Beginner’s Guide: Miles & Points

N.B. This post was published recently for an international audience at triptipedia.com, you can see that version here. Some amendments have been made here to to give UK based examples.

If you’re looking to travel the world on a budget, then collecting points and miles can be a good way to reduce your costs. Surprisingly this can be true even if you’re not a frequent flyer or regular hotel guest.

Points and miles schemes effectively provide an opportunity to build up travel credit, sometimes with specific brands (e.g. Hilton Honors points) and sometimes with the potential to transfer across multiple partners (e.g. American Express reward points). You collect points/miles, on spending and/or travel bookings, and once you have enough, you can then exchange them for reward flights or hotel nights. However, there are a lot of different schemes, with different set ups, which can make it seem complicated, and depending how you redeem points their value can vary significantly.

Here are some quick beginners tips for earning and redeeming points to use for travel…

Tips for Earning Points

1) Find a good rewards card and earn points on your everyday spending.

This is my favourite way to earn points, because it doesn’t have to cost you anything more than your usual spending. With a reward credit card, you earn points for every £ spent and often a decent points bonus on top, for meeting a spend target. As long as this spend target is consistent with what you’d normally spend anyway, then you’ll get points for just putting your money through a different card. Schemes with current UK rewards cards include American Express Rewards, Avios, Starwood Preferred Guest, IHG and Nectar.

For me, the best reward credit cards are those which allow you the flexibility to transfer points to multiple partners. In the UK, the cards with the most flexible points are American Express membership cards – and that’s where I started my point collecting. With the exception of IHG, Amex points can be transferred to all of the schemes listed above. It’s also worth noting that you can earn bonuses on more than one card, and these bonuses can be quite attractive. So often people will apply for additional cards to earn one bonus after another – some caution should be applied in relation to the potential impact on credit ratings though. My advice would be to start with one card and aim to earn a flight or hotel stay and then learn about the points systems as you go.

A good example of a point earning card is the American Express Preferred Rewards Gold Credit Card, which you can read my post about here. With this card you can earn over 20,000 points on the first £2,000 you spend – which can be worth as much as £200 in flights or hotel stays.

It is also important to remember to pay your statement in full each month if you’re using a reward credit card – otherwise the interest you pay will likely outweigh the benefit of the rewards you earn.

What can you get with 20,000 American Express points?

2) Register to earn points, and elite status, with any hotels brands or airlines you use regularly.

The more obvious way to earn points, is by actually using the hotels or airlines. If you travel for work or leisure, consistently using certain brands will allow you to build up points quickly. In addition, most brands have a ‘status’ system, where after a certain number of stays/flights/points, you earn additional benefits and increase the number of points you earn per booking. For example, after 20 Hilton stays you receive gold status, the benefits of which include free breakfast, upgraded rooms where available and an 80% points bonus.

If you really want to rack up points, you can use a rewards credit card for your travel bookings. Particularly if the schemes are linked, you can earn points on both, and sometimes get an additional bonus. For example in the UK flights booked with American Express Gold/Platinum cards earn double points (plus any points with the airline), as do IHG hotel bookings on the IHG Rewards Club Premium Credit Card. Some cards also give automatic status, which will add benefits and enhance the points earned on each booking.

Tips for Redeeming Points

1) Know the Difference Between Flight and Hotel Schemes

There’s a major difference between flight and hotel schemes. Hotel reward nights are completely free – once you have enough points you exchange them for a reward night and, usually, pay nothing in addition. Reward flights however, can be more complicated. Taxes and fees usually still apply for a reward flight, and these can vary greatly. It’s possible to get some very good deals on reward flights, but effectively these will always be a discount, rather than a completely free flight.

For example many British Airways short haul flights from the UK are capped at £17.50 taxes plus 7,500 Avios points (one way), which can represent a great deal. With other airlines, and for longer routes, the taxes may by £100’s though.

2) Check Whether You’re Getting a Good Deal

It’s important to check the points price (including taxes) against the cash price you would be paying. A quick Google search will tell you what to expect in terms of value per point, and you can then divide the cash price by the points required to check that. As a general rule, a rough guide for point values for some of the main schemes would be:

American Express Rewards: 0.45-1p (depending where you transfer them)

Avios: 1p

Hilton: 0.35p

IHG: 0.4p

Marriott: 0.5p

It’s really important to check as redemptions can vary significantly – in fact it’s not unheard of to see the taxes on a reward flight costing as much as the current cash price. That said, there are also some fantastic deals to be found, where you can save £100’s – it’s worth following points blogs to find out about these!

Avoid ‘gifts and giftcard’ redemptions with travel points – they are almost always a poor deal (i.e. 50%+ less value for your points). Also, whilst in some cases it’s possible, transferring points out of hotel schemes and into airmile schemes will usually offer a poor return.

3) Look Out for Points Promotions

This one applies to both earning and redeeming points really. By following points blogs, plus the schemes/brands you’re interested in, you’ll find out about the latest promotions. Usually you have to ‘opt in’ to these and once you do you’ll earn bonus points and/or get discounted points redemptions. For example Hilton currently have a promotion where you can earn an extra 2,000 points per stay, and IHG run a pointsbreak promotion each year, where you can book certain hotels for a discounted points rate.

Conclusion

Points and miles systems can seem complicated, but if you start simple and earn your first flight or hotel stay you’ll see the potential for some good savings on your travel. If you follow a few of the points blogs you’ll also quickly pick up some useful tips.

If you doubt how much value you can get from points, see my post detailing how I ‘Travel Hacked my Honeymoon’ earning a luxury hotel stay on my wedding spend.

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