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Miles and points are at the very core of travel hacking.
Clearly, the goal is to earn miles and points and use them to redeem for award travel.
However, not all miles and points are equal. So, it’s important to understand the different types of miles and points and the value each can return.
What are miles and points?
Miles and points earned from travel rewards credit cards, airlines, and hotels are a form of currency in the same way the Dollar or Euro is.
The difference is miles and points can be used to redeem for travel costs like flights, hotel nights, but also potentially things like transportation, cruises, activities, and tours.
What are the different kinds of miles and points?
There are 3 different types of miles and points, transferable, branded, and cashback.
Let’s look at each one individually to make sure you understand the differences between each type.
Transferable Points are earned with a bank credit card attached to a travel rewards program. Examples include credit cards like the Chase Sapphire Reserve or The Platinum Card from American Express.
These points are flexible and can be transferred to multiple airline and hotel partners connected with the bank’s travel rewards program.
Transferable points don’t expire as long as you have an active transferable points-earning credit card with that particular bank.
In addition, these points offer a degree of protection against negative airline and hotel award chart changes. If one particular transfer partner devalues its awards program, you still have the option to use your transferable points with a different transfer partner.
Brand-Specific miles and points are specific to a particular airline or hotel loyalty program. They’re earned from paid travel and by using co-branded airline cards and hotel credit cards like the Hilton Honors American Express Card or the Chase Southwest Rapid Rewards Premier.
Examples of brand-specific miles and points are IHG points for Intercontinental and Holiday Inn Express stays or United miles for flights on United and its airline alliance partners.
This type of travel rewards currency does not change.
American Airline miles are always American Airlines miles. Hyatt points are always Hyatt points.
Airline alliances and partners can add value, though, to your branded miles and points. For example, American Airlines miles can be redeemed for flights with their Oneworld partners.
The downside is, if an airline or hotel rewards program devalues, so does your currency.
In addition, inactive loyalty program accounts can expire after a set period of time. For this reason, it’s better to use these miles or points sooner rather than later.
Cashback Points are just that. The money you spend on a cashback credit card earns points that can be redeemed for a statement credit or cash awards.
Cashback points have a set value of 1 cent per point. In this case, 50,000 points would give a $500 return value.
Cashback rewards are simple to use, removing the need to understand airline and hotel loyalty program rules and award charts.
Which type of miles and points offers the best value?
Transferable, Brand-Specific, and Cashback miles and points vary greatly depending on a range of factors from the strength of a bank’s travel transfer partners to loyalty program perks to your own unique travel goals.
Here are 5 things to keep in mind as a travel hacking beginner.
- Successful travel hackers have a diverse portfolio with a combination of all 3 types of miles and points. But this takes time to build.
- Transferable points return an excellent value for international travelers, much more than 1 cent per point as cashback points do.
- Brand-Specific and Transferable miles and points can be a powerful duo. For example, Chase Ultimate Rewards Points transfer to United. Paired with the co-branded United Explorer card, it’s possible to earn enough points for an aspirational redemption.
- Luxury travelers preferring to fly and stay in premium classes and hotels should focus on transferable and brand-specific currencies.
- Cashback rewards are best for expenses that cannot be covered by traditional airline or hotel loyalty programs, like car rentals and cruises.
As you get started with travel hacking, it’s important to know the different types of miles and points and how each one can help you reach your travel goals.
Which type of miles and points do you earn?
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