On a similar note...
On a similar note...
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Welcome to the world of miles and points! We’re glad you’re here. In this beginners guide, we’ll show you the basics of miles and points (or “travel rewards”). We will explain this hobby, the different types of travel reward “currencies,” the best ways to earn miles and points — and of course, how to redeem travel rewards.
So sit back and get comfortable as we help demystify the fun and exciting world of miles and points.
What are your travel goals?
This is an important question to consider when evaluating what you would like to get out of your miles and points hobby. Do you want to travel several times a year to an exotic location, flying in first class on miles and paying for your hotel on points? Do you want to fly to visit friends and family using miles (but don’t care if you sit in economy or business class)? Or do you just want to learn what travel rewards are all about?
The good news is that regardless of your travel goals, understanding miles and points can make those goals a reality. Using travel rewards to see the world can save a lot of cash. And when you get into this hobby, you begin to realize that all sorts of travel is affordable and within reach.
What is the miles and points hobby?
You know those people who say they flew in first class nearly for free and only paid $5 in taxes? Well, those people used airline miles to fly. They didn’t pay $4,000+ for that first class seat.
The gist of using miles and points is simple: Sign up for a credit card that earns travel rewards and redeem those rewards for plane tickets or hotel nights instead of paying with cash. To keep earning travel rewards, use that credit card as your primary source of payment for everything. Stop using cash or a debit card, because neither method of payment earns travel rewards. That thesis alone is the bulk of the miles and points hobby.
The rest is knowing how to maximize your earnings and use award charts to book the travel you want. Let’s get down to basics and delve into various types of travel reward currencies.
Different types of travel rewards
Think of travel rewards as another type of currency. Just like stocks, crypto, bonds or foreign currencies, travel rewards present a way to pay for your travel experiences and invest in your travel goals.
There are three types of travel rewards: airline miles, hotel points and transferable points.
Airline miles are specific to each airline. One example of airline miles is United MileagePlus miles. To earn United miles, you need to register for a frequent flyer account with United. Then, each time you fly with United (or another Star Alliance airline — more on alliances later), input your MileagePlus number on the reservation to earn miles for the flight.
United (and many other airlines) also has its own co-branded credit cards, such as the United℠ Explorer Card, which earns United miles every time the card is swiped. In addition to flying and earning miles on your flights, using this credit card for everyday purchases is the best way to earn United frequent flyer miles.
The number of miles earned on a flight depends on various factors including the type of seat you book, distance flown and cost of the ticket. Similarly, the number of miles earned with a co-branded credit card also depends on the type of purchase. For example, the United℠ Explorer Card earns 2 United miles per $1 on restaurants and hotels, and 1 United mile per dollar on everything else.
Then, you can redeem your earned miles for award tickets on that airline (and its partners). Generally, airline miles are not transferable directly from one airline to another.
» Learn more: NerdWallet’s full review of the United Explorer card
Here are the major airlines you should pay attention to when getting started with points and miles, as well as some useful details about each:
Relevant Domestic Airline Frequent Flyer Programs
Alaska Airlines Mileage Plan: Great for booking West Coast travel and award tickets on Cathay Pacific to Asia.
American Airlines AAdvantage: Useful for booking off-peak rates to Europe in the fall and winter.
Delta SkyMiles: Good for last-minute bookings; no “close-in fees” for tickets booked less than 21 days before travel.
Southwest Airlines Rapid Rewards: Generally good award availability and straightforward pricing (award prices tied directly to cash fares).
United MileagePlus: Usually has the highest award availability due to Star Alliance membership.
Relevant International Airline Frequent Flyer Programs
Air Canada Aeroplan: No 21-day close-in booking fees.
Air France/KLM FlyingBlue: Offers discounted monthly Promo Rewards.
British Airways Executive Club: Distance-based award chart makes it great for short-haul award flights.
Virgin Atlantic Flying Club: Excellent premium economy experience for low number of miles (despite high taxes).
You can earn hotel points via paid hotel stays or by using that hotel chain’s co-branded credit card. One example of such a card is the Marriott Bonvoy Boundless™ Credit Card. Similar to airline credit cards, each hotel chain’s credit cards incentivize members to use the card by giving bonus points for using the card at hotels. The Marriott Bonvoy Boundless™ Credit Card, for example earns 6 Bonvoy points per $1 for purchases at Marriott properties.
The best use of hotel points is usually for an award night redemption. Some hotel chains offer free nights to encourage members to use their loyalty points at the hotels (e.g., with Marriott you can book four award nights and get the fifth night free). In many cases, hotel points are transferable to airlines, but the transfer ratios are usually poor.
Relevant hotel programs
Transferable points are the most flexible type of travel rewards currency. Examples of transferable points are Chase Ultimate Rewards® and American Express Membership Rewards. The points are extremely versatile because you can redeem them in a number of ways, including for gift cards, cash back or by transferring to specific airline partners.
For example, American Express points are transferable to Delta at a 1:1 ratio. Because of their flexibility, these points are often considered more valuable than airline miles or hotel points.
Unlike airline miles and hotel points, transferable points are earned by using credit cards specific to the transferable point currency. For example, the Chase Sapphire Reserve® earns Chase Ultimate Rewards® points. The Business Platinum Card® from American Express earns Membership Rewards points. You cannot register for one of these rewards accounts without having a specific credit card (see below).
Now that you know the three main types of travel rewards, you are ready to get started. So what do you need to know before you begin?
Before you begin
Know your credit score
For the most part, travel rewards credit cards are available only to those with excellent credit scores (720 and up). If your credit score is significantly below 720, it’s important to take steps to improve it if you’re interested in participating in this hobby.
Think of your credit score as a pie cut into five pieces: payment history, credit utilization, length of credit history, mix of credit types and recent applications.
Prepare to pay bills in full each month
If you decide to open up a travel rewards credit card, you will likely want to meet a certain minimum spending requirement within several months to earn the welcome bonus. For example, the American Express® Business Gold Card offers the following: Earn 35,000 Membership Rewards® points after you spend $5,000 on eligible purchases with the Business Gold Card within the first 3 months of Card Membership.* Terms Apply.
You need to consider if you can meet that minimum spending requirement within the specified time frame. If you charge purchases on the card just to earn the welcome bonus but then end up taking many months to pay that balance off, you will incur finance charges.
Paying interest to earn travel rewards negates the value you’d derive from earning points. Remember, this is supposed to be a fun way to save money and travel the world for nearly free — it should not put you in debt. If you cannot meet the minimum spend requirement for the card you want, choose a card with a lower spending requirement.
» Learn more: 10 ways to meet the minimum spend on your credit card
Limit your cash usage
The key to maximizing your miles and point earnings is to stop using any method of payment that does not earn travel rewards. If you get into this hobby, make it a habit to only use a credit card that earns travel rewards. The best way to do this is to stop using cash and/or your debit card. Take your travel rewards card with you everywhere you go and use it to pay for everything, even small things like a $2 Snapple.
Now that you know what travel rewards are and what good habits to keep in mind, let’s have some fun and look at the best ways to earn travel rewards.
How to earn travel rewards
Below, we have listed the five best ways to maximize earning travel rewards.
1. Utilize welcome bonuses
The fastest and most efficient way to earn miles and points is by signing up for a travel rewards credit card and using that card for everyday purchases. Credit card companies want to incentivize customers to use their products. For this reason, credit card companies will usually offer a sign-up bonus to a first-time holder of a credit card.
Sign-up bonuses can be as high as 100,000+ points depending on the offer. Usually, a higher offer corresponds to a higher minimum spending requirement. This makes perfect sense because credit card companies want to reward customers who use their products the most. As a rule of thumb, an offer of 50,000 points/miles or more is considered a “good” offer.
One example of a strong offer is the Chase Sapphire Preferred® Card, which is currently offering the following: Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®.
Credit cards come out with limited-time offers all the time, so if you’re considering getting a card but think the sign-up bonus is low, you can always wait to see if a better offer comes along.
» Learn more: The best credit card bonus offers available now
Relevant Credit Cards
To get started, sign up for a credit card that earns airline miles, hotel points or transferable points. If this is your first card, a transferable point credit card will offer the most flexibility for earning and redeeming points.
If you already have a transferable point card and want to add another card to your portfolio, consider your travel goals. Do you fly with United often? If so, think about a United credit card as your next card. Is Marriott your favorite hotel chain? Maybe it makes sense to add a Marriott card to your portfolio. Regardless of your plans, deciding which card to get is a personal decision and there is no right or wrong answer.
Below, we’ve included a list of some of the best credit card offers currently available, organized by airlines, hotels and transferable points programs.
» Learn more: How to choose a travel credit card
American Airlines: The AAdvantage® Aviator® Red World Elite Mastercard® is currently offering the following: Earn 50,000 AAdvantage® bonus miles after making your first purchase and paying the $99 annual fee in full within the first 90 days. When the card is used on eligible American Airlines purchases, you will earn 2 miles for $1. All other purchases earn 1 mile per $1.
Alaska Airlines: The Alaska Airlines Visa Signature® credit card earns 3 Alaska miles for every $1 spent on eligible Alaska Airlines purchases and 1 Alaska mile for every $1 spent on all other purchases.
United Airlines: The United Club℠ Infinite Card has a high annual fee: $0 intro for the first year, then $525. Despite the high annual fee, the card offers 4 United miles per $1 on United purchases, 2 United miles per $1 on restaurants and travel, a United Club membership, a $100 statement credit toward Global Entry, and much more.
» Learn more: NerdWallet’s best airline credit cards
Marriott Bonvoy: Here’s the current offer on the Marriott Bonvoy Boundless™ Credit Card: Earn 5 Free Nights after you spend $5,000 on purchases in the first 3 months from account opening. The card also comes with an annual free night certificate worth 35,000 points and a ton of other perks. The annual fee is $95 and not waived in the first year.
Hilton Honors: The Hilton Honors American Express Business Card provides another excellent offer: Earn 130,000 Hilton Honors Bonus Points with the Hilton Honors American Express Business Card after you spend $3,000 in eligible purchases in the first 3 months of Card Membership. Terms Apply. The annual fee is $95 and is not waived in the first year. With this card, you’ll earn 12 points per $1 on Hilton purchases and 6 points on select business and travel purchases. Terms apply. If Hilton hotels are your thing, this is a great card to have.
» Learn more: NerdWallet’s best hotel credit cards
Transferable point cards
Chase Ultimate Rewards®: Here’s the current offer on the Chase Sapphire Preferred® Card: Earn 80,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $1,000 toward travel when you redeem through Chase Ultimate Rewards®. On this card, you’ll earn 2 points per $1 on travel and dining at restaurants worldwide and 1 point per dollar on all other purchases. The card has a $95 annual fee that is not waived in the first year.
American Express Membership Rewards: The Business Platinum Card® from American Express currently has the following welcome offer: Earn 75,000 Membership Rewards® points after you spend $15,000 on qualifying purchases within your first 3 months of Card Membership. Terms apply. With this card, you’ll earn 5 Membership Rewards® points per $1 on flights booked directly with airlines or via American Express Travel and on prepaid hotels booked on AmExtravel.com. You'll also get a $200 annual airline credit, a $200 annual credit for Dell purchases and when you use points to pay for all or part of a flight with your selected qualifying airline, you can get 35% of the points back. Although the annual fee is $595, the card provides various annual credits that offset the fee. Terms apply. This is an excellent premium travel card.
2. Use the right card for the right spending category
Not all travel credit cards are created equal. Depending on which card you have, the card will offer bonus points for spending in a specific category. For example, the Chase Sapphire Preferred® Card earns bonus points on travel and dining at restaurants. So, if you hold this card along with another credit card, you’d probably use the Chase Sapphire Preferred® Card for all your travel and dining expenses.
Another excellent card to have in your portfolio is the Chase Freedom Flex℠, which offers rotating quarterly bonus categories.
As seen above, in the second quarter of 2020 (April 1-June 30), you can earn 5% cash back on up to $1,500 spent at grocery stores, gyms and select streaming providers.
Furthermore, you can turn the 5% cash back earned on the Chase Freedom® into Chase Ultimate Rewards® points. If you hold a premium travel card like the Chase Sapphire Preferred® Card, you can pool your points, and get 25% more value when you redeem your points for trips through the Chase Ultimate Rewards® travel portal.
You can maximize your point earnings by using the Chase Freedom® for all purchases that earn 5 points per $1 and using the Chase Sapphire Preferred® Card for all other purchases. If you max out the bonus category, you will earn 7,500 Chase Ultimate Rewards® points per quarter. Earning 30,000 points per year on a no-fee card is a pretty sweet deal.
3. Flights and hotel stays
Each time you book a flight or a hotel reservation, make sure that you’ve registered for the airline or hotel chain’s loyalty program and input your loyalty number into the reservation. Although this is a very straightforward way to earn travel rewards, it is often overlooked. Make it a habit to not skip this step.
4. Shopping portals
An extremely easy way to earn travel rewards is by shopping online via shopping portals. CashbackMonitor lists all shopping portals currently offering cash back, airline miles, hotel points or credit card points (transferable points).
Let’s say for example you want to make a purchase from Nike.com. Check CashbackMonitor for current shopping portal offers.
As seen above, many shopping portals offer cash back for Nike.com purchases. To earn the points, simply click on the portal you would like to earn points with. If you want airline miles, you could earn 6 British Airways Avios per $1 or 2 United miles per $1 (at the time of this offer). If you’d prefer to have a more flexible currency, choose to earn 3 Chase Ultimate Reward points per $1 instead.
And don’t forget that these portal points are in addition to what you’ll earn from spending on your card. Let’s say you’re making a $100 Nike purchase and want some British Airways Avios. By simply clicking through the British Airways shopping portal, you will earn 600 BA Avios on the transaction. If you use your Chase Sapphire Preferred® Card for this purchase, you would also earn 100 Ultimate Rewards® points.
5. Dining programs (U.S. only)
Dining rewards programs provide an excellent and easy way to pick up some airline frequent flyer or hotel loyalty points just by dining at a participating restaurant. First, you sign up for an account with a dining program and add a credit card to your account.
Then, every time you visit a participating restaurant and use the card on file, frequent flyer miles will automatically post to your dining account. Currently, Alaska Airlines, American Airlines, Delta, JetBlue, Southwest, Spirit, United, Hilton and IHG offer dining programs.
These dining programs are run by the Rewards Network, so you can earn loyalty points on only one program at a time. At this time, only U.S. restaurants participate in the dining programs.
You can also earn extra points when you sign up for a new account. For example, at the time of publication United was offering a 2,500-mile bonus when you registered for the program and completed a dine within 30 days.
Now that you know about some of the best ways to earn travel rewards, let’s take a deeper look into how to redeem points.
Redeeming travel rewards: Airlines
Each airline that offers a loyalty program allows members to redeem frequent flyer miles for award seats. In addition, some airlines are members of alliances. Airlines that are part of the same alliance include codeshare agreements with one another that allow passengers to fly on one another’s flights and earn/redeem miles with each other.
For example, United Airlines is a member of Star Alliance, and so is Lufthansa. When you fly on Lufthansa, you can input your United Airlines MileagePlus number on the reservation and earn United miles.
Redemptions work the same way. You can use your United miles on United.com to book a Lufthansa award ticket. The ability to fly on alliance partner airlines opens up a world of possibilities for award redemptions.
The three main alliances are Star Alliance (26 member airlines), SkyTeam (19 member airlines), and Oneworld (13 member airlines).
Star Alliance members
Star Alliance is the largest of the three and provides the most flexibility for earning and redeeming miles. Let’s say you hold the United Club℠ Infinite Card, which is currently offering the following sign-up bonus: None.
After meeting the minimum spend requirement, those bonus United miles are redeemable for award tickets on all of Star Alliance’s 26 member airlines — so you have numerous redemption options all over the world.
When applying for a credit card with a specific airline, consider which partner airlines you want to fly and redeem points with. Remember, airline miles are not easily transferable from one airline to another.
» Learn more: Your guide to airline alliances
Redeeming travel rewards: Transferable points
If you have a credit card that earns Chase Ultimate Rewards® or American Express Membership Rewards, you can transfer points from those credit cards to member airlines or hotels. The advantage of having a Chase or AmEx card is that you can keep your points in their most versatile form (with the issuer’s program) until you are ready to transfer them to an airline or hotel. Once transferred, the points cannot be refunded back to Chase or AmEx.
Chase Ultimate Rewards® — 13 transfer partners
Chase has 13 transfer partners (10 airlines and three hotels). Generally, transferring points to hotels isn’t advisable due to the lower valuation of hotel points.
American Express Membership Rewards — 22 transfer partners
AmEx has 22 transfer partners (19 airlines and three hotels). Although AmEx has more partners than Chase, Chase’s transfer partners include United, which until recently had one of the better award charts.
Given the numerous transfer partners available between Chase and AmEx, it’s easy to see why these programs are so valuable. Deciding which program to prioritize can be based on which companies you want to fly or stay with.
Each of the airlines and hotels shown above has different award charts and redemption requirements. When electing to transfer miles, consider the value of your transferable points compared to the value of the redemption you have in mind.
The bottom line
Although the world of miles and points can seem daunting, it doesn’t have to be. The best way to get started is to apply for a travel credit card that matches your needs. Then, learn how to maximize earning travel rewards.
The last step is knowing how to redeem points for the best redemptions, though this is more of an art than a science. There is no right answer and no ideal redemption that is right for everyone. However, getting started can put you on the path to traveling the world for nearly free. Think of travel rewards as another currency to add to your portfolio.
How to Maximize Your Rewards
You want a travel credit card that prioritizes what’s important to you. Here are our picks for the best travel credit cards of 2020, including those best for:
Airline miles and a large bonus: Chase Sapphire Preferred® Card
No annual fee: Wells Fargo Propel American Express® card
Flat-rate rewards with no annual fee: Bank of America® Travel Rewards credit card
Premium travel rewards: Chase Sapphire Reserve®
Luxury perks: The Platinum Card® from American Express
Business travelers: Ink Business Preferred® Credit Card
Planning a trip? Check out these articles for more inspiration and advice: Find the best travel credit card for you Baffled by points and miles? Let the 80/20 rule guide you Earn more points and miles with these 6 strategies