The 5 Minute Guide to Point Redemptions
Life's too short, let's get started!
Welcome to the 2 new Thinker who joined Thinking Cap(ital), thanks for continuing to share this with friends, we’re now 145 strong 💪
In the past few weeks we discussed a few of my favorite credit cards for points (here) as well as some strategies to get over the minimum spend hurdles to achieve the bonuses (here).
After reading the top 3 guides (Points Guy, Upgraded Points, Nerd Wallet) to getting started with points, I wanted to synthesize the info into a 5 minute post, welcome to said post!
We’ll break it down into 3 sections:
Why should you care?
Vocabulary
Taking stock before taking off…
I’ve said it before, and I’ll say it again. All of this assumes that you’re ready, willing and able to pay your credit card bill in full each and every month.
Your mission, should you choose to accept it is to use this guide to start planning a vacation for yourself.
Why should you care?
The best convincing I can do is share some of my own results. In the past few years I’ve booked the following reward flights:
First Class from LA to Tokyo via ANA, typically $14,000 each way, can instead be booked for 55k miles. If you were to redeem those miles for cash, they would only be worth $550
Business Class from NY to Milan via Emirates, typically a $3,000 RT flight, can instead be booked for 90k miles. Cash value would have only been $900
Room at Hyatt Andaz 5th Avenue, typically $540 per night for 25k points which would have only been worth $250
As you can see, the more luxurious the experience, the higher the savings. Not to say that I would ever spend $14,000 on a flight, but I definitely enjoyed the experience way more than $550 worth. Points enable once in a lifetime experiences to happen once a decade or more if you’re planning for them.
Vocabulary
To me, the hardest part of starting a new role or working in a new field is always the vocabulary. While most of what we do is similar across sectors, here are a few terms you’ll encounter that are worth understanding from the start:
Points, you already know what it means, but don’t be tricked into thinking that all points have equal value. The best points are those the are most transferable and maintain a strong transfer ratio. The top three point programs are American Express, Chase & Capital One.
Transfer Ratio, since the best bookings almost always involve a transfer from your credit card to a specific airline or hotel, you’ll have to keep the transfer ratio in mind. From credit card to specific airline/hotel is typically 1:1 or more favorable, but from specific program to the credit card is at best 1:1, but sometimes far less favorable. For example, Marriott to an airline takes 3 Marriott points for 1 airline mile, meaning the Marriott points are inherently less valuable.
Redemption, the act of trading points for a flight or hotel.
Sweet Spots, redemptions that are particularly favorable. These are the two magic words to keep in mind as you’re searching for redemptions to a specific destination or through a specific loyalty program (credit card/ airline/ hotel).
For example, searching “Capital One sweet spot redemptions” yields a fantastic article highlighting 5 options. If you already had a destination in mind you can simply replace “Capital One” with your destination.
Taking stock before taking off…
Ok, I hope I have inspired to care a little bit more about points and mile. So, where should you start? I think you should start with a destination in mind. Let’s say you’d like to visit Hawaii and want to do it in Business Class.
First, I’d search “Hawaii sweet spot redemption” and perhaps come across that same article, detailing the Turkish Airlines partnership with United:
You’ll need 12,500 miles each way and you’ll have to search for a “United" Saver” award via their website.
Next, I’d ensure there’s availability for my flight. Once I feel comfortable that there’s a decent amount of availability for the time of year I’d like to go, then I’d either create a Turkish Airlines account or transfer my miles to an existing account.
If I don’t have sufficient miles, then at least I found a redemption that interests me, which would allow me to more confidently apply for a new card, especially if the intro bonus will cover my flights (once I hit the minimum spend).
It’s as simple as that. Find a route that excites you, ensure there’s availability, and then get the card.
If you’re a bit more seasoned and already have a few cards, you’ll want to optimize for transfer partners missing from your portfolio, annual fees that pay for themselves, benefits that aren’t redundant (there’s only so many Priority Pass memberships that a person can use).
Where do you want to go? Please reply with a sweet spot that you’ve found or have set your sights on and I’ll recap in the next issue!
🛫 Bon voyage!
Armand