Credit Card Points and Miles
Okay okay. This is a fun one. Best to start with a real-life example. Here is my actual Africa itinerary (I leave to meet Cara on Sept 20th and am quite excited).
Nick's Africa Flights
- Phila to Tanzania -- 40,000 American miles + $42. The cash price would have been $1024.
- Zanzibar to Egypt -- 17,500 CapitalOne Miles transferred and booked with Avianca Airline + $83. The cash price would have been $1054.
- Egypt to Morocco -- $275 cash ticket booked. (50,000 Miles + $166 would have been a terrible use of miles)
- Morocco to Phila -- 30,000 American miles + $89. The cash price would have been $1982.
All flights per person in economy/premium economy, most with (unavoidable) layovers. Business class tickets are harder to find and cost more.
Just from reading the routes above, hopefully, you took away the following:
- Paying a grand total of $489 out of pocket vs. $4,335 is huge savings for the same seats
- It is possible to transfer credit card points to airline loyalty programs, then book an award ticket using that airline
- Points/Miles are not always the most 'cost-effective' way to book; paying cash may make more sense
Playing the Game
Although the above trip and savings both sound awesome, I should warn you that it's a decent amount of work to 'play the game.' Accruing the points and miles for this trip took me years to collect, mostly from opening credit cards and getting the signup bonuses after hitting a spending threshold. For example, since Philadelphia is an American Airlines hub, gathering American Airlines miles is a great idea for locals. Over the past five years, I've hoarded about 150k miles from three American Airlines credit card sign-up bonuses. Two bonuses were from the exact same Citi credit card I opened, got the signup bonus, and closed at the 11-month mark before the annual fee hit.
Credit card rewards points from Amex, Chase, Citi, and other banks are transferable and thus more flexible than airline/hotel points, making them the most valuable points currency you can accrue. Why would you want to transfer points to an airline/hotel partner? The short answer is that it's a better use of those points. For example, instead of booking a 20,000-point flight through the Chase travel portal, you may be able to transfer 10,000 points to one of Chase's airline transfer partners to book the exact same ticket. This value amplifies quickly with business class seats. To illustrate how big this world of partner transfers is, see the diagram below. Interactive version here. The diagram only covers airlines -- you can also transfer points to Hotels, although that's generally a worse use of points. Looking at the diagram, Marriott's loyalty program looks like the best because it has the most transfer partners. However, transferring 3 Marriott points typically leaves you with 1 point in whatever airline you're transferring to (a bad ratio of 3:1). 99% of the other programs are a ratio of 1:1, meaning that 1,000 Chase ultimate rewards points transferred to United Airlines become 1,000 United miles.
For hotels, the only truly great redemption option across all programs is transferring Chase points to Hyatt hotels. My Dad and I used this method on our 2019 cross-country trip and stayed in very solid, primarily brand-new hotels (Hyatt Places) with excellent breakfast buffets. The nightly cost was typically only 5,000 Chase points (worth $50), which included all taxes and fees for two people. Crazy good value. I would transfer the Chase points to Hyatt, then immediately book a room on Hyatt's website. No need to talk to any humans.
If you want to play this game, the entry fee is a credit card that can transfer points to other programs. No $0 annual fee credit cards have this ability, so you would need to pick between the ~$95 annual fee cards and the premium $400-700 annual fee cards. Cards with annual fees aren't necessarily 'bad' as long as you get more benefits than the annual fee costs. In short - the card should pay for itself. Picking a card is a whole different ball game, and I'm happy to recommend one for you because I know wayyy too much about all this stuff. Just ask. Easily the best starter travel card is the Chase Sapphire Preferred ($95 annual fee), because it's easy to use and understand. That's probably not the best first credit card, only the best first card for playing the points/miles game. For a first credit card, something with a $0 annual fee is a smarter option.
The Best Resources
- www.uscreditcardguide.com -- Forgive the generic name and the older web design, but this blog is the only place that tracks credit card sign-up bonus offers over time. It also has a consistent format to compare one card to another. Subscribe to keep tabs on the best credit card sign-up bonuses. I got a 5 free night offer on a Chase Marriott card this summer that can be used at any Ritz Carlton (usually $1000/night).
- www.point.me - A subscription-based points/mile airline search engine. I paid $12 for one month of access to search and book our Africa flights. It's the best resource I've found for booking airline award travel, hands-down. The similar (but free) award flight search engine called awardhacker only finds 'theoretical' bookings, not 'actually available' airline seats like Point.me does.
- www.awardwallet.com - This site is basically a paid spreadsheet that tracks and automatically updates all of your loyalty program balances. One of its best features are notifications when you have points in loyalty programs that are about to expire, and ways to avoid losing them to expiration!
- www.snowcap.me - Last but not least is a website that yours truly made to educate people about how to freeze/unfreeze your credit reports. If you apply for any credit card through my site partner, I get a pretty lucrative commission. When I applied for the CapitalOne VentureX last year (a $400 annual fee card), I got a $90 commission - for applying through my own website! There's a ton of money in credit and credit cards. It's best practice to keep your credit files frozen unless you apply to a new card, mortgage, or other credit account.
- Lindsay, Chloe, Antonio, and Garrett are still sitting on the additional $1000 in cash.
Please remember to update the google sheet detail tab when you buy/sell something. I look at the revision history each month so I can include your trade in this newsletter. The summary tab is at the bottom of this email as a picture and the live link to it is here.