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With so many loyalty programs available, it can be difficult to see the big picture of how different types of reward points fit into your overall strategy. Which points are best? The answer: It depends entirely on your goals. In this post, we’ve organized rewards points into four types or groups based on how you can redeem them.
For those new to points and miles, this framework is a great starting point to compare the strengths and weaknesses of different programs. We'll illustrate how different types of reward points work. It's worth noting that you can find some types of points that don't fall neatly into a single category. For example, you might have multiple redemption options with a single currency. This is usually for the best, however, since you can take advantage of greater flexibility.
Once familiar with the basics of various types of reward points, you'll be able to see which type(s) best fits your travel needs.
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Fixed-Value Reward Points
Our first group includes all the rewards points assigned a specific cash value — fixed-value rewards. These types of points are like a foreign currency, which is pegged to the U.S. dollar. Most fixed-value rewards are assigned an exact value, but a handful may fluctuate within a narrow range. There are several fixed-value points with some key differences in how you can redeem them for travel. Let's walk through each.
Cash back
Cash back is the most straightforward and flexible type of fixed-value reward. Your rewards accumulate directly as dollars; you can use them however you like. In most cases, you can redeem cash back as a statement credit, which means the bank will apply the rewards as a payment towards your upcoming bill. Some cards let you receive your rewards as a check or deposit to a bank account, but this is not a universal feature.
Popular personal cash-back cards include the Chase Freedom Unlimited® and the Citi Double Cash® Card.
- Intro Offer: Earn a $200 Bonus after you spend $500 on purchases in your first 3 months from account opening
- Enjoy 5% cash back on travel purchased through Chase Travel℠, our premier rewards program that lets you redeem rewards for cash back, travel, gift cards and more; 3% cash back on drugstore purchases and dining at restaurants, including takeout and eligible delivery service, and 1.5% on all other purchases.
- No minimum to redeem for cash back. You can choose to receive a statement credit or direct deposit into most U.S. checking and savings accounts. Cash Back rewards do not expire as long as your account is open!
- Enjoy 0% Intro APR for 15 months from account opening on purchases and balance transfers, then a variable APR of 18.99% - 28.49%.
- No annual fee - You won't have to pay an annual fee for all the great features that come with your Freedom Unlimited® card
- Keep tabs on your credit health, Chase Credit Journey helps you monitor your credit with free access to your latest score, alerts, and more.
- Member FDIC
- Rates & Fees
- Earn 5% on purchases through Chase Travel℠
- Earn 3% on dining at restaurants
- Earn 3% on drugstore purchases
- Earn 1.5% on all purchases
Some solid small business options include the U.S. Bank Business Triple Cash Rewards World Elite Mastercard® and the Ink Business Cash® Credit Card.
- Earn $350 when you spend $3,000 on purchases in the first three months and an additional $400 when you spend $6,000 on purchases in the first six months after account opening
- Earn 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year
- Earn 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year. Earn 1% cash back on all other purchases
- With Zero Liability you won't be held responsible for unauthorized charges made with your card or account information.
- No Annual Fee
- Redeem rewards for cash back, gift cards, travel and more through Chase Ultimate Rewards®.
- 0% introductory APR for 12 months on purchases
- Member FDIC
- Rates & Fees
- 5% cash back on the first $25,000 spent in combined purchases at office supply stores and on internet, cable and phone services each account anniversary year
- 2% cash back on the first $25,000 spent in combined purchases at gas stations and restaurants each account anniversary year
- 1% cash back on all other card purchases with no limit to the amount you can earn
Related: The Best Cash Back Credit Card Offers
Travel statement credits
Travel statement credits work much like cash back, except you are limited to merchants in the travel category. The Capital One Venture Rewards Credit Card is a great example of this kind of redemption in action (although this particular card offers other redemption options, too).
Simply use your card to pay for travel purchases, including flights, hotels, cruises, car rentals, rideshare apps, and more. Then, you can apply your fixed-value rewards as a statement credit against the travel purchase.
- Earn 75,000 Miles once you spend $4,000 on purchases within the first 3 months of account opening
- 5X miles on hotels, vacation rentals and rental cars booked through Capital One Travel
- 2X miles on all other purchase
- Fee credit for Global Entry or TSA Pre✔® (up to $120)
- No foreign transaction fees
- $95 annual fee
- 5X miles per dollar on purchases through Capital One Entertainment (through 12/31/2025)
- 5X miles per dollar on hotels, vacation rentals and rental cars booked through Capital One Travel
- 2X miles per dollar on all other purchases
Tip: Want to know if a merchant classifies as travel? Use the AwardWallet Merchant Category Lookup Tool
A big advantage of this redemption mechanism is that you can book travel through your preferred website or online travel agency — you're not stuck with a particular airline, hotel chain, or online travel agency (OTA). This means that you can shop around for the best price and aren't required to book in a certain way to redeem your earnings.
- 1.5 points for every $1 you spend on all purchases
Travel portals
Travel portals let you exchange points for various travel experiences, but you have to purchase through a specific website. Instead of paying for travel with your card and redeeming points for a statement credit afterward, you exchange points for the trip you want on a specific website. This is far less flexible than the previous types of fixed-value rewards.
In addition to not being able to shop for the best price, some travel brands (especially hotels) won't give you credit towards elite status or elite benefits when you book with a third-party travel portal. Another downside is that you may want to purchase travel items unavailable on that site — such as Disney tickets or guided tours.
Wells Fargo Go Far Rewards is a good example of this type of redemption. Other cards that earn fixed-value points redeemable through travel portals include the U.S. Bank Altitude™ Reserve Visa Infinite® Card and Bank of America® Premium Rewards® credit card.
Fixed-value airline points
These are a bit different than the other rewards currencies in this group. Programs like Southwest Rapid Rewards and JetBlue TrueBlue (to a lesser extent) tie the number of points you need for a flight directly to the cash price. The exact value you get for your points may fluctuate a bit, but it is held within a limited range.
Although these programs don't offer the same opportunity for getting outsized value as traditional frequent flyer miles, they are much easier to use. And the pricing is transparent. If there's a seat available, you can buy it with your airline points in these programs. The higher the cash price, the more points you'll pay. It's that simple.
Fixed-value hotel points
Accor Live Limitless is a great example of a fixed-value hotel program. You'll redeem 2,000 points to knock 40 euros off your hotel bill — no more, no less. You have to redeem in 2,000-point increments and always get the same value from Accor points. The redemption value is fixed, regardless of hotel type or how much it costs.
The revamped (and heavily devalued) Radisson Rewards program is another example of fixed-value hotel points, but the pricing functions much like Southwest Rapid Rewards, where your redemption value is within a tight range. Expect to get around 0.25 cents per Radisson point.
Strengths of fixed-value points
- Transparency
- Ease of use
- Flexibility
Transparent pricing is the most attractive feature of fixed-value rewards points. You know what to expect. If you want to use fixed-value reward points for $1,000 worth of travel, and each point is worth 2¢, you will have to redeem 50,000 points. If each point is worth 1¢, the travel will cost 100,000 points. This simplicity appeals to many.
Their simplicity also makes fixed-value points much easier to use than some other types of points. You don’t need any special knowledge to redeem these points effectively. You worry less about whether you're getting a good deal since you typically can shop around before redeeming your points. Since these points are tied to cash prices, you only need to evaluate whether the cash price seems fair.
Another advantage of fixed-value rewards is flexibility. You can nearly always use them to cover travel costs that aren't easy to book with other types of points. Consider using them on your car rentals, your Airbnb stays, and even cruises or safaris. Fixed-value rewards points are great to have in your portfolio when you are traveling somewhere that doesn't have big hotel brands or major airlines.
Sometimes, they are your only viable option. I once redeemed fixed-value reward points for an overnight ferry trip from Nova Scotia to Newfoundland. There's no other way I could have redeemed points to make this a “free” trip.
Weaknesses of fixed-value points
- Limited upsides
- Vulnerable to price changes
The biggest downside with fixed-value points is that it's hard to get outsized value. This is the primary tradeoff. Simple redemptions and transparent pricing don't lend themselves to maximization opportunities.
Many points and miles enthusiasts desire to book aspirational travel that they would never dream of paying for at the retail price. Many wouldn't even pay a fraction of the price. With some of the other types of points covered in this post, it's possible to turn a single credit card welcome bonus into a $10,000 first-class flight. That simply isn't possible with fixed-value reward points.
Finally, as a consequence of being tied to the retail cost of travel, the number of fixed-value points you'll need for a given trip changes constantly. This can make it harder to plan your earning strategy for an upcoming trip. It also means that last-minute air travel will usually require far more points.
Frequent Flyer Miles
Unlike the airline rewards programs in the fixed-value group, traditional frequent flyer programs don't tie the number of miles you need for a redemption to the retail cost of a flight. Nor are miles used to directly offset the cash cost like a travel statement credit redemption. Instead, prices for award seats are set by the program in their loyalty currency.
For example, the Alaska Mileage Plan frequent flyer program issues miles as its loyalty currency, which you can redeem for flights on Alaska Airlines or its extensive list of partner airlines.
There has been some blurring of lines, though, in the past several years. Many programs have moved to a dynamic pricing model, where the cash prices influence how many miles you need for a free flight. However, there is still not a direct correlation between the rewards currency and redemption pricing.
With most frequent flyer programs, the cost of travel is determined by either the distance you fly or the region of the world you want to visit. With the aforementioned dynamic pricing, some airlines now use a mixture of region-based and/or distance-based pricing as part of their dynamic model. Prices for award flights also consider the class of service you fly. A business-class ticket costs more than an economy award ticket in these award pricing charts.
Region-based frequent flyer programs charge a flat rate from airports in one region to another. For example, this could be between the U.S. region and Europe region. Often, pricing starts at a “Saver” (i.e., lowest) level, with tiers of higher-priced award seats.
Other programs use distance-based pricing, such as British Airways Avios. They may charge more for a flight from Los Angeles to Paris than they charge for a flight from New York to Paris. In general, each route has a fixed starting price — regardless of how much it costs to buy the airfare in cash.
Related: Best Airline Credit Cards With Annual Fees Under $100
Major frequent flyer programs
The largest miles-based U.S. frequent flyer programs include:
Some popular non-U.S. frequent-flyer programs include:
- Air Canada Aeroplan
- Air France–KLM Flying Blue
- Avianca LifeMiles
- British Airways Avios
- Cathay Pacific Asia Miles
- Singapore Airlines KrisFlyer
Strengths of frequent flyer miles
- Award costs are less impacted by changes in the cash price
- Book expensive, premium-cabin tickets for a fraction of the normal price
- Possible to find deals on last-minute tickets
- Experience, knowledge, and patience are rewarded
Frequent flyer programs are the gateway drug of the points and miles hobby. Since award prices are more independent of cash prices, you can often find incredible opportunities to redeem a small number of miles for a trip that would be insanely expensive. Business- and first-class flights and tickets booked close to the date of departure are great examples of opportunities for incredible redemption values.
A ticket for a flight today is usually far more expensive than a ticket for the same flight a few weeks from now. Airlines know folks who book same-day travel are usually business travelers (who don't mind since the company is picking up the tab) or someone dealing with an unexpected emergency (nice, right?). They inflate those last-minute prices because those customers are willing to pay more.
But award tickets don't necessarily follow the same logic. If a flight is going out half-empty tomorrow, the airline's cost to add more passengers is very low. A little extra fuel for you and your bags and maybe a soft drink in flight. Outstanding miles are a liability for the airline, so they are incentivized to get them off the books when the extra cost is as low as possible.
The same logic applies to business- and first-class tickets. Airlines don't want you to take the last seat in the cabin if someone would have paid $8,000 for the privilege. But, if they expect empty seats, they're often happy to open up those spots to folks with miles.
Weaknesses of frequent flyer miles
- Often difficult and time-consuming to redeem
- Confusion regarding how partner award flights work
- It's easy to overpay (or fail to find anything to book) if you lack experience
The huge upside with frequent flyer miles comes at the expense of simplicity. Would I like to drink $300-a-bottle champagne while lounging in a private first-class suite on my next 14-hour flight? Sign me up! Now, about booking that award ticket…
Fixed award pricing creates havoc with supply and demand. Airlines typically release only a small percentage of their seats as award seats — those you can book with miles. These seats are usually called award availability or award inventory. The airline's revenue-management team watches ticket sales like a hawk. If they expect empty seats, they'll open up more award availability. If they expect a flight to sell out with cash, there will be far fewer award seats.
When many people with miles chase a small number of seats, such as around the holidays, finding a reasonable award flight can be difficult. For this reason, frequent flyer miles can be incredibly frustrating if you lack experience.
Compounding things further, it might be possible to use more than a dozen types of points or miles to book a given flight. Although the award price charged by one frequent flyer program is generally the same for a given route, a different frequent flyer program might allows you to book the same flight for fewer miles, lower taxes, or both.
For example, consider this entire post about when it's a better deal to use British Airways points to book American Airlines flights instead of using AA miles. Learning how to use partner awards to your advantage is a huge part of becoming a master of points and miles.
The double-edged sword of frequent flyer miles: dynamic pricing
Several airlines — most notably, the major U.S. carriers — have moved slowly toward dynamic pricing for their award flights. Rather than release a limited number of award seats at set prices, they make many more seats available. You just have to pay more miles for them. This has taken some of the best opportunities out of the system (but not all).
Conversely, you can often find reasonable redemptions more frequently, rather than needing to hunt for elusive award inventory. In some cases, you'll now see cheaper prices than when the program was strictly region-based.
But it's also easy to overpay — either too many miles or too much in taxes and fees. An example of this is reward flights where you're getting less than 1 cent per mile in redemption value. This is terrible value for nearly every frequent flyer currency. At that point, earning cash back and paying out of pocket for a ticket is better. This is one reason you want to diversify and have airline miles and fixed-value rewards available.
Hotel Points
Hotel points are a relatively straightforward type of reward currency. Historically, programs would divide their properties into categories and charge a fixed price (or prices within a range) for a free night of accommodation. However, many programs have now introduced peak and off-peak pricing or an even more dynamic model.
Examples of heavily dynamic pricing include Hilton Honors and Marriott Bonvoy — two of the largest hotel loyalty programs. For dynamic programs, there is usually a cap on the number of points a property will require. An example of a hotel program with truly fixed-value rewards is Accor (previously mentioned above).
Generally, more expensive hotels are assigned a higher category and require more points to book. While this pricing model generally aligns the award cost with the cash price for a room, the price in points for a given hotel room doesn't typically change wildly from one day to the next.
For example, in the World of Hyatt loyalty program, the cost of a standard room is fixed for all hotels in the same category. So you’ll need the same number of points for a Category 5 Hyatt whether you're staying in Miami, Paris, or Hong Kong — this will only change according to each property's peak and off-peak dates. Peak and off-peak prices vary by no more than 30% of standard rates.
Related: Best Hotel Credit Cards With No Annual Fee
Strengths of hotel points
- Relatively easy to redeem
- Some aspirational awards available for a fraction of the normal price
- Elite status benefits can add extra value without spending more points
Hotel points are generally easier to use than frequent flyer miles for several reasons. Many hotels will let you use points to book any room available for sale. While this isn’t true for all hotel programs, you won’t run into the highly restricted award availability you often face with airline miles. It’s also easier to know which properties are redemption options. You can usually book any of a program's individual brands as an award.
Hotel points can make it possible to book really expensive properties at next to nothing. For example, in our post on luxurious Marriott redemptions, we highlight some examples of using points for properties that charge over $1,000 per night. These aspirational redemptions can be cool if they fit in with your travel plans, but they aren’t the only way to get good value. I've gotten some of my best value out of my Hyatt points on stays at run-of-the-mill Hyatt Place properties.
Related: 12 Best Hyatt Redemptions Under 12,000 Points Per Night (Over 4 Cents Per Point)
Another big advantage of hotel awards is the enhancement elite status can provide. If you book a standard room (at the standard price in points), you may end up with extra benefits like early check-in, late check-out, free breakfast, or even an upgrade to a suite.
Even better, you don’t need to spend a lot of money (or a lot of nights away from home) to get hotel elite status. Many of the best hotel rewards credit cards offer complimentary elite status or a way to achieve elite status faster with your regular spending.
Weaknesses of hotel points
- Often lower value than other types of reward points
- Limited booking options in some parts of the world
The primary weakness of hotel points is that they generally aren't worth as much as airline miles or transferrable bank points. Hyatt is a notable exception. With 70,000 Hilton or IHG points, you might get a free two-night stay at a mid-tier hotel. That many points might not even get you one night at a top property. Yet 70,000 United or American Airlines miles can get you a one-way business-class flight to Europe. Airline miles often provide between 2x and 4x more value than hotel points.
But that doesn't mean you should avoid hotel points. Not at all. I collect plenty. But you should get a feel for their relative value when comparing credit card welcome offers and deciding which card to use for everyday spending.
Lastly, if you like to wander off the beaten path, you'll find pockets of the world where it's impossible to use certain hotel points. You won't have trouble using hotel points in New York City, Paris, or Tokyo. But places like Corsica, France, and Salvador, Brazil, can be a different story.
Also, if you prefer to stretch your budget by having access to a kitchen or need extra space to stay sane on a family trip, a service like Airbnb might be a better option. In those cases, fixed-value points are a great way to use rewards to cover accommodation. A notable exception is the ability to use Wyndham Rewards points for Vacasa rentals.
Types of hotel points
Hotels that offer reward points for stays include:
As you'll see in the next section, Marriott Bonvoy is also the only major type of transferrable points that isn't a bank rewards program.
Transferable Rewards Points
Transferable points are the most flexible type of reward points because you can convert them into other types of loyalty points. These points may also be redeemable for a fixed value through a travel portal, as cash back, or as a statement credit for travel purchases. Many people value transferrable points the most since they offer the greatest amount of flexibility. This is their biggest feature.
When you transfer these points to an airline or hotel, they take on all the prices and rules of the partner program. Transfers are only one-way. In short, once you have moved them to a travel partner, you can't transfer airline or hotel points back into your transferable points account.
Related: How to Consolidate Transferable Points for an Award Ticket
Types of transferable points
The most popular transferable reward points are:
- American Express Membership Rewards
- Bilt Points
- Brex Rewards
- Chase Ultimate Rewards
- Capital One Venture Miles
- Citi ThankYou® Points
- Wells Fargo Go Far Rewards
In addition, the Marriott Bonvoy hotel loyalty program also functions as a transferable reward points currency since you can convert Bonvoy points into airline miles. It's worth noting that Marriott isn't the only hotel program that offers transfers to airline partners. We don't cover the others in depth because their conversion rates are generally terrible — think 10:1.
Strengths of transferable points
- Maximum flexibility
- Easy for beginners and rewarding for experts
- Less risk of devaluation
- Easy to earn
Since transferrable reward points can be transferred to a variety of other loyalty programs, these points give you many more options than other types of reward points. When you're ready to book a trip, pick the program that offers the best rules or price.
One can argue that cash is ultimately the most flexible. Some transferable currencies can be redeemed for cash at a reasonable rate, as well. I still recommend redeeming for travel since this is where you overwhelmingly get the greatest value.
For beginners, the sheer number of options can make it much easier to find something that works. As you learn more about the individual hotel and airline programs, you see that each has its sweet spots that offer especially good value. Points and miles experts love transferable points because they let you leverage the best parts of every partner program.
Here's a perfect illustration. If you need a short, nonstop flight, British Airways' distance-based awards can cost half as much as the competition. If you want to visit multiple destinations, a program like United MileagePlus lets you build them into your itinerary for the same cost as a simple round trip, thanks to its Excursionist perk. Since both are Ultimate Rewards transfer partners, Chase points allow you to capture the best parts of both airline programs while reducing your risk from a devaluation in either program.
Lastly, Chase points are among the easiest to earn. But each program has a full lineup of rewards cards that come with lucrative welcome bonuses and award points on your daily purchases. You'll never run out of options.
See the following:
- All of the Cards that Earn American Express Membership Rewards Points
- All of the Cards that Earn Chase Ultimate Rewards Points
- Build a Winning Combo of Citi ThankYou® Rewards Cards
- The 6 Best Capital One Credit Cards for Every Purchase
Weaknesses of transferable points
- Maximizing value can be complicated
- Easiest options provide less value
With so many ways to redeem your points, it can be more challenging to decide on the best course of action. If you're a perfectionist by nature, you may suffer from analysis paralysis and often be left wondering if you're getting the best possible deal. But many options are better than only having a few. Don't forget to place a value on the time you spend searching for awards.
You can also request expert help with a booking right from your AwardWallet account. If you have transferable points, your booking expert can provide even better options.
Most of the best transfer partners are airline frequent flyer programs. Transferring bank points to hotels or redeeming them for a fixed value is great, but simplicity comes at a cost. If you move transferrable points to programs with lower point values, you'll leave value on the table.
Collect Different Types of Reward Points
As you can see, there are many different reward points and many ways to use them! To take advantage of all their different benefits and avoid their pitfalls, it is a good idea to have a diversified portfolio. I try to maintain as many types of points as I can.
As an example, if you are headed to Greece, you could use Ultimate Rewards to transfer points to an airline partner to book your flights. You might be able to use hotel reward points for your stay in Athens. However, Greece's smaller islands have a limited number of chain hotels. You might decide to stay in an Airbnb and use fixed-value points from your Capital One Venture to cover those costs. Having some reward points of various types gives you flexibility when booking your trip and allows you to spend less out of pocket.
The moral of the story: Don't pigeonhole yourself into just one or two favorite programs. Diversify. And be sure to include some transferable points in your rewards arsenal. The best points are those you can transfer to your favorite programs and use in other ways.
Final Thoughts
If you're new to the world of points and miles, it can seem completely overwhelming. Learning the basics is critical. By understanding the different types of reward points, you'll lay a good foundation for figuring out your favorite loyalty programs and redemptions.
As you've seen, each different type of reward points has its own strengths and weaknesses. If you value simplicity, focus on fixed-value rewards and hotel points. Alternatively, airline miles and transferable rewards can be hugely rewarding if you don't mind the effort required to figure out their best uses.
For those just getting started, we cover award booking strategy extensively on the blog. Also, our Facebook community Award Travel 101 is a great place to start your journey. But, like most things worth learning, it takes time and energy to develop the knowledge you need. We're here to help!
For rates and fees of the cards mentioned in this post, please visit the following links: Chase Freedom Unlimited® (Rates & Fees), and Ink Business Cash® Credit Card (Rates & Fees)
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