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Today, TPG Senior Points & Miles Correspondent Nick Ewen shares the story of how a recent point transfer saved the day (and his travel budget), and explains why transferable points should be the focus of your award travel strategy.
Flexibility can be your biggest ally in the points and miles game. You’ll often find award inventory by changing your departure or arrival dates by a day or two, looking at nearby airports or adding a connection (rather than taking a nonstop flight). This is the main reason why transferable point currencies are so valuable; they offer automatic, built-in flexibility by allowing you to choose from a variety of transfer partners.
In this post, I want to demonstrate exactly how important that flexibility is by sharing an anecdote from my own travels, and explain why all award travelers should aim to have some kind of transferable points on hand.
How Transferable Points Saved the Day
I have long been a fan of these flexible loyalty currencies, but their power really hit home for me earlier this month. My wife and I are taking our daughter to Europe this November for her first birthday; our initial plan was to use Delta miles for one-way business class flights on Air France, and American miles for one-way business class flights on British Airways (we are squarely on Team TPG when it comes to children in first/business class). However, with Evy traveling internationally as an infant-in-arms, we would need to pay 10% of the adult fare plus taxes and fees, and unfortunately, both airlines tend to charge exorbitant fares for one-way tickets (around $8,000 each). We needed a plan to minimize our out-of-pocket expense.
Fortunately, two different kinds of transferable points came to the rescue. I remembered that Virgin Atlantic is a transfer partner of both Chase Ultimate Rewards and Citi ThankYou Rewards, and that Citi is currently offering a 25% transfer bonus to Virgin Atlantic. I had a decent number of ThankYou points from a recent sign-up bonus on the Citi ThankYou Premier Card and a bunch of points from my three Chase cards (the Chase Sapphire Preferred Card, Chase Freedom and Ink Plus Business Card).
In addition, Virgin Atlantic flights are bookable with Delta SkyMiles, and availability tends to be much better than transatlantic flights on Delta’s own aircraft. In fact, on our ideal dates, at least 9 business class award seats were available on the nonstop flights from Miami to London-Heathrow and back. Finally, Virgin Atlantic is one of the most generous airlines when it comes to bringing an infant with you on an award ticket, requiring just 10% of the miles redeemed (plus a fraction of the taxes and fees). London, here we come!
In the end, I did the following:
- Cancelled my existing award booking for 2 passengers from Miami to Paris (for free due to my Platinum Medallion status)
- Booked a round-trip business class award on Virgin Atlantic using SkyMiles for 1 passenger (125,000 miles)
- Transferred 60,000 ThankYou Rewards points to Virgin Atlantic (for a total of 75,000 miles after the bonus)
- Transferred 35,000 Ultimate Rewards points to Virgin Atlantic
- Booked a round-trip business class award on Virgin Atlantic using Flying Club miles for 1 passenger + 1 infant-in-arms (110,000 miles)
Virgin Atlantic does impose significant fuel surcharges on award tickets, but this cost still wound up being significantly cheaper than our original plan. Plus, we get to fly Virgin Atlantic Upper Class again, including access to the Clubhouse in London-Heathrow (I agree with TPG when he describes it as “one of the best airport lounges” he’s ever seen).
Why Transferable Points Are so Useful
Of course, my situation is very specific, and clearly won’t apply universally. However, transferable points come in handy in a wide variety of situations that make them a great option for just about everyone. Here are a few reasons why I highly recommend making transferable points the foundation of your award travel strategy:
1. Minimize exposure to devaluation — Earlier this month, TPG Contributor Richard Kerr wrote a brilliant article about why points and miles are a bad long-term investment. He pointed out the plethora of devaluations we’ve seen over the last few years, including these notable offenders:
- Delta SkyMiles has undergone a slew of devaluations like moving to a revenue-based earning model and creating a more dynamic pricing model for awards (as of June, 2016).
- Hilton Honors completely overhauled its program back in 2013 to the detriment of its members.
- Club Carlson implemented two devaluations just last month (one to its award chart and another to its co-branded credit cards).
- United MileagePlus raised rates on partner award redemptions, and then followed Delta’s lead by implementing a revenue-based model for accruing miles.
While transferable points don’t completely eliminate the possibility of an airline or hotel suddenly devaluing its program, it does minimize your risk of being left with a boatload of points or miles that you can’t use. For example, if an American Express Membership Rewards transfer partner changes its program without warning, you still have access to many other airlines that offer valuable redemption options.
2. Take advantage of transfer bonuses — When you earn with a credit card connected to a specific airline or hotel program, the points or miles simply post to your account. However, you’ll often see that currencies like Membership Rewards or ThankYou Rewards will offer transfer bonuses for specific partners. As I mentioned above, I took advantage of Citi’s current transfer bonus to Virgin Atlantic to book our flights in November, but there have been other recent offers:
- 25% bonus for transfers to Etihad Guest from Citi ThankYou Rewards
- 35% bonus for transfers to Virgin America Elevate from Membership Rewards
- 40% bonus for transfers to British Airways Avios from Membership Rewards
- 100% bonus for transfers to Hilton Honors from Citi ThankYou Rewards
In addition to these temporary transfer bonuses, the Starwood Preferred Guest program offers a consistent 5,000 mile bonus when you transfer 20,000 points to airline partners.
TPG pegs ThankYou Rewards points at 1.6 cents apiece in his most recent valuations, and he lists Virgin Atlantic miles just a shade below at 1.5 cents apiece. Based on these figures, the 60,000 ThankYou points I transferred were worth $960. However, by converting them to 75,000 Flying Club miles (worth $1,125), I actually increased their value by over 17%!
3. Redeem more efficiently — Each transferable currency can be used to cover both airline and hotel costs, which gives you the flexibility to redeem with whichever one offers the better value for your points on any given trip. In other words, when airfare is sky-high but room rates are reasonable, you can transfer points to an airline partner and pay cash for the hotel. Conversely, when flights are cheap but you want to stay at a luxurious (and expensive) resort, you can transfer points to the hotel’s loyalty program.
Let’s take Ultimate Rewards as an example. You can transfer to British Airways when you need to book expensive short-haul flights (one of the key benefits of distance-based awards using Avios). However, if your flights are reasonably priced, you can transfer points to Hyatt Gold Passport and redeem for nights at a luxury property like the Park Hyatt New York or Andaz Wall Street.
4. Cash in on bonus categories — A final benefit of these currencies is that the associated travel rewards cards tend to offer a greater variety of bonus categories for everyday purchases. Most co-branded airline or hotel credit cards offer fairly limited bonuses, mainly for purchases made directly with that specific airline or hotel. However, most cards connected to transferable points programs include a wider range of bonus opportunities. These are some of my favorites:
- Citi ThankYou Premier Card — 3x points on travel (including gas) and 2x points on dining & entertainment.
- Ink Plus Business Card — 5x points at office supply stores and on cellular, landline, internet and cable TV services (capped at $50,000 of spending annually), and 2x points at gas stations and on hotel stays (also capped at $50,000 in spending).
- Premier Rewards Gold Card from American Express — 3x points on flights and 2x points at US gas stations and US restaurants.
As a result, you may be better off using one of these cards when making purchases directly with a given airline. For example, Delta co-branded American Express cards offer 2 SkyMiles per dollar spent with Delta. However, if you use the Premier Rewards Gold card for those purchases, you’ll earn 3 Membership Rewards points per dollar spent, which can then be transferred directly to Delta. As a result, you can effectively earn 3 SkyMiles per dollar spent. You also won’t be pigeon-holed into earning Delta miles, since you can decide which transfer partner makes the most sense when you’re ready to redeem!
Transferable points came to the rescue for my family’s upcoming trip to Europe, and that’s just one example of how valuable these programs can be. One of the best pieces of advice TPG has ever given is to diversify your points and miles, and transferable points help you do this automatically. If you don’t currently have a card that accrues Membership Rewards, Ultimate Rewards, Citi ThankYou Rewards or Starpoints, I would strongly advise you to rethink that strategy. You never know when those flexible points will come in handy.
For more information, check out these posts:
- Top 5 Factors to Look for in Transferable Points Programs
- Choosing the Best Transferable Points Program
- Transferable Points Showdown: Which Program Wins?
- Comparing the Transferable Points Programs
What experiences have you had with transferable points? The Points Guy Assessment: The Chase Sapphire Preferred is a great pick for the beginner and the frequent traveler. The CSP has superb travel benefits, double points on certain purchases, and a 50,000 point sign up bonus. The $95 annual fee is waived the first year so this puts it as one of the less expensive cards, while still allowing you to earn one of the most valuable point currencies.
The Points Guy Assessment:
The Chase Sapphire Preferred is a great pick for the beginner and the frequent traveler. The CSP has superb travel benefits, double points on certain purchases, and a 50,000 point sign up bonus. The $95 annual fee is waived the first year so this puts it as one of the less expensive cards, while still allowing you to earn one of the most valuable point currencies.