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Start Here: Points and Miles 101

AwardWallet receives compensation from advertising partners for links on the blog. The opinions expressed here are our own and have not been reviewed, provided, or approved by any bank advertiser. Here's our complete list of Advertisers.

AwardWallet receives compensation from advertising partners for links on the blog. The opinions expressed here are our own and have not been reviewed, provided, or approved by any bank advertiser. Here's our complete list of Advertisers.

You may have heard some friends talking about how they took a trip for free using credit card points. Or maybe you saw something on Instagram telling you it's possible to save thousands of dollars a year on travel. Perhaps that got you wondering, “What the heck are points and miles and how can I use them to travel more for less money?”

Well, you've come to the right place. At AwardWallet, we're passionate about helping people learn how to earn, use, and maximize their points and miles — and keep track of it all along the way, but more on that later. This guide goes over everything you need to know to get started, so buckle up!

Overview

We want this to be a helpful resource for you. We have many more articles deep-diving into every topic under the sun, but for now, we'll keep this relatively simple — making sure you have the information needed as you foray into the points and miles world. Let's outline what this article includes so that you know what to expect.

Getting Into Points and Miles

Knowing your credit score

Before you open your first credit card, you need to have a good idea of your credit score. There are many ways to check your score for free. Most rewards credit cards require a score that is considered good to excellent. This number ranges depending on the credit scoring model, but, generally, a good credit score is anything above 660.

It's important to implement habits that build your credit. Travel hacking is a marathon — not a sprint. Keeping a healthy credit score is vital. Here are a few ways to ensure this:

  • Pay your cards on time every single month. This is the single most important factor in raising your score and keeping it high.
  • Keep your total credit utilization under 30%, but under 10% is even better.
  • Do not close your oldest account, even if you never use it. The length of your credit history is important. It's likely that you could change this card to another one if you're not using it.
  • Space out your card applications. Each card application requires a hard pull on your credit, which causes a small, temporary dip. Do this less often to keep your score up.
  • Have a mix of types of credit. Lenders like to see that you are responsible with multiple types of credit — bank loans, mortgage loans, credit cards, etc.

Related: Tips for Managing Your Credit Score

a student looks at a computer to learn about credit cards with a grandfather
Credit: Andrea Piacquadio/Pexels

Healthy budgeting habits

Next, it is imperative to have healthy spending and budgeting habits with your regular expenses. This means that you must have a good grasp on how much money you have coming in and going out each month. The goal is to put your regular, everyday spending on a new credit card — not to spend a ton of extra money just to get some points.

Who Shouldn’t Get into Points and Miles?

There are some instances where diving into the points and miles world may not be a great option — at least not for now.

If you currently have a lot of debt, you should focus on paying that debt down first. This can take some time, but working towards getting rid of your debt is the first step toward being able to successfully use points and miles to travel. There are a few ways to accomplish this:

If you have a habit of overspending and not being able to pay off your cards on time and in full, you should focus on getting that under control first. After all, paying interest on rewards credit cards will eliminate any rewards you're earning. Our recommendation is to download a budgeting app —like YNAB or Pocketguard — to help.

The Basics

Now that we've got the pre-points and miles items covered, let's get into the good stuff: learning how to actually earn points and maximize your spending so you can travel more for less money.

What are points and miles?

The words “points” and “miles” can be used somewhat interchangeably when referring to the rewards earned from credit cards or by flying with airlines or staying at hotels. As a generalization, miles are used for airlines while points are used for credit cards and hotels.

There are many ways to earn points and miles. You can earn them by spending on a credit card, by staying at hotels, by taking flights, and more. However, our favorite way to earn a large chunk of points with comparatively little spending is to regularly open new credit cards and earn sign-up bonuses.

a man sits at a table holding a credit card and looking at his computer
Credit: Ivan Samkov/Pexels

The step-by-step process

This simple process is something that we repeat over and over again to continuously earn points. Here are the basics for how it works:

  • Step one: Open a new credit card with a large sign-up bonus, also called a welcome offer. This will be something like, “Earn 60,000 bonus points after you spend $4,000 on purchases in the first three months from account opening.”
  • Step two: Put your regular spending on the card. There are many ways to meet the spending requirements on new cards, but some ideas include gas, groceries, utilities, childcare, gym membership, purchasing household goods, clothing, and more.
  • Step three: Spend the required amount of money in the specified timeframe to earn the sign-up bonus points.
  • Step four: Use the points to book travel! We'll discuss how to do this in a bit.
  • Step five: Repeat, starting with another credit card.

Related: A Beginner's Guide to Building a Credit Card Application Strategy

Our Favorite Beginner Cards

Now that you know how the process works, let's go over a couple of our favorite beginner cards.

We highly recommend one of these two cards as your first travel rewards card. After that, you have a plethora of other options. To help you choose, here are some other articles going over some of our favorite cards. Your next card choice will likely depend on your financial situation, spending habits, and travel goals.

Related: Why We Recommend Starting With Chase Credit Cards

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Credit: Artem Podrez/Pexels

Co-branded cards

Additionally, if you're loyal to a particular airline or hotel chain, then you will most likely want their co-branded rewards credit card. These are cards from a credit card issuer — like Chase or Citi — that earn points or miles in a specific program, such as Delta Air Lines SkyMiles. Here's our roundup of cards for each program:

How To Use Your Points

First, you need to get familiar with the different types of award points. Then, you can decide the best way to use your points. There are three main ways to redeem your points for travel: cashing them out as a statement credit to cover travel costs, booking travel in the bank portal, or transferring them to travel partners. Let's break each of these down.

Cashing out points

The simplest way to use your points is to cash them out as a statement credit. Some points can only be used this way — these are called fixed-value points. This typically gives you a one cent per point valuation, although certain banks give you even less value.

Honestly, this is our least favorite way to use points since the value is typically lower than what you can otherwise get. However, it can be a good option for covering certain travel expenses that aren't as easily covered with points. This could mean redeeming to offset something like car rentals, cruises, or theme park tickets.

Related: How To Maximize Fixed-Value Points and Miles in 2024

Booking travel in the bank portal

Next, you can use your points to book travel in the bank's travel portal. Each bank has its own aggregator portal that searches across many websites and compiles all of the options into one place. When you book this way, you may be able to get further value from your points than simply cashing them out.

For example, when you use the Sapphire Preferred to book travel through the Chase portal, your points are worth 1.25 cents apiece. This means 1,000 points gets you $12.50 in value — a slightly better value than cashing out at 1 cent per point.

Here's our guide on how to use the portals for each major card issuer:

Transferring to travel partners

Finally, you can transfer your points. Transferring points to airline and hotel partners requires more knowledge and effort than cashing your points out. However, it's our favorite way to redeem points, and it's how you'll get the most value. So we want to make sure you have a basic understanding.

The reason we recommend starting with the Sapphire Preferred or Capital One Venture is that they each earn flexible rewards that can be transferred. When you redeem your points through transfer partners, you can potentially get double, triple, or even quadruple the cash-out value.

a woman in an infinity pool overlooking a beach and ocean
Credit: Chelsea Gates/Unsplash

For example, a standard award night at the Grand Hyatt Kauai costs 30,000 World of Hyatt points per night. If you booked the same room with cash, it would cost a minimum of $650.

Chase Ultimate Rewards points transfer to World of Hyatt at a 1:1 transfer ratio. That means you'd only need to transfer 30,000 Chase points to Hyatt to book an award night. But, if you booked the stay through the Chase travel portal, you'd need at least 52,000 points. And if you simply cashed out your Chase points at one cent each to offset the cost of a paid stay, you'd need at least 65,000 points.

There are five major transferrable points programs:

There are also two honorable mentions for niche transferrable points programs:

Using AwardWallet

Now that you have a good understanding of all things points and miles, you need to be sure to keep track of everything. That's where AwardWallet comes in. We help you track over 650 different loyalty programs through our free platform. Check out how to use AwardWallet to track your rewards. Plus, we track more than just hotel and airline programs. We also track free night awards, upgrades, and other perks. You can even get a reminder when it's time to renew your passport!

Furthermore, you can sign up for a daily email with recent AwardWallet Blog articles by customizing your notifications. That way, you won't miss out on the latest news, card offers, and more.

Ryan Smith and wife in ANA first class before takeoff
Before take-off in ANA's new first-class seats. Credit: Ryan Smith/AwardWallet

Other Things To Know

We know that we've given you a ton of information here today. So instead of adding anything further, we'll leave you with some articles that might be helpful if you'd like to keep reading and learning:

Final Thoughts

The world of points and miles is vast, but it doesn't have to be overwhelming. When learning something new, you can read and learn about it — as you've done here — but then you just have to take the first step. Get your finances in order, open your first card, start earning those points, and then choose how you want to use them.

As a reminder, we all choose different ways to use our points. The goal is that they are helping you accomplish your travel goals. We at AwardWallet are honored to help you achieve those goals.

And yes, we're sure you have questions. Our Facebook group Award Travel 101 is a great place to ask them.