Altimtr

1st May 2013 – Global

Miles & points for beginners

For those just beginning to discover the beauty of miles & points, start here with a comprehensive roundup of the basics before moving on to our more specific, in-depth guides.

Category

  • Frequent flyer programs

Tags

  • Beginners
  • Miles

Introduction

When we speak to people who feel they aren’t getting much out of miles & points, the single biggest issue we find is that they take a passive approach. They never quite get a handle on how the programs work so their miles mostly sit idle. We don’t blame them. Miles & points get complicated quickly. But it’s precisely because these programs are so complicated that they have so much potential.

We are all free agents in a market where airlines, hotels, banks and retailers are competing for our business. They want a loyal customer base and they want to keep it. That’s great news for us because by taking an active, informed approach to loyalty programs, we can do very well in the exchange. Whether the goal is to travel in luxury, travel more often, or upgrade our parents on a transoceanic flight, it’s all possible thanks to miles and points. Like any worthy pursuit it just requires a bit of work.

Basic concepts

What are miles & points?

Miles, points, frequent flyer miles, air miles – these are interchangeable terms for the currencies companies hand out to customers as a reward for using their product. It started with the frequent flyer mile—one ‘mile’ was put into your account for every real mile you flew. Using these miles, you could get free flights. That basic idea remains mostly unchanged, except that nowadays miles are handed out for all manner of activities and can also be redeemed for just about anything. Hotel program points can be transferred to airline miles, credit cards offer miles in return for spending, et cetera.

Redemption rates, or the cost in miles or points to receive a free flight, free hotel night or whatever else you might redeem for, vary widely. Different programs use different systems for calculating points as well. The important thing to know is that the value of a mile or point is arbitrary and set by each program individually.

What is elite status?

Elite status is given out to program members for a certain amount of flying on an airline and its partners or a certain amount of stays or nights at a hotel group. The perks are usually attractive: bonus miles when you fly, upgrades, lounge access, better treatment when things go wrong, and so on.

  • There are usually different levels of status, and each level has its own set of perks. The higher tiers tend to be much better than the lower tiers.

  • In most cases, elite status must be re-acquired every year – you can’t have one good year and lock it in for life.

  • When determining elite status qualification, many programs will count total flown miles for the year as well as number of segments, with the possibility of qualifying on either. Many airlines will also count up a ‘weighted’ total of your flying activity where higher fares earn more towards qualification, and lower fares earn less or sometimes none.

  • We are increasingly seeing examples wherein the amount of money spent – as opposed to miles flown – acts as a counter towards elite status. There is some consensus that this trend will continue to spread.

  • Some elite status or partial credit towards elite status can be obtained from co-branded credit cards.

What are credit card reward points?

It’s important to differentiate between airline program miles, hotel points, and credit card points. Most of the big credit card companies have their own rewards schemes. These credit card points tend to be very valuable because they can be transferred out to a range of airline/hotel partner accounts, giving you flexibility when you want to use points. For this reason, each program and credit card product deserves a course of study of its own.

Altimtr Example: We have some British Airways points but not enough for the award flight we want. Luckily we also have American Express Membership Rewards points. A quick online process lets us convert our Amex points to British Airways points at a 1:1 ratio, and those points arrive in our BA account instantly, ready to be used for the flight we wanted.

Step one: sign up for airline programs

Some airlines have better frequent flyer programs than others and sometimes the best program for you won’t even be in your home country. That will depend on your own needs, so to start figuring this out and choosing where to earn miles, see our top ten frequent flyer programs and our guide to picking a frequent flyer program.

It’s likely you’ll want to sign up for all of the major programs if you get really serious about building a diversified mileage portfolio and taking advantage of the unique offerings of each.

Altimtr Example: We focus on American Airlines AAdvantage as our primary program, where we concentrate the bulk of mileage-earning from flying and attain top-tier elite status for the attractive benefits. But while enjoying the elite bonus miles (usually double the flown miles) and the upgrades and other perks while flying (such as eight international upgrade certificates a year), we also earn miles & points in a number of other programs which we consider secondary, such as Delta’s Skymiles or Virgin America’s Elevate. We’ll occasionally even bank points in programs we don’t use much if the opportunity arises, usually in the form of a good bonus offer for a car rental or a nice credit card bonus. That’s because there’s likely to be a use for those miles at some point down the line. In the miles & points world, we feel you can never have too many options.

Step two: sign up for hotel programs

There are far fewer hotel programs than airline programs, so it’s smart to be signed up with all of the big ones like Hyatt Gold Passport and Starwood Preferred Guest even if you don’t regularly stay at the big chain hotels. Hotel points are useful both for free or discounted hotel stays and room upgrades. They can also be used in certain cases for transferring points to airline programs.

Some of the elite status perks at the big hotel groups can also be very attractive. Even the lower elite status tiers usually include free internet and the occasional free breakfast. Being top tier tends to mean room upgrades (sometimes to suites) and other preferential treatment like free room service breakfast and extra points on each stay.

While we don’t put as much emphasis on hotel points in our travels as we do airline miles, we nevertheless love their potential for free hotel stays in some of the world’s finer properties. And while feeling compelled to stay at a drab yet expensive Sheraton just to get Starwood Preferred Guest (SPG) points is sometimes a side effect of getting involved with hotel points, if handled correctly they will prove an important part in your miles & points collection strategy.

Hyatt Gold Passport: probably the best overall program with a great range of Park Hyatts and Grand Hyatts around the world at which to use points and a dependable selection of mid-range hotels around the world in which to earn them.

Starwood Preferred Guest: a great program because points can be used at great value to reduce the cost of a stay via ‘cash & points’ bookings, and can also be transferred to airline programs at a favorable ratio for topping up mileage accounts when necessary.

Hilton HHonors: recently devalued it’s points significantly but there are many Hiltons around the world, Hampton Inn is often one of the nicer budget hotel options, and the chance to use points at luxury Conrad properties means these points are still worth something.

IHG Rewards Club (changing it’s name from Priority Club): we don’t usually bother with this one but we do like Intercontinental Hotels, their higher end brand.

Marriott Rewards: another program we don’t use much, its elite recognition is some of the worst of the majors, though there are nice properties to be found such as JW Marriott hotels.

Club Carlson: not many great hotels but occasionally runs lucrative bonus point campaigns.

There are also certain smaller hotel programs that might be of interest depending upon your travel patterns:

Kimpton InTouch Guest Rewards: good frequent guest recognition, some interesting hotel options.

Small Luxury Hotels of the World: good hotels and recognition for higher-end stays away from the world of the big chains.

Hotels.com: a bit of an outlier on this list, we really like hotels.com for stays at most independent (non-chain) hotels. Hotels.com will give you a free night after every 10 nights booked through the site at the average value of those nights. That works out to a 10% rebate on hotel stays, which is hard to beat in most cases. Note that if you book a chain hotel such as a Hyatt on hotels.com, odds are you won’t get any Hyatt points for that stay, so for the big chains we recommend booking directly with the hotel.

Step three: apply for credit cards

Once you’re signed up for all the major points programs the crucial next step to actually building up serious balances of points is to apply for a few credit cards with generous sign-up bonuses. Not everyone is comfortable with cycling through a number of credit cards a year but at the moment this is by far the best way to earn a lot of miles fast.

It’s also quite a lot of fun - assuming you can be responsible about it. If you have a good credit history and are smart about staying on top of your finances (e.g. paying balances in full and on time) you can get several credit cards a year and earn hundreds of thousands of points with minimal effort. You never even need to fly or stay in a hotel to get the points, though we obviously recommend doing that as well. We apply for 10-15 credit cards a year and our credit score remains very good.

To have a look at the state of your credit, we recommend spam- and cost-free website creditkarma.com.

To get further into the world of earning points with credit cards, see our guide on earning points with credit cards and our updated list of the top ten points-earning credit cards.

Other earning opportunities

Shopping portals and dining programs

Many airlines, hotels, and others offer online ‘shopping portals’ wherein you click from their site to an online shop and earn miles or points for the purchase. Similarly, airline and hotel dining programs allow you to register credit cards online and then receive bonus miles when spending money at participating restaurants. All of these can add nicely to mileage balances when used strategically, so it’s a good idea to click around on your program’s website to see what’s possible.

Rental cars

It can be a good idea to sign up for rental car programs for expedited access to vehicles and upgrades but when earning points for renting a car we prefer to look around at which airline is offering the most miles at the time of the rental.

Altimtr Example: A recent offer yielded 3,000 US Airways miles for Avis rentals of three days or more. That was much better than any of the other airlines were offering, so even though we generally prefer American or United miles, we gave our US Airways number when reserving the car. A few car rentals like that and the miles will start to add up quickly.

Guidelines for earning and spending

Not all flights earn miles

One of the most important things to know at the outset is that many airlines, especially those outside the US, don’t offer full mileage accrual on their cheaper fares. In some cases, you might not earn any. This can be a source of disappointment so it’s good to orient yourself and know what you’re getting into before you book a flight. Airlines tend to make this complicated – it can be difficult to figure out the “fare basis” that determines your mileage when booking and it can be difficult to know which fares earn how much with which partner airlines.

For a detailed breakdown of how to ensure your fare earns miles, see our article on booking paid flights.

The more miles, the more potential value

Miles are usually worth much more when redeemed at higher amounts, so it can pay to save up before spending. For example, the value of a 50,000-mile one-way award flight for San Francisco to London in business class is likely to be exponentially more valuable than a 30,000-mile one-way award for that same flight in economy. That’s because the fare for the business class ticket would have likely been five times higher (or more) than for economy.

Spread them around

Miles are fickle. They don’t love us like we love them. Sometimes you’ll find that all those American miles you’ve been earning won’t get you to Seoul when you need to be there. Because availability can be a tough adversary it’s great to have some United miles you can call upon in that case, for example. The more options the better so, as we mentioned at the beginning, it’s a good idea to be signed up to several frequent flyer programs at the same time and be thinking about credit card points too.

Credit card points are your friend

As already mentioned, credit card points (Amex, Chase, etc) are so useful because they are transferable to multiple airline and hotel partners, which means that they can likely help you get that flight to Seoul when you want it. See our guide to earning points with credit cards for more on that.

Always think about earning

Whenever you do anything, it’s good to stop and think about how you might earn some miles, points, or cash back from the situation. The best example is putting everything you spend on credit cards instead of cash. In addition, if you have a range of points-earning credit cards, think about which one will be best to use in any given moment because certain cards offer more points for certain kinds of purchases. For example, it’d be a shame to pay your phone bill with an American Express Platinum card and earn 1 point per dollar when paying that bill with a Chase Ink card would earn 5 points per dollar instead.

It’s also good to evaluate airfares to determine if a cheaper fare that doesn’t earn miles is really better value than a slightly more expensive fare that does. For example if one flight option stands to net 20,000 miles while another option that’s $100 cheaper will earn none, it’s useful to consider whether that 20,000 miles will be worth more than the $100 saved. In most cases, it will be. At the same time, paying $900 more for those 20,000 miles would likely be a foolish proposition – so of course a bit of perspective is recommended as well.

Mileage running

Some points enthusiasts have gained notoriety for flying solely in order to get miles & points, and often flying far out of their way as well. It’s a topic that captures the non-frequent flyer public’s imagination because it seems so absurd: going from San Francisco to Los Angeles via New York and adding 5,000 miles onto a trip just because the fare was good, for example. Usually, a mileage run is done in order to attain elite status toward the end of the year. While we don’t do a huge amount of mileage running these days, in some cases it can make sense, especially if you’re close to elite status and there’s a compelling airfare that can get you that status easily.

Miles may lose value

It’s a sad fact that miles can lose value. Airlines and hotels change their rules and make booking award flights more expensive from time to time. With that in mind, hoarding all your miles & points for a retirement travel fund might not be the best idea. We like to have some miles in reserve for emergencies, unexpected or impulsive trips, or helping out friends and family but we’re also big advocates of spending miles regularly.

Be informed

When it’s time to use miles, it’s crucial that you know as much as possible before calling an airline. Look at airline partners, route maps, whatever you can to avoid being duped by a) confused or uninformed agents, b) lazy agents, or c) malevolent agents. You’ll come across all three types at one point or another. Most importantly, have a good sense of which flights are available using miles before you call. For more on that, see our guide to finding and booking award flights.

Tools for a better frequent flying life

Expertflyer.com

We love subscription-based Expertflyer for looking up flight availability, setting alerts for award seats (available on certain airlines) and generally having a professional level of awareness when booking flights.

Awardwallet.com

There are a few sites that can help you keep track of your mileage balances. For us such a service is vital in order to stay on top of points posting and make sure they’re not expiring. Though Awardwallet has suffered some lately, losing the ability to track balances with American, United and Delta, it’s still our preferred site for tracking everything else. You can keep track of multiple balances in one place as well (those of family and friends for example). Full access to the site does cost money but you get to choose how much to pay.

Gcmap.com

Use this simple, accurate site to calculate distances flown. Highly useful for working out roughly how many miles you’re going to earn.

External resources

Blogs

There are a number of miles & points blogs containing a wealth of information – these bloggers know what they’re talking about and are always on top of the latest deals & offers. Some have been going for a particularly long time. They pioneered making frequent flyer information widely available and have been an invaluable resource over the years:

View from the Wing

The Points Guy

One Mile at a Time

Forums

The frequent flyer forums are where we first learned how to do all of this and they’re full of useful knowledge and discussion across many thousands of posts.

Milepoint.com

Flyertalk.com