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The fundamentals of award travel are simple. Earn points and miles – redeem those points and miles for amazing travel experiences. Anyone can do it. Right? In theory, yes. But when first starting out, it can be a confusing hobby to be involved in.
There are hundreds of different rewards earning credit cards on the market, each advertising its unique advantage over the competition, and it can be hard to weigh the value of different options without a firm understanding of each rewards currency.
As an example, let's look at the term ‘points.'. You want a credit card that earns points, but what kind of points? Rewards points can refer to retail points, hotel points, fixed-value points, flexible or transferable points, points you can only redeem as cash back, or airline points for revenue based programs like TrueBlue and Rapid Rewards (and occasionally distance-based programs – we're looking at you Qantas…). For someone new to the game it’s information overload.
In this post, we want to clarify the difference between fixed-value points and transferable or ‘flexible’ points.
What's the Difference Between Transferable and Fixed-Value Points?
Transferable rewards currencies like Ultimate Rewards and Membership Rewards transfer to a variety of airline and hotel partners. It’s easy to earn them in bulk using category bonuses, regular promos, and point bonuses, and, while you can redeem them for a fixed value through their respective travel portals, you’ll get exponentially higher value transferring to partners for premium cabin award flights, and luxury hotel stays.
You can typically redeem fixed-value points against any expense that codes as travel, from taxi fares to campground fees, hostels, hotels, Airbnb, flights you can’t redeem points or miles for, or even the taxes and fees attached to your flights. There is no such thing as a ‘good' or ‘bad' redemption value for fixed-value points like Barclaycard Arrival Miles; you get a penny value for every point.
- Fixed-Value Points – Have an assigned value (typically 1-2¢ per point), redeem points against the cash price of ticket/service you purchase (i.e. $1,000 airfare = 100,000 points), earn points and miles for airline & hotel bookings, cannot transfer to airline or hotel partners, ideal for miscellaneous travel expenses, when there is no available award space, cheap domestic airfares, rental cars, cheap hotels, and accommodation not part of a traditional rewards program such as Airbnb.
- Transferable or Flexible Points – Transfer to a variety of airline and hotel partners to take advantage of award chart sweet spots, or redeem for fixed value through a travel portal, best for premium cabin international awards traveling in first or business-class and luxury hotel stays.
Fixed-value points are the workhorses of the award travel world, wiping out expenses we would otherwise need to pay with cash. Think award fees and taxes or an Airbnb hundreds of miles from the nearest chain hotel. Flexible points, on the other hand, can be leveraged for the kind of luxury travel most of us couldn't usually afford. Flying in business and first-class where cash prices warrant thousands of dollars per ticket and staying in $800+ per night hotels. Very different uses but both essential to a successful award travel strategy. That isn't to say you can't use transferable points for economy class and lower-priced hotels where you'll still receive excellent value; we're covering the extreme.
Credit Cards That Earn Fixed-Value Points
There are three primary fixed-value rewards currencies:
- Barclaycard Arrival Miles
- US Bank FlexPerks
- Capital One Venture Miles
Both Barclaycard and Capital One label their rewards currencies ‘miles,’ but in reality, when used for travel, they are points with a fixed 1¢ per point value, and cannot be transferred to airline frequent flyer programs. Ironically, FlexPoints are more akin to traditional airline miles as they can only be redeemed air travel, not all travel expenses.
FlexPerks® Travel Rewards Visa Signature® Card – Earn 20,000 points after you spend $2,000 in the first 4 months, earn 2x FlexPoints per dollar at gas stations, grocery stores or airlines (whichever category you spend the most on) plus most cell phone providers, redeem points on over 150 airlines. As of 2018, each point is worth 1.5¢ per point. $0 annual fee for the first year, then $49.
Capital One® Venture® Rewards Credit Card – Earn 50,000 Miles once you spend $3,000 on purchases within 3 months from account opening, earn 2x Venture Miles per dollar on every purchase, redeem as a statement credit against any travel purchase, no foreign transaction fees, $0 intro for first year; $95 after that.
Credit Cards That Earn Transferable Points
Again, there are four bank-issued transferable rewards currencies, plus Marriott due to its stellar list of 3:1 airline transfer partners.
- Chase Ultimate Rewards
- American Express Membership Rewards
- Citi ThankYou Rewards
- Capital One
- Marriott Rewards
We consider Ultimate Rewards the most valuable of the four bank rewards currencies due to the quality of airline and hotel transfer partners, and the Chase Sapphire Preferred® Card to be the best beginners travel rewards card currently available.
Chase Sapphire Preferred® Card – Earn 60,000 bonus points. Get 2X points on travel and dining at restaurants, transfer points to BA, Singapore, United, JetBlue`, and Hyatt, or redeem for 1.25¢ per point in the Chase Travel Portal, no foreign transaction fees, great travel insurance benefits, and an annual fee of $95.
The Blue Business℠ Plus Credit Card from American Express – Earn Earn 2X Membership Rewards® points on everyday business purchases such as office supplies or client dinners. (Terms Apply), 1 point on purchases after that, access the Amex Do More Business savings program. No annual fee (Rates & Fees).
One of the foundational keys of successful award travel is understanding the different types of reward points and miles, and how best to use them to maximize value.
Achieve your travel goals without spending thousands of dollars by pursuing a diverse and balanced portfolio of rewards-earning credit cards. Earn transferable points like Ultimate Rewards and transfer to airline partners for premium cabin awards, and fixed-value points like Arrival Miles to pick up fees, taxes, and incidental travel charges, reducing your out-of-pocket expenses as much as possible.
If you have any questions on the difference between fixed-value and flexible rewards points, please reach out in the comments.
For rates and fees of the cards mentioned in this post, please visit the following links: Barclaycard Arrival Plus® World Elite Mastercard® (See Terms), and The Blue Business℠ Plus Credit Card from American Express (Rates & Fees)
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