Are You Earning The Right Airline And Credit Card Rewards?

Redeeming airline frequent flyer miles for free flights is already difficult, and it is going to be getting even harder.

In an excellent New York Times article, “Guesswork in Cashing in Delta’s Frequent-Flier Miles,” personal finance columnist Ron Leiber highlighted that Delta, in particular, is making it harder to obtain information about redeeming frequent flyer miles and will be making further program changes for travel after June 1, 2016.

Delta recently issued a statement, saying “for travel on or after June 1, 2016, the number of miles required will change based on destination, demand and other considerations. But most Award prices will remain unchanged.” As Leiber criticizes, Delta did not provide any further details.

Our thoughts and recommendations:

You should evaluate how to get the most benefit from your travel and credit card spending. What has been best in the past may not be the strategy you should continue in the future.

The theoretical “standard” that 25,000 frequent flyer miles will get you a free flight is a thing of the past. A Delta spokesperson in May stated “you’re going to see that completely change.”

Based on Delta’s statements, you should try to redeem Delta frequent flyer miles as soon as possible. It will likely be advantageous to redeem them for travel before June 1, 2016. This may also apply to other airline reward programs, as they may also impose stricter redemption criteria.

You should determine how best to accumulate and use credit card reward benefits. The optimal strategy may be different for each person, based on their spending, travel habits and locations. The key is to think about this and decide what is best for you.

It makes sense to have a credit card that can provide you with perks such as free checked baggage, which Delta’s American Express card provides. But that does not mean you then need to use this as your primary spending card. You may be able to get better overall benefits than accumulating Delta travel miles from this card.

Using credit cards that offer cash back may be more valuable than frequent flyer airline miles. Some credit cards offer 1-2% in “cash back” for credit card spending, in addition to bonuses that can be as high as 5-6% at varying times and for selected types of purchases. Credit cards such as Chase Freedom and Discover offer these benefits, but these added perks must be activated quarterly. Certain Capital One credit cards offer 1.5% in cash back. You need to research these, as offers and benefits change.

As Leiber’s article points out, you should be trying to get a benefit of at least 1%, if not closer to 2% on your credit card and frequent flyer points. It can be very difficult to calculate the real value of airline and hotel award points. We think credit card cash-back rewards may be worth more than airline frequent flyer miles, which can be hard to use and determine if you are actually getting at least 1-2% value. Leiber’s article cites a few websites that provide more detailed information on this topic.

Hotel reward points and perks may also be more beneficial than airline frequent flyer miles, particularly if you also use a hotel’s branded credit card. If you do travel frequently and stay at certain hotel brands, it may make sense to use that hotel’s branded credit card. This can provide you with significant benefits, like immediate or quick free points (= free room nights), additional points for each stay, elite status (like room or club level upgrades) and other benefits.

Other credit card and related recommendations:

 * If you have a credit card that offers quarterly benefits, like Discover and Chase Freedom, make sure you activate these benefits each quarter. They can send you an email alert quarterly, which simplifies this.
* Redeem your cash back points. If you are accumulating cash back on a credit card, you don’t need to let the cash back balance to keep growing. For example, redeem your money every 3 months.
* Try to use your frequent flyer points in the near future, to test their availability and quantify the benefit, as well as to use them before they lose even more “value” in 2016.
* A premium credit card with an annual fee may make financial sense, if you actually utilize the “extra” benefits.
* Read the fine print and understand all the benefits of your credit card or reward program. Some provide benefits in case of overnight airline cancellations, club level upgrades (which can be a $100-$300 per night benefit), and airline incidental refunds (including for in-air Wi-Fi, food purchases and extra baggage fees).


If you want to know what’s in my wallet, or discuss what is in your wallet, let me know. I’d be happy to discuss this with you.

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