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With global travel plans on pause for many, hotels and airlines are doing everything they can to attract new business. We’re seeing especially generous promotions and some of the lowest prices in recent memory.
When the cost to buy travel with cash is lower than normal, your strategy for using rewards should change too. In our Facebook group, Award Travel 101, we discuss these topics daily. (If you haven’t joined yet, head on over and tell ‘em Joe sent you!)
Today, I want to share some insights from a recent Award Travel 101 conversation (check out the video) about flexible points—and why it's more important than ever that you know how to redeem them for maximum value.
- What Are Flexible Points?
- What is different in the COVID-19 era?
- Using Flexible Points for a Hotel Stay
- Using Flexible Points for a Flight
- Our Take
What Are Flexible Points?
Flexible rewards are points or miles that give you more than one way to redeem. The most common ways to use points are:
- Cashback — Exchange your points for cash.
- Statement Credit — Use rewards to get reimbursed for a travel purchase.
- Travel Portals — Pay for travel with points (usually through a specific “portal” or travel website).
- Transfer Points — Move your flexible points directly to a partner airline or hotel loyalty program.
We cover each of these in much more detail in our beginner's post on the types of rewards points. With flexible rewards, you have the choice of more than one of the methods above. Most of the time, one of those choices is a lot better than the others.
In this post, I'll show you how to make the right decision every time.
What is different in the COVID-19 era?
The conventional wisdom is that the fourth option—transferring points to other loyalty programs—is usually the best choice. When you see stories about using points for luxury travel like Emirates and ANA first class or Qatar QSuites, those redemptions often take advantage of transfer partners.
But right now, paid travel is cheaper than ever. And that means the other three ways to redeem your points are much more likely to be the right choice. Let’s take a look at some examples.
Using Flexible Points for a Hotel Stay
With borders closed to Americans, it's hard to get too excited about getting outsized value from overseas trips. However, flexible point currencies still quite valuable—just in a different way than before. That's because we have seen cash prices plummet for flights and hotels.
Let's start by assuming that you have two of the most popular types of flexible rewards:
- Chase Ultimate Rewards
- Capital One Rewards
Both of these rewards programs are running huge welcome offers on their flagship cards. So, now is a great time to start collecting these points.
- New Offer! Earn 100k bonus points after you spend $15,000 on purchases in the first 3 months from account opening. That's $1,250 toward travel when redeemed through Chase Ultimate Rewards®
- Earn 3 points per $1 on the first $150,000 spent on travel and select business categories each account anniversary year
- Earn 1 point per $1 on all other purchases - with no limit to the amount you can earn
- Points are worth 25% more when you redeem for travel through Chase Ultimate Rewards
- Redeem points for travel, cash back, gift cards and more - your points don't expire as long as your account is open
- No foreign transaction fees
- Employee cards at no additional cost
- $95 Annual Fee
- 3X points per $1 on the first $150,000 spent in combined purchases on travel, shipping purchases, Internet, cable and phone services, advertising purchases made with social media sites and search engines each account anniversary year
- 1X point per $1 on all other purchases
- Earn 100,000 Miles when you spend $20,000 on purchases in the first 12 months from account opening, or still earn 50,000 miles if you spend $3000 on purchases in the first 3 months; worth $1000 in travel if redeemed for a fixed-value, or potentially much more when transferred to airline partners
- 2 Miles on every purchase, plus earn 5 Miles on hotel bookings and car rentals through Capital One Travel
- Fee credit for Global Entry or TSA Pre✔® (up to $100)
- No foreign transaction fees
- $95 annual fee
- 2 Miles per dollar on every purchase, every day.
- 5 Miles on hotels and car rentals through Capital One Travel
Take for example the following domestic travel hotel stay. An upcoming weekend getaway to Dallas, TX at the Grand Hyatt DFW—which is a Category 5 property located in the airport terminal.
1. Transfer Chase Points to World of Hyatt
Category 5 properties cost 20,000 Hyatt points per night. World of Hyatt is a 1:1 transfer partner of Chase Ultimate Rewards, so you'd need to transfer 40,000 Chase points for a two-night stay.
That means the recently increased 100,000-point signup bonus from the Ink Business Preferred® Credit Card would normally get you five nights at this excellent hotel.
- 30,000 Hyatt points (transferred from Chase) if you hold The World Of Hyatt Credit Card
- 34,000 Hyatt points (transferred from Chase) if you aren't a Hyatt cardholder
But let's look at the other options to redeem points at this property.
2. Redeem Chase Points Through the Ultimate Rewards Portal
Instead of transferring points directly to Hyatt, you can also redeem Chase points for a fixed value through the Ultimate Rewards Portal. When the cash price is relatively low—like in this case—you'll spend fewer points with this method.
The value of each point depends on which Ultimate Rewards cards you hold. A two-night stay for $282.72 would cost:
- 18,848 Ultimate Rewards points with the Chase Sapphire Reserve® – at 1.50 cents per point.
- 22,618 Ultimate Rewards points with the Chase Sapphire Preferred® Card or Ink Preferred – at 1.25 cents per point.
But there are a couple of major drawbacks to booking hotels through a third-party like Chase (rather than directly with Hyatt). First, you won't earn points from your stay. Hyatt's Bonus Journey's Promotion offers triple base points on paid stays booked through Hyatt. (You must register here before January 15, 2021.) That's 15 points per dollar spent!
Also, Hyatt doesn't award credit towards elite status or provide perks to elites unless you book direct.
3. Redeem Capital One Points for a Statement Credit
Capital One Rewards are the perfect solution if you care about earning Hyatt points and elite status. With Capital One, you aren't required to book through a third-party website like the Chase Travel Portal. Instead, you simply book your stay directly with Hyatt and pay with your Capital One Venture Rewards Credit Card.
Then, just redeem your Venture Miles within 90 days for a statement credit that cancels out the cost of your Hyatt stay.
- 28,272 Venture Miles would cover a two-night stay for $282.72
While this is more expensive than redeeming through the Chase Travel Portal, it might be a better choice after you account for Hyatt elite status, and the points you'll earn from your stay.
4. Pay Yourself Back with Chase (Available for a Limited Time)
Groceries are a necessary item in most of our budgets, where travel may not be. But, instead of using cash to buy groceries and points on travel, what if you were able to do the reverse? That's possible for a limited time thanks to Chase's Pay Yourself Back (PYB) tool.
There’s been plenty of buzz relating to this feature that Chase implemented as a part of their response to the COVID-19 pandemic. This option was originally valid through September 30, 2020, but it has recently been extended through April 30, 2021.
If you decided to use points to PYB, you’d be able to redeem your points at the same rates listed in “option 2” above. For example, $300 worth of grocery store purchases would cost:
- 20,000 Ultimate Rewards points with the Sapphire Reserve at 1.50 cents per point.
- 24,000 Ultimate Rewards points with the Sapphire Preferred at 1.25 cents per point.
Then, you could take that $300 and pay for your stay directly with Hyatt.
But there are other variables that could reduce it even further. Paying cash will allow you to earn points in the process too. In fact, with so many stackable promotions right now, we created a tool that can quickly determine whether you should transfer points to Hyatt or utilize the Pay Yourself Back feature. Here's our recent Facebook video with more info on the tool!
Using the example provided above, two nights would cost me just shy of 13K after returning over 6K points from the credit card, promotional offer, base earnings, and my Globalist status.
Using Flexible Points for a Flight
Flexible points can create the same opportunities with cheap airfare. Let's take a look at flights to Dallas for the same weekend. For this example, we'll add another flexible currency, Amex Membership Rewards to the mix.
- Earn 60,000 Membership Rewards® points after you spend $4,000 on eligible purchases with your new Card within the first 6 months.
- Earn 4X Membership Rewards® Points on Restaurants worldwide, including takeout and delivery.
- Earn 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per calendar year in purchases, then 1X).
- Earn 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com.
- $120 Dining Credit: Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub, Seamless, The Cheesecake Factory, Ruth's Chris Steak House, Boxed, and participating Shake Shack locations. This can be an annual savings of up to $120. Enrollment required.
- No Foreign Transaction Fees.
- Annual Fee is $250.
- Terms Apply.
- Rates & Fees
- 4X Membership Rewards® points when you dine at restaurants worldwide.
- 4X Membership Rewards® points at U.S. supermarkets (on up to $25,000 per year in purchases, then 1X)
- 3X Membership Rewards® points on flights booked directly with airlines or on amextravel.com
- 1X on other purchases
- Earn up to a total of $10 in statement credits monthly when you pay with the Gold Card at Grubhub, Seamless, The Cheesecake Factory, Ruth's Chris Steak House, Boxed, and participating Shake Shack locations. This can be an annual savings of up to $120. Enrollment required.
1. Transfer Points to a Frequent Flyer Program
If you decide to transfer miles, here is how the costs will break down:
- 46,000 Amex Membership Rewards – Transferred to Delta Skymiles
- 41,500 Chase Ultimate Rewards – Transferred to United Mileage Plus
You'll notice I didn't include a flexible-points price for the American Airlines option in the middle. Both Amex and Chase points can be transferred to British Airways Executive Club, and British Airways points are a great way to book short, nonstop domestic AA flights. (We've covered this in strategy in more detail here.)
However, to book those flights, you need American to offer AAdvantage Saver award space. If AA.com were showing this flight priced at 25,000 miles for a round trip, we could book it using 18,000 British Airways Avios points—transferred from either Amex or Chase. But with the price at 30,000 miles, that option is off the table.
Related: Which Flights Can I Book with Miles?
2. Buy a Flight with Cash
However, if we're trying to conserve cash, you could use the Capital One Venture to book direct with American Airlines. Just like in the previous example, you'd redeem your points for a statement credit after making your purchase.
The flight above would cost:
- 19,420 Venture Miles — Redeemed for a statement credit with the Capital One Venture
Capital One has made huge strides in creating greater value for members by offering airline and hotel transfer partners. But in this case, “erasing” your charge is going to be the best option.
I'd much rather save my American Airlines AAdvantage miles for one of these higher-value awards. But is there yet another way that beats Capital One?
3. Redeem Points as Cash (Portal Booking)
Zero cash out of pocket, 12,947 points spent, and 870 AAdvantage miles earned make this a very inexpensive trip.
You can also redeem Amex Membership Rewards points for 1.0 cents per point (Amex Travel Portal). That would still be a lot cheaper than transferring Membership Rewards to Delta, but it doesn't measure up to booking with Chase.
- 12,947 Ultimate Rewards points with the Sapphire Reserve.
- 15,536 Ultimate Rewards points with the Sapphire Preferred or Ink Preferred.
- 19,420 Membership Rewards points with the American Express® Gold Card or other Membership Rewards-earning cards.
With flights, you don't have to worry about earning elite status. Flights booked through third-party sites like Amex and Chase are still eligible to earn frequent-flyer miles and credit towards elite status.
It's important to realize that not all award currencies are created equal. However, flexible point currencies such as American Express Membership Rewards, Citi ThankYou Points, and Chase Ultimate Rewards provide us all with opportunities to do more for less! When you have multiple options, you are no longer at the mercy of the individual program.
Which program do you find to be most valuable?
For rates and fees of the cards mentioned in this post, please visit the following links: American Express® Gold Card (Rates & Fees)
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