Points and miles are assets. At first consideration, this statement may seem equal parts ridiculous and understandable. Are those frequent flyer miles you slowly accumulate or hotel points you periodically rack up really worth something? Or, are they just the play money in an elaborate game cooked up by the brands that issue them? Well, both can be true. Without getting too much in the weeds, the companies that issue them treat them as a liability on their balance sheet, so there is certainly the expectation that they can be used as an asset for redemption of something else of value. I fully subscribe to this, but through my journey, I have learned and proven that transferable points are truly valuable assets to have in their game of travel rewards and brand loyalty.
WHAT’S IT ALL ABOUT?
Much more is to come on unraveling the complex world of credit card rewards, but suffice to say, the key categories here are cashback, points, and miles. I would say cashback is pretty self-explanatory and everyone and their mother has produced a cashback credit card. Maybe you’ve also heard of Delta SkyMiles or Hilton Honors points? American Airlines AAdvantage miles? But, do American Express Membership Rewards ring a bell? Chase Ultimate Rewards? I know I’m starting to lose people now.
Miles were first created to reward loyal travelers, mainly business travelers, with a system to reward them with occasional freebies. Credit cards hopped on the scene later on with co-branded cards and eventually, hotels and more joined the fun. Again, much more to come on this down the road.
What’s the point? Get it? The point.
In an increasingly competitive market, brand loyalty is the difference between success and failure. If an airline can offer you, the traveler, some perks and the periodic free flight in exchange for you being loyal and spending thousands of dollars with them, they’re going to take it. But, do you truly have to be loyal to one brand? Enter transferable points.
WHY ARE THEY A VALUABLE ASSET?
Flexibility
For sake of consistency, let’s stick with Chase Ultimate Rewards. How are they acquired? Through countless credit cards offering varying amounts of return on your spend. How are they redeemed? For a statement credit or buying gift cards or merchandise. For booking travel through their online portal. Each option carries its own redemption value, but for the most part, these points can be used at 1¢ per point, which means 1,000 points equals $10.
More and more, non-transferrable points and miles, such as Delta SkyMiles for this exercise, are becoming flexible as well with redemption options for hotels, rental cars, magazines, and more. So, let’s move on to the biggest reason for transferable points – outsized value.
Outsized Value
I previously mentioned that you can be flexible in redeeming your Chase Ultimate Rewards for roughly 1¢ per point. This can vary with how you are redeeming and with what credit card you pocess, but without transferring the points, you’ll top out at 1.5¢ per point. Well, the flexible redemption option alluded to, but not mentioned yet, is to transfer your rewards to a transfer partner. For our domestic American travelers, you’ve probably heard of JetBlue, Southwest, United, Marriott, Hyatt, and IHG. Possibly you’ve also heard of Emirates? British Airways? Air Canada?
While the World of Hyatt program is the darling Chase transfer partner in the points and miles community, my example for outsized value falls within the Air France-KLM Flying Blue program.
The whosie whatsit program?
Air France and KLM (Royal Dutch Airlines), along with a few other small airlines comprise this valuable program that is also a member of the SkyTeam Alliance, offering partner booking options with other airlines, such as Delta and Virgin Atlantic.
Mrs. Common Cents Kyle and I had the privilege of taking a 10-day, 7-country road trip through Western Europe last year purely through the use of points and miles, as well as other cash earning hustles and hacks. Yeah you guessed it, more to come on this later.
Our return leg of the trip took us from Munich to Washington-Dulles with a layover in Amsterdam. The cash price for each economy ticket ended up being $1,667. I assure you over $3,300 was not in the budget for us, but with the usage of rewards points, it became attainable. At the price of 34,000 points and $406.56 of taxes and surcharges, we made it happen.
Factoring in the $406.56 of surcharges and fees, the 34,000 points were still able to produce a value of nearly 9¢ per point. Just a little better than the 1-1.5¢.
Outsized value.
NEXT STEPS
While I contend that transferable points are an extremely valuable asset, I will not persuade you that they are for everyone. When considering entering or proceeding with the world of travel rewards, it is essential to have a plan and understand your goals. Earning and using points and miles takes some work, but the rewards can produce unbelievable value.
If you are interested in traveling more using travel rewards, please feel free to contact me for help in getting started.
