Using Airline Credit Cards to Score Premium Travel Awards
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Picture this — two travel reward credit card holders are saving up for an airline award ticket. Over a year or two, one of them charges $40,000 to his reward card affiliated with a major domestic airline, yet has trouble finding a round trip domestic award in Economy class for the 40,000 miles he earned. The other cardholder charges the same $40,000, but she ends up with a Business class award from New York to Milan, spending several nights visiting in London, Paris, and Barcelona along the way.
How is this possible? The first cardholder could have been using nearly any credit card from United, Delta, American, or US Airways, which offers one mile per dollar spent, and domestic economy class awards for as little as 25,000 miles. In contrast, the second cardholder used the Asiana Airlines Visa, offered by Bank of America to customers in the United States. It offers two miles per dollar spent, and for the 80,000 miles she earned, their Star Alliance partner award chart allows award trips of up to 10,000 miles, in Business class, visiting as many as four different cities along the way. This is a dramatic illustration of how choosing the right credit card, and redeeming the ideal award can make a dramatic difference in the value a credit card holder receives in return for their continued loyalty. (See also: Top 5 Travel Credit Cards)
Why You Should Use Your Reward Credit Cards for Premium Awards
Using a reward credit card is all about maximizing your return on each dollar spent. I hold credit cards that return 2% cash back on all spending, and some with even higher rates of return on certain purchases, so I know that any miles earned should be worth at least two cents.
Now let’s look at how most airlines price their tickets in miles and in dollars. A domestic round trip award ticket in economy class can require as little as 25,000 miles, but those tickets are very hard to find. Most likely, any award available at the lowest mileage rate will sell for about $250-$500, with rare exceptions. Therefore, I am only receiving only about 1–2 cents in value for my domestic economy awards. A typical economy class ticket to Europe sells for between $1,000 and $2,000 depending on the destination and the time of year I am traveling, yet the award will only require 50,000 miles at the lowest levels. Now I am receiving a more substantial 2-4 cents in value per mile spent. The same ticket in Business class will cost between $4,000 and $8,000, yet most domestic carriers will charge only 100,000 miles for the award. All of the sudden, I am earning a remarkable 4-8 cents in value for each mile redeemed, and by extension, each dollar charged to the typical rewards credit card.
How to Maximize the Miles You Earn
Cardholders can further increase their returns by using a card that earns double miles. For example, the Asiana card previously mentioned is a rare product that earns double miles on all purchases, but there are other cards that offer mileage bonuses on broad categories of transactions. For instance, the American Express Premier Rewards Gold Card offers triple points on airfare booked directly from airlines and double points on gas and groceries. (Note: American Express is a Wise Bread advertiser.) In addition, nearly all airline cards offer double miles for purchases with their affiliated carrier. When I use my credit card to earn double miles, and those miles are redeemed for premium class international awards, I end up with an astonishing 8-16 cents in value returned per dollar spent.
Earning the Right Miles
Why bother earning miles with one airline when some credit cards earn flexible points in a system that will allow you to transfer your points to miles in any one of several different airlines? For example, American Express’s Membership Rewards points can be transferred to miles with about 20 different carriers. Likewise, Chase’s Ultimate Rewards points can be redeemed for miles with several different airlines or points in various hotel chains. My favorite card is the Starwood Hotels Preferred Guest credit card from American Express (review here), which offers the points that are transferable to mileage with 30 different frequent flier programs, as well as free hotel nights. (Terms and restrictions apply.) I’ve transferred their points to miles with a dozen different airlines, each time earning the right award for my particular travel needs.
Finding the Best Awards
I could write a book on how best to redeem your airline miles, but if I had to sum it up in one word, it would “Partners.” Remember the incredible Asiana award? That traveler never had to set foot on a flight operated by the airline based in Korea. Instead, she simply redeemed her miles for an award on flights operated by its partners. Since Asiana one of 30 Star Alliance partners, their miles can be redeemed on flights to Europe on United, Continental, US Airways, Air Canada, Lufthansa, Swiss, Scandinavian, and others. Consider the possibilities of earning flexible reward points, and transferring them to the mileage programs of one of many airlines for travel on any of those airline’s many partners. Only then will you begin to realize the endless permutations of travel awards that are offered.
The confusing part is that each airline has its own partner award chart and its own rules. While Asiana allows travelers to make visit three cities on an award ticket, fellow Star Alliance partner US Airways only allows one stopover (a stopover is usually defined as a change of planes with more than 24 hours in the same city).
Ultimately, finding the most valuable awards means studying each airline’s award chart the way you might look for great deals in your Sunday paper. It takes some effort, but I will get you started — I recently booked a Business Class partner award on Delta to Africa. It required 120,000 miles, which is merely 20,000 miles more than their Business class partner award to Europe. I will only be visiting Kenya and Uganda, but with the same award, I could have had a free stopover in Europe, continuing on as far as Madagascar or Mauritius in the Indian Ocean with their partner Air France. If you redeem Starwood Preferred Guest or Membership Rewards points for Flying Blue Miles (the frequent flier program of KLM, Air France, and others), you could redeem a promotional award to Europe for half the standard rate. Since they consider Tel Aviv to be a European award, you can fly as far as Israel, in Business class, for a mere 50,000 miles. To earn Flying Blue miles, you can transfer points from the Membership Rewards or Starwood Preferred Guest programs.
Despite customer’s frustration redeeming frequent flier miles, there are still many great values out there. By using your credit card to earn the right miles, and by finding the best value in rewards, you can still find premium travel awards that are far more valuable than mere cash back.
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Editorial Note: Any opinions, analyses, reviews or recommendations expressed in this article are those of the author’s alone, and have not been reviewed, approved or otherwise endorsed by any card issuer.