If you’re new to the miles and points world, it can seem big and complex---maybe a bit too complex. This series' goal is to clarify the different between airline miles, hotel points, and other rewards points and how best to use them.
Noob Guide to Miles & Points Series Index
- Noob Guide to Miles & Points: Part 1 - Introduction to Rewards Points
- Noob Guide to Miles & Points: Part 2 - Understanding Airline Miles
- Noob Guide to Miles & Points: Part 3 - Understanding Hotel Points
- Noob Guide to Miles & Points: Part 3 - Understanding Flexible Bank-Points
- Noob Guide to Miles & Points: Part 4 - Understanding Cash Back & Travel Bank-Points
With a little groundwork and understanding you''ll be on the road to earning the right miles and points for you. If you’re already a seasoned veteran and know what points suit you best, this post probably won’t serve you apart from being a refresher.
Credit cards are a powerful way to travel for less
To start, if you’re reading this right now it’s likely because you're already savvy that credit card companies offer lucrative welcome bonuses which can get you a lot of free travel. From my expereince this is THE BEST way to travel for less and take trips that you normally could not afford.
Many noobs (read: beginner) can easily be confused by the terminology and crazy acronyms that float around the miles and points world. I’ve broken down this series into several posts to try to keep things simple and short---hopefully it will be a quick read.
Miles Vs. Points Vs. Cash Back
Each rewards credit card is branded with a specific rewards earning system. Some credit cards will earn miles and some will earn points. Often when you sign-up for a new credit card you will earn a large welcome bonus in rewards---either miles or points.
What Are Airline Miles, Hotel Points, and Flexible Bank-Points?
There's a big difference between what type of rewards currency you earn---either miles, points, or cash back. Not only is the type important, but also the airline you earn miles with since not all airline miles are created equally. This goes for hotels and flexible bank-point as well. More on this later.
To make things even more confusing the terms miles and points is almost interchangeable among these rewards programs. Generally credit cards earn these 4 types of rewards:
- Cash back - earn money directly back in your pocket.
- Airline miles/point - use to redeem for award tickets/free flights.
- Hotel points - use to redeem for free reward nights at hotels.
- Bank-point miles/points - use to cover the cost of travel (statement credits) or transfer to hotel or airline miles/points programs.
Understanding how each of these redemption structures works is key to maximizing the value of your miles and points. The good thing? It’s actually quite easy once you get going and you'll quickly end up earning miles and points from various programs to diversify you earning strategy. This means you will likely be earning many different types of miles and points.
In short, most airline credit cards earn miles, most hotel credit cards earn points, and flexible bank-point and cash back credit cards will also earn points.
Earning airline miles is one of the easiest ways to save money on flights
However, sometimes banks will mix-up what they call their rewards currency. Some call their rewards points miles (e.g. the Barclays Arrival card earns miles) and some airlines call their rewards miles points (e.g. Southwest Rapid Rewards Points). Of course this makes things more confusing than they have to be, but it is the case.
Redeemption Basics
One other point to clarify before we move forward is that most points and miles cannot be combined or transferred UNLESS they are flexible bank-points earned directly with a bank rewards system (less a few exceptions). In general you cannot transfer or combine miles between different airline and hotel programs. This means if you have United miles you cannot transfer or redeem them with American Airlines, vice versa.
The 3 big airline alliances
You can only redeem airline miles with the respective airline frequent flyer program, but this doesn't mean that you can only fly on that airline. Most major airlines are part of an airline alliance---Star Alliance, Oneworld, and SkyTeam. In fact, if you have airline miles with one airline in the alliance, you can redeem them for flights on any other airline in the alliance. This makes it possible to earn airline miles with just a few major frequent flyer programs and book award tickets to almost anywhere in the world on any airline.
Flexible bank-points can be transferred to various airline and hotel programs. This is the most common instance you will hear someone talking about transferring miles or points. Flexible bank-points have several redemption options, but in general you will get the most value from them when you use transfer them to a airline or hotel partner.
In the next few posts of this series we’ll go over each type of rewards miles or points, the best ways to earn them, and how to use them.
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