Beginners Post: Five Types of Miles

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This is the fifth post in a monthlong series that started here. Each post will take about two minutes to read and may include an action item that takes the reader another two minutes to complete. I am writing this for an audience of people who know nothing about frequent flyer miles, and my goal is that by the end, you know enough to fly for free anywhere you want to go.

Where We Are and Where We’re Going

So far I’ve just tried to get you excited about the possibilities with miles, but now the real education begins.

And this education begins at the end. With miles you always need to work backwards from your goals to which miles are best for those goals to which strategy is best for earning the miles you need.

That means this section of the beginners’ guide will be about redeeming frequent flyer miles. Later posts will delve into the specifics of a type of miles–like American Airlines miles–but today I’ll start generally by talking about the five types of miles.

The Five Types of Miles from Easiest to Understand to Most Complicated

  1. Credit Card Points Pretending to Be Miles
  2. Airline Points
  3. Region-Based Miles
  4. Distance-Based Miles
  5. Transferable Points (ie points that transfer to two or more of the types above)

1. Credit Card Points Pretending to Be Miles

If you’ve seen a Capital One Venture Card ad with Jennifer Garner, you probably don’t understand what Capital One points are because the marketing deliberately obfuscates the product.

Whenever you see an ad that promises miles you can use on any airline with no blackout, the card does not earn true miles. It earns points worth 1 cent (usually) each toward the purchase of any cash ticket. Because you can redeem the credit card points for any cash ticket at a fixed rate, they can legitimately market the card as having no blackouts.

Cards that earn points that can be used at a fixed rate toward any flight are great for people who know how to find cheap tickets, people who don’t mind flying low cost carriers, people who need to travel on completely fixed dates, and families who travel in economy.

These are the simplest rewards program to understand: 1 point = 1 cent or 1.14 cents or whatever the company says they’re worth. You never have to search for award space (explained below); you just purchase any cash ticket on any airlines and redeem your points to offset the cost of the ticket.

Examples of Cards/Programs In This Category:

  • Capital One Venture
  • Barclaycard Arrival Plus and Arrival
  • Discover Miles
  • Many Smaller Banks’ “Miles Earning” Cards
  • Any Card that Promises Redemption of Rewards on Any Airline with No Blackouts

Program to Start with For Beginners: Start with the Barclaycard Arrival PlusTM World Elite MasterCard® with 40,000 bonus “miles” after spending $3,000 in the first three months. The card earns 2 miles per dollar on all purchases, and the miles are worth 1.14 cents each toward any flight, hotel, car rental, cruise, or other travel expense. It is the best of the bunch for its sign up bonus, value of its miles, and the fact that you can redeem for any travel expense not just flights.

Further Reading: Three Steps to Get $500 in Free Flights, Hotels, and Car Rentals from the Arrival Plus Card

2. Airline Points

Airline points are points that have a fixed value or close to a fixed value and can be redeemed on any flight that airline operates. The number of points you need is based on the ticket price.

These are conceptually very similar to the fixed-value credit card points above, except that these can only be used on one airline.

For example, Southwest’s Rapid Rewards can be redeemed for any Southwest flight with no blackouts as long as tickets are for sale. You just pay 70 Rapid Rewards times the base fare. A flight with a $100 base fare would cost 7,000 Rapid Rewards.

These programs are much easier to understand than traditional airline miles that require award searching (explained below) and amounts of miles based on an award chart and award availability.

Examples of Programs In This Category:

  • Southwest Rapid Rewards
  • JetBlue TrueBlue
  • Virgin America Elevate

Program to Start with For Beginners: If Southwest serves routes you want to fly, join the program and get one of the Southwest credit cards when the bonuses go to 50,000 points every few months. If you usually fly with the same companion, get the Southwest Companion Pass–possibly the best deal in travel.

Further Reading: Basics of Southwest, JetBlue, and Virgin America Points

3. Region-Based Miles 

The three legacy carriers in the United States–American, Delta, and United–plus Alaska and a host of foreign carriers like Singapore and AirFrance Flying Blue have region-based mileage programs.

Each of these airlines is a member of an alliance with a few dozen airline partners. You can use your miles on any of the partners. American Airlines is part of oneworld, and there are 24 airlines on which you can redeem American Airlines miles. United is part of Star Alliance. Delta is part of SkyTeam.

On its own flights, each legacy carriers either releases Saver award space or doesn’t (in which case it releases Standard/AAnytime/Level 2-5 award space.) Saver award space costs the fewest miles, but it is not available on every flight in every cabin. It is most available when the airline expects to have empty seats. Think unpopular days, routes, and seasons.

All partner award space prices at the Saver level, so if you are booking Cathay Pacific or Qantas flights with American Airlines miles, you are paying the Saver price.

The number of miles you need for an region-based award is determined by three things:

  1. The cabin you want to fly: economy, Business, or First
  2. Whether you found Saver award space or not
  3. The departure region and arrival region. The cities you fly into/out of don’t matter. Just the regions. Think North America and Europe.

Once you have those three piece of information, you read off the price of your award from the award chart of the airline whose miles you’re using.

These types of miles are complicated because you have to be proficient at searching for Saver and partner award space, or you have to hire an Award Booking Service like mine in order to maximize the value of your miles. But if you can handle the complexity, these miles are more valuable than any other type of miles.

If you find Saver award space, you can fly one way from Los Angeles to Paris in Business Class for 50,000 American Airlines miles. That’s probably a $2,000 ticket, which means it would cost about 200,000 Arrival miles.

American, United, Alaska, and Delta miles tend to be best for international trips, especially in premium cabins.

Program to Start with For Beginners: American Airlines has the cheapest award chart because United and Delta more recently increased the prices on their charts. You can go to Peru for 15,000 miles one way or Southeast Asia in First Class luxury for only 67,500 miles one way.

Some credit card offers in this post have expired, but they might come back. If they do they will appear –> Click here for the top current credit card sign up bonuses.

For a limited time, the Citi® / AAdvantage® Platinum Select® MasterCard® comes with 50,000 bonus miles after spending $3,000 in the first three months. The card also comes with other awesome benefits like a 10% rebate on miles used for award bookings.

The business version, the CitiBusiness® / AAdvantage® Platinum Select® World MasterCard®, also comes with 50,000 bonus miles after spending $3,000 in the first three months. This card comes with 2x miles on select business purchases and a 5% miles bonus on renewal. One person can have both cards. Getting both would be enough for a roundtrip anywhere in the world and up to four roundtrips to the Caribbean.

Further Reading: Basics of American, United, Alaska, and Delta miles

4. Distance-Based Miles

British Airways has by far the most important distance-based program though there are other distance-based programs like All Nippon Airways (ANA.)

With British Airways awards, miles needed for an award are calculated by adding up the miles needed for each flight on an award. The miles needed for each flight are calculated by only two things:

  1. the distance of the flight
  2. the cabin of the flight

All flights within a certain band, like 0-650 miles flown, cost 4,500 British Airways Avios. Flights from 651-1151 cost 7,500 Avios and so on.

You can see how these will have different strengths than region-based awards. With region-based awards your cities didn’t matter, so New York to London is the same miles as Los Angeles to Istanbul. In distance-based awards, your regions don’t matter so Los Angeles to Honolulu is the same price as Los Angeles to New York. (Normally awards to Hawaii are more expensive with region-based miles.)

The ideal use of distance-based awards is for short flights that would otherwise be expensive with region-based miles or cash. With British Airways Avios, for instance, the best deals are short, direct, economy flights in the Western Hemisphere.

5. Transferable Points

Transferable points are points you earn from a credit card that you can transfer to many different types of airline miles or other points. For instance, Chase Ultimate Rewards transfer 1:1 to six airline miles/points programs, four hotel programs, and Amtrak points.

Transferable points are awesome because they give you so much flexibility. Each airline program has strengths and weaknesses in terms of the number of miles you need and the availability from point A to point B. Collecting transferable points ensures that no matter where you decide to go, you can always transfer your points to the type of airline miles that is best for the award you want.

Transferable points are most valuable when there is a transfer partner in every alliance; when there are partners with region-based, distance-based, and fixed-value programs; and when the points can also be used like cash to buy flights.

Examples of Programs In This Category:

  • Chase Ultimate Rewards
  • Citi ThankYou Points
  • American Express Membership Rewards
  • Starwood Preferred Guest Starpoints

All four of the transferable points programs:

  • have transfer partners in all three alliance
  • have some partners with region-based programs and some with distance-based programs
  • allow you to directly buy flights with the points at a fixed rate (not that that’s necessarily a good idea)

As you can see, transferable points are the most complex. You need to understand the other four types of miles, so that you can understand your options with transferable points. But if you master the transfer partners, you will get more valuable from transferable points than any single type of miles.

Bottom Line

Those are the five types of miles:

  1. Credit Card Points Pretending to Be Miles
  2. Airline Points
  3. Region-Based Miles
  4. Distance-Based Miles
  5. Transferable Points (ie they transfer to two or more of the types above)

Did you notice they all have different strengths? That’s why it’s so important to diversify across the types of miles. You want to have the best mile for the job, and you want to use the types of miles in concert.

In the next few posts, I’ll explain in detail the most important programs, so that you’ll have an idea which miles you’ll need for your dream trip. Then we’ll work backwards and talk about all the ways to earn those miles.

 


Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

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13 COMMENTS

  1. […] For every dollar you spend on travel and dining, you’ll earn 3 Ultimate Rewards points. We value Ultimate Rewards at 2 cents each. They are quite versatile–you can transfer them (1:1) to seven different airline loyalty programs. That includes four programs with region-based miles, one with distance-based miles, and one with airline points. […]

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