So, you want to learn how to unlock discounted or free travel? Credit cards points or miles may seem like a complicated concept or something only for high spenders, but this is not true!

Credit card points and miles are for anyone no matter how much you make, and while you may see travel cards with fees that cost nearly $1000 a year, there are many travel cards that are under $100 a year or even free!

Follow this guide and you will learn almost everything you need to know about points and miles, how to earn them, and the way to get the most out of them for maximum value

Very simply, credit card points/miles are currencies that are given to you as rewards for using your cards. These points can be used for things such as, cashback, travel portal redemptions, or sent to hotel and airline transfer partners the bank has agreements with.

The main focus of this article is transfer partners as these provide you with the most value, however cashback and travel portal redemptions among other things offered by the card issuer can sometimes be close to or better then transfer partners, but most of the time this is not the case.

This article will have a lot of terminology so I will explain it all here

• Transfer Partners

  • These are airline and hotel partners the card issuer has partnered up with to allow you to transfer your card points to the partners rewards program, usually the transfer rate is 1 credit card point equals one transfer partner point, but sometimes the transfers are not equal, and you should check this before transferring points to make a redemption, sometimes there is a transfer bonus as well. The rates are commonly quoted as 1:1 or 1:2 or 2:1, with the first number being the ratio of the credit card and the second being the ratio of the transfer partner. Usually, you have to transfer points in batches of 1000 

• Transfer bonus

  • A limited time bonus that allows you to get more points than you would normally get transferring to that partners program. For example, if the partner has a normal transfer rate of 1:1 with a 40% bonus, the transfer rate now becomes 1:1.4

• Foreign Transaction Fee (FTF)

  • A fee charged for purchased made not in USD, usually 3%, most travel credit cards with annual fees dont have this. All Capital One cards do not

• Annual Fee

  • The fee that is charged every year to hold the credit card

• Effective annual fee

  • The annual fee minus the value of the credits you use, this number can be negative, meaning you are earning more than you are spending on the annual fee. 

  • REMEMBER, the effective fee should only include credits that fit your lifestyle, and you would use before or use naturally, using credits you would never have used before just to justify the fee is not saving you money!

• Credits

  • Perks the card offers that have a direct cash value and are often reimbursed as statements credits after you use the card somewhere

• Earning Rate

  • The number of points or cashback you earn per $ you spend, expressed as X for points and % for cashback cards

• Cashback

  • Credit card rewards that are given back as cash as a percentage of each dollar spent

• Cashback equivalent

  • The equivalent you would earn as cashback if you account for the value of the points

  • This is calculated as: Points earning rate x CPP = cashback equivalent %

• Sign Up Bonus

  • An introduction bonus you get when you open the card requiring you to spend a certain amount of money in a specified amount of time to earn a specified number of points, this is usually way more than you would get if you spent this amount normally and is a great way to jump start you rewards journey and is important when deciding what cards to sign up for

  • Make sure you have a plan on how to meet this bonus before you get the card!

• Pop up jail

  • something preventing you from getting a sign-up bonus, usually to many cards in a certain amount of time or you earned the bonus before

• 5/24

  • Chase's rule where they will not approve you for a card if you have opened 5 or more cards in the last 24 months

• Credit Card Ecosystems

  • A collection of cards (usually two or three) that collectively earn points in a single points system, this usually consists of one or two special category cards (usually for dining and groceries) and one catch all card with a higher flat rate then special category cards for categories with no bonuses

• Sock Drawer Card

  • A credit card you have but don't use for purchases but has benifits such as allowing points transfers or lounge accsess.

• Nicknames and Programs

  • AmEx-American Express

  • MR- Amex Membership Rewards, AmEx's points system

  • UR- Chase Ultimate Rewards, Chase's Points System, all Chase cashback cards earn UR but cannot be transferred without a Sapphire or Ink profred card

  • C1- Capital One

  • C1 Miles - Capital Ones points system

  • C1 Rewards Dollars- Capital Ones cashback system that can be exchanged for C1 Miles with any Venture card or Spark Miles Card

• Cents per point (CPP)

  • The unit you use to determine the value of a credit card point expressed as the number of pennies each credit card point is worth

  • Here is a good guide to determine if you are getting good value from your points

    • 0-0.9 CPP, DO NOT REDEEM, this is worse than cashback, 

      • the only exception this should be made is in non-transferable points systems, mostly hotels and hotel cards, as the earning rates on these are much higher than normal transferable points card many times being double or triple what transferable points cards earn thus offsetting the poor value of induvial points as more points are earned

    • 1-1.4 CPP, decent but the same or better then cashback, would recommend saving for higher redemptions but if you need to travel or have tons of points this is not bad

    • 1.5-2 CPP, very good redemption rate, this will let you earn many more points than most cashback cards creating lots of value

    • >2 CPP, insanely good redemption rate, a great value and in most cases better than paying cash

    • Check the graph below to learn how to calculate CPP

Keep in mind when you redeem points there is usually a fee, usually for taxes, this should be subtracted from the cost that you would have paid if you paid cash as shown above

The number of points per redemption should be the number of points you transfer from your credit card to the transfer partner, NOT the number of points the redemption itself is unless you did not transfer any points

There are many ways to earn points, the easiest and most common way is just by spending on the card. The base earning rate is usually 1x. Most travel cards have certain categories that earn higher amounts of points, usually categories such as dining, groceries or travel.

When picking a card, try and find one that has higher rates on your most used categories, usually around 3x or 4x.

Catch all cards are cards that have a flat earning rate that is higher than a travel card but have little or no bonus categories. The flat rate on this card is usually 1.5x or 2x, making them good cards when you don't have a higher rate in that category but still allowing you to earn more than 1x.

The next way to earn points is a sign-up bonus. As mentioned above it is a bonus of points you earn for spending a certain amount of money over a certain amount of time after opening the card and earns you many more points than you would normally earn making it a great way to jump start your points and miles journey.

Referrals are a good way to earn some bonus points too. Referrals are when you send your friend a link to sign up for a card, if they are approved you get a kick back for getting them to sign up. This is great for you, but also sometimes referral bonuses earn your friend a better deal than they would get on their own! (If you see any cards you want on one of my videos or website, use my referral link!)

As you will notice, most of the time one card does not fit all and you will need multiple cards from the same issuer to maximize points. These are called card ecosystems, credit cards that earn the same points system but at different rates. This consist usually of 2-3 cards per ecosystem. 

In many cases free cashback cards will serve as one of the cards, but a paid travel card will allow you to exchange that cashback into points. AmEx is the exception as their cashback and points cards are entirely separate and cannot be exchanged

Common Ecosystems

These are some of the most common card ecosystems