Credit card rewards can be extremely valuable for anyone who loves to travel. The sign-up bonuses that credit card issuers hand out after applying for a new card can earn you a free ticket to most places in the world. But which card is right for you?
The answer depends on your travel goals. Do you want to travel domestically within the United States? Are you planning a trip to Europe? Do you want to fly first class on Cathay Pacific? Your goals should have a direct correlation to what credit cards you carry in your wallet.
Over the past couple of years, we've witnessed some major devaluation by loyalty programs. Two of the bigger ones are Delta Air Lines Inc. (DAL) and Hilton Worldwide Holdings Inc. (HLT). These programs run are at the sole discretion of the companies, which means you never know when the value of your points might be slashed in half. Because of this, unless you have near term travel plans, you should always be cautious about stockpiling rewards with just one brand.
This is where transferable points programs come into play and why they're so great for anyone who travels on points and miles. These programs are rather simple. You earn points by using certain credit cards, and those points can be transferred to any of their participating programs. So instead of just having points with one airline or hotel, you can transfer points to several different ones.
There are five major transferable points programs: Chase Ultimate Rewards, Citi ThankYou Rewards, American Express Membership Rewards, Starwood Preferred Guest and Diners Club.
Why transferable points programs?These programs are great for anyone who isn't loyal to any particular brand. Because one program might have four different airlines included, it gives you options to choose from. You could transfer your credit card rewards to any of those four airlines loyalty programs. Let's assume, for example, that you've been a lifelong United Airlines (UAL) flyer. You decide that you want to take a trip to Europe. Unfortunately using your United miles might not be the cheapest option for you. Luckily you have points with a transferable points program that includes both United Airlines and British Airways. Because flying to Europe with British Airways partner, American Airlines, is cheaper than United, you've just saved yourself miles for a future trip.
The fine printIf you're a beginner with credit card rewards, then there are two things to keep in mind: First, you should never transfer your points until you're ready to use them. For instance, if you choose to transfer Chase Ultimate Reward points to Southwest Airlines (LUV) and then your plans change, you won't be able to put them back in your Ultimate Rewards account. Second, make sure you never cancel a credit card if you still have points in your account. For example, let's say you cancel a card that's associated with a Citi ThankYou account. If you cancel that card before transferring your points, then you risk losing them all. (See also Should You Close Your Credit Card?)
5 great transferable points programNow that you know the basics on how transferable points programs work, let's take a look at each of them.
Chase Ultimate Rewards
Chase Ultimate Rewards is the favorite with a lot of travelers not only because of the credit cards associated with the program, but also because of their transfer partners, such as:
Each of these transfer partners will transfer at a 1:1 ratio, which means one Ultimate Reward point will turn into one point with any of these programs.
The Ink Bold (no long available to new applicants), Ink Plus, and Chase Sapphire Preferred will allow you to transfer your points to any of the mentioned partners. The Chase Sapphire (no longer available), Ink Cash and Chase Freedom will earn Ultimate Reward points, but you need to also hold one of the first three cards mentioned if you want to transfer points to a partner.
While it's not nearly as good of a value, you can also book travel through the Ultimate Rewards travel portal for 1.25 cents per point. This might be good if you are looking to book things like a cruise, car rental or some other travel expense. (See also How To Maximize Chase Ultimate Rewards.)
Citi ThankYou Rewards
The Citi ThankYou program might be the weakest of the five, due mostly to the fact that none of the airline transfer partners are U.S. based; some don't even operate in US cities. Either way the company is slowly making improvements. A few years ago it didn't even have transfer partners. All you could do with your points was redeem them for statement credit. Today points can be transferred to the following airlines or hotels:
If you are a Citi Premier, Citi ThankYou Premier or Citi Chairman cardholder, then you can transfer your ThankYou points to any of these partners. If you have one of the three cards, you can also make transfers from points earned with the Citi ThankYou Preferred, AT&T Access More Card from Citi or Citi ThankYou Preferred for College Students.
One thing to note about transfers to Hilton is that it is at a 1:1.5 ratio. If you were to transfer 1,000 ThankYou points, you would receive 1,500 Hilton Honors points in exchange.
American Express Membership Rewards
American Express Membership Rewards program is quite valuable because there are several different credit cards with which you can earn them. Also, American Express has an impressive list of transfer partners, and up until March 2015, you could transfer points to Frontier Airlines. Although that relationship no longer applies, you still have the following transfer options:
If you want to book travel with an airline or hotel not listed above, you can also use your points through the American Express travel website. Planning to catch a ride using Uber? American Express Membership Rewards points are now redeemable for Uber rides, though that's not a valuable option. (See also Is Uber The Future Of The Taxi Industry?)
There are several credit cards that let you earn American Express Membership Reward points. Most of these also come with some fairly high sign-up bonuses, and a few even offer bonus points for spending on different categories like grocery stores or gas.
Starwood Preferred Guest
Starwood Preferred Guest is another one of the most popular programs because they have a total of 32 different airline partners including American Airlines, Alaska Airlines, British Airways, LAN, Japan Airlines and more. You can also use your Starwood properties at more than 1,000 Starwood (HOT) properties worldwide, which include Westin, Aloft, Sheraton and others.
While other programs have several cards that earn points, the Starwood Preferred Guest only has two, mostly because Starwood is a hotel group and not a credit card issuer like Citi, Chase or American Express. The two available cards are the Starwood Preferred Guest Credit Card and Starwood Preferred Guest Business Credit Card.
One of the best features about transferring Starwood points is that you receive a 20% discount when you transfer 20,000 points to a participating airline.
Diners Club Rewards
Late in 2014 Diners Club announced that it was reopening its Diners Club Rewards program, which offers consumers a lot. Not only does Diners Club have 14 airline transfer partners, it also has seven different hotel partners, which is more than any other program. Partners include:
The Diners Club program has two different credit cards that allow you to earn points: the Diners Club Premier and Diners Club Elite. Unfortunately, neither come with any sign-up bonus, making them slightly less attractive when compared to other programs.
The Bottom LineTransferable points programs are very valuable for travelers because they help you keep your portfolio well-diversified. This is helpful in case one or more transfer partners devalues their programs. Next time you're looking to get a travel rewards credit card consider one that comes from one of these five programs.
