Editor's Note: This story originally appeared on The Penny Hoarder.
Whether you long to jump on a plane every possible break, or you’re saving up for that dream vacation, airline points and frequent flyer miles can make your dollars travel further.
Treat these credit card travel rewards like the financial asset they are. You can use miles and/or points for flights, upgrades, hotels, vacation packages, rental vehicles and more.
Airline miles and credit card points are digital money in the bank, the original cryptocurrency. We’ll explain exactly what points and miles are, the best ways to accumulate them and what you should consider before using them.
Know the Difference Between Airline Points and Frequent Flyer Miles
Frequent flyer miles turned 52 years old in 2024. In 1972, United Airlines began giving its passengers the first frequent flyer miles. A few years later, airlines started using miles to create rewards. Since then, they’ve become the standard for commercial flights.
Let’s start with some definitions. First, what is the difference between points and miles? Are they interchangeable?
Frequent flyer miles, or airline miles, accumulate from the flights you take. They can be figured in two different ways: One is based on the price of the flight; the other is a combination of the distance flown and booking class.
You can earn points on credit cards and apply them to travel purchases. For this article, we are focusing on credit cards tied to airlines. These points are usually, and importantly, transferable. Transferable points are credit card points that you’ve earned through purchases and sign-up bonuses. You can use them on flights, hotels and other deals.
Airline miles and credit card points are akin to money in the bank. Not a huge amount — points are usually worth between 1 and 10 cents apiece. They’re a fantastic tool to help make your travel fantasies come true. Like any tool, the more information you have on how to use them, the more useful they are.
Decide on a Rewards Card
You might use specific credit cards because they have no annual fee. A bank card can be easy to use and convenient to pay off. Some credit cards offer cash back after spending money in specific ways.
But if you are seeking out a travel rewards card, there are a couple of important financial habits to consider before finding the right one:
- Do you pay off your balance every month? Many no-fee cards have a no-interest grace period, but after it ends, a 20%-30% APR can be charged.
- Are you loyal to a specific airline, or use a variety to travel? If you usually stick to the same airline, lean toward getting their affiliated card. If you look for the best deal on any carrier, a travel reward card might be best.
- Do you pay your monthly bills by check, electronic transfer or credit card? Switching monthly bills to the credit card, as long as you pay it off, can accumulate travel points quickly.
Branded, or affiliated, credit cards often have an annual fee. If you plan on using your card’s points for travel, that fee could be worth the investment. Fees can range from $95 to more than $500 a year. Paying an annual fee of $250 might seem counterintuitive to saving. You can earn enough points to get round-trip airfare to Europe, though, and come out ahead.
There’s a caveat: Only plan on accumulating points and miles this way if you’re sure you won’t end up drastically increasing your debt instead of decreasing it.
Understand Your Travel Priorities
If you feel confident you can stay on top of payments, then your once-in-a-lifetime trip to New Zealand or your series of weekend getaways can cost less and be enjoyed more.
This is where understanding your travel priorities really matter. If you fly home a lot to see mom in Wheeling, West Virginia, and like to fly nonstop, then it would make sense to get a branded credit card from Spirit or Southwest airlines.
Which airline credit card is best for you? The Penny Hoarder has a great overview of the individual airline cards. Once you choose a card, you build your loyalty to that brand. Look at the airline and their affiliated partners to ensure they fly where you want to go.
There are credit cards that let you accumulate travel points that you can transfer to airlines, hotels, rental cars, cruises and vacation packages. These are called travel reward cards. The Chase Sapphire Preferred Card is a popular option. Though it has an annual fee of $95. This can be offset by point bonuses when you hit certain spending targets.
Another lauded, but more high-end travel card is the Capital One Venture X. You can earn a ton of bonus points and cash back if you use their website to book your travel. It has a higher annual fee of $395. Some of the rewards might be worth it, including lounge access at airports, and a $100 Global Entry credit.
A benefit of these cards is that they aren’t tied to a specific airline or any travel. You can use the points toward booking cruises, hotels and other vacations.
Check on Your Points’ Expiration
You don’t want to lose your points or miles.
Alaska, Delta, JetBlue, Southwest and United airlines points never expire unless you close your account.
Most other airlines have a certain amount of time of inactivity before the account is closed, ranging from six months to two years.
Points don’t expire on most credit cards, whether affiliated with an airline or not.
However, missing a payment or several payments, transferring points to another bonus program or lack of activity on a card might affect your points balance and access. If you are someone who juggles their credit cards, maximizing points on a travel card may not work out.
Use Your Rewards
Once you know what trip you want to take, it is time to use your credit card travel rewards. There are a couple of ways to do this, depending on whether you use a branded airline or a travel reward card.
For branded airline cards: You can use them on the airline’s website or through the credit card’s portal (which eventually will send you back to the airline’s site). Points and miles can be used to book an entire vacation package, or just the flight.
Depending on how many points you’ve accumulated, you can pay for flights, upgrade your seats, make onboard purchases, etc.
If you have a travel rewards card like the Chase Sapphire or Capital One Venture, you will book travel through their travel portal. They might offer cash back or points on some purchases. There are some third-party travel portals that you can work with, but they probably won’t maximize your points.
An important tip: Before booking your flights, hotels, etc., through a rewards card travel portal, calculate how much they would cost through other sites. Make sure you are getting the best deal possible.
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