The Ultimate Guide to Reward Travel: Chapter One

The most detailed guide to earning and using frequent flyer miles, hotel and credit card points for reward travel.

What You’ll Learn in Chapter One

  • What are travel rewards?
  • Where do travel rewards come from?
  • How can I earn travel rewards quickly?
  • What can I do with travel rewards?

We’ll go ahead and make a bold claim. You don’t know enough about rewards and it’s costing you big time. You could be maximizing your frequent flyer miles, hotel and credit card points better. Don’t be alarmed! You’re not alone. Most people severely misuse and miss out when it comes to rewards (also referred to as ‘points’ or ‘miles’).

You could be earning more – a lot more – just by knowing a few basic principles. If you read this guide, you’ll start to understand how reward travel works.

What are travel rewards?

Rewards are currency that can be used in place of cash. Airlines, hotels and credit cards have been rewarding customers for their loyalty since the 1980’s. Each airline, hotel or credit card creates their own reward program currency. Maybe you’ve heard of Citi ThankYou Points, Southwest Airlines Rapid Rewards or Starwood Hotels & Resorts Starpoints to name a few. They are all different currencies. Each airline, hotel and credit card company makes their own rules for how and when you can use their rewards. You can’t use them for anything other than what the programs specifically allow. Rules are rules. Unfortunately, we don’t make the rules. But our revolutionary technology will help you follow them and make the most of it!

Where do travel rewards come from?

Rewards can be earned in a few different ways. The primary sources are flights, hotel stays, and credit card spending. Sometimes there are other promotional offers that generate reward points. And it is also possible to purchase reward points in many programs.

As a general rule: airline miles are ‘created’ by the airline that operates the reward program and hotel points are ‘created’ by the hotel chain – nothing unusual there. Credit card rewards have more options. Some are created by the credit card company (if the card earns rewards in a bank-operated program like Chase Ultimate Rewards) or they can come from travel providers (airlines and hotels) if the card earns co-branded travel rewards (like American Airlines AAdvantage miles earned on a Citi credit card).

These programs began as a way to encourage ‘loyalty.’ The companies provide rewards in return for the number of miles flown with a single airline or nights stayed at properties in a single hotel chain. Nowadays, this is not the way most rewards are earned. Ever since the airlines and hotel chains formed intimate partnerships with credit card issuers, everything now revolves around earning rewards through credit cards. You could spend hours flying on a particular airline and many nights staying in a certain hotel to earn a few reward points. Or, you can simply make smart decisions about which credit cards to get that earn rewards and you could get thousands of rewards in just a few weeks.

How can I earn travel rewards quickly?

Many credit cards offer sign-up bonuses that can greatly accelerate the speed at which you grow your rewards balances. These are typically in the range of 15,000 to 60,000 and are based on a minimum spend on average of $2,000 in the first 3 months of opening an account. Along with sign-up bonuses, credit card companies reward you for your spending by “paying you back” for every purchase you make with their card. You can earn anywhere from 1 point/dollar spent to 10 points/dollar spent or more.

What can I do with travel rewards?

Redeeming rewards can be very lucrative because it can save you thousands of dollars in travel costs. Now you can travel more often, to better locations, and in a higher class of service! While you might never be willing or able to pay the high prices charged to fly in first or business class, it’s very possible if you pay with rewards instead. It is a lot easier to earn enough rewards for that trip than it is to earn the equivalent amount of cash.

There are a number of ways to redeem points. You’ve probably heard of ‘cash back’, redeeming for merchandise magazines or golf clubs, and ‘unique concert experiences.’ But, the way to truly maximize your rewards is through travel.

Here’s why: say you have 25,000 points. You can get cash back for these points at a fixed rate of 100:1 ($0.01 per point), or a total of $250 cash back. If you used these rewards on travel, these same 25,000 points could pay for a roundtrip flight from New York-Los Angeles, which could easily cost you $400. Meaning, you’d get 60% more value by using rewards for travel! The benefit is even greater when you fly in a premium cabin or stay at an expensive hotel with those points.

Pretty cool right? Read on for more about using rewards for travel.