’s easy to stay informed about what transfers are available at any one time either by a simple google search or looking at the credit card website.

Airline Alliances and Partnerships

Airline alliances play a crucial role in expanding the reach of points and miles. Major alliances such as Star Alliance, Oneworld, and SkyTeam connect multiple airlines, allowing you to earn and redeem miles across different carriers. For example, you can use American Airlines miles for flights on partner airlines like British Airways or Qantas.

These relationships mean you don’t just look at the American Airlines website to book a flight on American Airlines. You also look at Qantas, British Airways, etc. OR, you use an aggregator like Point.me or Seats.Aero. Having more than one booking option for the same flight means better availability for award seats.

Hotel Loyalty Programs

Hotel loyalty programs allow members to earn points for each stay, which can be redeemed for free nights or upgrades. When you are a member of the hotel loyalty program, you not only accumulate points through hotel stays, but you can also earn points through various travel and lifestyle partners. For instance, I earn Marriott Bonvoy points with every purchase made through Uber and Uber Eats just by linking my Uber account with my Marriott loyalty account.

Credit Cards That Earn Points and Miles

Credit cards allow you to earn points or miles based on what you use the card to buy. The cards have “bonus” categories that offer multipliers based on the category where you used the card.

• Common Categories: Users might earn extra points on dining, grocery stores, travel, or gas.
• Rotating Categories: Some cards have quarterly rotating categories that change, requiring users to activate them.

Understanding where you tend to spend money and then using the card that includes a category for that spend helps you maximize the points and miles earning and take more or fancier trips.

Sign-Up Bonuses and Their Impact

Sign-up bonuses serve as incentives for new cardholders, often providing a major boost in points or miles. These bonuses are how my family of four can travel as much and as nice as we do. A typical sign-up bonus offers ranging from 50,000 to 100,000 points after meeting a minimum spending requirement within the first few months.

Managing Points and Miles

Keeping track of what points you have and how many of each is extremely important. Why go through the effort to learn about points and miles, earn the points or miles then lose them because you were lazy when it came to organization. Stay organized and informed and save money!

Use a spreadsheet, app, website, whatever works best for you to monitor your balances across multiple loyalty programs. I discuss organization in more detail in the article about the importance of organization. (Trust me, its not thrilling content but its important.)

Points Expiration Policies and Devaluation

Many loyalty programs have specific expiration policies that can catch you off guard if you are not paying attention. Typically, points or miles expire if an account remains inactive for a certain period, often ranging from 12 to 24 months. If your account is inactive you may lose those hard-earned rewards.

To prevent expiration, you should frequently engage with their loyalty programs. Simple actions, like earning or redeeming points, can reset the expiration clock. Additionally, some programs offer options to extend expiration dates through various methods, such as credit card activity.

Devaluation can have a significant impact on the value of points and miles. Travel programs often change their redemption rates, which means that what might have once been a great deal may no longer be the case. For this reason, it’s recommend that you earn and burn your points and miles quickly. No points or miles are completely safe; any loyalty program can update its rewards structure at any time.

Elite Status and Its Perks

Points and miles play an important role in leveling up travel experiences. Many loyalty programs include status levels and the more points means higher status means you earn bonus miles earn points even faster. If you don’t like room upgrades, late checkouts, and free breakfasts then ignore everything about elite status.

To attain elite status, regular travel and point accumulation are essential. Each airline and hotel has its criteria, and the benefits can vastly differ. Once you figure out which hotel and airline you will travel most often I suggest you focus on earning status with that program. Warning: Eventually you could end up like crazy me with status across all of the programs.

Advantages of Points Over Miles

Points, especially when they are transferable, offer flexibility in redemption options. They can be used for a variety of travel-related expenses, such as hotel stays, car rentals, and experiences.

If transferable options are too complicated for you then points earned with Chase, Amex, Capital One also offer options to use their points to book flights, hotel, car rental through their travel portals. The value return on your points in a bank portal is almost always less than if you make the effort to learn about transferring the points.

Advantages of Miles Over Points

Miles (excluding Capital One Miles because they act like points) are specifically associated with one airline making the ability to redeem them slightly less flexible. If you have American Airline miles you can only make a reservation through the American Airlines site. Notice that I did not say you can only fly with American Airlines; this is because of airline alliances. The downside is that partners in the alliances don’t release the full award seat inventory to each other so there are less award options available.

When miles earning also includes status with an airline, you can be eligible for upgrades and exclusive promotions unavailable to points holders. This includes accessing premium seating or priority boarding, which makes the overall travel experience more comfortable.

Applying Points and Miles to Real-Life Scenarios

Real life example of how I used points and miles for a trip to Universal Studios and Disney California Adventure.

Total for 4 people	Cash Price	Points “price”
Flights To Anaheim	$1000	44,000 and $22.40 in fees
Hotel for 4 nights	$1500	100,000, zero fees, included daily free breakfast, snacks, bottled water
Flights Home	$2000	88,000 and $22.40 in fees

Final Thoughts About Points and Miles

I love that I discovered the value of points and miles. In the past few years I have saved over $160k in travel expenses. Technically its probably not savings because we would not have taken those trips if not for points and miles. I love to travel and being able to take amazing vacations with my family makes the effort to learn and use points and miles totally worth it.

Thanks for reading, friends! Happy Travels!