Maximizing the points you earn is only half the game. The other half is maximizing how you use your points. Good redemptions can more than double the value you receive from your points, effectively doubling your return on your credit card spending. In this post we will outline some general approaches to maximizing the value of your miles and points.

Pay yourself back (~1x return)

Most credit card programs have an option to “Pay Yourself Back” with your credit card points. While this can be a good option if you are in need of cash, it is also the option with lowest rate of return, typically <= 1 CPP (cents per point). If you are planning on spending cash on traveling then it is a far better option to use your points toward travel via the below methods.

Pros:

• Simple
• Can use for any airline/hotel

Cons:

• Lowest value

Travel Portals (1-1.5x return)

Credit card travel portals allow you to book flights, hotels, and more through a third party booking company. Typically you will be able to redeem your points at a rate of 1-1.5 CPP. Some examples are the Chase Sapphire Preferred at 1.25 CPP, Chase Sapphire Reserve and American Express Business Platinum at 1.5 CPP. One thing to note is that you will likely not earn any points or status with hotels through this method, but you can earn status and miles with airlines. This can be a good option if you are booking a hotel that is not a part of a major loyalty program.

Pros:

• Can use for many airlines/hotels
• Can earn airline status and miles
• Moderate value

Cons:

• Need to go through a 3rd party (this can be annoying if you need to cancel or rebook)
• Cannot earn hotel status or points

Transfer Partners (1.5-8x return)

All the major credit cards have transfer partnerships with airlines and hotels that allow you to exchange your credit card points for points in the partners program. Many of these programs have points or miles that are worth 1.5+ CPP on average. An example is Hyatt, a Chase transfer partner, that often has redemptions worth 2+ CPP. If you have a lot of points and are looking for a special experience many airlines have business class award tickets that can be purchased with points up to ~8 CPP allowing you to experience a $4,000-$10,000 flights for free!

Pros:

• Highest Value
• Can earn status with airlines and hotels

Cons:

• Limited number of transfer partners