When used effectively, the credit cards that give you hotel and airline loyalty points provide more value than the cash back that you can ordinarily achieve in a cash-back credit card.
Here’s how to get started.
- If you do not have them, open accounts with the major loyalty programs that you intend to use. This table shows how we value a point in each of the major hotel programs, and this table shows how we value a point in each of the major airline programs. The tables also show the cards that accumulate points in each program.
- Recognize that many programs have miles and points that expire. You will want to track your miles and use them as quickly as you can. Prepare a means of tracking your balances and the expiration date of your points in each program. Awardwallet.com and Tripit.com both offer mileage tracking programs. Using the “Notes” application on your IPhone or Android device also works perfectly well.
- Choose the right credit cards. The right credit card for you is the one that earns points that you are likely to redeem. Cards that earn flexible points that can be transferred to any of a number of partners (such as Chase Sapphire Preferred where points can be transferred to United, British Airways, Singapore Airlines, Hyatt, Amtrak and others) often have significant embedded value in the flexibility that they provide. While Chase is our favorite flexible card issuer, we also recommend the other programs listed on this page. If you prefer a card that earns hotel points directly, the three best cards are listed here, as are those for airlines here. This chart demonstrates the most valuable cards based on the point value across all categories.
- Meet the promotional spend requirement. Most cards have promotional spend requirements that require that you to spend at a certain level over a certain period of time before you get the sign-up bonus. If you do not believe that you can meet a promotional spend requirement for getting the points or miles that a card offers, delay applying for the card until such time as you will have bills that will allow you to meet them. For example, the Amex Platinum Card ordinarily requires that you spend $10,000 within 3 months of opening the account in order to get 50,000 membership rewards points. It also carries a $450 fee. While the card has many benefits that may justify the $450 fee, you are passing up one of the biggest if you open it during a period where you will not be running the spend levels required to get these points. By the same token, you should use credit cards over cash, but always pay your balances on time. If you fail to pay your balances, interests that you will owe will outweigh any points you will receive. Do not pay a premium to use your credit cards (such as at a gas station) as the premium you are paying will outweigh any points you will receive.
- Begin to familiarize yourself with the ways to redeem points or miles. By doing so, you will be able to get the rewards which are most valuable among those that are most useful to you. On most airlines, you will get the most value for your points by redeeming for long haul flights in Business or First class (British Airways is an outlier here, and the best value in their program is often in coach class on short haul flights operated by American or Iberia, its partners). At hotel chains such as Hyatt, your points may go further if used to stay at some of the lower category hotels. For example, the Hyatt Regency in Greenville, South Carolina and the Park Hyatt in Mendoza, Argentina are both outstanding properties where the rack rate can be quite high, but they are also both category 2 hotels where a room can be had for 8,000 Hyatt points per night. Flexible point programs may offer more strategies for maximizing value. See, for example, this recent article details how to get tremendous value by transferring Chase, Citibank or American Express points to Singapore Airlines’ frequent flier program.
Once you have committed to a strategy of earning hotel points and airline miles for your spend, you should also have a look at these 10 rules.