The more you travel, the less straight forward travel advice becomes. Like any great sport, points are a game of inches – and everyone is trying to gain an edge. For years, the best way to use credit card points has been to transfer them to an airline or hotel loyalty program, to receive far better value. But that’s changing, and there are many instances where it actually makes more sense not to transfer them at all. Just use them to book tickets on your credit card website!
When it comes to this game time decision, it’s all about the rebate. When you transfer miles to an airline or hotel – you earn nothing in return. You get your ticket, but you do not earn loyalty points or frequent flyer miles on your flight or hotel stay. This keeps you from earning hotel or airline elite status, which means no perks for you. But when you book using your credit card points through the credit card company, you earn points, miles and elite status as if you paid cash.
Spending Rate
Premium credit cards such as the Chase Sapphire Reserve, Citi Prestige and Amex Platinum are steadily increasing the cents per point you get when you spend your points. Whereas you used to be lucky to receive 1 cent per point of cash value, you now regularly get over 1.5 cents of value. The higher value per point, the better – so be sure to check yours out, whatever card you have.
Especially when talking about tickets in premium economy or business class, there are lots of miles and elite status points on the table to be earned. By using your credit card points towards the price of a ticket you’re able to earn all the benefits of buying a ticket with cash. You’ll earn elite status points towards future perks like free bags and lounge access, and you’ll earn frequent flyer miles for future “free” tickets.
Flexibility
The most common complaint regarding airline miles or hotel points is that you can never use them when you want to. By transferring your credit card points to an airline or hotel, you may be able to extract some incredible values, but you’ll be very limited to “when”. Using credit card points directly with your bank allows you to pick virtually any day or time to travel, and apply the amount towards the total purchase. You don’t even need enough points to cover the entire ticket. You can use them to cover just part, whereas if you use airline miles, you absolutely need enough to cover the whole thing.
Frequent Miler offered an interesting discussion on this, regarding business class tickets on Singapore Airlines between New York and Frankfurt. If you used Chase points, you’d cough up 135,000 points using Chase Sapphire Reserve for round trip business class. But in return, you’d earn up to 15,000 miles and almost the same in elite status qualification. AND you can pick virtually any date to travel. The same ticket using points would’ve cost 130,000 points if you transferred them from Chase to Singapore Airlines, you’d need to pay taxes and surcharges, you’d be limited to dates when using points AND you wouldn’t earn any miles or status points! Tragedy!
Case By Case
The correct answer for your individual needs will always be on a case by case basis. The more elite frequent flyer or hotel guest status means to you, the more often it will make sense to use points directly through your credit card program, so you can earn a rebate. If, however you’re a once a year traveler and elite status or earning enough points by flying is out of sight, you can go the other way. But one thing is for sure – you need to consider both.
How do you spend your credit card points?
I hanover booking all my flights with AMEX Plat and hoarding the points at the moment.
Some airlines, like you United have a ‘premier qualifying dollar’ spend category to make elite status. Is there a way to buy with points and gain that PQDs?
I think you make an excellent point here. I don’t have a job that requires regular flying (maybe 3-4 trips a year) but with family trips last year made AA Platinum Pro. So far this year all of my domestic flights have upgraded to first class! I love it- so trying to keep status. The idea of flying half way around the world and not getting “credit” is disturbing, so options to use points to buy tickets is appealing. I used to do this with the Citi Prestige on AA, until its devaluation. Looks like Amex Bus Plat and CSR are best options now, getting ~1.5 cents per mile. Any advice on best program to concentrate on specific to this need would be appreciated. In addition, I’m interested in buying a cheap ticket (to get miles) and then upgrading to business/first class. Airlines seem to make this challenging.