Sunday, October 21, 2007

Credit Card Frequent Flyer Miles vs Points

For several years, the “conventional wisdom” was that it was best to accrue miles in a single airline program (by flights and credit-card purchases), as well as to collect airline miles themselves rather than convertible “points” that could be used for a ticket. The thinking was that the Capital One, American Express, Merrill, or other points programs redeemed at lower comparative levels than the assumed 2 cents per mile for airline credit-card expenditures and subsequent redemptions.

Now, at least for us, we’re rethinking that model. For more than 20 years, we have lived near small airports (where the dominant carrier didn't always have the best options) and have often driven to other larger airports for various long-haul flights. Thus, we have miles with United, USAir, Alaska, American, and Continental (plus a few on Northwest, Delta, BA, and KLM). We’re not hoarders – we try to use the miles regularly. But redemptions are getting harder to come by, and some commentators have suggested that the "value" of frequent flyer miles has shrunk to barely 1 cent per mile.

We’ve also played the credit card games, switching cards depending on the offers available. Over the years we’ve build up “points” for flights with Capital One, Merrill, and Amex, and used them when we wanted to fly cheap but couldn’t get a carrier’s frequent flyer seat.

Right now, we’ve decided to concentrate on building points using the Hilton HHonors Amex and American Express FreedomPass credit card programs. Hilton’s Amex card offers us 3-5 points per dollar spent, and at their redemption levels, that gets us anywhere from $450-600 worth of Hilton-chain hotel room stays for the same $25,000 in charges that would get us a hard-to-acquire domestic ticket using a United Visa, for example. The American Express FreedomPass program offers essentially 1-1/4 cents per mile, and the points can be used for air tickets on any airline (it’s a “refund” type point arrangement) as well as for other travel services. (Capital One has had a similar long-time program which offers 1 cent per mile, but redemption levels are less friendly.)

So we now use a regular cash rebate credit card for the categories (gas, groceries, etc.) where we can get 3% cash back (better than the “old” 2-cents-per-mile anyway), and use either the Hilton HHonors Amex or the FreedomPass Amex for all our other charges. We still keep our (no-annual-fee) airline credit cards, and use them once or twice a year to keep the clock ticking on each airline’s frequent flyer account in case we don’t fly that carrier.