The market is shifting…
Not everything in life should be transactional, but cashing in your points certainly is. You earned those points, forgoing other potential points offers because of great perceived benefits. So why sell yourself short? Why cash out all those points for a great experience and receive absolutely no return or ongoing value, when booking the same flights another way could help line you up for a year of perks, and even more frequent flyer miles?
If “flexibility” is not in your travel vocabulary, and “what you want, when you want it” is – this approach can potentially change the way you see points. By saving the hassle of taking your credit card points and transferring them to a complicated airline program, you can wind up using fewer points and actually even earn some in return. Years ago when all flights were expensive, and premium economy or business class were out of sight, this would never have made sense, but now that we’re seeing crazy flight deals – the game is totally changing. Using points as cash is the new “it” thing. This works in all cabins, but has the most dramatic effect in business class.
Cash Points V Airline Points
Obviously, you don’t want to actually pay for your flight with cash, but how you choose to pay for it with points can make a huge difference in the benefits and future returns you receive. It can also make a huge difference in when you can go, since one avenue will afford lots of flexibility, while the other will offer very little – if any. We’re talking about using your credit card points to book flights through your credit card’s travel website versus transferring points to an airline frequent flyer program to book. Here’s why it’s not as simple as you think…
Today, there are $1800 round trip business class flights to China available from the US. It doesn’t matter where they start, the same principles will apply wherever you are. Regardless of cash price, round trip business to China on most airlines runs around 120,000-140,000 points round trip from the US through most frequent flyer programs. When you use your points for flights such as these, via an airline loyalty program, say… Delta Skymiles, you earn no elite status points or frequent flyer miles when you cash in. You’re just cashing in. But…
Via Credit Card Travel Site
Certain credit cards such as Chase Sapphire Reserve, give you 1.5 cents per point of cash value for any ticket or hotel purchase made through Chase Travel. In this example, you could spend 120,000 points to have the credit card company “buy” your ticket. Though it’s not 1.5 cents, quite a few Citi, Barclays, Amex and Chase credit cards also offer 1.25 cents per point of value. That means you’d become a “paying” business class customer, able to pick any date that the good deals are available, rather than be beholden to what (if any) available dates exist using points. Since you technically become a paying customer, you earn points towards elite frequent flyer status as well as lots of lovely airline miles back in return. And of course, you can book as many seats as you like.
Example: Booking this ticket through Chase Ultimate Rewards, or another credit card travel program rather than transferring my points to a frequent flyer program, I’ll use the same or less points – be able to virtually pick any date and I’ll earn roughly 20,000 frequent flyer miles back in return, as well as elite status credit. These credits will help me earn upgrades, lounge access and free checked bags all year. If I had transferred my points to an airline program, I’d miss out on 20,000 miles and all the status credits.
And unlike using points in most frequent flyer programs, even if you DON’T have all the points needed, you can use them to cover some, most or all of the ticket price when booking through your credit card travel site. You just pay whatever balance is left in cash. So if the ticket is $1800, and you only have 90,000 points you’ll just pay whatever the remaining cash balance is. Using Chase Sapphire Reserve you’d end up paying $450 in cash after your points cover $1350. Even on “free flights” booked through frequent flyer programs, some airlines charge fees up to $450 and you get nothing back in return. Terrible! Using your credit card travel site eliminates these fees, allowing you to literally pay zero for a round trip business class -and earn points back. That’s great stuff.
Must Do
Before you transfer your points over to an airline to redeem an increasingly difficult ticket to book, you should look up the cash cost of the ticket, checking if it would be better to just use points towards the cash cost. We’ve seen business class fares from Europe to Asia under $1000, from the US to Europe under $1500 and of course, awesome deals in economy too. While some nerdy bloggers may tell you that you’re not getting the “maximum CPM” this way, you’re cashing in for a great experience and earning valuable future travel rewards, rather than nothing. Some tickets, such as first class will almost always make more sense to transfer your points to an airline loyalty program, but with so many good deals around these days, it’s crucial to look and see if you’d actually be getting better value by just booking through your bank’s travel site.
Have you taken advantage of this emerging way to redeem points?
Featured image courtesy of Air New Zealand.
Yep. Ever since the AMEX Platinum card started with the 50% now 35% back feature its a no brainer for me. We pay lots of invoices that are $5k up so there’s an additional 50% MR points earning. Put those two together with cheap first and business tickets has been awesome. I would have never used miles for first class ticket to Vegas. $300 first class from LA. 30,000 MR points divide by 1.5 is 20,000 points. 35% back from 30,000 is 10,500 points. So I end up spending 9,500 net for a $300 ticket. That blows away the CPM metric people use for mileage redemptions except I earn miles as you pointed out. Plus I book one ways for airlines that have lounges at each airport that I can access with the card. Beats the hell out of the Chase Reserve for any business owner with large invoices.
I have. I wanted to take my mom to Hawaii on the anniversary of my dad’s death (leave on the day he died and return 7 days later on the day he was buried) so she wouldn’t be too sad. I fly United Airlines for work every week so I could easily earn enough miles to book one round-trip ticket in business class at 190k miles. However I could not earn enough miles from flying for 2 tickets, and I definitely wanted to fly in business class (nonstop on lie flat seats so my mom could have that experience). I did, however, have a ton of Chase Ultimate Rewards points, and the cost of the flight was about $2500 or 167k points, so it was cheaper to pay with points than to transfer them to the airline. I realize that this is still an enormous amount of points and miles to use, but our dates were not flexible so we couldn’t look for cheaper dates. Anyway, I was glad to save 23k points!
Really great article. I think most people get intimidated by the expert level nuances of booking an award ticket that many sites present. People lead really busy lives, and if this isn’t a full time hobby, then the simpler the better. That’s our take at Travel Freely with our card management system, and I appreciate the similar message in this article. Take the easy wins that are easy to book. – Zac
The only problem with this is that sometimes the airline portal may not pick that wonderful bargain flight, instead sometimes choosing a refundable version, which would defeat the purpose. Remember the free F class Amex flights? Same principle.
I use the southwest card for personal use, use the online petal for any purchase possible to earn bonus points with the goal of earning a companion pass (wife flies free). We then use points to book my ticket and she comes along, not sure if there’s a way to maximize further than we are currently. I realize there is no first class or lounges.
Got the capital one dusk card for my business, 2,% cash back is nice with no annual fees.
I’m sure there are better ways to maximize, this just works well for us given that we only travel a few times a year max.
I love this post and I couldn’t agree more. I have done this twice over the last couple of years. I’m more than happy to use 5,000 extra Chase Rapid Rewards, booking through Chase, to fly at a convenient time instead of transferring my Rapid Rewards to an airline that has me flying out before dawn. I’m new to the points and miles scene, only been serious for the last couple of years, but at the end of the day I play points and miles for my vacations, so why would I inconvenience myself and family?
Hi – any similar options in Europe / UK?
Thx
+ 1, Gib?
One difference to consider if you need flexibility for travel booked in advance……if you have airline status you can often change Award ticket dates without penalty, but if you book a ‘paid’ ticket the penalties can often be around $400 per ticket to make changes. If your dates are locked, then I agree with this approach.
Yes! I just booked 2 round trip tickets from Des Moines to Honolulu. 114,000 points. I thought about transferring my Chase points to United, but all flights would have gone through either Chicago or Denver. We are flying in February and didn’t want to risk snow delays. So I used the Chase portal and booked American. It went through Phoenix. It was completely free (100% points)! I couldn’t be happier.