Points & Miles 101: NerdWallet’s Quick Start Guide

Diving into the world of travel rewards can seem daunting. We've got you covered.
Dec 17, 2021

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Perhaps you’re wondering why your friends race to foot the bill for after group dinners out. Or maybe you’re tired of being the only team member who doesn’t get bumped up to a premium class on work trips. Or maybe even you can’t knowingly pass up a deal, even if it’s a small one.

Welcome to Points and Miles 101, the official NerdWallet quick start guide for aspiring travel hackers. Here, we nerd out about all things points and miles.

Helpful lingo

Rewards travel has a language all of its own, and getting a grasp of the general concepts will improve your foray into the points and miles pool. Know words like:

  • Award charts. Certain airlines and hotels offer award charts to define the costs of bookings in points and/or miles. This is often done in contrast to dynamic award pricing.

  • Award travel. Award travel refers to flights, hotel stays, vacation packages or other travel-related expenses booked by redeeming travel rewards.

  • Bank programs/credit card rewards program. Some financial institutions, like Chase or Capital One, run loyalty programs associated with specific credit cards. Members typically are cardholders that earn flexible points that may be used to book flights and hotels through the program’s travel portal or transferred to other loyalty programs.

  • Dynamic award pricing. Dynamic award pricing means that a company ties the cost of a specific booking to the cash price. This is a pricing structure used instead of an award chart.

  • Loyalty programs. Loyalty programs are run by a travel corporation and exist to encourage customers to repeatedly fly or stay with the corporation’s brands. Examples include World of Hyatt and Delta SkyMiles. You can find loyalty programs offered by non-travel entities, too (but for the purposes of this guide, we'll focus on the travel-related ones).

  • Miles. In this context, miles are a type of travel reward earned with an airline loyalty program. They are typically earned by flying or spending on an airline credit card. You can think of miles as airline points. Whether they are called miles or points varies depending on the loyalty program — for example, United Airlines, American Airlines and Alaska Airlines use the term miles, but Southwest Airlines members earn Rapid Rewards points.

  • Points/travel rewards/rewards currencies/miles. Travel rewards are a virtual currency that go by many names. They are earned by charging eligible purchases to a credit card, flying, spending with partners or staying in hotels.

  • Redemptions. When points and miles collectors can use their earned travel rewards to pay for award travel or some other benefit/reward.

  • Transferable currencies. Rather than being tied to an individual brand, transferable currencies are designed to transfer to several hotels and airlines for a variety of redemptions. These are often offered by bank programs/credit card rewards programs.

  • Travel credit cards/rewards credit cards. Travel rewards credit cards are a type of credit card that earn points, miles or travel rewards that cardholders can redeem for award travel. Airline and hotel credit cards are a type of travel credit card, technically, but usually the term travel credit card refers to a more general card that earns a transferable currency in a bank program/credit card rewards program.

  • Valuations. NerdWallet’s annual analyses to figure out how much each loyalty program’s miles or points can be worth in cash when used for award travel. These values can help you determine when to pay in cash versus points.

The master list of travel loyalty programs

Travel loyalty programs come in a variety of shapes and sizes. The most common are hotel rewards programs, airline frequent flyer programs and bank programs. Online travel agencies, such as Hotels.com or Expedia, also run their own loyalty programs. All of these programs are similar to non-travel loyalty programs that you might already be a part of, like Target, Old Navy or Starbucks.

Here’s an overview of your travel loyalty program options, broken down by type.

Credit card rewards programs

General credit cards rewards programs — also known as bank programs that earn transferable currencies — are the bread and butter of many points and miles strategies. Their inherent flexibility (since they aren't tied to a single travel company) make them attractive to individuals who aren’t “all in” on a single program. These include:

Airline frequent flyer programs

If you live near an airport that is serviced by multiple carriers, you have your work cut out for you. You can choose between several major airlines’ rewards programs. Travelers who fly out of smaller airports may have a more clear-cut option as to which airline they'll likely use most frequently.

Domestic airline loyalty programs include:

Here's a smattering of popular international airline loyalty programs:

Hotel loyalty programs

Travelers can book regular stays within a specific hotel portfolio and earn rewards. Here’s a sampling of hotel rewards programs to shop and consider.

Articles to get you started

Consider this section “Required Reading” to develop a firm foundation in your points and miles knowledge.

For an ultra-comprehensive overview of the travel rewards universe, start here, with our Beginner’s Guide to Points and Miles. This article covers the basics and then some, helping readers think through esoteric and practical topics alike.

  • What are your points and miles goals?

  • Are you ready to pay off your credit card bills in full each month?

  • Does a general travel credit or a co-branded credit card make more sense?

While we live and die by points and miles (we’re nerds, remember?), we also know that plenty of travelers forgo loyalty program membership and still have enjoyable vacations, flights and hotel stays.

Even so, using points can still be useful to save money on travel. You don’t actually have to spend 50 nights per year in hotels or fly somewhere every other weekend to reap the benefits. With a well-planned strategy and without spending extra money, you can earn almost-free hotel nights and flights, plus fringe benefits like complimentary checked bags, airport lounge access or late check-outs.

Points values vary from loyalty program to loyalty program, and understanding the entire landscape can get overwhelming quickly. Explore the topic deeper in our article, Why do travel points matter?

Points values vary from loyalty program to loyalty program and even booking to booking.

Some programs have a fixed value for their points. For example, Southwest Rapid Rewards points rarely deviate from the value of 1.4 cents cents each. If you want to buy a $100 flight with your Rapid Rewards points, it’ll likely cost you about 7,142 points ($100 flight / 1.4 cents value = 7,142 points). If you wanted to buy a $200 flight, it would probably cost you double the points as well (1.4 cents value x 14,285 points = $200 flight).

Similarly, many credit card rewards programs have a fixed value. One Capital One mile is worth 1 cent.

Other programs may use dynamic pricing or an award chart, which can make the valuations fluctuate across bookings. For example, one night at a Marriott hotel might cost $550 in cash or 60,000 points ($550 / 60,000 points = 0.91 cent valuation). Meanwhile, a different booking at another Marriott property might cost $350 in cash or 60,000 points ($350 / 65,000 points = 0.58 cent valuation).

Because point values vary so much, it’s helpful to know an average value to target when making award bookings. If the booking gets you less than the average value of your points, you should probably just pay in cash instead.

But figuring out the average value is no easy task. That’s where we come in. We collect and analyze hundreds of real-world award booking costs to determine the average value of different rewards currencies. With these in hand, you’ll be able to quickly determine whether or not an individual booking is a good deal. See the value of your preferred loyalty program or browse options with our deep dive: What Are Points and Miles Worth This Year?

Are you ready to jump in and take up the travel hacking hobby as one of your own? We’re so glad to have you. We’ve broken it down into five easy steps.

1. Pick a rewards card.

2. Select your priority loyalty programs.

3. Work toward elite status.

4. Learn the rules.

5. Find high-value redemptions.

Next up — Travel Rewards Credit Cards 101

Now that you have a solid understanding of points and miles, the next step is to expand your knowledge of what travel rewards credit cards are out there.

To help you make the best possible credit card choice for your budget, financial goals and travel desires, we’ve put together another quick start guide: Travel Rewards Credit Cards 101.

Why you should listen to us

We’re die-hard nerds who felt motivated to lessen the financial sting of our favorite activity — traveling — by learning the tricks of the points-and-miles trade. Our editors and writers boast over 40 years of experience in the travel industry, and our travel rewards redemptions range from business class tickets to Japan to mattress runs in Vegas.

Our editorial guidelines outline the integrity we strive to maintain in every word we write and every recommendation we make.


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 2022, including those best for:

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