Travel Hacking: Reward Points are NOT all Equal

Trying to understand reward points? If you are just getting started check out our blog titled What is Travel Hacking?

One of the big things to remember when starting out is not all miles/points are created equal. A big key to understanding what you need is understanding where you want to go. To understand why this is important read our blog article Travel Tip: Where do you want to go? Some points are cash back on travel purchases, some are points for a specific hotel brand or airline, and some are points to a travel agency through the credit card company. The best can do all three.

The best example of these to give are the Barclays Arrival or Capital One’s  Venture card that you probably have seen in their heavily pushed commercial.  These are only worth a penny per mile.  When they say you are getting two miles per dollar.  You are getting two cents back per dollar.  Where this can be good, you can get this back from a no annual fee cash back card that does not lock you towards travel.  I do have the no annual fee (no longer available) Arrival card and use it towards credit for taxi’s, shuttle buses, or hotels, such as the one we use in Cancun, that does not have a loyalty point program.

When you can use their own loyalty points, you can usually get some of the best deals.  One of the biggest drawbacks is that the one company owns that ‘currency’.  They can change redemption rates on you, sometimes with no notice.  So you could be saving for one to two years, just to have them increase the redemption cost right before you are ready to book.

American Express and Chase have these as an option for some of their cards.  This is like a concierge service also.  You can redeem points through their travel agency and get 1.25-1.5 cents per dollar.  Some of the benefits also at this time is they also can help if there is issues during the trip.  It isn’t travel insurance, but they can help with rebooking due to flight cancellations, etc.  They also have options to book hotels and flights that do not have loyalty programs.

I will use the Chase Ultimate Rewards Program as the example for the best reward point hybrid.  This is my key to my current travel due to the flexibility it offers.

This reward card allows you to use your reward points with a cash back feature. This is great so if you change your mind and do not seeing travel in the future due to a change in plans.  Unlike some travel point cards, you do not have to book travel in order to get the cash back.

The second option you have with this reward card is you can transfer to multiple partners.  For airlines, you can transfer to Southwest, United and seven other airlines throughout the world.  For hotels, you can transfer to Hyatt, Marriott, and IHG (The full family of Holiday Inn brand hotels).

An example where this comes in handy is when I am booking hotels in Milwaukee for flying out on one of my Vegas trips.  The cost for a room at the Hyatt, where you can see the airport from your window, is $110 a night or 5,000 Hyatt points.  If I redeem through the Chase Travel portal, it would cost me about 8,800 points but if I transfer the points to Hyatt from the same account first, it costs me 5,000 points.  That is almost worth $50 in travel redemptions I am saving by doing that.  I do not have to decide either until redemption on where I want to transfer those points until I need them.  Some transfer partners are immediate, where others could take up to 2 days.

The third option this cards allows is booking through their travel portal.  This does give the options for some better options also.  One of my friends has been doing more out of country travel due to Taekwondo.  She has utilized this option for many of her trips to try to get options for flights through airlines she would not have had the dedicated points for, along with hotel stays that may not have locations in the United States.  Also this does give the option, if you don’t have enough in points that allows you to pay the difference.  It helps reduce the cost for some of the more expense trips that some people may be looking at taking.

When starting out in travel hacking, it may seem like it will take forever or that we are only talking about pennies.  I look at it more like a drop of water from your house gutter on the sidewalk.  Over a period of time, that simple water drop will leave a hole even through the hard cement.  Travel hacking gets easier over time. Having some of these options to even supplement the cost of your next trip will be beneficial.  Stick with it and those small savings items will add up quick. You will be seeing the benefits in no time at all.