Why Credit Card Points Are Worth More Than Airline Miles

Miles and points have unlocked opportunities to travel in luxury without breaking your wallet. There are many ways to earn miles and points, and there are also many ways to spend them. The key is that we need to strategically manage your “assets,” just like your money in the bank.

The obvious way to earn credit card points is through spending. Clearly, the more you spend, the more points you earn. In addition to spending, the fastest way to earn points is through credit card sign-up bonuses. 

Similarly, you can earn miles in several different ways, primarily by flying. Although, over the years, it’s getting harder and harder to accumulate airline miles by flying as more airlines have adopted a revenue-based business model. That means you earn miles based on how much you spend, not fly.

Let’s discuss why I think keeping credit card points makes much more sense than hoarding your miles.

Flexibility

Major credit card issuers like American ExpressCitibankChase, and Capital One have transfer partners. Each bank has its unique partnerships, although most are overlapping. These partnerships allow customers to have flexibility in terms of points transfer.

To give an example, let’s say I have 45,000 Citi ThankYou points. Since Citibank and Turkish Airlines are transfer partners, I can quickly transfer my ThankYou points to Turkish Airlines Miles and Smiles program on a 1:1 ratio. With this flexibility, the 45,000 Turkish Airlines miles can be redeemed for a one-way business class ticket between North America and Europe.

Expiration Date

Most credit card reward programs allow you to keep your points indefinitely as long as your account is open and in good standing. Depending on the terms and conditions, your miles may expire within a specific timeframe after the transfer. If the program devaluates, the miles you transfer today may not worth the same by the time you are ready to use them. So I highly recommend you keep your points in your credit card reward account unless you have a plan for immediate use.

Miles Devaluation

Frequent flyer programs constantly devaluate. The miles are getting harder to earn, and the redemption rates are getting more expensive to redeem. If you are one of those people, who like to hoard your miles and think you can use them when you “retire,” then stop right now! Your miles will never appreciate. Instead, they will depreciate over time. I’d say the healthy balance to keep is somewhere between 100,000 – 300,000 miles.

Difficulty to Earn

The days where airlines awarded you with the number of miles based on how far you fly were long gone. There are a few frequent flyer programs out there that are still using distance-based mileage earning. But nowadays, you only earn miles based on how much you spend and what fare class you purchase.

Credit card reward programs have always been a revenue-based. However, each reward program offers its unique spending bonus category. For example, Citi Prestige earns 5x on travel and dining, while my Amex Gold earns 4x at the grocery store. Not to mention, there are many credit card sign up bonuses out there where you can take advantage of. That said, I am not suggesting you sign up for credit cards if you are not comfortable and can’t afford the monthly payment.

Transfer Bonus Promotions

From time to time, credit card reward programs offer a transfer bonus. For example, recently Amex Membership Rewards program offered a 40% bonus for a point transfer to British Airways Executive Club, Iberia Plus, or Aer Lingus AerClub. Depending on your redemption plan in mind, this promotion might represent an excellent value.

Beyond Airlines

The great thing about credit card reward programs is that there are many redemption options beyond airline transfer partners. For example, you can transfer your points to hotel loyalty programs, which can then be redeemed for free hotel nights. But personally, this is not my preferred redemption choice as hotel rates are often not as expensive as airfare in a premium cabin. That said, in some cases, it may be worth redeeming hotel points for a free stay at some properties in Maldives or Bora-Bora, for example.

Never Redeem for Gift Cards

Most credit card reward programs allow and encourage you to redeem your points for gift cards. In my valuation, it’s terrible value. At most, you get one cent for every point you redeem.

Consider the same example above. If you have 45,000 ThankYou points, you can redeem it for a one-way business class between North America and Europe. It retails at $8,872!

With the same number of miles, you’ll get at most $450 worth of gift card. So you tell me which one has a higher value: $450 or $8,872.

Conclusion

Of course, you are free to use your miles and points as you like. My suggestion above is based on my valuation. Though I have something personal to tell you. If you use your points for gift cards, it will break my heart!

Credit:
JW Marriott Maldives
Google Flights

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