INTRODUCTION

There are a variety of mileage/point programs out there, each claiming to be better than every other program available. Here’s a breakdown from my experience.

There are generally 2 types of mileage/point programs: individual airline programs (like United Mileage Plus) or generic credit card rewards (like Capital One Venture Rewards). Both types of programs have their advantages and disadvantages.

AIRLINE PROGRAMS

When you have points with a specific airline’s program, you’re generally “locked into” using your points with that airline, although that’s not necessarily a bad thing. Depending on the airline, you can redeem your points for flights on that airline AND partner airlines. For example:

– United is partners with almost 30 other airlines in the Star Alliance, some of which you probably have never heard of, but some of the big names include: Lufthansa, Singapore Airlines, Air New Zealand, Thai Airways, US Airways and Ethiopian Airlines.
– American is part of the OneWorld Alliance, which includes British Airways Qantas, Cathay Pacific, and Royal Jordanian.
– Delta is part of the SkyTeam Alliance, which includes Air France, Korean Airlines, KLM, Alitalia, and Aerolineas Argentina

For flights within the US, there are relatively few partners, but things really open up when looking to fly internationally.

GENERIC CREDIT CARD PROGRAMS

Many credit card companies have their own point system, like Capital One Venture Rewards, Chase Ultimate Rewards, and American Express Membership Rewards. Often times, these companies advertise that you can book “any flight, any airline, any time” – which can be a positive, but it is only the best value in certain situations, and you pay for that added flexibility.

Usually, when redeeming generic credit card reward programs, they give you a fixed rate that your points are worth, usually around 1 cent per point ($0.01/point). When looking at a flight, you can multiply the dollar amount (i.e. $300) times 100 to determine how many points you need for the reward ($300 * 100 = 30,000 points). So with 30,000 points, you can redeem your generic Capital One Venture Rewards for a flight that costs $300. The advantage is, you can use your points for essentially any flight, but this is a relatively poor use of points.

COMPARING THE TWO

$300 for a roundtrip isn’t sky-high, but for certain destinations in the US, prices can be $400, $600, or more. With generic credit card rewards programs, this translates to requiring 40,000, 60,000, or more points.

With most airline mileage programs, a standard roundtrip within the US is 25,000 points, regardless of what the “retail price” of the ticket is. Certainly, there’s an extra factor of award availability (not every seat is available to use your points for a reward), and availability can vary widely from airline to airline, but generally speaking, you can get way more bang for your buck with airline mileage programs.

Consider flying to Europe: if a roundtrip ticket is $1200, at a fixed redemption value of 1 cent per point, it’d cost 120,000 Capital One Venture Rewards to book the flight. With a standard mileage program requiring 50,000 points to fly to Europe, you’re getting much better value. Divide $1200 by 50,000 points to see the cost per point, and you should come out with $0.024, or 2.4 cents per point. In this case, an airline mileage point is 2.4 times “better” than a generic reward point.

The real “value” is even more apparent when it comes to international first and business class awards. In 2011, I took a trip in first and business class to Dubai, Greece, and Germany. The ticket would have cost a little over $15,000 if I had paid for it, but it only cost me 110,000 miles. The value from these miles: $15,000 / 110,000 = $0.136, or 13.6 cents per mile (13.6 times better than the Capital One Venture Rewards).

For some folks who only want to travel in the US, the generic reward programs can sometimes be a better option (since they do offer the flexibility to redeem on “any airline, any flight, any time”). But even for relatively expensive domestic tickets – and especially for international tickets – airline mileage programs are much more valuable.

One way or another, I highly recommend investigating and keeping up with at least one or two mileage programs. There are lots of sign up bonuses for things like TV service and credit cards, so it can be an incredible way to see the world. If you have any questions, feel free to post a comment below.