The Basics Of Cheap And Free Travel With Points. Part 2: How Points Are Redeemed

In my previous post, I wrote how credit card, airline and hotel points are earned. Today I will explain how these points can be redeemed for free and cheap travel. Depending on the program, point redemption options can vary from a single one to a few dozen ones therefore knowing what the options are is very important. I will now introduce you with the most common redemption options and in my future posts I will provide more specific details on which points and how can be used for cheap or free travel to holy places. Generally, there are four ways to redeem your points:

  1. Book Flights And Hotel Stays On Bank’s Travel Website. Some banks, such as Chase and American Express allow certain cardholders to book flights and hotels with their points right where they manage their accounts – on bank’s website. Redemption value, depending on the credit card you have, can vary from $100 for 10,000 points to $150 for the same 10,000 points. Assuming that you received 50,000 bonus points with your new card, point redemption can be worth $500-$750 in airfare or hotel stays. If you don’t have enough points to cover full cost of your ticket or hotel stay, most banks will allow you to pay the remaining part of your purchase with a credit card. In many cases booking flights and hotels with points on bank’s website provides good or even excellent value for your points, especially if airline ticket or hotel is on sale for your travel dates. However very often transferring points to airline or hotel programs and booking travel through these programs can give your points even more value.
  2. Transfer Points To Airline Frequent Flyer Or Hotel Rewards Programs. Credit cards with transferable points usually have around a dozen or sometimes more transfer partners (airline and hotel programs) that you can transfer your points to. Also, there are airline and hotel co-branded credit cards that only earn points of that airline or hotel program and these points are automatically transferred to that particular airline or hotel program. When you transfer your credit card points to an airline frequent flyer or hotel rewards program, your credit card points become points or “currency” of that particular program. You can then use them to book airline tickets with that airline or hotel chain. Booking travel through airline and hotel programs can sometimes give your points more value than booking it on bank’s website. For example, you can book a transatlantic round-trip flight from certain US cities for just 26,000 points via British Airways program while the same flight on bank’s website would cost around 50,000 points. On the other hand, booking travel on bank’s website in many cases can be a better option than booking through airline or hotel programs. For example, the same Holiday Inn Express hotel can cost 7,000 points per night on bank’s website and 15,000 points via IHG (Intercontinental Hotels Group) program. So it is always important to carefully consider all available point redemption options and choose the one which gives the most value for your points. If you don’t have enough airline or hotel program’s points to cover full cost of your ticket or hotel stay, many programs have “points and cash” programs where part of the cost can be covered with points and the remaining part paid with a credit or debit card.

    Chase Freedom, IHG Rewards Club And Barclaycard Arrival Plus Credit Cards
  3. Use Your Points For Statement Credit. There are a lot of credit cards that allow using points to cover purchases that you have made with your card in the past (usually with the last three months). Some of these cards allow using points to cover any of your purchases and some cover only travel purchases. Let’s say that you booked a hotel stay for $350 two weeks ago and your credit card now has a $350 balance. Usually you would have to transfer $350 from your checking account to pay off that balance. But you will not need to do that if this is a credit card that allows to use points for statement credit – your balance will be paid off by points, assuming that you have enough points to cover that balance. If you don’t have enough points to cover full balance, most likely you will be allowed to cover part of the balance with points and the remaining part with dollars. Usually, redemption value for these points is $100 for 10,000 points. Although this is not the best value you can get for your points, these credit cards have one advantage compared with other credit cards – they give you much more freedom in choosing where to book your travel. Your choice is not limited by what’s available at one bank’s website, a few airlines or a few hotel chains. These points will cover purchases made with any airline and any hotel. They can also cover train, bus, cruise and taxi travel.
  4. Purchase Gift Cards And Merchandise On Bank’s Website. You can also use your points to buy popular retailers’ gift cards, buy merchandise on banks’ websites and sometimes even use your points for purchases on websites like Usually, this is not the best way to redeem your points (especially buying merchandise on bank’s website) because you can get much more value from your points by using them for travel purchases.