Sometimes the best way to use your rewards miles isn’t obvious. Just because you racked up a bunch of Virgin Atlantic miles doesn’t mean you should necessarily redeem for Virgin Atlantic airfare (in fact, you shouldn’t). There are some neat tricks you can use to make your miles a worth a little—or a lot—more.
If you have a Virgin Atlantic credit card…
Don’t fly with Virgin Atlantic!
First off, let’s make one thing clear. Having enough miles to pay for a flight doesn’t necessarily guarantee a free ticket. Many frequent flyer programs require you to pay for taxes and fuel surcharges out of pocket. Such is the case with Virgin Atlantic. And unfortunately, Virgin’s ticket prices are weighed toward taxes and surcharges more so than other airlines.
Let’s take, for example, a flight from New York City to London. Flights with Virgin Atlantic and Continental Airlines are similarly priced. In fact, looking at the same dates for a particular week in December 2011, we find an identical round trip price of $1,276.80. Continental charges $1,078 for fare and $198.80 for taxes and fees. Virgin Atlantic, on the other hand, charges only $696 for fare and a whopping $580.80 for taxes and fees. The end price is the same, but the distribution is wildly skewed. Because your rewards miles don’t cover taxes or surcharges, you would end up paying $198.80 (typical) out of pocket through Continental or $580.80 through Virgin Atlantic. That’s huge!
But if you have a Virgin Atlantic credit card, there is hope. To avoid the disproportionate tax and fee costs, simply transfer your miles to one of Virgin Atlantic’s flying club partners. As in the previous example, flying with Continental could save you nearly $400 on a transatlantic flight. Why get a Virgin Atlantic card in the first place? Because it has a pretty enviable rewards rate. You earn 3% at Virgin Atlantic (which, remember, you shouldn’t use) and 1.5% rate everywhere else (which is actually kind of awesome).
If you have a Starwood America Express credit card…
Rejoice!
The Starwood American Express is one of NerdWallet’s favorite hotel credit cards, but it’s not just for free nights. When you redeem Starpoints for airfare, you trade 20,000 Starpoints for 25,000 airline miles. The Starwood card earns points at a 1% base rate (up to 5% at Starwood hotels), but when you redeem for flights, you’re getting a pretty solid 1.25% back.
The 1.25% rate is significant because it’s better than a lot of airline branded credit cards out there. Delta Airlines, for example, offers a credit card with a flat 1% rate on all purchases. It doesn’t make much sense to use a Delta card when you can buy Delta tickets with Starpoints, which accumulate at a faster rate.
NerdWallet estimates Starpoints to yield 2.3% back when redeemed for hotel stays, making the Starwood American Express a pretty well rounded travel rewards card. It has a great signing bonus of 25,000 points, which is enough for 6 free nights or part or all of a flight.
If you have an airline branded credit card…
Get rid of it!
Chances are, you can do better. Airline credit cards generally offer pretty mediocre rewards rates. Here’s a list of some of the top airline credit cards and their corresponding rewards rates:
| Airline | Rewards rate on airline purchases |
Rewards rate everywhere else |
|---|---|---|
| Southwest |
2% | 1% |
| US Airways |
2% | 1% |
| Virgin America |
3% | 1.06% |
| Virgin Atlantic |
3% | 1.5% |
| Alaska Airlines |
1% | 1% |
| Frontier |
1% | 0.5% |
| United MileagePlus Explorer |
2% | 1% |
| Continental* |
2% | 1% |
| Delta (Platinum) |
1% | 1% |
| Delta (Gold) |
2% | 1% |
| Delta (Reserve) |
1% | 1% |
| AAdvantage |
1% | 1% |
*We believe it will be phased out in favor of the United MileagePlus Explorer
As you can see, most airline cards offer 1-3% back at their own airlines and around 1% back everywhere else. Now compare to a couple of the general travel rewards cards available. The Capital One Venture, for example, yields a flat 2% back on all purchases—not just travel, but day-to-day expenditures as well. You don’t have to contend with blackout dates, you can fly on any airline and you get a sizeable signing bonus. With the Chase Sapphire Preferred, you’ll receive 2% back on all travel purchases and 1% everywhere else. And if you book travel through Chase Ultimate Rewards, you’ll save 20% of the points you’d normally spend.
The moral of the story is this: don’t judge a credit card by its name. Virgin Atlantic miles are more useful when redeemed at Continental. The Starwood American Express claims to be a humble hotel card but is, in fact, better for airline rewards than many airline credit cards. And airline credit cards tend to limit your flight rewards, while the general best miles cards allow you to earn and spend virtually anywhere. Before you make a decision, take a second to look beyond the surface and delve into the details.
| Capital One® Venture℠ Rewards Credit Card | Chase Sapphire Preferred℠ Card | ||||||||
|---|---|---|---|---|---|---|---|---|---|
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| Signing Promo | |||||||||
| 10,000 Capital One No Hassle Miles Bonus after spending $1,000 - in the first 90 days | 40,000 Chase Ultimate Rewards Bonus after spending $3,000 - in the first 3 months. | ||||||||
| Intro APR Promo | |||||||||
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| Annual fee | |||||||||
| $0 intro for first year; $59 after that | $0 the first year, then $95 | ||||||||
| Details | |||||||||
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Check out a no international transaction fee cards, and stop paying unnecessary fees!