These days, there’s a rewards credit card for just about everyone, including frequent travelers. Whether you fly around the country for work, enjoy taking your family on vacations, or love to sightsee solo, earning rewards on your travel spending is a great way to save money and get free perks.
However, if you’re sitting on unused travel points or miles, they aren’t doing you any good; you have to use your points strategically to get the most value of of them. So if you want to use your travel rewards but aren’t sure where to start, here’s what you need to know.
Travel rewards can come in a few different forms. It’s important to understand the various types of travel rewards so you can earn and redeem them strategically:
Once you’ve racked up some travel rewards, you have several ways to use them. Here are some of the most common options.
If you have a specific airline or hotel you want to book through, you can visit their website, log into your account, and purchase a flight or hotel stay using the points you have available. This is the most straightforward option for redeeming travel rewards. Plus, your rewards are often most valuable when used to book directly with the chain you earned points with.
Keep in mind that just like when you’re booking a flight or room with cash, the total number of points needed will depend on whether you’re booking a more standard or premium option. For example, plane seats in an exit row or business class will require more miles than a spot in coach. Similarly, booking a suite or poolside hotel room will require more points than a standard room at the base rate.
Most major travel card issuers have a special website for redeeming travel rewards. “Typically, issuers will have an online portal with redemption options including travel booking, travel reimbursement, gift cards, and cash (usually in the form of statement credits or deposits to eligible accounts),” says Rachana Bhatt, head of credit card, unsecured lending, and retail lending distribution at PNC. “Within each redemption category, consumers usually have the ability to choose from numerous options like airline tickets, hotel stays, car rentals, cruises, experiences, restaurant and store gift cards, and much more.”
The conversion rate for travel points is typically 100 points to every dollar. However, some card issuers may bump up the value of your points when you go through their portal rather than booking directly through travel partner websites. Chase Ultimate Rewards points, for example, see a 25% to 50% redemption bonus when used to book travel through the portal, depending on the particular card you used to earn them.
Some credit card issuers have partnerships with different hotel and airline brands to allow cardholders to transfer their reward points directly to the travel partner. For example, American Express has three hotel partners—Choice Privileges, Hilton Honors, and Marriott Bonvoy—as well as 18 airline partners, including Delta and JetBlue. Capital One is partnered with three hotel chains and 15 airlines.
“Leveraging points transfer partners is a popular way to use travel credit card rewards and can make cardmembers’ points go even further for them and their travel plans,” says Pam Habner, CEO of U.S. branded cards and lending at Citi. “Through points transfers, cardholders can redeem their points and convert them to another airline or hotel loyalty program which can provide cardmembers access to even more perks during their travels based on the loyalty program’s offerings.” Habner adds that keeping an eye on limited-time offers can help you find the best conversion rates for your rewards redemption.
While this is often the method for getting the highest redemption value from your points, keep in mind that it does require a lot more research and knowledge of how various loyalty programs work. Additionally, once you’ve transferred your points to a partner, you can’t transfer them back.
If you don’t want to go through the effort of comparing redemption options, points values, and loyalty programs, you could opt to use an award booking service such as Award Advocate or Mile Value. These services specialize in redeeming complicated travel awards, and will search for award availability and book travel for you, for a fee.
There are definitely benefits to going this route. For one, you’ll free up time to focus on other things while your travel is being planned for you. Plus, an award booking service may know about more redemption options that you wouldn’t otherwise be aware of, opening up possibilities for redeeming rewards at a higher rate. On the other hand, the fee to use these services will eat into any savings you secure.
One of the simplest ways to redeem your travel rewards is by booking your travel directly, then requesting a statement credit to offset the cost on your credit card balance. With this method, you don’t have to worry about comparing redemption values across multiple partners or programs—you simply get the value of your points added back to your balance as a credit, reducing the total amount owed.
The downside is that you might miss out on higher redemption values. points redeemed for a statement credit are worth about 1 cent each, versus the higher values you can enjoy by redeeming via other methods.
View this interactive chart on Fortune.com
Choosing the best redemption method isn’t the only way to maximize your travel reward values and save the most money. Here are a few more ideas to keep in mind:
There are a variety of ways to redeem travel points, including through your card issuer’s travel portal, directly through travel partner websites, by transferring them to your card issuer’s travel partners, or even requesting a simple statement credit.
Travel rewards are most commonly used to book flights and hotel stays. However, they can be used to cover a number of travel-related expenses, including cruises, rental cars, vacation packages, and more.
In general, one travel point or mile is equal to one cent. So if your flight costs $400, for example, you’d need 40,000 points to book it. However, it’s possible to redeem travel points strategically so that each point is worth more, requiring fewer points to book.
This story was originally featured on Fortune.com
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