TPG beginner’s guide: Everything you need to know about points, miles, airlines and credit cards

Welcome! You’ve just clicked on what has the potential to be one of the most life-changing articles on The Points Guy — and possibly even the internet, if we do say so ourselves. Seriously, we are very glad you’re here.

That’s because we’re going to teach you everything you need to know about points, miles, airlines and credit cards so you can travel the world — and do it nearly for very little out of pocket cost.

When I started working at TPG three years ago, I knew nothing about points and miles. Seriously, I almost exclusively used my debit card for everything. Shudder.

Since then, I’ve thankfully learned a thing or two, and have traveled to destinations such as Japan, Croatia, Aruba and more — all using points and miles. What you’re about to read is everything I wish I knew before I started working here.

In fact, there’s never been a better time to start learning the ins-and-outs of the points and miles game, especially because so much of it can be done from the comfort of your own home — and because your points and miles may be the key to you getting back out there just as soon as you’re ready, even if your wallet isn’t as full as you’d like.

So, start dreaming up your next trip, fasten your seatbelts and enjoy the ride. You’re about to become the smartest traveler you know.

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In This Post

The basics

First thing’s first: Using a debit card has no point. Pun intended.

By using a debit card, you’re spending money and not getting anything back in return. When you use a credit card, though, every time you pay for shopping online, eating out, groceries, toiletries, what-have-you, you’re earning valuable points and miles you can use on your next vacation. Not to mention you’ll also have access to valuable benefits like purchase protection and those all-important, built-in coverages like trip delay and trip cancellation insurance.

Wouldn’t you rather know that all the money you spend is like an investment toward your next trip?

Now, here’s the cardinal rule of points and miles. Are you ready? If you remember nothing else from our talk, remember this: Pay your credit card bills on time and in full every single month. Never, ever spend more than you can afford or buy things you wouldn’t have bought with plain cash. If you need to lean on your card for things you can’t afford with cash at the moment, use the card with the lowest interest rate, not that earns the most rewards. This rule is so important it took the top spot on our list of 10 commandments for travel rewards credit cards.

Now that we’ve got that settled, let’s go back to that vacation you’ve been planning.

What are points and miles?

Simply put, points and miles are a type of currency. You earn them every time you take a trip or make a purchase on a rewards credit card, and can later use them for free travel.

The industries of credit cards, airlines and hotels are closely intertwined, and the entire point of the whole “hobby” is to use those currencies to travel the world. Here’s how it breaks down in its simplest form:

Using airline miles for airline tickets: If you have United miles, for example, you can use those miles for flights with United and its various partners.
Using hotel points for hotel stays: Likewise, if you have Marriott points, you can use those earnings for free nights at the dozens of brands under the Marriott umbrella.
Using credit card points directly for travel: This varies by credit card issuer, but most credit card programs allow some type of direct redemption of their points via an online portal. Generally speaking, you either pay for your flights or hotels using your points (instead of paying cash), or you swipe your card and then redeem points or miles to effectively “erase” the purchase from your statement.

Once you get to the advanced level, you can use more complicated strategies to get even more out of your points and miles. For example, many credit card programs allow you to transfer your points to partners and then redeem them for award flights or hotel stays. By doing so, you’ll often pay a fraction of the price for the flight or hotel than you would with cash, especially when redeeming your points or miles for luxury flights or hotels. These points are called “transferable points,” and they’re a key component in the points and miles world.

This is what I did when I transferred my American Express Membership Rewards points to Aeroplan, Air Canada’s loyalty program, to get home from my trip to Japan last summer. I used 75,000 Amex points, worth about $1,500 based on TPG’s most recent valuations, for a flight that otherwise would have cost at least double that if I were paying with cash (which I clearly wasn’t).

A central strategy here is also understanding that points and miles currencies are all worth a certain amount of money, since you can use them in exchange for travel. They’re not all created equal, though, and vary from program to program. Using our monthly valuations guide is a good place to figure out the approximate value of your points and miles, even though this can vary depending on the exact award you’re booking. Using your points and miles to travel is what we call an “award redemption.” You’ll see this term all over the site.

The whole fun in the points and miles game is to never pay more for a flight in points or miles than you would if you just paid for it in cash (with your credit card, of course).

For example, our valuations put United MileagePlus miles at 1.3 cents apiece, so if you have 50,000 United miles, we’d peg that balance at roughly $650 in value (50,000 x $0.013 = $650). Now let’s say you’re considering buying a plane ticket on United that would require 50,000 miles or set you back $400 if you paid for it outright. In this case, you’re getting a much better deal by paying for the ticket in cash — assuming you have the cash at the ready for the purchase.

If, on the other hand, those 50,000 miles covered a flight that costs $800, using your miles is a much better option.

Again, you’re often going to get more bang for your buck by using points and miles on luxury flights and hotels, but it really comes down to personal preference, and there are exceptions to every rule. There’s no right way to play the game — and if you’re happy making your travel goals happen, that’s what’s important.

As far as semantics go, keep in mind that most credit card companies and hotels have “points,” and most airlines use “miles,” with a couple of exceptions. JetBlue and Southwest airlines, for example, have programs that use points rather than miles. Conversely, Capital One uses miles as its currency, despite being a credit card issuer where point could really be a more straightforward term.

On that note, these are the names of common airline miles you should know:

And here are the major hotel points currencies:

Last but definitely not least, here are the credit card currencies:

American Express Membership Rewards points (a fancy way of saying “Amex points”)
Bank of America®️ Premium Rewards®️ points
Barclaycard Arrival miles
Capital One miles
Chase Ultimate Rewards points (a fancy way of saying “Chase points”)
Citi ThankYou Rewards points (a fancy way of saying “Citi points”)

There are, of course, many more, but these are some of the most popular, U.S.-based points and miles currencies that should be on your radar.

Still with me? Good. Now, let’s dive into the most effective way to quickly boost your points and miles balances: signing up for a credit card.

Credit cards to have in your wallet

The whole fun of having a credit card to earn points and miles is that the money you spend normally on everyday expenses has added value as it gets you closer to your next trip. Needless to say, though, there are a ton of credit cards out there, and it can be hard to figure out the best one for you — but don’t worry, we’ll walk you through it.

The key here is to choose a rewards card based on your travel needs and spending habits. Do you mostly travel in Europe or Asia? Then a Southwest credit card won’t do you much good, even if there’s a great sign-up bonus.

We recommend you set a travel goal such as a spending week in Paris, taking the family to Disney World, or vacationing in Hawaii and then start looking at credit cards that can help you earn the points needed to make that happen. Getting a card with aforementioned “transferable points” is a great place to begin, since you can then transfer these points to airlines, hotels or book through a portal.

Here are some of our favorites:

Chase

Chase is a very popular credit card issuer and offers a number of great cards, especially for beginners. While some of its cards only offer cash back, others (like both Sapphire cards) are points-earning cards that allow you to transfer points to hotel and airline partners. Some of Chase’s most notable partners are Southwest, United, Hyatt and Marriott.

Now is a good time to mention that Chase has a little something called the “5/24 rule” that makes all points people shudder. In order to get a Chase card — no matter what type of card it is — you cannot have opened five or more personal credit cards across all banks in the last 24 months. In short: If you’re planning on signing up for multiple cards in the next couple of years, it’s a good idea to get your Chase cards first. You can read more about the 5/24 rule here.

Here are some of our favorite Chase cards:

The information for the Chase Freedom Unlimited and Chase Freedom has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

American Express

American Express has a lot of solid cards to choose from, as well as a great rewards program and transfer partners, such as Delta, JetBlue and Marriott.

Keep in mind that Amex does impose a once-per-lifetime restriction on credit card sign-up bonuses. You’ll want to hold out for the biggest bonus possible or utilize the CardMatch tool for better offers.

Here are some top Amex cards to consider:

Capital One

Capital One has been gaining popularity ever since it added the ability to transfer miles earned on the Spark and Venture card families to airline partners. Just remember, the issuer has a two-card limit when it comes to personal credit cards.

Here are Capital One’s most popular cards:

The information for the Capital One Venture, Capital One Spark Cash, and Capital One Savor card has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Read more: Best Capital One credit cards

Citi

Over the last couple of years, Citi has adjusted its credit card portfolio in an attempt to stay competitive with Chase and American Express, though it has some card application restrictions that can impact your eligibility for one of these cards. Be sure to read up on those before applying.

The information for the Citi Prestige and Citi Premier has been collected independently by The Points Guy. The card details on this page have not been reviewed or provided by the card issuer.

Read more: Best Citi credit cards

Other cards to have in your wallet

These aren’t the only credit cards that may deserve spots in your wallet. As I mentioned before, it’s a small travel world after all. The major airlines and hotel programs team up with credit card issuers on what are called “cobranded cards,” which earn you points or miles for a specific hotel group or airline.

These are typically smart picks if you’re loyal to a specific airline or hotel chain, live in a city with a major airline’s hub, or if you want to earn a bonus and use the points for a particular reason (read: a cool flight or dream vacation).

You can also select credit cards that offer bonuses for different types of spending:

Credit card myths

We know you might have some anxiety about signing up for a bunch of credit cards — or cards with high annual fees — so we want to clear the air.

Will too many cards hurt my credit score?

Your credit score comprises a variety of factors, including payment history (35%), amount of debt owed (30%), length of credit history (15%), new credit (10%) and credit mix (10%). Having multiple credit cards won’t negatively impact your credit score if you keep your utilization rate low and pay them off in full every month.

In fact, TPG’s executive editorial director, Scott Mayerowitz, currently has 19 credit cards and has yet to see a negative impact on his credit score.

Every time you apply for a new credit card, your score does take a small 2- to 5-point hit. But that dip is temporary and, in the long run, you’ll likely benefit from the lower utilization rate these additional credit lines can generate.

Why should I get a card with an annual fee?

Many of the top rewards credit cards carry a fee of $95 or more, and the more premium cards can cost upwards of $550. But don’t be deterred by those numbers. A lot of times, the valuable perks they come with easily outweighs the high number, and you’ll end up getting way more than what you paid.

Take the Hilton Honors Aspire Card from American Express, for example. It has a $450 annual fee (See Rates & Fees) but conveys Hilton Diamond status (the highest level of elite status you can earn with Hilton) every year. Normally, you’d need to stay at least 60 nights at Hilton hotels around the world every year to earn Diamond status. As a result, you can get perks such as free breakfast, lounge access, upgrades and more. The math speaks for itself here, and having this benefit on a credit card is worth the fee, even if you stay at Hilton hotels just a few times every year.

But that’s just the beginning. The card also comes with an annual up to $250 airline free credit, an annual up to $250 Hilton resort credit and a free weekend award night certificate to use at almost any Hilton around the world. And that doesn’t even mention the current 150,000 point welcome bonus after spending $4,000 on purchases in the first three months of account opening. So yes, the annual fee is hefty. But … it is also easily worth it if you use the perks.

Other top-tier credit cards offer hundreds of dollars in money-saving benefits like airport lounge access, companion tickets and annual free nights, to name a few. Recently, credit card issuers began tweaking these benefits to include dining out, streaming services and more so that customers can take advantage of them while they’re not traveling.

If you ultimately decide these benefits aren’t worth paying an annual fee, you can cancel or downgrade a credit card down the line. Believe it or not, there are rewards credit cards with no annual fee.

Will I earn many rewards beyond the sign-up bonus?

While many rewards credit cards offer pretty substantial welcome bonuses (say, enough to get you a round-trip flight in coach to Europe), skeptics will say this is a one-time occurrence, and that minimal rewards afterward don’t add up to much. But this couldn’t be further from the truth.

Since many rewards have category bonuses that will help you earn points at an accelerated rate, those points and miles can add up very quickly.

Let’s say you spend a lot of money on groceries. You can earn 4x bonus points at U.S. supermarkets on a card like the American Express® Gold Card (up to $25,000 in spending each year; then 1x). And if you spend a lot of money on gas every week, a card like the Hilton Honors American Express Surpass® Card will earn you as much as 6x points at the U.S. gas stations. It’s not hard to earn 3x – 5x bonus points per dollar spent in popular bonus categories.

Some hotel credit cards offer annual free nights just for renewing your card, too, while plenty of other cards offer spend-based bonuses and perks on an annual basis.

How to earn points and miles

Now that we’ve covered the fundamentals, let’s talk a little bit about how to actually earn those points and miles.

Sign-up bonuses

The easiest and best way to accumulate points and miles is through sign-up (or welcome) bonuses. This is another way of saying, “If you spend a certain amount of money on our credit card in a certain amount of time, you’ll earn a certain extra amount of our points.” It varies from card to card, and each card comes with pros and cons to it — a sign-up bonus is just one part of the pie.

These fancy bonuses are your best bet to quickly earn a ton of points or miles, and you can check out our current best offers of virtually every card on the market here.

Keep in mind that the timeline for a welcome bonus to appear in your account varies from issuer to issuer. Officially, American Express takes about eight to 12 weeks, while Chase takes six to eight weeks; Citi takes eight to 10 weeks, and Capital One pays within two billing cycles. Our best piece of advice is to hit the minimum spending requirement way before your statement closing date — you don’t want to get down to the wire. For more details, read this post.

Everyday spending

You’ll also earn points or miles on all of your regular expenses — anything from dining to groceries, gas, cellphone bills, you name it.

Depending on what card you have, you can earn even more miles for different categories. For example, some cards offer more points when you spend on dining, and others offer more points when you spend on airfare.

So, for example, if a card offers 4 points for every dollar you spend on dining, and your lunch cost $10, you would earn 40 points. Those 40 points alone won’t get you far — they won’t get you anywhere, really — but these small purchases do add up over time.

The key here is to pick a card (or card) that closely matches your spending habits, and you’ll see those points or miles add up in no time.

Shopping portals

Taking advantage of online shopping portals might be one of our favorite strategies for earning points and miles, mostly because it takes about five seconds, and you can do it from the comfort of your own couch.

Here’s how it works: Instead of starting directly on a retailer’s site, you’ll start on an airline’s shopping portal, which will then direct you to the retailer’s site. You’re still purchasing the exact same items directly from the merchant, but because you started at the shopping portal, you’ll earn a bonus. You can find each of these with a simple Google search. Easy as pie.

So, if you want to buy a pair of shoes at Saks Fifth Avenue, don’t go directly to Saks.com. Instead, you’ll want to go through your preferred airline’s rewards portal that will then take you directly to Saks. You’re still purchasing items from Saks, you’re just earning extra bonus points in the process. If you aren’t sure which shopping site is most rewarding, you can quickly compare the miles being awarded by many sites at once by hopping over to cashbackmonitor.com.

You can take this all one step further, too, by paying with a credit card that earns bonus points or miles on online shopping purchases. This, my friends, is a little something we like to call “double dipping.”

Buying, flying and staying

You can, of course, earn points and miles by doing business directly with an airline or hotel. You can miles almost every time you fly with any given airline, and you’ll earn hotel points by staying overnight with a participating property. Just be sure to sign up for their loyalty program first!

Airline basics

While we’re on the subject of airlines, let’s talk a little bit about how you earn points and miles while flying. Each airline has its own system of awarding you miles every time you sit down on one of their flights on a “paid” ticket. (Though sometimes you can pay with certain types of points and still earn miles.) Over time, these miles add up and ultimately you’ll be able to use all of them for an award flight to the destination of your choosing. Are you sensing a theme here?

Again, let’s start with the basics. In the U.S., there are 10 major airlines. They are:

There’s a difference between airlines — some are known as a “full-service” and some are “low-cost” carriers.

The names are pretty self-explanatory, but full-service airlines have, you guessed it, full service. They typically offer different cabins to sit in, such as economy (coach), premium economy (fancy coach), business and, occasionally, first class.

Low-cost airlines only have economy and typically, they nickel and dime you for just about everything. Delta is an example of a full-service airline, while Spirit is a low-cost carrier. That said, the introduction of basic economy tickets on full service airlines does complicated the matter a bit, but we’ll save those details for another day.

Let’s talk about elite status for a second. Elite status is great if you travel frequently and thus, get to enjoy the perks. But a word to the wise: Chasing elite status just to have it is generally not worth it. You’ll end up spending more money than you’ll get out of it. The value of status depends on the airline, but that’s why we put together these handy guides for further reading:

Keep in mind that airlines and hotels have made adjustments to earning requirements and have extended elite status for the next year or so, given the current global health crisis. If you are a big spender, there are also ways to charge your way to elite status in select programs.

How to use your points to travel the world

You’ve digested the essentials, so let’s talk for a second about airline alliances, since this will open up so many options and help you travel the world at least partially for free.

Remember how I said airlines, hotels and credit cards are closely intertwined? Let’s go deeper. Alliances are more or less what you think they are: a way for the airlines to play nicely with each other and get you where you want to be.

Most importantly for you, this is where all of those points and miles you just earned really come into play. Airline alliances make it easy for you to use your points from one airline’s program to book a flight on another. Translation: Vacation, here you come!

There are three main alliances you should know about: Oneworld, SkyTeam and the Star Alliance. As far as U.S. airlines go, American Airlines is part of Oneworld, Delta is part of SkyTeam and United is part of Star Alliance. Alaska is also planning to join Oneworld in 2021.

Most major (and nonmajor) airlines belong to an alliance, though notable exceptions include Alaska (for now), Etihad, JetBlue, Southwest, Virgin Atlantic and Virgin Australia. Still, airlines can form partnerships outside the major alliances, and these airlines also partner with credit card issuers — so you can still earn and redeem miles on their flights in a variety of ways.

When I flew Japan Airlines last summer in first class to Tokyo, for example, I used 70,000 Alaska Airlines miles for the ticket (worth about $1,260 in our book) because Alaska Airlines and Japan Airlines are partners. Had I paid for the flight outright, it would have cost me a whopping $13,000 … one-way.

Like we said: A fraction of the price.

Hotels operate a little differently. Sadly, there are no true alliances, so you can’t use your Marriott Bonvoy points to stay at a Hyatt hotel or cash in Hilton Honors points for a stay at an independent safari lodge. Well, at least not exactly, though there are a few cool partnerships out there.

You can, however, transfer your credit card points to hotels, or use your issuer’s travel portal. You’ll almost always get a better value when transferring to partners, but it’s important to check the travel portal to see what deals are available.

For instance, Chase and Hyatt are transfer partners. For every Chase point you transfer to Hyatt, you’ll get 1 Hyatt point in return — so if you transfer 30,000 Chase points to Hyatt, congratulations! You now have 30,000 Hyatt points to use on Hyatt hotel stays all over the world.

This is what’s called a 1:1 transfer ratio. You’ll want to commit that term to memory, since you’ll see it all over the site.

How do you get started?

Now that you have all these basics under your (seat)belt, here’s what you can do to get started.

The first step is to sign up for loyalty programs that let you earn points or miles. You don’t have to sign up for every program under the sun, but we would strongly recommend signing up for the ones from the airline(s) you fly frequently, along with the major hotel programs.

Next, brush up on the terminology. These terms, such as saver award, award redemption and hotel category, are the fundamentals of points and miles, and everything will make more sense once you start to familiarize yourself with these terms that we often toss around here like beads at Mardi Gras. You can learn more in our handy dandy TPG glossary (you’ll want to bookmark that).

We touched on this briefly, but you’ll also want to consider your travel goals and strategy. Would you rather save up and book an insanely luxurious flight (or two), or use your points and miles for a number of virtually free flights in the back of the plane? There’s no wrong answer here.

While you’re likely not booking travel for the immediate future, we rounded up some essential reading to help you get started.

How to redeem miles with Alaska, American, Delta, JetBlue, Southwest and United
How to redeem points with Hilton, Hyatt, IHG and Marriott
How to redeem miles with British Airways Avios
From no credit to free flights: An inside look at a 23-year-old’s credit journey
The best starter credit cards of 2020
How to apply for a credit card
The one thing TPG readers wish they’d known before getting into points and miles
How to book your first award flight using airline miles
3 ways credit card beginners can avoid biting off more than they can chew

The biggest thing to keep in mind is this little nugget I mentioned earlier: Never pay more for a flight in points and miles than if you just paid for it outright with your credit card. There’s a method to the madness here.

We know now that points and miles are worth a certain amount of money. The whole point of, well, points is to maximize what you’re working with.

Paying the equivalent of $1,330 worth of points for a flight that costs $16,000? Outstanding. Not paying cash for your stay at the St. Regis Maldives? That’s exactly what we’re talking about. With a little bit of patience and practice, you’ll be on your way there before you know it.

Don’t forget to like us on Facebook, follow us on Twitter and Instagram, subscribe to our newsletter, and be sure to check back to the site daily for news, updates, and more — you’re about to be the savviest traveler you know. Welcome to TPG, we’re glad you’re here.

For rates and fees of the Hilton Aspire card, click here.

Featured image by Abbie Winters.

CASHMANDU

TPG beginner’s guide: Everything you need to know about points, miles, airlines and credit cards

In This Post

The basics

What are points and miles?