Points, Miles, and Credit Cards: A Primer for True Beginners

I’ve been talking to a lot more friends and coworkers lately about my whole points/miles/travel obsession, and it’s always a topic that others find fascinating. After all, who doesn’t want to get more bang for their buck with their travel? As many of my regular readers already know, I like to take an analytic approach to my writing. I like to do a little math to figure out the true value of our points and the true cost of our trips.

Not long ago I created the Chase Ink/Bluebird Award Cost Chart, then followed up with the SPG/Bluebird Reward Cost Chart. If a true beginner were reading those posts they’d have no idea what I’m talking about. It would be completely over their head, and that’s nothing to be embarrassed about at all – we were all there once. In fact, even the concept of transferring points instead of taking cash back could seem confusing to some.

And that’s why I want to write this post – a sort of introduction to miles and points.

A lot of coworkers and friends I’ve spoken to recently have known that I’m big on credit cards and travel, but didn’t know the details of it. When I suggested they get the Sapphire Preferred card, they did…but didn’t quite understand why the card is useful. Sure that 40K point signup bonus could be worth $500 in travel, but I could make those points worth so much moreAnd that concept is hard for some people to understand sometimes. So, let me explain.

The true value of programs like Chase Ultimate Rewards (the points program that comes with the Sapphire Preferred card) and American Express Membership Rewards comes from the ability to use transfer partners. You will almost always get better value by transferring points to frequent flyer or other loyalty accounts than by using the points program’s fixed-value point system.

Don’t worry – I’ll explain with some real-world examples in a minute. But before I do, we have to do some math. It’s not hard math, but you need to do it even if you hate it because it is essential to figuring out whether you’re getting good value for your points. The only way we can determine that is by placing a dollar value on your points. You have to ask “how much is one point worth?”

Chase markets the Sapphire Preferred card’s 40K bonus by saying the bonus amounts to “up to $500 in travel.” That means their points are worth 1.25 cents each or $0.0125/point. So if you wanted to fly from LAX-JFK and found a flight for exactly $500, you could use your 40K points instead. If the flight costs $750, you would need 60K points ($0.0125 x 60,000 = $750). It’s a fixed value for each point. Similarly, American Express only gives you $0.01 per point (1 cent per point) with their program.

The beauty of these programs, however, is that you can transfer them to airline and loyalty partners and get much better value than 1.25 cents per point. With Chase, for example, you can transfer points at a 1:1 ratio to United Airlines and Hyatt Hotels, the two most popular programs. I’ll use these programs to show why transferring points is a better value than using Chase’s (or Amex’s) fixed-value system.

LAX-JFK in Economy

I’ll pick some random dates to make this easy. Let’s take a look at a round trip flight from LAX-JFK in September and evaluate the costs in cash, points using Chase’s program, and points using United as a transfer partner.

LAX-JFK in Economy

LAX-JFK in Economy

Let’s evaluate the above flight. The top red box shows that this flight would cost 25K miles plus $5 in taxes/fees. The second red box shows that if we were to buy this ticket using cash, it would cost $357.80. We can use these numbers to determine how much value we would get from our points by simple division.

You take the actual cost of the ticket, $357.80, and subtract the award taxes and fees of $5 (this is done because the $5 is already incorporated into the $357.80). Then divide that number by 25,000 points. So $352.80/25,000 = $0.014112. That means you’re using your points at a value of 1.4 cents each. You can already see that this is better value than if you used Chase’s program to buy the ticket.

If you did use Chase’s program, it would cost you 28,624 points to book the same ticket (28,624 points x $0.0125 cents each = $357.80).  You saved yourself 3,624 points by transferring your miles to United Airlines first.

Once you become a little more advanced, you’ll learn to take other things like mileage accrual into account as well. For example, if you did use the 28,624 Chase points to book the flight, you’d also earn United points for the flight (but you don’t earn points for rewards flights). If you factor that in it may end up being cheaper, but that’s a topic for a different time.

LAX-JFK in Business

Let’s take a look at the exact same flights, except this time we’ll fly in Business Class instead of Economy. If you’re reading my blog and others like it, you’ll see that a lot of what we like to do is travel in premium cabins. THAT’S where some of the best value comes into play, and on long flight’s it might be worth it to you (or you might choose to book Economy and save points for hotels).

LAX-JFK in Business Class

LAX-JFK in Business Class


As you can see, the amount of points required has doubled to 50K plus the same $5 taxes/fees. But if you were to buy this flight using cash, it would cost a whopping $4,273.80. Let’s do the same calculations we did for the Economy ticket.

By transferring our points to United Airlines, our cents-per-point value would become $4,268.80 (remember, I subtract the $5 taxes/fees) divided by 50,000 points = $0.085376, or 8.5 cents per point. That’s fantastic value. Using Chase’s program, the same ticket would cost 341,904 points (see image below).


It's almost never a good idea to use points this way!

It’s almost never a good idea to use points this way!


Would you actually pay $4,273.80 for a cross-country flight in domestic Business Class? Probably not. I know I wouldn’t. But there’s really no other way you’re getting that ticket, so it’s fair to say your points would be worth 8.5 cents+ in this case.

Oh by the way – your United points can be used on all of Star Alliance also, so you can get nearly anywhere in the world by transferring points to United Airlines. You can read my guide to redeeming points on United Airlines and Star Alliance if you’re interested.


It Works for Hotels, Too

Hyatt is the favored hotel transfer partner of Ultimate Rewards. While they don’t have hotels everywhere in the world like Hilton, they do have them in quite a few places in Europe and elsewhere, and the value can be tremendous. Let’s take an example of one night in Paris on Friday September 20th.

Hyatt in Paris on Points.

The Hyatt website is above and the Chase website is below.


The top half of the image is from the Hyatt website. As you can see the price is either $498.62 or 22K points. This gives us a value of $498.62/22,000 points = $0.02266, or about 2.3 cents per point. The bottom image is through Chase’s program, which charges 40,714 points for the same hotel (and again at the fixed rate of 1.25 cents each). Would you rather pay 22K or 40K points?

And that’s not even the best value. Paris happens to be home to one of the very best Hyatt hotels in the world, the Park Hyatt Paris-Vendome, which can get very expensive. But guess what – 22K points is currently Hyatt’s top-tier, highest category price in points. So that means…


The Park Hyatt is one of Hyatt's best properties.

The Park Hyatt is one of Hyatt’s best properties.

The same 22K points can get you a room that normally costs $836.50. That’s $836.50/22,000 points = $0.0380 or 3.8 cents per point. Either way, you’re getting twice the value (or more) for your points simply by transferring them to Hyatt.



There’s always a catch, right? Yes, there are a couple with these also. The biggest one is in regards to airfare, and it has to do with availability. Just because there are seats for sale on a particular flight doesn’t mean that an award seat is also available. Airlines open up availability depending on whether they think they can sell a seat for cash (which they’d prefer). If they can’t, in many cases they’ll open it up for points. It’s mostly based on their sales estimates and can be unpredictable unless you do this for a living.

That means that if you want to go to Europe during a holiday weekend like Labor Day, you probably wont be able to leave Friday after work like you want. You might not even be able to leave Saturday or Sunday either, because the airline might think they can sell those seats for cash. But once you learn about availability and how to search for it (see my Beginner’s Guide to Redeeming Points), then you’ll be able to figure it out – but it will take time.

The other hard part is if you’re traveling with a partner and need to be on the same flight (i.e. you need 2 tickets on identical itineraries). This is tough for international, premium-cabin trips during peak times. It’s not impossible – not even close – but you have to put in some time to make it work for you.

A co-worker of mine that’s been reading my blog just snagged 2 Business Class seats to Europe on Labor Day weekend after a couple of weeks of searching. He and his wife will be hitting up Barcelona, Paris, Amsterdam, and Dublin for much, much less than they otherwise could have. In fact, he decided to fly Economy on the way back in order to save for his next trip to Hawaii. But he put in his time to figure it out and learn, and that’s the key. How much time are you willing to devote to this to save money?


Just the Tip of the Iceberg

This is, as they say, just the tip of the iceberg. I only discussed two transfer partners from Chase, and there are several others. I didn’t even discuss American Express and their transfer partners. There are just so many ways to get more for your points, but you need to start reading and researching to get there.

I’m a fan of my Beginner’s Guide to Earning Points, but there are plenty of other points bloggers that have great beginner’s guides as well. You’ll learn that the single easiest way to earn points is by getting credit card signup bonuses. I know, I know…you think it will ruin your credit. It can if you’re reckless, but once you learn how credit actually works your score might actually improve. Mine definitely has.

So keep reading and researching and you’ll soon learn how to take a dream vacation every year at deep discounts!


  1. Great post! I like the scenario of considering using the points on Chase instead so you earn the miles on United if the value is close, I hadn’t thought of that.

    • Thanks – you know, as I was writing out that scenario I realized that it might not be all that clear even to those that have been following along for a while. I might write another post to dig into that a bit further.

  2. Much better than pictures of toast and hotel lobbies! 😉 I am sending it to a friend who closed his CSP account because he didn’t understand how to make it work for him.

  3. Great post my wife and I just booked a trip to Thailand with a stopover in Tokyo. Used 50,000 miles from United card plus 40k Ultimate rewards (each) for a grand total of 185k miles plus $170 in fees. We are flying back business/first and the cost of the same trip was $15600. I think we did pretty well using our miles for the first time.

    • Awesome! I think you’ll come back from that trip spoiled and ready to do it again at least every year! I also happen to be going to Tokyo for Labor Day and Bangkok in early January.

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