Today, I am going to focus on one of the easiest ways to start travelling for less: collecting points and miles. Note that for this article, the words “points” and “miles” will be used interchangeably as there is not much difference between the two.

You’ve probably flown flights on the legacy US carriers– American Airlines, Delta Airlines, and United Airlines– and may have flown on international airlines such as Air France, Lufthansa, and British Airways in addition to other US airlines such as Spirit Airlines, Frontier Airlines, and JetBlue. You may recognize the Frequent Flier programs SkyMiles (Delta), AAdvantage (American), and Avios (British Airways, Iberia, Aer Lingus, and now Qantas).

But did you know that often points and miles for airlines that you may have never heard of nor will ever fly can have the most outsized value? For example, to fly on United, your best bet may be to use Turkish Airlines’ Miles and Smiles or to fly Delta, you may want to use Virgin Atlantic’s Virgin Points (formerly Flying Club Points). Don’t worry if this is confusing for now, a future article will explain the redemption process in booking flights.

There are five types of credit cards:

1. Cash-back cards usually earn either a fixed percentage (typically 1.5% or 2%) on all purchases, a fixed category bonus (such as 3% back on restaurants), or a rotating bonus with a limit (such as 5% back on groceries and at Walmart, on the first $2,500 in purchases in a quarter).
2. Store cards should typically to be avoided as they offer limited reward potentials unless you spend a great deal of money at one particular store. For example, the Target Red Card earns 3% cash-back on all purchases in-store or online).

The next three types of cards earn points or miles, rather than cash-back:

3. An airline card earns that airline’s miles on all purchases, with an increased amount on certain categories. For example, the American Express Delta Platinum Card (not to be confused with the American Express Platinum Card) earns 3x SkyMiles per dollar spent on all purchases with Delta and select hotels, 2x SkyMiles per dollar spent on purchases on grocery purchases, and 1x SkyMiles per dollar spent on all other purchases. Almost all major airlines, both US and international, have at least one co-branded credit card available.
4. A hotel card has a very similar structure, just for a hotel rather than an airline. For example, the Marriott Bonvoy Boundless card issued by Chase offers 6x Bonvoy points per dollar spent at Marriott, 3x Bonvoy points per dollar spent on up to $6,000 in combined purchases per year at grocery stores, gas stations, and dining, and 2x Bonvoy points per dollar spent on all other purchases.
5. Last but not least, transferrable point cards are offered by four major players: American Express (Membership Rewards Points), Chase (Ultimate Rewards Points), Citi (ThankYou Rewards), and Capital One (Venture Miles). Note that the “miles” earned by Capital One are akin to other transferable points, they are not airline miles. Why would you want to earn American Express Points rather than an airline’s miles or a hotel’s points? That is the beauty of transferable points. Let’s say that you have an American Airlines Credit Card and have earned many AAdvantage Miles but need to fly from Atlanta to Detroit, two of Delta’s biggest hubs. Those AAdvantage Miles might not be very helpful, but SkyMiles (a 1:1 transfer partner of American Express) would be!

Note: the best way to earn points is through bonuses on new credit cards. While it is important to maximize daily spending, opening a new card can result in 50,000, 70,000, or sometimes even 150,000 points after meeting spending requirements (usually between $2,000-$6,000 over the course of either 3 or 6 months). Even assuming you can earn 5x points on every purchase, you would need to spend $10,000 just to earn 50,000 points.

Here is a list of some of the best transferrable point credit cards:

• American Express Gold Card ($250 annual fee, excellent for grocery and restaurant spend)
• American Express Platinum Card ($695 annual fee, fantastic for airline spend and high-end perks)
• Capital One Venture X Card ($395 annual fee, great all-around earning card, easy to earn back AF)
• Citi Premier Card ($95 annual fee, solid in many categories, only way to make Citi points transferable)
• Citi Custom Cash Card ($0 annual fee, excellent earning in your top spend category)
• Chase Freedom Unlimited ($0 annual fee, solid all-around earning)
• Chase Sapphire Reserve Card ($550 annual fee, great earning on food and travel, high-end perks)
• Chase Sapphire Preferred Card ($95 annual fee, solid earning across several categories)

Future posts will review each card in-depth, but before deciding which card(s) are best for you, it is a good practice to understand how much you spend and in which category. My previous post about budgeting is a good place to start. You want to know the total amount that you spend and a breakdown by categories for two reasons:

1. When deciding to open a new card, you need to be confident that you can meet the minimum spend requirement without going into debt. Some are simple, such as spend $750 in 3 months to earn $250, while others can be as high as $15,000 in 3 months. If you know you spend $1,000 a month, you can feel confident in your ability to meet most cards’ minimum spending requirements, but may be wary of applying for a card with $10,000 spend required in 6 months.
2. For cards that you will keep for the long-term, you should focus on maximizing the categories in which you spend the most. For example, if you buy gas once every 3 months, do you really need to focus on getting a card that offers 3x points, especially if you spend heavily on flights or restaurants?

Stay tuned for the fun next step: redeeming these miles for an incredible trip!

Evan