Transferring Points

Transferring points to travel partners – an irrevocable action, and not without risk

The best way to extract value from credit cards using points is often through travel partners. Travel partners offer discounted points fares that are not available through your cards’ travel services. To take advantage of these discounted fares, points need to be transferred from your credit card awards account(s) to the travel partner awards account. These transfers are irrevocable, and particularly with airlines, not without risk. While transferring points can be with hotel partners as well as airline partners, this page focuses on airline partners as they present a greater challenge to book at discounted rates.

This page covers:

• The value of transferring points

• Opening award accounts

• Booking flights

• Pitfalls

• Summary

The value of transferring points

There are two ways to book flights through points: Book through the travel service of the credit card bank (ChaseTravel, AmexTravel, CapitalOne Travel, etc.), or by transferring points to the banks’ travel partners. In this case, you are booking directly through the travel partner.

Let’s first look at the value of points when booking through the bank travel service.

The bank travel service searches across all airlines for the best flight at the lowest cost, much like a travel agent does. They then inform you how many points would be required to purchase the flight, based on a cost of 1 point per $0.01 flight cost (with some exceptions). So, a flight with a cost of $700 would cost 70,000 points.

The exceptions noted above are as follows:

• Bilt provides point value of $0.0125 each, so a $700 flight would cost 56,000 points

• Chase awards a value of $0.0125 for Sapphire Preferred points, and $0.0150 for Sapphire Reserve points

• CITI offers a points back award of 10% for the first 100,000 points used annually. So using 100,000 or more points would receive 10,000 points back.

So, in summary, booking through the credit card bank travel services earns us at best 1.5 cents per point, and more commonly in the 1.0 – 1.25 cents per point.

Now let’s look at some examples of booking directly through the travel partner.

To get the best value through the travel partners, we need to search for discounted, or saver, fares. The landscape of when saver fares are available is constantly changing, so it may require some patience and a keen eye to find the deals.

The first case is a domestic flight with United Airlines. The images below show cost in dollars and in points for the same flight. To compare the value against the travel services, we need to calculate the cents we’re earning per point for the flights.

The simple math is: (cost of flight – cost to use points)/points used.

For the economy class, this is ($449 - $5.60)/15,000 = 2.9 cents per point

For business/first, this is ($869 - $5.60)/30,000 = 2.87 cents per point

The values are very similar to each other, and either class fare extracts much more value per point than booking through the travel services.

Next, let’s look at a first-class, international trip on Singapore Airlines, regarded by many as the most well-run and luxurious airline, from London Heathrow to Singapore. The below images show both the cost and miles required to reserve a first class seat on that flight.

The taxes (not shown) are GBP 275.72, and the conversion to USD (at the time) is 1.25 to 1.

The point value for this flight is: (GBP 6,155.72 – 275.72)*1.25/141000 = 5.21 cents per point.

This is an even greater value than the domestic flight, and significantly better than booking through the travel services. In fact, unless you are earning at least 2x points when purchasing on your card, you’re better off using a 2% cash back card and paying for your flight than you are using the bank travel services. For more information on cash back, check out our Maximizing Cash Back section.

Opening award accounts

Because discounted point offers can change quickly, time is of the essence when you find a fare you like. Points cannot be transferred to an airline award account unless an airline account already exists. If this hasn’t been addressed ahead of time, it could cost you valuable time in booking your award travel and could also lead to technical issues.

Our recommendation is to create award accounts in advance with all the major airlines you might use, as well as all major hotel chains. There is no charge for this, and it likely requires about an hour of your time.

Booking flights

To book at the travel partner discounted fare, you must first have points in that partner’s award account. This is done by requesting the bank source to transfer your points to that partner.

Once the points are transferred, booking is done through the airline award site.

Pitfalls

The action of transferring points to a travel partner is irrevocable. Once with the travel partner, they cannot be transferred back to the bank. If you found the best fares, transferred your points, and were able to book your desired flights, you’re all set!

The following are not uncommon issues in booking through partners:

• Booking, then finding a better fare – It is possible you may have booked a flight to Paris where the outbound cost you 70,000 points, and the return 117,000 points. Overall, the cost of the two flights is still a good deal. With continued monitoring, you might find a return for 70,000 points. It is easy to make the change by calling the airline, but the difference in points used, in this case 47,000 points, remains with the airline award account.

• Booking one-way, but not finding a reasonable fare in the other direction – Depending on your pain tolerance, this could mean paying a less reasonable fare for the other direction, or scrapping the flight altogether. The latter means that the points used to successfully book one leg of the flight would remain with the travel partner.

In both of the above situations, airlines may charge change or cancellation fees. Some offer such changes free of charge, while others charge up to $150 per change and $200 for cancellation.

• Not booking in time – In most cases, the transfer of points from your bank to the airline award account is immediate. However, with some partners, this transaction can take 1, 2, or even up to 5 days! If you try to use these points to book a discount fare, then the targeted fare may be gone by the time you can book it. In this case, the entire transferred amount remains with the airline award account. Continued monitoring may result in efficient use of the points, even for your current trip. If nothing opens up, and you don’t have sufficient points to book with another airline, you may find yourself in a bind.

Once points are with a travel partner, they are not lost…they are just locked in with that travel partner, and must be used with that travel partner. In addition, these points may expire with account inactivity. If you find yourself having points with a travel partner, ensure you read the agreement terms about point expiration, so you know how to keep them active until you need them.

Summary:

Opening award accounts in advance and understanding the expected time required to transfer points can help you best be prepared for successful transfer and use of your hard earned points.

If you seek help in booking your travel, please select the button below to view our service offer, or contact us at email@maxyourplastic.com. We’ll be happy to help!