Why are Points so Valuable?
To understand why credit card points are so valuable let’s take a look at transferrable points earned from cards like American Express, Chase, Citi, and Capital One. Why these cards and their points are so valuable is because unlike cobranded cards like the Delta American Express cards, these banks allow you to transfer their points to their airline and hotel partners usually at a 1:1 ratio. American Express partners with 18 airline and 3 hotels. Chase has 11 airline and 3 hotel partners. Citi has 14 airline and 3 hotel partners. Capital One has 15 airline and 3 hotel partners. Having these cards with transferable points allows you to diversify you points and not put all your eggs er miles in one basket. Having cards from multiple of these banks allows you to further diversify your points.
Additionally, there are many airlines that are not in an alliance but partner with various airlines out there. What this means is that you can usually use one airline’s miles to book a ticket on another airline if they partner with them or are in the same alliance. I say usually because the airline has to have seats available for sale with miles. You can hopefully start to see the web of possibilities expanding.
On a recent trip to Mallorca that my wife and I took I transferred 144,000 Amex points to Singapore Airlines for both of us to fly from New York, JFK to Frankfurt. That part about taxes and fees earlier? Well, I also had to pay $11.20. Not too bad. For our trip home I transferred 126,000 Citi points to a South American airline not many have probably heard of called Avianca. Their LifeMiles program is phenomenal. They are a member of the Star Alliance. Now why would I transfer those Citi points to a South American airline if I was trying to fly home from Europe? Well, being that they are in the Star Alliance, I can use those LifeMiles for a flight on Swiss Airlines which is just what we did. In addition to the 126,000 miles I used, we also had to pay $199.74 in taxes and fees for both of those tickets. In my book that is a pretty good deal considering a coach ticket on the same flight would have cost over $1,000 and a business class flight would have set me back $3,500 each! 63,000 points plus $99.87 or $3500? The choice is simple.
All said and done we used 270,000 credit card points and $210.94 in taxes and fees for a roundtrip flight that would have cost $12,000. That’s the equivalent of 4.4 cents per point!
Most people are used to using their points through American Express or Chase’s travel portal to book their flights with points. That’s certainly a fine way of doing things but at best you’ll only get 1 or 1.5 cents per point towards the cost of a flight. In our case, the $12,000 worth of flights we booked would have cost between 800,000 and 1,200,000 points. My favorite way to use my points is to get outsized value for travel. It may take some time and effort to find great flights, but I find it well worth it.
