Airline And Hotel Program Devaluations Prove Why Transferable Point Currencies Are Critical

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As airlines and hotels continue to devalue their programs again and again, it becomes more and more obvious that putting your everyday spending on a co-branded card, like a Citi AA card, Chase United card, or Delta AMEX card, is foolish.

Those cards offer nice benefits like free checked baggage and more that make them worth keeping, but other than the signup bonus, they don’t offer a compelling value for spending. You should not lock yourself into any single mileage currency if you can avoid it. Airlines and hotels are not loyal and don’t deserve your loyalty as it won’t be rewarded in kind.

You can earn more points per dollar on everyday spending by using a card with transferable points like Chase Freedom Unlimited (Normally earning 1.5 points per dollar and currently offering 3 points per dollar for up to $20K in spending during the first 12 months on a new card signup), Chase Ink Unlimited ($500 signup bonus in the form of 50,000 points plus 1.5 points per dollar spent), or The Blue Business℠ Plus Credit Card from American Express (Earning 2 points per dollar spent on up to $50K in annual spending per primary card that you have).

Of course there are other cards that offer up to 5 points per dollar on bonus category spending:

  • Chase Ink Cash has a 50K signup bonus and earns 5 points per dollar on cable, TV, telecom, cellular, office supply stores, and gift cards from office supply stores, plus 2 points per dollar on dining and gas ($0 annual fee).
  • Chase Sapphire Preferred has a 60K signup bonus, earns 2 points per dollar on dining/travel, can transfer all Chase points into miles, and points are worth at least 1.25 cents each for paid travel ($95 annual fee).
  • Chase Sapphire Reserve has a 50K signup bonus, earns 3 points per dollar on dining/travel, can transfer all Chase points into miles, and points are worth at least 1.5 cents each for paid travel ($450 annual fee with $300 travel credit).
  • Chase Freedom has a 15K signup bonus and earns 5 points per dollar on rotating categories ($0 annual fee).
  • Chase Ink Preferred has a 80K signup bonus and earns 3 points per dollar on shipping, advertising, and travel, can transfer all Chase points into miles, and points are worth at least 1.25 cents each for paid travel ($95 annual fee).

But even more critically than earning more points per dollar, those cards offer “hybrid” points that allow you to choose between redeeming your points for cashback, redeeming your points for paid travel, or transferring your points to many different airline and hotel mileage programs.

A co-branded card locks your miles into one airline or hotel. When they devalue their points, your points are worth much less.

But if you have transferable points with cards from banks like AMEX, Capital One, Chase, or Citi you can find another airline or hotel that isn’t actively devaluing their points. Or you can redeem for paid tickets. Or you can cash your points out. That flexibility is valuable.

Having a Business Platinum® Card from American Express allows you to receive a 35% points rebate when redeeming points for paid coach airfare on the airline of your choice and on premium cabin airfare on all airlines, making the 2 points per dollar earned on The Blue Business℠ Plus Credit Card from American Express even more valuable.

If you have a Chase Sapphire Reserve your points are worth a minimum of 1.5 each towards paid travel. If you have a Chase Sapphire Preferred or Chase Ink Preferred your points are worth a minimum of 1.25 each towards paid travel. As you can earn between 1.5-5 points per dollar everywhere that means you earn a minimum of 2.25%-7.5% towards paid travel.

Airline miles and hotel points can be worth even more than 1.5 cents each and with transferable points you can see when the miles are worth more than 1.5 cents each and transfer them when you need them. By optimizing how you use them and transferring on demand, they won’t be devalued without recourse.

It’s true that as airlines and hotels devalue their programs that the upside of transferring bank points into mileage programs will go down. I still think there will be opportunities for outsized mileage values, but that they will become more rare as awards begin to shift towards dynamic pricing rather than published award charts. But that’s OK if you have a card that allows you to redeem for paid travel at a good value or look for value in mileage transfers. You just need to compare the cost of redeeming for paid travel versus the cost of award travel via a mileage transfer to an airline or hotel program.

In other words, if a paid ticket from JFK-LAX is $125 and the mileage cost is 12,500 you can use your Chase points at a value of 1.5 cents each and book the ticket for 8.3K points. Note that your spending earns more than 1.5% back as you also earn between 1.5-5 points per dollar spent.

If a last minute paid ticket from Cleveland to NYC is $500 and the mileage cost is 7,500 BA Avios (for travel on American) or 7,500 Avianca Lifemiles (for travel on United ) you can transfer your AMEX/Chase points into airline miles and realize a value of 6.7 cents per point. As you can earn between 1.5-5 points per dollar everywhere that means you earned between 10.05%-33.5% towards paid travel. One-way travel, last-minute tickets, and premium cabin travel often offer great values for your points.

You can use partner mileage programs, like Air Canada, ANA, Avianca, Singapore, and many more, to book travel on United for fewer miles than United charges. Same goes with Flying Blue or Virgin Atlantic for Delta travel and British Airways or AA travel.

That’s why even in an era of devaluations I’ll still be using mileage cards over cashback cards. At least until all of the transferable airline and hotel programs go full JetBlue/Southwest by directly tying the award cost of a ticket to the paid price, which would kill the ability to earn that outsized value. There’s no doubt that outsized values are becoming harder to obtain, but I don’t see it going that far. Of course only time will tell.

If that happens I’ll have to reevaluate what cards I should be using. Until then, strategies like the Chase Quinfecta and cards like AMEX Blue Business Plus suit me just fine.

Will devaluations change your spending strategy?

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33 Comments On "Airline And Hotel Program Devaluations Prove Why Transferable Point Currencies Are Critical"

All opinions expressed below are user generated and the opinions aren’t provided, reviewed or endorsed by any advertiser or DansDeals.

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Pete

I follow your strategy as well, and fully agree. Am starting to think about cash back cards a bit more though, but still not enough to forego spend on Chase UR cards.

anonymous

Dan- does AmEx give instant card numbers on business cards (Blue Business) too?

HY

Basically just stick with AR and UR besides for bonuses on airline/hotel cards. Is that what ur saying?

Helen

What about for International business class awards? Will you still be able to get outsized value when traveling to Europe, Israel, Asia, etc.?

Mitch

I spend aout $2 million on UPS shipping a year. What card would you suggest is best to use?

gemarakop

Are chase csp/csr really worth 1.25/1.5 anywhere or only what you can book on expedia?

eli

only expedia

Jack out of the Box

You can book only through Chase which has there system running primarily through Expedia.

PM

Great post. Thank you Dan. Overall this change will hurt more “opportunistic” miles collectors. The vast majority of people don’t know/use Avianca, ANA, Aeroplan, KrisFlyer or BA-Iberia-Aer combinations.

Another advantage of hybrid points

Another advantage of hybrid points over redeeming with airline points is that since you are redeeming your points for paid travel, you can earn airline miles for flying.

What’s your reasoning?

@Dan What’s your reasoning for preferring Amex Blue Business Plus over the SimplyCash Plus Business Credit Card from Amex?

Anthony

Dan,

Don’t ignore elite qualification bonuses for spending, which is the main reason why people spend (a lot) on Delta Amex cards.

Flying Jew

Thanks Dan

Can you or have you in the past posted how to book United rewards on other airlines for less miles? Is it simply setting up a FF account on those programs and searching awards?

Why does this anomaly exist?

Thanks

Steven Rothman

I disagree on using Flying Blue on delta – (I have 1.2 mil miles flying blue) …over the last two years, Delta was less miles every time I fly from LAX to YUL, Bos, or JFK. Flying Blue was more miles and $$

Zack

When booking through Amex Travel, does it count towards MQD, MQM…?

Nick

Dan, based on this post, I would like to transfer my Delta available credit to my Amex Everyday Preferred, and then cancel my delta card.

I have $30k available credit on each, is it safe to transfer the delta credit to the everyday, where the everyday would then be $60k credit limit?

Me

I am also focusing on the chase quinfecta for these reasons. I haven’t been able to bring myself to use the Amex blue business card much due to the lower typical value of MR vs UR. What percentage of spend do you aim for on that card?

David P

Is the double cash card from Citibank a good card? I think they offer 2% cashback on all purchases.

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