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Hack Your Way Home for the Holidays: A Guide to Redeeming Your Credit Card Rewards

Airline Credit Cards, Credit Cards, Travel Credit Cards
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Millions of travelers will swarm airports and hotels this holiday season — but not all of them will pay full price. You don’t have to, either, if you’ve saved up enough points or miles on your credit card. Redeeming rewards strategically could save you hundreds on your trip.

NerdWallet surveyed major travel rewards and loyalty programs to find the best redemption strategies for holiday travel. Here’s what you need to know to get the most out of your rewards during peak season.

Airline loyalty programs

Even though many airlines are reportedly making more seats available for cardholders redeeming their rewards, it can still be tough to find affordable award tickets during the holidays. Here’s what we found in looking at eight major airline loyalty programs:

  • Peak season deals: Alaska, American and United were the only airlines that listed a flat award price for all flights in the continental U.S. on their websites. By comparison, other airlines set awards prices according to location, availability, the cash price of a ticket or a combination of these factors. For expensive long-haul domestic flights during peak season, these flat rates can yield high redemption rates.
  • Most valuable: Virgin America Elevate points are worth 2.2 cents each when redeemed for flights, according to NerdWallet calculations.
  • Discounts: British Airways and United offer lower fares on off-peak days, including some during the holiday season, which they list on their websites. American Airlines offers mileage discounts to cardholders.
  • Redemptions to avoid: On Alaska and American, the least expensive one-way award tickets are 12,500 miles each. On United, they’re 10,000 each. If you get a one-way ticket that costs less than $125 or $100 with your rewards on these airlines, respectively, you’d be getting less than 1 cent per point, a poor value.
  • Good to know: Most airline-branded credit cards offer free checked bags.

If you’re planning to redeem your American Airlines AAdvantage miles for an international ticket, this holiday season may also be a good time to do it. On March 21, 2016, the airline is overhauling its rewards program and increasing the amount of miles required for those trips.

Airline loyalty programs, compared

 Average Value Per UnitHow the program worksBest strategyAvoid redeeming for:
Alaska Airlines Mileage Plan
Unit: Miles
1.3 centsFlat-rate miles price for each regionUse miles for your most expensive trips.One-way flights that cost less than $125

Why: The minimum cost for one-way tickets is 12,500 miles, regardless of the cash price.
American Airlines AAdvantage
Unit: Miles
1.2 centsFlat-rate miles price for each regionUse your miles for your most expensive trips, and see if you can get reduced mileage awards, which allow you to book at a discount. If you usually spend your miles on international flights, redeem before March 21, 2016, for better value.One-way flights that cost less than $125

Why: The minimum cost for one-way tickets is 12,500 miles, regardless of the cash price.
British Airways Executive Club
Unit: Avios
1.6 centsAvios price adjusted for availability and locationUse your Avios on off-peak travel days. Flights with big fuel surcharges

Why: You can actually end up with a negative value for your Avios with these fees.
Delta SkyMiles
Unit: Miles
1.8 centsMiles price adjusted for availability and locationBook two one-way flights, instead of a round-trip flight, to see more low-mile options.Pay With Miles feature for trips under $100 or international trips.

Why: You’ll typically get less than 1 cent per mile in this situation.
JetBlue TrueBlue
Unit: Points
1.4 centsPoints price depends on dollar price of ticketBundle flights with hotels for slightly better value. N/A
Southwest Rapid Rewards
Unit: Points
1.0 centsPoints price depends on dollar price of ticketUse your points for Wanna Get Away tickets for slightly better value.Business select and anytime tickets

Why: You’ll get a slightly lower redemption value, on average.
United MileagePlus
Unit: Miles
1.7 centsFlat-rate miles price for each region. Saver awards are also available.Use your miles on saver awards, if available.One-way flights that cost less than $100

Why: The minimum cost for one-way tickets is 10,000 miles, regardless of dollar price.
Virgin America Elevate
Unit: Points
2.2 centsPoints price depends on dollar price of ticketUse your miles on the lowest-cost tickets, if possible.N/A

Hotel loyalty programs

Some hotel groups, such as Hilton and Starwood Preferred Guest, don’t restrict award spaces during peak season, but rooms can still cost plenty in points. We examined seven major hotel loyalty programs to find the best ways to save over the holidays. Here’s what we found:

  • Peak season deals: At all the hotels surveyed, the award price for a room depended on hotel category, which is determined by the hotel’s location and amenities, rather than the cash price of a given room. That could translate to some good award deals at some locations, as prices rise during peak season.
  • Most valuable: Hyatt Gold Passport points are worth 2.2 cents each, and Starwood Preferred Guest’s are worth 2.3 cents each when redeemed for hotel stays, according to NerdWallet calculations.
  • Discounts: Marriott and the Ritz-Carlton have PointSavers programs that can save you 33%.
  • Redemptions to avoid: Hyatt, Marriott and IHG offer poor redemption values for transferring points to airlines. Starwood Preferred Guest, by contrast, offers several 1:1 airline transfer partners.
  • Good to know: Most hotel-branded cards offer automatic elite status, which provides benefits such as free upgrades, late checkouts and free Wi-Fi.

Keep in mind that the hotel loyalty landscape is due for some major changes. Marriott recently announced plans to acquire Starwood Hotels and Resorts, which could change the value of Starwood’s points, now worth 2.3 cents each when redeemed for hotel stays. For loyal Starwood Preferred Guest members, this could be either good news or bad news, depending on how the merger goes.

Hotel loyalty programs, compared

 Average value per pointHow the program worksBest strategyAvoid redeeming for:
Club Carlson0.4 centsPoints price depends on hotel categoryUse points on hotels with rooms that are expensive relative to others in the same category.N/A
Hilton HHonors0.5 centsPoints price depends on hotel categoryUse points on hotels with rooms that are expensive relative to others in the same category.Points & Money

Why: You’ll generally get less than 0.5 cents per point this way.
Hyatt Gold Passport2.2 centsPoints price depends on hotel categoryUse points on hotels with rooms that are expensive relative to others in the same category.Airline transfers and miscellaneous hotel costs

Why: It tanks the value of your points, sometimes by more than 75%.
IHG Rewards Club0.7 centsPoints price depends on hotel categoryUse points on hotels with rooms that are expensive relative to others in the same category.Airline transfers and flights

Why: It reduces the value of your points by upward of 30%.
Marriott Rewards1.0 centsPoints price depends on hotel categoryUse Marriott’s PointSavers program to save up to 33%.Air + Car packages and CruisesOnly

Why: NerdWallet estimates you’ll get about 0.4 cents per point on these redemptions.
The Ritz-Carlton Rewards0.9 centsPoints price depends on hotel categoryUse the Ritz-Carlton’s PointSavers program to save up to 33%.Abercrombie & Kent travel certificates

Why: Your points are worth only 0.45 cents each on this redemption.
Starwood Preferred Guest2.3 centsPoints price depends on hotel categoryUse points on hotels with rooms that are expensive relative to others in the same category, transfer to 1:1 partners or use Cash & Points.Rental car certificates for Avis and SIXT

Why: NerdWallet calculates that your points are worth only 1.43 cents each on these redemptions.

Credit card travel rewards

General travel credit cards offer much more redemption flexibility than “co-branded” cards — those that bear the name of a specific airline or hotel group. NerdWallet surveyed the travel rewards programs of eight issuers to find out which ones offered the most value during the holidays. Here’s what we found:

  • Peak season deals: You can redeem Barclaycard Arrival Miles, Capital One No Hassle Miles and Discover it Miles for travel statement credit at a value of 1 cent each, a decent value. These flexible redemption options are ideal for someone traveling on a budget during peak season. With travel statement credit, you charge travel expenses like normal, then redeem your rewards to reduce or eliminate the charge on your credit card bill. You don’t have to worry about the availability of award seats or rooms, and there are no “blackout dates.”
  • Most valuable: U.S. Bank FlexPoints, worth 2 cents apiece according to NerdWallet calculations, were the most valuable general travel rewards.
  • Discounts: While you can redeem Chase Ultimate Rewards points, U.S. Bank FlexPoints and Wells Fargo Points for cash back at a value of 1 cent each, you’ll get more value by booking travel on their travel aggregator sites. Chase gives you a 20% discount on travel booked through its rewards site, for example.
  • Redemptions to avoid: American Express Membership Rewards and Citi ThankYou give you less than 1 cent per point when you redeem for statement credit.
  • Good to know: American Express, Chase Ultimate Rewards and Citi ThankYou Points offer 1:1 transfer partners.

These versatile cards continue to vie for travelers’ attention by offering increasingly competitive benefits. The Chase Sapphire Preferred® Card, for instance, recently started offering a larger sign-up bonus: Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®. That’s worth $625 when redeemed for travel booked through Chase’s Ultimate Rewards site.

Considering that the average price for a discounted round-trip airline ticket during the holiday season is $186 this year, according to a study by AAA, this bonus could potentially cover holiday travel costs for a family of three.

Credit card travel rewards programs, compared

 Average Value per point or mileHow the program worksBest strategyAvoid redeeming for:
American Express Membership Rewards1.0 centsPoints price depends on dollar priceBook travel through American Express and look for the lowest rates.Everyday charges

Why: Points are worth only 0.6 cents each when redeemed for statement credit.
Barclaycard Arrival Miles1.0 centsMiles price depends on dollar price. Whether you redeem for travel statement credit or cash back, you’ll get 5% of your miles back to use for your next redemption.Book the lowest-cost trip, then redeem for travel statement credit.Cash back statement credit

Why: Miles are only worth 0.5 cents each when redeemed for cash back.
Capital One No Hassle Miles1.0 centsMiles price depends on dollar price. Book online through Capital One, or redeem for travel statement credit using Purchase Eraser.Book the lowest-cost trip you can find, either through Capital One’s platform or on another site. Cash back check or statement credit

Why: You’ll only get only 0.5 cents for each mile when you redeem for cash back.
Chase Ultimate Rewards1.25 centsPoints price depends on dollar price. Also redeemable for cash back.Book through Chase Ultimate Rewards if you want to get 1.25 cent per point, instead of 1 cent per point for cash back. Transfer points to one of Chase’s 1:1 partners, if you can get a better return elsewhere.N/A
Citi ThankYou Points1.0 centsPoints price depends on dollar price. Also redeemable for cash back.Book travel through Citi’s Travel Center. If you have the Citi ThankYou® Premier Card, you’ll get 25% more value if you redeem this way.Cash back or statement credit

Why: You’ll get only 0.5 cents per point.
Discover it Miles1.0 centsMiles price depends on dollar price. Redeemable for travel statement credit.Book inexpensive travel and redeem your miles against your travel costs.N/A
U.S. Bank FlexPoints2.0 centsPoints price depends on dollar price category. Also redeemable for cash back.Look at U.S. Bank’s airfare chart before booking. If your ticket’s price is between two categories, try to get the one with the lower point price.Round-trip flights under $200

Why: The minimum cost for round-trip tickets is 20,000 points, regardless of dollar price.
Wells Fargo Points1.0 centsPoints price depends on dollar price. Book through Wells Fargo or redeem for statement credit.Redeem for travel through Wells Fargo’s site. You can get around 2 cents of value per point.Digital downloads, including music, games and ebooks

Why: You’ll only get 0.5 cents per point.

Next steps

Redeeming your credit card rewards is just one way you can save on holiday travel. If you want to trim your costs even more, set budgets for each meal you eat while you’re away from home; instead of renting a car, take public transportation; or trade an expensive hotel stay for a night on your parents’ foldout couch. And be sure to take advantage of your credit card’s free travel benefits.

Traveling during the busiest time of the year can be expensive, but with some skillful credit card reward redemptions and careful spending, it doesn’t have to drain your savings.

Claire Tsosie is a staff writer at NerdWallet, a personal finance website. Email: claire@nerdwallet.com. Twitter: @ideclaire7.


Image via iStock.