Have you ever met someone who travels the world on Credit Card points? It just seems like they get a free hotel room or flight upgrade every time they travel.
For me, that’s my friend and Credit Card Point expert, Jay Peay. As you’ll see from our interview, he’s learned to maximize credit card points, staying in five star hotels, flying business class internationally and generally, just living fabulously for less cost (you know I love that!). In our interview below, he shares his experience in the credit card game and teaches us that all points are not created equal. I’m excited to introduce you to Jay! And don’t worry… much more from him to come!
How did you get started in the credit card points game?
I previously worked for an airline, so it was already in my blood, but I really got into it during honeymoon planning.
Is this for everyone?
NO! It’s really important that you do not carry a balance and can afford to pay off your credit card each month.
What’s the coolest thing you’ve ever done with points?
For my honeymoon to Southeast Asia I booked free business class flights with points on Cathay and Asiana and stayed a few nights at the Park Hyatt Siem Reap and the Conrad Koh Samui for free using credit card points.
Are all miles and points the same?
No! There are a few types:
- Traditional Airline Miles: This is where you earn 1 mile per mile flown. Then you can redeem your miles for flights at fixed prices, typically based on region. Some airlines (British Airways for example) offer prices based on distance as opposed to region. United and Delta have already changed their programs to award spending rather than distance flown. American is soon to follow. Delta has eliminated their region-based chart, so they are actually more of a revenue based program at this point in my opinion (see below).
- Revenue Based Programs: This would be like Southwest. You earn “points” (not miles) based on spend. Then you redeem your points for flights based on the price of the flight. These programs are quite simple, you can actually calculate how much points are worth simply by running searches in dollars and in points. For example, a Southwest flight to Nashville costs $146 or 8,588pts +$5.60. So ($146-$5.60) / $146 is about 1.6-1.7 cents per point. You can think of this as a 1.6-1.7% rebate on all of your Southwest spend. Many mileage fans don’t love these programs because of their simplicity, there’s no way to get more than the fixed value like in the traditional programs. Something to note: Hotel programs are sort of a hybrid of the above 2 types: you earn based on spend but redeem for “nights” when available, and each hotel is typically in a “category” which is analogous to “distance” and “region”
- Credit Card Points: These are flexible “currencies” that convert into other programs. Amex Membership Rewards, Chase Ultimate Rewards, and Citi Thank You Points are examples. Most people would also include Starwood’s program because of its flexibility to convert to many airlines at a 20:25 ratio which makes it just as flexible as the bank’s programs.
- Cash Back: This is actually quite a good idea for many people who don’t care about international premium travel. The Citi Double Cash back card has no fee and offers 2% cash back. Fidelity offers a 2% cash back card, as does Barclay card Arrival+ (which has a fee but can be used at better than 2% towards travel). Don’t let credit card companies fool you into thinking of their cash back as “miles.” Capital One does this with their Venture card. You don’t earn miles, you earn points which can be used towards flights at a fixed point to dollar ratio. This is not the same thing as earning airline miles and redeeming for a save award based on a redemption chart.
Credit Card points are typically the most valuable because of the “optionality.” In other words, my Chase points have the flexibility to convert to United 1:1, to Hyatt 1:1, to Singapore Airlines 1:1, or some others. Or I can use them towards purchasing flights at a value of 1.25c/pt (and also earn miles on a flight booked that way). The flight you want is not always available through the program you want, so this can be very valuable. You also have flexibility to choose the program that best suits your needs (more to come on this!).
Best money advice you ever got?
Save. Particularly in tax advantaged account such as HSA, Roth 401-k, etc. Max them out if you can – you’ll wish you did in hindsight! You won’t even feel it if you set it up to be automatic and it sweeps into savings.
Where can we find you on a Saturday night?
What are you most excited about right now?
Started taking guitar lessons for the first time!
How can people connect with you?
If you want to connect, Ashley can put us in touch!
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