A Quick Introduction into Travel Points

I’ll keep the history part very short.

Points were developed by Airlines and Hotels to reward customers for being loyal to the brand. They were also developed to provoke people into continuously using the services of the company.

These days, most companies have loyalty programs and airlines/hotels seem to have the best. However, the companies also make it easy for you to waste your points, which is exactly what they want you to do. In order to make the best use of your hard earned points, you need to know a little bit about their valuation and what products you get the best value from.

Many people end up wasting points on silly products like IPods and espresso machines. Something like that. I’m not saying these products are silly – I’m just saying that buying them with points is silly. If you do the math, most products bought with points are an extreme waste of miles. The best value is with higher-end rewards like long distance flights or business class tickets. I will go into this in more detail further on.

A World of Award Programs

Points can be earned with many different programs. They can be earned with practically all the different airlines around the world such as U.S airways, Air Canada, American Airlines, ANA airlines, Alaska Airlines, Air Berlin, Etihad Airlines and almost any other airline you can think of.

Over time, you can sign up for all of them as various promotions come up. In the beginning however, it’s better to choose one airline from each alliance and take advantage of the many free offers for points throughout the year. Even if you don’t fly United Airways for example, they are part of the Star Alliance, which means you could use the points for other Star Alliance members like Air Canada (or vice versa). If you don’t feel the need to sign up for a reward program from each alliance at the moment, that’s fine – wait until one of them offers a little bonus for registration, which you’ll hear about in the deal alerts. At the very least, Sign up for an Aeroplan account. This is crucial for Canadians.

Why Earn Points?

Quite simply – for free flights! By earning points throughout the year, you can easily save up enough for one to four or more free flights. Most points come through free online offers or normal everyday shopping so it really doesn’t take much effort to earn them.

Another benefit is using them for high-cost travel such as business class flights to Europe, Asia, and Africa. Tickets for these types of seats often sell for thousands of dollars but can be had with points for much less.

Valuation

This is tough to say because it depends what you use your points for. A very conservative approach to valuing points is giving them a value of 1 cent for each point/mile. For example, 40,000 Aeroplan points would be worth $400 using this valuation. However, 40,000 points will send you on a return trip to Mexico, which is worth much more than $400 depending when you go. As you can see, travel points can be worth anywhere from 2-4 cents each when used for high-value travel. Note: Do not use the 1 cent approach for Air Miles. Air Miles are quite different. For example, it takes 1200 Air Miles to go from Calgary to Vancouver. That trip is worth more than $12. A rough estimate for Air Miles valuation can be around 10 cents per point. I don’t use Air Miles much but they can also add up to some great rewards. They tend to be a little more difficult to get compared to Aeroplan points but in the end, everything adds up and I don’t leave any option out.

When in doubt, take the conservative approach and use 1 cent per point.

Even using this approach, you will quickly notice how much of a waste it is to use your points for things other than flights. For example, when looking at the Amex Rewards brochure, an IPod Touch 64GB  is 70,000 points. That’s a whopping $700! You can buy them much cheaper than that in the store. Instead, you could use those points for a flight to Europe!

Flights are the best use of points. Even with flights, some are a better value than others. For example, It’s usually best to use your points for long-haul flights and avoid short-haul ones. It’s also best to check seat sales first because if you can grab an awesome seat sale, you’re better off paying for it (if you can) and earning points on that flight. Use your points for a later, more expensive flight.

Do Points Need to be Earned in One Program?

When it comes time to booking a flight, the points you are using MUST be in the same program. You can’t combine points from different airlines and you can’t combine two accounts into one. For example, you have 25,000 Aeroplan points but you need 40,000. You can’t take 15,000 points from your friends or families Aeroplan account. However, some programs do allow for transfers. For example, you can transfer AMEX points to Aeroplan and sometimes you can transfer Aeroplan points to many hotel programs – But generally yes, when it comes time to redeem, all the points must be with one reward program. However, you can earn reward points in as many programs as you like!

Expiring Mileage Accounts

Miles/points do expire! You need to know what the terms are of the reward program you are using. Many of them expire if there is no activity within a year and you do NOT want this to happen. In general, it’s quite easy to keep an account active. All you need to do is earn or spend 1 mile to avoid disruption. There are so many little promotions throughout the year that should stop this from happening. Also, don’t hoard miles forever. They do become devalued over time just like money. This is why its good to have a dream trip in mind and to take it once you have the points.