Rookie Guide to Award Travel: How to Choose Loyalty Programs

Aug 14, 2015

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When you get into the points and miles game, one of your first steps will be to choose which loyalty programs to focus on. Today, TPG Contributor Carly Blatt presents the third installment of her Rookie Guide to Award Travel with a breakdown of how to decide which rewards will work best for you.

For new award travelers, the sheer number of loyalty programs and ways to earn points and miles might seem daunting. Not only are there different types of loyalty currencies, but each individual program has its own quirks that take getting used to. When you’re starting out, it’s good to strike a balance between simplicity and value. To help you do that, in this post I’ll outline the different types of points you can earn, and which ones might work best for certain types of travelers.

Transferable points programs like Amex Membership Rewards offer added flexibility.

Use transferable points for flexibility.

TPG often touts the value of transferable points programs like Amex Membership Rewards, Chase Ultimate Rewards, Citi ThankYou Rewards and Starwood Preferred Guest, since they allow you to pool points in a central location and transfer them to a variety of hotel and airline programs (rather than being limited to just one).

As an example of why these points are valuable, suppose you’re heavily invested in a single airline program and hotel program (let’s say United MileagePlus and Marriott Rewards). If you can’t find award availability with United and Marriott, then you’re out of luck. However, if you’re invested in Chase Ultimate Rewards (from the Chase Sapphire Preferred Card) instead of the two individual programs, then you’ll have a number of other transfer options, including Southwest, British Airways, Virgin Atlantic, Hyatt and IHG. The more options you have, the more likely it is that one of them can accommodate your needs.

When deciding which transferable points program to focus on, consider how useful the various airline and hotel partners are based on your travel patterns. For example, if you live in Dallas (an American Airlines hub), you might favor Starpoints (from the Starwood Preferred Guest® Credit Card from American Express) for transferability to the AAdvantage program. You should also factor in any relationship or loyalty account you already have with a particular airline or hotel chain, since it may be worth selecting a transfer program that helps you maximize your existing balances.

Check out Jason Steele’s Transferable Points Showdown for more on the strengths and weaknesses of each program, and learn how to maximize transferable points with these posts:

Fixed-value points can come in handy when searching for low-cost coach tickets, especially when award availability is scarce.

Use fixed-value points for simplicity and when prices are low.

If you’re looking for a program that’s easy to understand, and you don’t care much about first-class flights or high-end hotels, then consider adding fixed-value rewards to your portfolio. With these programs (offered on cards like the Barclaycard Arrival Plus World Elite Mastercard and Capital One Venture Rewards Credit Card), one point typically equals around one cent toward travel — as an example, 30,000 points (or miles) will cover $300 worth of flights, hotels, or other eligible expenses. That makes it easy to calculate how many points you’ll need for a given redemption.

The greatest feature of these programs is that there’s no need to look for award availability; you can simply pay for your flights (or other travel), and then redeem rewards to wipe the charges from your statement. While fixed-value points tend to be worth less than transferable points, another huge advantage is that you earn miles on flights, which can be especially helpful if you’re on the path to elite status.

Fixed-value points aren’t ideal for international flights or premium awards, because you’ll need to accumulate a ridiculous number of points. For example, a $10,000 first-class flight to Europe might cost you 125,000 AAdvantage miles, but that same flight would cost you one million Venture Rewards or Arrival miles. If flying internationally or in premium cabins is your main goal, I’d avoid fixed-value points.

On the flip side, if you tend to book at the last minute, fixed-value rewards can be your best friend. Some frequent flyer programs add a close-in booking fee, but you can avoid this with fixed-value redemptions, since you’re just using points to cover the cash fare. Although fares will likely be higher when you book at the last minute, at least you’ll avoid extra fees leveraged by certain airlines.

For help selecting a credit card that earns points in one of these programs, check out TPG’s comparison of fixed-value cards.

If you live near a specific airline hub, focusing on earning miles with their program may be your best bet.
If you live near an airline hub, investing in that carrier’s frequent flyer program may be your best bet.

Consider using individual programs if you’re a hub captive or have strong brand preferences. 

Although transferable points and fixed-value points give you the greatest flexibility, there are times when it makes sense to cast your lot (at least in part) with a specific airline or hotel program. For example, if you live near a major airline hub and use one carrier exclusively, you might prefer to focus on earning miles and elite status in the corresponding frequent flyer program. Sticking with a specific airline can net you other benefits like elite qualifying miles, lounge access and free checked bags.

The case is even stronger for hotel points, since they’re generally worth less than airline miles and flexible points, and transfer opportunities are less lucrative. If you’re loyal to one hotel chain (either due to personal preference or because you use it exclusively for work travel), you might have little reason to earn (or transfer) points elsewhere.

That said, it’s important to diversify your travel rewards, and in general I wouldn’t recommend exclusively earning rewards in any single airline or hotel program. The ongoing downside to this strategy is that award availability can be limited, and you expose yourself more to the risk of devaluation.

What’s the best strategy?

The most effective strategy is to use all of the above. Focus on earning flexible points, but supplement them with fixed-value points and rewards in your favorite programs to cover all your bases.

However, if you’re a true rookie, I recommend starting with individual programs and then adding flexible points once you’ve learned how to maximize them. You might not maximize every single award redemption that way, but you can ease yourself into award travel as you get the hang of using your points and miles.

For more rookie tips, check out these posts:

When you first got into award travel, what was your go-to program?

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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