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Credit Card Reward Programs : What You Need To Know

by / 0 Comments / Mar 23, 2015

Over the years I have racked up millions of miles and points with a credit card reward program. There are numerous ways to earn these frequent flyer and reward points: through things like credit card sign-up bonuses, paid flights and normal spending. But it’s a whole another set of skills that is needed to actually redeem these points.

When I first started watching my airline miles balance climb into the hundreds of thousands I was pretty happy. But it wasn’t until I tried to actually use these points that I realized how difficult it can be to redeem frequent flier miles earned in a credit card reward program for travel.

Airlines and hotels don’t make much money off credit card with rewards travel so they don’t always have a lot of incentive to offer these awards. We’ve all encountered things like black out dates, low award availability and high fees when redeeming points and miles. These can be a pretty big nuisance, but if you accrue points with a transferable points program you’ll have a lot more flexibility and options when it comes time to booking.

The Big Four Credit Card Reward Programs

There are currently four major transferable points networks: Chase Ultimate Rewards (UR), American Express Membership Rewards (MR), Starwood Preferred Guest Program (SPG) and the newest addition to the family, Citi Thank You Rewards. Each network has their own set of transfer partners and it’s safe to say if you’re a member of all four of these programs, you’re going to have nearly unlimited options when it comes to redeeming points and miles.

Flexibility with Redemption

The best part about these transferable points networks is that they allow you to hoard your points now and decide where to redeem them later. This way, you can be more flexible with your travel redemption and you’ll also have a wide variety of hotels, airlines, and even trains to choose from.

You’ll normally get the best credit card reward program redemption rates with airline and hotel partners but with networks like Amex MR and Chase UR you can also redeem the points for gift cards or even cash back. There’s really something for everything with these transferable programs.

You do have to be careful though since once you decide to cancel the card you will forfeit any remaining points in your account. Unlike airline cards, these points programs are tied to your credit card account. So make sure you spend all your points before canceling.

Perks of Transferable Points Programs

Racking up miles with an airline card is always a good thing but what if that airline doesn’t fly where you want to go or doesn’t have any availability? That’s where a transferable points program comes in handy because it will really expand your booking capability. Here are some of the best perks:

  • How Does 30 Transfer Partners Sound?
    Starwood Preferred Guest is known for some pretty valuable redemption rates on luxury hotels around the world but they also allow transfers to any of their 30+ airline partners. In addition, you’ll also get a 5,000 point bonus for every 20,000 points you transfer.
  • Need a Top Off?
    Sometimes you’ll encounter situations where you only need 5,000-10,000 more points to reserve award travel. Transferable points programs can come in handy here too since they can help you top off any of your airline or hotel points balances.
  • Share Points
    Amex won’t let you share points anymore but Chase and Starwood will as long as it’s between family members, spouses or members of the same household. You may want to exercise some caution though with transfers to persons outside of family members and spouses since there have been reports that Chase is cracking down on these unauthorized transfers. Once you get the points into your airline account though for example, you’re free to book flights for whomever you want.

My Favorite Program: Chase Ultimate Rewards

We’re not going to break down every points program in this article but we can tell you why Chase UR is our favorite. Chase actually offers the fewest partners but they are also some of the most valuable.

I fly domestically a lot so I really value Chase’s partnership with Southwest. Points transfer at a 1:1 ratio and you can generally get around 1.5 cents per point with Southwest. United is another good partner since they don’t charge fuel surcharges on domestic and international flights and they are a member of the Star Alliance Network which means they have lots of destinations and availability.

Chase has a few hotel partners but your best redemption rates will come with Hyatt. Hyatt has some of the nicest properties around the world and they also offer no black-out dates. So as long as a room is available, you should be able to book it with points.

My favorite part about Chase UR points though is that transfers occur instantly with almost all partners. So if you want to snatch up award availability you won’t have to wait around for your points to transfer.

About the Author

Laura Agadoni has a background in credit union marketing, and her articles appear in various financial publications such as The Houston Chronicle's small business section, The Motley Fool, RISE Blog, The Penny Hoarder, San Francisco Gate's real estate section, Zacks, Opposing Views, Arizona Central's small business section and The Nest's budgeting money section. www.lauraagadoni.com

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