Redeeming Credit Card Travel Points: What You Need to Know
Turning credit card rewards into free travel may sound like magic if you haven’t done it yet. You use a card to buy groceries, gas and everyday goods, pay the bill every month and then jet off on a free vacation to a big city, fancy resort or tropical island.
However, you can make this scenario your reality if you qualify for a travel credit card and are willing to do a little legwork to learn how to redeem points or miles through your chosen credit card rewards program.
If you’ve always wondered how to fly for free with credit cards, check out this beginner’s guide to redeeming points and miles for travel.
Types of credit card travel points
There are three main types of credit card travel rewards points: airline miles, hotel points and flexible travel points. Learning to travel free with credit card miles starts with knowing the difference between these types of points and your redemption options for each one.
Airline miles typically can be redeemed for flights, cabin upgrades and experiences such as concerts or sporting events. You can earn airline miles by getting a co-branded airline credit card specific to your favorite airline, or you can transfer flexible travel points or hotel points into airline frequent flyer programs.
When you have an airline credit card, you typically have to redeem your miles with that airline or one of the airline loyalty program’s airline partners. Airline miles are the ticket to getting free flights with credit cards.
Hotel points typically can be redeemed for nights, stays, room upgrades, food and drink and spa services — think facials, pedicures and hot stone massages — at specific hotels and resorts. Most hotel points also can be transferred to the hotel loyalty program’s partner airlines. Hotel points typically are offered by co-branded hotel credit cards that are specific to a certain hotel or hotel chain.
Flexible travel points
Flexible travel points offer you the most reward redemption options. Flexible travel points are usually offered by general travel credit cards. Examples include: the American Express Membership Rewards and Chase Ultimate Rewards® programs.
These programs typically offer a travel portal where you can easily use your points to buy car rentals, cruises, flights, hotel stays and vacation packages. Most of these credit cards also allow you to transfer your points to airline and hotel partners, which gives you even more choices.
How do you redeem travel points? It depends on the program
Each credit card, hotel loyalty program and frequent flyer program offers an array of ways you can redeem your points or miles. Here are the redemption options for some major credit cards and programs.
Ways to redeem credit card points for travel
Most travel credit cards offer a variety of ways for you to redeem your points or miles for travel. The value of your points will vary based on how you redeem them. Here are your main redemption options, along with the pros and cons of each type.
As a travel statement credit
When you redeem your points as a statement credit, you book and pay for your travel with your credit card. Then you log into your account and make a request to redeem your points as a statement credit, or choose a specific eligible purchase to be deleted from your statement in exchange for a certain number of points. Different programs have different rules around redeeming rewards for a statement credit.
A quick, easy way to offset the cost of a trip you put on your credit card.
Generally offers very low redemption value. Example: Redeeming Citi ThankYou® points for a statement credit will get you a value of about a half a cent per point compared with 1.25 cents per point when redeeming through the travel portal.
Through the rewards program’s travel portal
Most credit cards that allow you to earn flexible travel points also have a travel portal where you can redeem your points. You simply log in to your account online, visit the travel portal and start shopping for the trip you want to take. For each option, you’ll see the number of points required to book the flight, hotel stay or package.
It's usually a good value.
Choose from a variety of travel deals, including ready-made vacation packages.
Easily compare the cash price and number of points required for different options.
Choices can be overwhelming.
You could get "sold" on a vacation from shiny photos and marketing.
You can get better values by transferring points to a partner airline.
Transfer to an outside loyalty program
Many travel credit cards offer a long list of transfer partners. You can transfer your points into the loyalty programs of various airlines and hotels, then redeem the points or miles as allowed by that program. Most rewards experts love this option due to its potential for high-value redemptions.
Allows savvy rewards users to glean top-level value from points and miles.
Requires more legwork and comparison shopping than other redemption options.
Once you've transferred your points to a program, you can't transfer them back.
How to redeem credit card travel points for the best value
How do you redeem travel points for the best value? Follow these tips that savvy travelers use to fly for free, upgrade to first class, stay at hotels and resorts around the world and even get VIP treatment in hotel spas without the high price tag.
1. Sign up for a credit card with a welcome bonus
If you’re new to the rewards game, get a head start by taking advantage of sign-up bonuses. These bonuses typically offer new cardholders a cache of points or miles for opening a card and spending a certain amount in a specific period. A sign-up bonus may be worth hundreds of dollars in travel. If you’re wondering how to get free airline tickets with a credit card, this is one of the top tricks.
2. Choose your redemption option before you choose your points
Planning ahead is key to getting maximum value from your rewards. If you start by deciding what you want to get with your rewards, it’s much easier to figure out which credit card to use for your everyday spending so you can reach that goal more quickly. If you use the wrong card, you may either not be able to redeem your points for the reward you want, or you may be forced to choose a less valuable redemption option to reach your goal.
3. Learn the ins and outs of your rewards program
If you ask any rewards expert how they travel free with credit card miles, they will tell you to learn the nuances of your rewards program. It may take a few hours of reading fine print, but what you learn will help you travel free like a pro. Here are questions to keep in mind when you’re reading the terms and conditions of the rewards program:
- How do you redeem travel points with the program? Which redemption options offer excellent value, good value and poor value? (Hint: As a general rule, flights and hotel stays tend to offer good value while gift cards and merchandise are notorious for poor value, but values vary by program.)
- Are there any blackout dates or other restrictions for when or how you can redeem rewards? If so, what are the restrictions and how do they work? Your rewards won’t do you much good if you can’t use them for the dates you want to travel.
- How hard is it to find award seat availability? You might want to try doing some “dry runs,” shopping for award travel way before you’re ready to book so you get used to the way the process works.
- Who are the transfer partners, and what are the rules for transferring your points or miles? How long do transfers take? What is the transfer ratio? (You want to look for a transfer ratio of at least 1:1 so that your points don’t become less valuable in the transfer.) Is there a transfer bonus? A transfer bonus can sweeten the deal.
As you’re poring over the fine print, take a few notes on points you want to remember when you go to book your trip.
4. Know the average value of your rewards program’s points/miles
It’s a good idea to get familiar with the value of a rewards program’s points or miles so you can choose a good program to earn points in and also decide if a particular redemption is above or below average in value.
Start by taking a look at our valuations of the currency (points or miles) of major rewards programs:
|Average value of points/miles
|Delta Air Lines
5. Find the sweet spots in your rewards program
Every rewards program has its “sweet spots” — redemption options that offer a particularly good value. Experts who frequently travel free with credit card miles always keep these deals in mind when planning award travel.
So how do you find these sweet spots? Start by checking the program’s award chart, which lists the different redemptions and how much they cost in points or miles. As an example, check the American Airlines award chart.
Look at expert recommendations for the best way to use the program’s points or miles for maximum value. For example, here are our takes on best redemptions for: American Airlines miles, Delta miles and Hilton points. Prefer a different program? Check our site for advice on redeeming points or miles for maximum value in the program of your choice.
It’s also a good idea to keep an eye out for special deals. Many programs will run award specials where you can get a bargain redemption for a lower “price” than normal. You may get emails or other messages from your credit card company alerting you to deals.
6. Do the math before you redeem
Quickly calculate the value of a redemption to see if you’re getting a good deal. In general, you want to aim for redemption values of at least 1 cent per mile.
To do the calculation, you’ll need to know the cash value of the item you’re getting, whether it’s a flight, a gift card or a hotel stay. If you’re getting a gift card with a face value, it’s easy. Otherwise, you might have to do a little legwork to find the cash value — for example, researching the cash pay cost of the flight you want to get with your miles or looking up the price of a hotel stay.
Here’s an example: You want to use your rewards to book a flight to the sunny Bahamas. It would cost you 30,000 miles for a flight that normally costs $500. So the redemption value for the plane ticket ($500 divided by 30,000) would be 1.7 cents per mile. This is a good redemption value — go ahead and book it.
In some cases, it may be worth it to pay cash for a redemption that’s a particularly poor value and save your points or miles for a more lucrative redemption down the road.
7. Be as flexible as possible
When searching for flights online, have you noticed that when you check the “flexible dates” box, you can sometimes get a much better value just by leaving a day earlier or extending your stay by a day? The same principle applies with award travel. You can often make your points and miles go further simply by being flexible. For example, a Marriott award stay can cost you double the amount of points in peak season versus off-peak season. So consider planning your vacation a month earlier or later to take advantage of off-peak pricing, or fly midweek and check prices for flying into different airports.
One closing thought to keep in mind: While searching out the best values can be fun and lucrative, you also need to consider your wants and needs. By taking the trip you really want to take when you want to, even if it doesn’t give you maximum value for your points, it may ultimately end up being the right choice for you.