I still regret my first travel credit card – not because it was a bad card, but because it wasn’t the right starter travel credit card for me. It wasn’t a transferable points card.
After finishing college and moving to Seattle for my first real job, one of my good friends convinced me to get a travel credit card to start earning points and miles. I was in a long-distance relationship with a woman living in Boston, so the potential of using miles for cross-country flights was appealing.
The mistake of an airline card
Without doing a whole lot of research, I applied for the now-defunct JetBlue American Express card. I got 20,000 miles after spending $1,000 in three months.
At the time, there were two nonstop flights between Seattle and Boston, and due to the long-distance relationship, I was going back and forth quite a bit. But as I soon learned, the SEA-BOS route was literally the only route that was useful to me.
The bonus I got on that card was not a good value because the points were not transferable points. Nope, these were points that I could only redeem on JetBlue.
I did end up using all my JetBlue points – several flights for me and the one-way flight when my now-fiancé moved to Seattle – but I earned almost nothing on everyday credit card spend. I was only earning one point per dollar on everything but JetBlue flights. And, as we teach in the beginner’s guide, JetBlue points have fixed value, so there’s not great value potential there either.
I could’ve made a bad decision a little bit better by at least getting an airline card that better suited the city of Seattle, like the Delta Skymiles card or the Alaska Air Visa Signature card. However, a transferable points credit card would’ve been a better place to start, especially in this early stage of my points and miles life.
Were there better options?
It’s not about whether there were better options, but how many better options existed. Like they say, hindsight is 20/20.
Because I didn’t have many travel plans and was so new points and miles, a card that earned transferable points, such as Chase Ultimate Rewards or American Express Membership Rewards, would have been much better to start with than an airline card. Even if I didn’t want to spring for a card with an annual fee like the American Express Gold Card or the Chase Sapphire Reserve card, the Chase Freedom Unlimited would have been a good place to start.
Recently, even Capital One’s Venture card added transfer partners, which puts it closer to being on a level playing field with the Chase and American Express cards.
Having any one of these cards would have allowed me to earn bonus points on things like restaurants, travel, grocery stores. But most importantly, it would’ve also given me the ability to transfer points to many different hotel or airline partners or even use them on travel portals to save money.
To find out more about Chase Ultimate Rewards, check out our review of the Chase Sapphire Preferred card. Similarly, check out our review of the American Express Everyday Preferred card for more information on Membership Rewards.
Why transferable points?
1. Transferable points can be used in different ways
Points like Ultimate Rewards and Membership Rewards can be used in many different ways. They both have their own travel portals where points can be redeemed for fixed values. This allows you to pay for part of your travel with points. You want to buy a $300 flight? Make it $150 and cover the other half with points.
But the most popular way to use transferable points is to, wait for it, transfer them to a different airline or hotel partners. Chase has 13 transfer partners and American Express has 21 transfer partners. Generally, the transfer is instantaneous, so you can decide how you want to redeem the points whenever you’re ready. There are a ton of great redemptions for Chase Ultimate Rewards both domestically and internationally.
2. They hold value for longer periods of time
Transferrable miles are less vulnerable to sudden devaluation because all of your eggs aren’t stuck in one basket. One of the most important things to remember when collecting points and miles is that they always lose value over time. In general, it’s not smart to hold onto a bunch of points and miles. When customers use points and miles at airlines and hotels, the airlines and hotels lose revenue. It’s essentially costing them money. The more points and miles that exist in the world, the higher risk for the airline or hotel.
From time to time, airlines and hotels will devalue their points or miles in order to minimize this risk. What does this mean? It means that a domestic flight might suddenly cost 10,000 more miles, or a hotel room might be 5,000 more points a night. This obviously isn’t good.
If you’re sitting on a stash of United miles and all of a sudden United doubles the cost of all flights when paying with miles, your stash of miles just got 50 percent less valuable. Now, if you are sitting on a stash of Chase Ultimate Rewards (that you might typically transfer into United), and United doubles the cost of all redemptions, it’s not as big of a deal.
While you’re probably not going to want to fly United anymore because of the increased rate, at least you are not stuck with a stash of miles that just got devalued. Instead, your Chase Ultimate Rewards still have value because of the many other ways you can redeem them.
3. Ability to use with airlines and hotels
The flexibility that comes with transferable points is huge. They can be redeemed with a number of different transfer partners such as hotels and airlines.
If you’re sitting on a nest egg of airline miles, they’re not going to do you a whole lot of good when you need a place to stay (some airlines do allow you to use miles to book hotels, but it’s typically a terrible value). While the idea of using points and miles to get free to Europe is enticing, airfare continues to get cheaper and cheaper, so you can usually find a good deal if you’re flexible. I’ve found that good deals are harder to come by with hotels.
If you have a stash of transferrable points, you can choose to use your points in the way that makes the most sense for whatever travel plans you’re making. The more flexible your points are, the better!
4. They earn better bonuses
As I mentioned in my horror story about my JetBlue American Express card, I was only earning a single point per dollar on everyday purchases. This was not an efficient way to accumulate points.
The transferrable points cards from Chase, American Express and Capital One all have bonus categories. This means that the everyday person, someone who is not spending a ton of money on hotels and airlines, is going to earn more points with these cards because they’re getting bonuses when they spend at gas stations, restaurants, and grocery stores.
Having cards that earn bonuses on everyday spending categories is the best way to earn points and miles quickly without traveling.
5. Multiple cards can earn the same point currency
Getting a family of transferrable points credit cards can also increase your point totals. How about having three cards, each with different benefits and bonus categories, that all earn Chase Ultimate Rewards?
For those of us who don’t travel a lot for work or spend a lot of money, earning points can be tough. When we do spend money, we need to be strategic about which card we use to make sure we’re earning the maximum number of points possible. Focusing on one type of points allows us to earn enough to redeem more quickly. I would rather have 50,000 Chase Ultimate Rewards than 25,000 United miles and 25,000 Marriott Rewards points.
By strategically using multiple credit cards with different bonus categories, I can exponentially grow my stash of points. The best way to do this is with the Chase Trifecta, but there are also ways to do it with American Express.
As you can see, there are many reasons why it’s smart to choose transferable point credit cards in order to start earning points such as Chase Ultimate Rewards or American Express Membership Rewards.
Transferable points are the “safer” bet because they can protect you against a devaluation from an airline or hotel chain. They also allow you more flexibility in redeeming with transfer partners. But most importantly, their bonus categories make it easier to earn points quickly with everyday credit card spend.