Unless you have been living in a cave in your hometown and have never left its cozy confines you have probably heard of an airline mile or hotel point. In a nutshell they are brand specific currency distributed by companies in the travel industry as a marketing tool to draw repeat business from consumers. If you use these programs as intended by their corporate overlords then you will likely see few benefits and they will rake in more of your hard earned dollars. The house wins. But it doesn’t have to be this way. There is an alternative. You can beat the house at its own game, and unlike in a casino you won’t get banned for life when you win too much.
If you have a rudimentary understanding of airline miles and hotel points you probably think there are just a couple basic ways to earn them and it might take years to accumulate enough to do anything meaningful. Take a flight, get a few thousand miles. Stay at a hotel, get a few thousand points. Sign up for an airline’s credit card and get a nice chunk of miles for maybe one trip. But after that you get one measly mile for every dollar you spend and it takes 100,000 miles for one coach ticket to Europe. This was me a few years ago. A free flight or a few stay every few years feels nice, but it is hardly life changing.
Enter the transferable point. There is a whole category of credit cards out there that earn their own special kind of currency. Maybe you have heard of some of them, maybe you haven’t. You may even have one of these cards but have never realized its full potential. Using the card to only earn one point per dollar. Or happily trading your points for less than ideal redemptions like gift cards or booking through the bank’s travel portal. Banks such as American Express, Chase, Capital One and Citi all have excellent transferable points programs. There are also several others trying to break into the market with varying levels of success.
What the hell is a transferable point you ask? The magic of a transferable point is that you can take one bank point and “transfer” it to a number of different airline or hotel rewards programs. Each bank has its own list of rewards programs it partners with, commonly referred to as “transfer partners.” So for example, United Airlines is a partner with Chase bank. So if you have a credit card that earns Chase Ultimate Rewards points you can transfer your Chase points to United Airlines. 1 Chase point becomes 1 United mile. You might ask at this point why is that any better than using a United Airlines credit card? Well, I can also take that chase point and transfer it to Hyatt hotels. 1 Chase point now becomes 1 Hyatt point. And it doesn’t stop there. Chase has a dozen other transfer partners beyond just United and Hyatt. If you earn 1 United mile with a United credit card you are stuck with only booking whatever United offers. With a transferable point you have so much more flexibility. You also have the opportunity to maximize the value you get from your points.
Another big advantage of credit cards that earn transferable points is that they often will earn you points at a higher rate than brand specific credit card such as a United Airlines card (these are typically referred to as co-branded cards in the biz). To demonstrate this we’ll use the Chase vs United example again. The two consumer Chase credit cards that earn transferable points are the Sapphire Preferred and Sapphire Reserve. They both earn 3 points per dollar spent on dining. So if you go out to eat and spend $100 on these cards you’ll pocket 300 points. 3 of the 4 United consumer credit cards earn 2 points per dollar on dining. The other earns one point. In this case the most you can earn for the same meal is 200 United miles. When you consider just the simple use case of transferring those 300 Chase points to United, you are ahead by 33% even if you are only interested in earning United miles. All transferable cards are different. Some are strong in one earning category but weak in another. Some are good but not great in every category. None of these cards are a one size fits all for every consumer. You must go through the exercise of determining which card(s) best match your spending patterns. That said, I can guarantee in most cases you will earn significantly more points using transferable point cards than you will on co-branded credit cards.
Hopefully you now have some baseline understanding of what a transferable point is and a slight inkling of how powerful they can be. In future posts we will start exploring the different programs and how to use them to start powering you to free travel.
Until next time, safe travels!