When Should I Transfer Points to Airline and Hotel Partners?

Sep 25, 2016

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TPG reader Sai sent me a message on Facebook to ask about transferable points programs:

“What’s the advantage of transferring Ultimate Rewards points to partners rather than booking through Chase?”

There are a lot of benefits to redeeming Ultimate Rewards points through the Chase travel portal. For starters, Chase tends to offer competitive prices and lets you use points to cover a portion of your total purchase. Booking directly can save you time as well as money since you don’t have to search for award availability. You can also earn miles and elite credits for flights booked through Ultimate Rewards, even when you pay entirely with points. These are all compelling reasons, and I think using the travel portal is a great option… sometimes.

The downside is that when you redeem points directly through Chase, the return you get is limited by the redemption rate. That starts at 1 cent per point, but you’ll get 1.25 cents per point if you have the Chase Sapphire Preferred Card or Ink Plus Business Card, and 1.5 cents per point with the new Chase Sapphire Reserve. Overall, that’s a decent value and it can work out in your favor to redeem points this way when cash prices are low. However, you can do much better, especially when prices are high.

The advantage of transferring points is that most award charts are fixed, so the cost of your flight or hotel room remains the same regardless of how the cash price fluctuates. For example, a Category 6 Hyatt property (like the Andaz 5th Avenue) charges 25,000 points per night for a standard room. Those rooms start around $475 per night and often exceed $600, which yields a redemption value of around 1.9 to 2.4 cents per point. You won’t get that same value by booking directly, since 25,000 points will only cover up to $375 at the highest rate.

The same goes for airfare: Your best option is to book directly when prices are low, and transfer when prices are high. For example, United charges 25,000 miles round-trip for a domestic economy award at the Saver level. If you’re able to find a cheap flight, then it makes sense to book through Ultimate Rewards. Once the cash price gets to be more than $375 or $400, however, you’ll be better off transferring to United MileagePlus (provided you can find sufficient award availability).

25,000 Ultimate Rewards points can get you a night at the Andaz 5th Avenue when you transfer to Hyatt Gold Passport.

The same general strategy applies to the ThankYou Rewards Travel Center. Like Chase, Citi gives certain cardholders a bonus for redeeming points directly. You’ll get 1.25 cents per point with the Citi Premier Card, and 1.33 cents per point with the Citi Prestige Card, so you can save a bit when prices are low. However, this doesn’t apply to Amex Membership Rewards Travel, since you’ll only get a redemption value of 1 cent per point at best. At that rate, you’re better off just paying cash and saving the points for a more rewarding opportunity.

For more on earning and redeeming transferable points, check out these posts:

If you have any other questions, please tweet me @thepointsguy, message me on Facebook or send me an email at info@thepointsguy.com.

Featured image courtesy of Shutterstock.

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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