Introduction to 'Transferable' Reward Points (2021)
- 1 What are “transferable credit card points”?
- 2 Transferable credit card points are better than regular frequent flyer miles
- 3 Transferable reward points versus fixed-value reward points
- 4 Introduction to the different transferable point programs
- 5 Comparing the credit card reward programs
What are “transferable credit card points”?
Each of the three biggest credit card companies operate their own reward program. Amex’s is called “Membership Rewards”, Chase’s is called “Ultimate Rewards”, and Citibank’s is called “ThankYou Rewards”.
The points you earn from these programs can be transferred to any of a bunch of different airline and hotel loyalty programs where they can be redeemed for free airplane tickets and hotel rooms. For example, you can convert your Chase Ultimate Rewards points into United miles to book an award flight to Europe, into Southwest points to pay for a quick flight to Las Vegas, or into Hyatt points to book a free hotel room in New York City. The points from these credit cards are like "miles" that you can magically use with any of a bunch of different frequent flyer programs.
In addition, you can use these points (like cash) to pay for most hotels, airline tickets, and other travel. For example, you can use your Ultimate Rewards points at 1.5 cents each to book a night at a traditional inn in Tokyo, an inexpensive flight on Norwegian Airlines, or a flight on American Airlines where there are no available frequent flyer seats.
Transferable reward points, earned directly from the credit card companies, are more valuable than regular frequent flyer miles. For most people, they are the best way to earn rewards from their credit card spending.
The points that you earn with the Marriott hotel program can also be transferred (at favorable rates) to airlines partners. Even though they are technically hotel points, they act enough like transferable credit card points to be part of the same discussion.
In addition, Diners Club, Capital One, and HSBC operate similar, but smaller, transferable rewards programs.
Each program has a distinct set of partner programs, different options for redeeming your points, and a separate set of available credit cards.
Transferable credit card points are better than regular frequent flyer miles
Earning points with Amex’s Membership Rewards, Chase’s Ultimate Rewards, Citibank’s ThankYou Rewards, and other transferable reward programs is almost always better than earning miles directly with a frequent flyer program.
- You can take advantage of award space on almost any airline. You can use frequent flyer miles for award tickets on any of the program's partner airlines. For example, you can use United miles on over two dozen different airlines that partner with United. However, if the available award space to your destination are with American Airlines or one of American’s Oneworld partners, you are out of luck.
- You can take advantage of whichever award redemption requires the fewest miles. Different frequent flyer programs require different amounts of miles for the same trip and have different rules and fees. For example, with most airline programs, a round trip to Hawaii is 45,000 miles in coach or 80,000 miles in business. But with Turkish Airline’s frequent flyer program, you can fly there (on United Airlines) for only 15,000 miles in coach and 25,000 miles in business. Rather than spending 45,000 United miles, you can spend 15,000 Turkish airline miles, for exactly the same flight!
- Or maybe you can get better value by using your points for a hotel room instead. It is much easier to find availability for free hotel nights than for free airplane tickets. For example, even over Christmas break, you could transfer 20,000 Ultimate Rewards points to Hyatt to book the Hyatt Maui or 12,000 points to book the Hyatt Place Waikiki Beach and easily get more than 2 cents per point in value—but you are extremely unlikely to be able to take advantage of frequent flyer tickets to Hawaii (at least at anything close to the normal mileage costs). To be fair, among the different transferable points programs, the only hotel transfer that usually makes sense is transferring Ultimate Rewards points to the Hyatt program.
- You can easily “top-off” your account balances. Over time, you are likely to build up points in several different reward programs from your paid hotel stays and flights or perhaps from credit card signup bonuses. However, you might not have enough points to make the award redemption you want. With transferable credit card points, you can often combine the points from your credit card with the reward points that are already in your account. Point transfers can also be used to keep an airline or hotel account active, so that you don’t lose your points.
- You can get better value if you need to “cash-out” your points. If you decide you can’t find good enough redemptions, you’ll generally get more value out of cashing-out your credit card points than you could by cashing-out frequent flyer miles. For example, you’ll only get about .5 cents for your Delta miles (by buying Amazon gift cards), but you can get 1.5 cents for your Ultimate Rewards points (by buying travel on the Chase website).
- The main drawback to transferable reward points is that you can’t always take advantage of “Anytime” awards on your most-frequently-used airline. When you want to fly on a specific airline with your transferable reward points, you will often have to transfer to one of their partners, because the airline itself isn’t a direct partner of your credit card program. You will then need to redeem a “partner award”, which only has access to regularly priced award availability. If you were collecting points directly with the airline, you would have the additional option to use a lot of extra points to book an "anytime award", even when there isn’t any regular (“saver”) award availability. For example, you can use Ultimate Rewards points to book flights on American Airlines via British Airways or Cathay Pacific’s frequent flyer program, but only if there is still availability at the regular rates. But you can only use American Airline’s own points to book more expensive anytime awards.
But with transferable points, you can transfer your points to at least one frequent flyer program that belongs to each of the three major alliances (and some extra programs as well). You can then redeem those frequent flyer points on each of those program’s partner airlines. In the end, each type of transferable reward point can be used to book frequent flyer tickets on over 100 different airlines. For example, if you have Ultimate Rewards points, you can transfer them to United to book one of United’s flights, to British Airways to book a flight on American, or to Air France to book a flight on Delta.
With transferable reward points, you are much more likely to be able to book the flights that work best for your schedule or take advantage of the only airline that has available award space to your destination.
Transferable point programs let you transfer to whichever of their frequent flyer partners requires the fewest miles, rather than being stuck with the award chart of a single program.
Transferable reward points versus fixed-value reward points
Don’t confuse transferable reward points, like Amex’s Membership Rewards, with travel redemption points that you get from credit cards like the Bank of America Travel Rewards card.
The points you get from Bank of America, U.S. Bank, and many other credit cards can indeed be used to book flights on any airline. But you'll always get a fixed amount of value per point.
Essentially, these credit card companies are just giving you cash back but forcing or encouraging you to use the cash to pay for travel. For example, the Bank of America Travel Rewards Card is going to give you 1.5 - 2.625 points per dollar and let you use those points to purchase travel at 1 cent each. It is essentially the same as earning 1.5 - 2.625% cash back.
Transferable reward points CAN be used in the same way, but they can also be transferred into actual airline and hotel reward points and then redeemed for frequent flyer tickets and award nights. While there isn’t always award availability, you have the potential for getting much more value from your transferable points.
As an example, if a ticket to Hawaii costs $600, you will need 60,000 Bank of America reward points to pay for the ticket, which would require spending $23-40,000 on the BOA Travel Rewards Card. Or you could book it with 25,000 Singapore Airline miles, by transferring in 25,000 Ultimate Rewards points, which you require spending less than $17,000 on the Chase Freedom Unlimited Card. Or even better, you could book it with 15,000 Turkish Airlines miles, by transferring in 15,000 Citi Thank You points, which would require spending just $7,500 with the Citi DoubleCash Card.
If you are booking business class tickets, the disparity is even greater. A $4,000 business class ticket would require 400,000 Bank of America points, or $152-267,000 in credit card spending. Booking it as a frequent flyer ticket might require 80,000 Ultimate Rewards points or under $55,000 in spending. Or even less, if you are able to take advantage of bonus rewards on travel or restaurant spending.
When you have a good opportunity to use frequent flyer miles, your transferable reward points are much more valuable than most cash-like credit card points. When there is no award availability or award prices are high compared to the cash price, you can use either of these types of credit card points to purchase tickets.
Only true “transferable” reward points let you get extra value from your points by finding good frequent flyer (and hotel) redemption opportunities.
Introduction to the different transferable point programs
The best transferable points reward program depends on whether you are comfortable using your points for frequent flyer tickets or whether you want to make sure there are easier ways to use your points.
During the Covid pandemic, Chase started allowing cardholders to use their points to offset grocery store, restaurant, and home improvement store charges made on their Sapphire cards. With the Sapphire Reserve, points are worth 1.5 cents each. With the Sapphire Preferred, points are worth 1.25 cents. For example, if you charge $600 at grocery stores, you can use 40,000 points to "erase" those charges from your bill.
This is a better deal than booking travel through Chase's travel portal. We encourage most people to hold onto their Ultimate Rewards points to use for Hyatt hotel stays and possibly frequent flyer tickets, but this new option is a great way to "cash out" your points at solid value.
We think Chase’s Ultimate Rewards is the best of the transferable credit card programs, especially for people who are just starting out. Ultimate Rewards Guide.
- The Ultimate Rewards Program has a small, but good, group of airline partners. Their partners include United Airlines (for Star Alliance awards without fuel surcharges), British Airways (for low-award-cost short-distance Oneworld flights), Southwest, and JetBlue.
- But what really differentiates the Ultimate Rewards program is that you can redeem your points for good values on something other than hard-to-take-advantage-of frequent flyer tickets. With Ultimate Rewards points, you can always get good value for your points (with very little effort) by booking award nights at Hyatt hotels, purchasing fixed-value award tickets with Southwest or JetBlue, or purchasing any other travel through the Chase website. In contrast, the only normally good options with Membership Rewards or ThankYou points is booking frequent flyer tickets.
- However, if you already gotten a few new credit cards in the past couple of years, you may not be able to take advantage of the program. You will be blocked from getting any of the Ultimate Rewards cards by the Chase 5/24 rule. Your only option for taking advantage of the Ultimate Rewards program would be to postpone getting other cards until you are back under the 5/24 limit.
The reason we unequivocally recommend Ultimate Rewards program is that you don’t need to mess around with trying to find a good opportunity to book frequent flyer tickets, when you don’t want to. But, in contrast to earning straight cash back, you retain the upside of using your points when you do find a good frequent flyer opportunity.
Amex’s Membership Rewards is the best program for anyone who is comfortable with using their credit card points for frequent flyer tickets. Membership Rewards Guide.
- Unless you find a good frequent flyer award ticket opportunity, you can only expect to get 1–1.25 cents in value for your points. Even though you can transfer to hotel partners, the exchange rates aren't good enough to make this worthwhile.
- If you DO plan to redeem for flights, Membership Rewards is better than Ultimate Rewards. Membership Rewards has many more transfer partners, making it more likely you can take advantage of a “sweet spot” that lets you book an award for less than the normal number of points. Unlike Ultimate Rewards, it doesn’t partner with United. On the other hand, Membership Rewards partners directly with Delta. If you live in Delta territory, this is a plus, as you can use your points for non-saver-level awards.
- You can get more from your points by taking advantage of Membership Rewards' promotions that give you a bonus when you transfer to selected airline partners. For example, Membership Rewards might give you 25% to 50% extra miles when you transfer your points to British Airways, Cathay Pacific, or some other program. You might get as much as 50,000 miles from only 25,000 points. Take Advantage of Transfer Bonuses to Get More Value from Your Reward Points.
- Membership rewards is the easiest program to build up points from signup bonuses and they offer very good earning rates in many categories. Amex cards offer the best possible reward rates on groceries and gas. If you are willing to put up with some quirks, you can earn 1.5 points per dollar on everyday spending (just like you can with Chase). And if you are willing and able to get a business card, you can earn 2 points per dollar on everyday spending. There are also many more options for earning lucrative signup bonuses than there are with Chase and no 5/24 rule to worry about.
Chase has only ever had one transfer bonus, while Membership Rewards offers several every year.
Membership Rewards with business cards
If you have any sort of a small business, even one that hasn’t made any money yet, you are eligible to sign up for small business credit cards. If so, the Membership Rewards program becomes considerably more valuable. Unlock Extra Reward Points with Business Credit Cards.
- You can get the Amex Blue Business Plus card to earn 2x points on all purchases. This is better than the 1.5x Ultimate Rewards points that you can earn with one of the Chase Unlimited cards. Get a Great General Purpose Reward Card and Use It for All of Your Spending.
- If you get the Platinum Business card, you gain the option to "cash out" your Membership Rewards points at 1.54 cents each. Whenever you purchase tickets from Amex Travel for your favorite airline or for any business or first-class seats, you can use your points at 1 cent each and get a 35% refund on the points you used. For example, if you want to purchase a ticket for $320, you would need to use 32,000 points. But then you would get 11,200 of those points back. When you do the math, this works out to 1.54 cents in value per point.
- This alters the dynamics of the Membership Rewards program and makes it more universally appealing. With this approach, you can always guarantee a floor of 1.54 cents in value per point, even without a good frequent flyer redemption. Like with Ultimate Rewards, you have a reliable way to get solid value from your points and still preserve the upside of getting even more value from a great award ticket opportunity. Plus, you get access to Amex's larger set of airline partners, frequent mileage transfer bonuses, and easier point earning opportunities.
- This flexibility comes with extra costs associated with the Business Platinum card. The annual fee for this card is $595. It does come many useful perks and benefits (shared with the regular Platinum card), a $200 credit that can be used for incidental expenses on a single airline of your choice, and $200 a year in credits for purchases from Dell. While it can be hard to fully use these credits, they can partially offset the annual fee. Which Premium Reward Card is Right for You?
Citibank’s ThankYou Rewards isn’t as good as the Ultimate Rewards or Membership Rewards program. ThankYou points are still very valuable and worth collecting, just not as valuable as Ultimate Rewards and Membership Rewards points. It falters in several different ways. ThankYou Rewards Guide
- They have a smaller and less valuable set of airline partners, although they still have a least one reasonable choice in each of the major alliances. On the other hand, they are the only program that partners with the hard-to-use but often valuable Turkish Airlines program.
- Like the Membership Rewards program, frequent flyer tickets are the only option for redeeming your points at more than 1 cent each. You are unlikely to be able to get good value redeeming points with their hotel partners. Until April 2021, existing Premier cardholders are grandfathered into the ability to receive 1.25 cents per point when buying travel through the Citi website.
- It can be hard to earn lots of points through signup bonuses. You can only earn a single significant signup bonus every two to three years. With both Amex and Chase, you can earn bonuses from a bunch of different cards. But, unlike Chase and Amex, you won't be blocked from future signup bonuses by the "5/24" or "once in a lifetime" rule. Even so, it is hard to get that excited about a program where you can only earn around 50,000 points every two years from signup bonuses.
- ThankYou points are tied to the specific credit card that earned them. If you cancel that card, you only have 30 days to use them or transfer them to a partner program. Alternatively, you can convert your card to the no-annual-fee Reward+ card, but then you will no longer be able to transfer them to airline programs.
- On the other hand, ThankYou credit cards earn valuable reward rates on spending. You can earn 2 points per dollar on all spending with the DoubleCash card versus only 1.5 points per dollar with the Freedom Unlimited card (you can also earn 2x with Amex, but only with a business card). The Citi Prestige offers the highest reward rate on restaurant purchases. The Citi Premier offers competitive reward rates on an unusually wide set of categories.
Marriott has the largest number of airline partners, but it is the hardest program to earn points with.
- Marriott gives you 25,000 miles for every 60,000 points you transfer. With the other programs you almost always get 1 mile per point. Even if you can earn twice as many Marriott points on your spending, you'll be getting less miles per dollar.
- Marriott has, by far, the largest and best collection of transfer partners. You can book on the widest range of airlines, better take advantage of non-saver award availability, and always take advantage of the best available redemption rates.
- The other major downside of their program is that it can take days, or sometimes even weeks, for points to transfer. Award availability might disappear before your points have had a chance to arrive. Even worse, you could wind up in a situation where your points are stranded in a specific airline program.
Capital One points
In 2018, Capital One expanded its points program to allow for point transfers to over a dozen airline partners. This option isn't available for all the Capital One cards, just the Venture Miles (personal) and Spark Miles (business) cards. Venture Points Guide.
- Like the Ultimate Rewards program, the Capital One program doesn't effectively lock you into using your points for frequent flyer miles. You can still receive 1 cent per point, or 2 cents per dollar, when you use your points to purchase any sort of travel. Of course, like the other transferable points programs, you have the opportunity to get higher value by converting your points to miles.
- Capital One points DON'T transfer on a 1:1 basis. You'll only receive 750 miles for every 1,000 points. But because you earn 2 points per dollar, you are still receiving 1.5 miles per dollar, which is essentially the same as the Chase Freedom Unlimited or Amex Everyday Preferred card. With Singapore Airlines, JetBlue, and Emirates you'll only receive 500 miles for every 1,000 points (1 mile per dollar).
- Capital One's program isn't as attractive as the other transferable points programs. Capital One's set of airline partners isn't as valuable and there are no good options for earning bonus category rewards. If you want to avoid the hassles of frequent flyer tickets, Capital One will give you more value per dollar than Membership Rewards or ThankYou Rewards, but not as much as Ultimate Rewards.
- We recommend earning Capital One points with signup offers (if you can), but we would use other cards for ongoing spending. You'll earn more valuable rewards with the Chase Unlimited combo or other everyday credit cards. With the points transfer option, Capital One "miles" are more valuable, but unfortunately it is still hard to get approved for their cards.
Comparing the credit card reward programs
Here's how the main programs stack up against each other:
|Chase Ultimate Rewards||Amex Membership Rewards||Citi ThankYou Rewards||Marriott||Capital One Rewards|
|Reward rates for credit card spending||Great||Great||Great||Poor||Good|
|Ease at building up points with signup bonuses||Good||Great||Okay||Poor||Poor|
|Overall Quality||Good||Better||Good||The Best||Less Good|
|Number of airline partners||7||18||12||35||14|
|Time it takes to transfer points||Instant||Instant for most||Usually 1-2 days||Usually 2-14 days||Instant or 1-2 days|
|“Cash” Value per point|
|With the right card||1.50||1.25-1.54||1.11||0.33||1.00|
|Good option for hotel redemptions||Hyatt||No||No||Marriott||No|
|Cheapest card to keep points alive (and transferable)||$95
(No card needed)
Here's the base values we assign to each type of point:
|Ultimate Rewards||Membership Rewards||ThankYou Rewards||Marriott||Capital One|
|If you highly value business and first-class tickets||At least 3 - 4 cents per point, sometimes much more||1 - 1.5 or more||2 - 3 or more|
|If you are patient and use coach tickets||1.5 – 2 cents or more||.5 - .8 or more||1 - 1.5 or more|
|Value of easier-to-redeem redemption options||1.5 - 1.75||1||1||.7||1|
|Value from using points to pay for travel||1.5
(w/ Sapphire Reserve)
(1.54 w/ Business Platinum)
|The “base value” we use for our calculations||1.7||1.5||1.4||.7||1.1|
Because there are so many credit cards, it is easier to build up large quantities of Membership Rewards points by taking advantage of signup bonuses. For everyday earning, Membership Rewards is a probably a little better. But Ultimate Rewards has a few extra options for earning 5x rewards. The following table compares the highest earning rates for the three major transferable point currencies
|Office Supply Stores||5||-||-|
blog comments powered by Disqus