In the coming weeks we’ll be looking at different types of credit cards and their reward programs, with an aim to introduce you to those frequently used by travelers. Such a topic can be divided into three categories: transferable programs, airline and hotel branded cards, and fixed point value cards.

Category #1 – Transferable programs including:

Category #2 – Airline and hotel credit cards earn miles/points for that specific airline or hotel. For example, the United Explorer Card earns purely United miles. And the Marriott Bonvoy Bold Credit Card earns purely Marriott points.

Category #3 – Fixed point value cards are more akin to cash back cards. The points you earn for spending on the card can be redeemed at a fixed rate. Generally the redemptions are a statement credit or a purchase “eraser.”

Let’s move about the cabin and familiarize ourselves with these categories.

Category #1 – What are “transferable points”?

Transferable points, such as American Express Membership Rewards, allow you to transfer your credit card points to a variety of airline and hotel partners. Upon transferring Amex MR points to a partner, you will thus have airline miles or hotel points which can be used to book award flights or nights.

Here is an example using a transfer partner of American Express membership Rewards (Amex MR). In the screenshot below we are taking 30,000 Amex MR points from our credit card account and transferring them to Aeroplan, Air Canada’s mileage program. As the transfer ratio is 1:1 we will end up with 30,000 airline miles in our Aeroplan account. We can then use those miles to book flights on Air Canada and their partner airlines.

Heads up – transfers are not reversible!

Transfers to airlines and hotels from Chase, Amex, Citi, and other transferable programs are final. Once you move transferable points to an airline or hotel, it is not possible to transfer those points back to your credit card account.

Crucially, this includes if the flight or hotel is later cancelled. Those points will stay with the airline or hotel program. For example, if we send Amex MR points to Aeroplan, and then we cancel (or the airline cancels) our ticket, those points will remain in our Aeroplan account. Those points will not be returned to our Amex account.

Only in extremely rare circumstances, such as a program error, have we seen points returned to the credit card program.

Hence it is generally advisable to only transfer points when you have a specific and imminent plan in mind.

How are transferable points beneficial?

One key benefit is that you have the option to transfer your points to many different airline and hotel partners. This as opposed to earning just one type of “currency,” such as earning purely Delta miles using a Delta credit card.

Options to utilize different loyalty programs comes in handy for a number of reasons. For a real life example, let’s say you want to fly from Atlanta to Rio de Janeiro, Brazil to ring in the New Year. Delta offers a direct flight on this route.

Rio de Janeiro by K2

If you had a Delta-branded credit card and thus earned only Delta miles, it is going to set you back a cool 350,000 miles one way to fly Delta One lie-flat business class:

But by earning transferable points, such as Amex MR, you can transfer just 45,000 points to Amex’s partner Virgin Atlantic and book the exact same Delta One lie-flat suite:

That’s 305,000 less points for the same exact flight!

The same idea can apply to economy flights as well. On the same route as above, the lowest cost for any date if booking with Delta miles is 39k:

Once again, by having the flexibility of transferable points, we can send just 22.5k Amex MR points to Virgin Atlantic in order to book the same flight for less:

Earning points with a transferable program like American Express is a good idea for any traveler. You’ll have more options and a much better chance at getting great value.

Category #2 – Airline and Hotel Cards

Airlines and hotels around the world offer their own unique credit cards. From the Avianca Vida Visa to the British Airways Visa Signature to multiple Southwest and United cards among many more.  It’s the same on the hotel side, including Marriott, Hyatt, Hilton, and others.

As opposed to transferable points, which can be transferred to a variety of airlines and hotels, airline- and hotel-branded cards earn points in that particular program only.

How do I tell these cards apart from other cards?

It is usually quite easy to identify these cards – they’ll have the airline or hotel branded right on the card. Such as the Chase United MileagePlus Explorer:

Here’s an example of a hotel-branded card from Hilton. The Hilton rewards program is called Hilton Honors.

Achtung!

There are two key points to understand with airline and hotel cards.

1. Airline- and hotel-branded cards earn points in the airline/hotel program they are branded with.

2. Airline- and hotel-branded cards do not earn transferable points like Chase Ultimate Rewards or Amex Membership Rewards.

With respect to the first point, it’s pretty straight forward. The airline or hotel you see on the card is the program with which you’ll earn points. If it says United, you’ll earn United miles. When you see Marriott Bonvoy, you’ll earn Marriott Bonvoy points. When it says Delta, you’ll earn Delta miles. You get the idea.

The second point is critical to make clear. Though you may see Chase or American Express or Citi noted on the card, airline- and hotel-branded cards do not earn Chase/Amex/Citi points.

Above, we showed a picture of the Hilton Honors card. In no less than two places on the front of the card, you can clearly see American Express. But when the card carries airline or hotel branding, it does not earn American Express Membership Rewards points. It will only earn points in the airline or hotel program it is associated with.

Thus, in the case of the American Express Hilton Honors card, it earns points only in the Hilton Honors program.

Similarly, Chase issues a number of airline- and hotel-branded cards. In the example above we shared a picture of the Chase United MileagePlus Explorer card. As it is branded with an airline, the card thus earns miles directly with said airline. It does not earn Chase Ultimate Rewards points.

Here is a Chase card, branded with a hotel – IHG (InterContinental Hotels Group):

The IHG program includes hotels such as Regent, Kimpton, Crowne Plaza, and Holiday Inn, among others.

So does this card earn Chase points or IHG hotel points?

If you answered IHG hotel points, you are spot on.

Another way to think about it – if you see an airline or hotel program on the card, that trumps everything else on the card. You’ll earn points directly with the airline or hotel program which you see on the card.

Top Tip: If you are in the market for a hotel card, the aforementioned IHG Rewards Club Premier card has its best ever offer – 140,000 points after spending $3,000 in the first 3 months. This comes with a free award night after each account anniversary year among other benefits. More details at this link. Miles to Memories has details on another offer floating around for this card.  

Naturally, the points you earn with an airline or hotel card can then be used to book award flights or hotel stays within that program.

Why would I want to only earn points in a specific airline or hotel program?

In a word – benefits.

Airline and hotel cards generally come with benefits which the cardholder, and in some cases companions traveling with the cardholder, get to enjoy. The exact benefits vary from card to card so be sure to understand each offer thoroughly.

Many airline cards, for example, will come with benefits such as a free checked bag and priority boarding. These generally apply to the cardholder and up to three or four others who are traveling on the same reservation as the cardholder. Airline cards may also offer discounts on in-flight purchases such as WiFi or food and drink.

The United Explorer Card, for example, comes with the aforementioned benefits as well as:

  • Two one-time United Club lounge passes per year
  • Access to additional award space inventory
  • $100 Global Entry or $85 TSA PreCheck credit

That is a lot of additional benefits for a card which has a $0 annual fee for the first year and $95 per year thereafter.

Likewise on the hotel cards, you’ll get extra benefits such as late check-out, free parking, free upgrades, etc. Again, the benefits will vary from card to card.

Take The World of Hyatt Credit Card, for example. In addition to earning 9 Hyatt points per dollar for Hyatt stays, you will also get:

  • World of Hyatt Discoverist status as long as the account is open and 5 qualifying nights are booked each year
    • Includes late check-out, room upgrades, bonus points, waived resort fees, and more
  • One free award night at a category 1-4 hotel or resort each card member anniversary
Andaz Scottsdale Resort and Bungalows, a Hyatt property

The big takeaway here is that you get these airline or hotel benefits just by having the card. You do not need to hold any sort of status with the airline or hotel program. This can add a lot of value for those of us who would otherwise not be able to achieve status.

Category #3 – Fixed Value Cards

Our third category of cards earns points which have a fixed value. The value-per-point is fixed, such as 1 point equal to 1.5 cents, but varies depending on the card.

This category covers a wide range of travel credit cards; from cards with no annual fee and few extra benefits, to more premium travel cards with higher annual fees and more benefits.

There are many cards of this nature. A couple examples of such cards:

  • Capital One VentureOne Rewards – no annual fee card earning unlimited 1.25 points per dollar on every purchase. Each point is worth 1 cent towards erasing travel purchases, or half a cent each towards a statement credit.
  • Bank of America Premium Rewards – $95 annual fee card earning 2 points per dollar on travel and dining, and 1.5 points per dollar on all other purchases. Each point is worth 1 cent.
  • US Bank Altitude Reserve – $400 annual fee card earning 5 points per dollar on prepaid hotel and car rentals, 3 points per dollar on all mobile wallet purchases, and $325 in annual statement credits towards travel purchases. Each point is worth 1.5 cents.

Most often, these points can be redeemed as a statement credit or to “erase” previous purchases.

A statement credit is exactly that – you’ll be able to choose how many points you want to “cash out” towards a credit on your next statement. If you hold a card where each point is worth 1 cent, then you can choose to redeem 10,000 points for which you’ll receive a $100 statement credit.

Some cards offer a purchase “eraser” whereby you select an applicable purchase that you’ve made and apply your points towards that purchase. Thus you “erase” some or all of the amount you’ll have to pay.

Most cards have a minimum amount or specific level of points needed per statement credit or per purchase eraser. Check the details of each card.

Why would I want a fixed value “cash back” card?

Among other arguments, there are two major reasons these cards can be very useful in your portfolio.

  1. Many such cards do not have an annual fee or have a low annual fee. Many folks starting out in the points and miles game may be sensitive to paying annual fees. Not to mention, it certainly can take some time to learn the ropes and plan out your credit card strategy. So these cards can be a great introduction into this arena. In fact, this is exactly how we, K2, got our start. Many sunsets ago, we picked up the Barclaycard Arrival World MasterCard which is no longer available. It was a no annual fee card which helped us erase hundreds of dollars off an airfare purchase. We were intrigued to say the least.
  2. These cards are very useful to fill any voids in your credit card spend which are not covered by other cards. Or maybe you do not spend enough on, say, restaurants to warrant having a card for that purpose. These cards can be very helpful to maximize points or cash back earnings.

Top Tip: There are cards with no annual fees which can earn transferable points. Generally, they will need to be paired with a transferable points-earning card. You’ll just need to transfer the rewards earned from the no-annual fee card to the transferable points-earning card. Examples:

Point and Mile Expiration

An interesting detail to keep in mind: Transferable points (Membership Rewards, Ultimate Rewards, etc.) generally do not expire as long as the account is open and in good standing. The same is true for the third category, fixed value cards. However, points earned via airline- and hotel-branded cards will be subject to the expiration policy of the particular airline/hotel program. That also holds true once you transfer points into an airline or hotel program.

On the contrary, when you cancel a transferable point-earning card or a fixed value point-earning card, you will lose any leftover points if you don’t employ a strategy to keep them in some capacity (more on that to come). Canceling an airline or hotel card, however, will not affect the life of those miles. Once you earn an airline or hotel point, they are subject to that loyalty program’s expiration policy.

Final Approach

Popular credit cards among travelers can be broken down into three major areas: transferable programs, airline and hotel cards, and fixed value cards.

There are pros and cons to just about every type of card, all of which will be very personal to each user.

In the coming weeks, we’re going to be diving into more specific detail about these reward programs. We’ll start with transferable points, taking a look at American Express Membership Rewards in the next article.

Top Tip: Sarah Page, the owner of MileValue, is an expert in the area. She offers free personalized credit card consultations to help analyze your needs, travel goals, and all the details. In this day and age of strict application rules and Big Brother shutdowns, the smart approach is to have short- and long-term strategies. From beginners to veteran travelers, you should routinely assess your portfolio and strategies. You can get in touch with Sarah Page via the “Services” tab at the top of this page or by clicking here.

What are some of your considerations when looking at credit cards, and why? Let us know in the comments below.

Cheers and earn on!