Give yourself some credit: A Conversation with The Points Guy
I remember the moment I got the travel bug. I was in elementary school; I probably had the flu. I was watching t.v., and while flipping through the channels, I saw Samantha Brown (the patron saint of travel) touring Honduras. Brown was filming her show Passport to Latin America, talking to locals, eating delicacies, and zip lining in the jungle. I got over the flu, but the travel bug has gotten quite extreme. Since that fateful day, I have loved to travel. As COVID-19 shut down the travel industry, I had a conversation with Madison Blancaflor, a credit card writer at The Points Guy, to ask how people can understand and utilize points/miles in a Post-COVID-19 world.
(Photo of Samantha Brown Passport to Latin America's DVD or streaming service. Image courtesy of https://www.amazon.com/Passport-to-Latin-America/dp/B001LQYHXS)
1. What's the difference between a point and a mile?
Just the name. Some airlines use points, while others use miles. Some transferable credit cards use points, and others use miles. All hotels use points. Both terms are the other currency other than cashback. So you either get cashback or points in miles on a credit card.
(Gif Courstey of Wix.com)
2. What is Cashback?
So cashback is always 1% = 1 cent per dollar. Cards will have higher earning rates (ex. Capital One Savor earns 3% cash back on dining and entertainment), but each % is always worth 1 cent. At The Points Guy, we tend to gravitate toward points/miles more than cash back because you can potentially get much more than just 1 cent of value from each point/mile. But cash back is great for beginners or those who want to redeem rewards on more than just travel purchases such as airfare and hotel stays.
(Gif Courstey of Wix.com)
3. Is it worth it to buy Points or Miles?
Some people say yes, some people say no, that's a contention point in the industry. I think it depends on what you're paying for them. Sometimes you can buy points, and it's an excellent deal based on how much the points or the miles are typically worth versus how much you're paying for him. But, most of the time, I would say it's not worth it.
(Gif Courstey of Wix.com)
4. How Much do points/miles cost?
It'll depend on the airline; sometimes, airlines run promos. We'll probably see more of those coming up as people start traveling again. I’d clarify that a lot of the time, points/miles will cost more than they are worth. Sometimes, hotels and airlines do run promos that can make buying these points/miles more attractive depending on the traveler. We’ve seen a few solid promos recently (airlines/hotels are looking for income since travel has been down due to covid-19, and selling points/miles is one way to make money), and I wouldn’t be surprised if we see more in coming months. However, I wouldn’t recommend students and beginners buy points/miles — it’s better to earn them “for free” through credit cards, shopping portals online, and traveling.
(Gif Courstey of Wix.com)
5. As we transition back to travel, what will happen to people's statuses or points (will people get an extension on points/miles or status on airlines)?
Status: It depends on the airline. A lot of airlines and hotels either gave elite status extensions. This past year, they made it easier to earn elite status by lowering requirements for what you usually have to do to earn elite status or extended people's elite status an extra year.
Points/Miles: Some airlines' points don't expire. You have to be actively earning or redeeming within the last 24 months to keep your points on other airlines. Generally, if you're earning points and miles on a credit card, those will not expire so long as your accounts open. Delta, JetBlue, United, and Southwest miles/points never expire. Some airlines will do anywhere from 6 years to a month from the last account activity (so as long as you are actively earning or redeeming rewards periodically, you’d be fine).
(Gif Courstey of Wix.com)
6. How should ( in college, post-secondary, etc.) students start to build credit so they can get travel perks?
There are two main avenues I'd recommend.
1. Be an authorized user on someone else's account. So if your parents have credit cards, to be an authorized user on those accounts means that it will be recorded on your credit. The fact that you're an authorized user on your parents' account would help you if you decide to apply for a credit card that you would like to count in your favor, so long as your parents also have a good credit score.
2. Start with student version credit cards. They typically aren't as valuable due to how much you're earning, but they do help you build up points and have students specific perks, too.
(Gif Courstey of Wix.com)
7. How can you use COVID-19 earned points for future travel plans?
I wouldn’t be surprised if we see more devaluations in loyalty programs as travel rebounds, but it’s not necessarily because of dynamic pricing. Dynamic pricing acts as sort of the avenue for devaluations because they can change so frequently and drastically depending on the day. So while dynamic pricing makes it easier for programs to drive up the cost of award trips potentially of award trips, dynamic pricing in and of itself isn’t the cause of those changes. As more people return to travel, many people will start redeeming all of those points/miles they’ve accrued over the past year while not traveling. That flood of points/miles being redeemed could mean airlines/hotels jack up award pricing, therefore devaluing how much those points/miles are worth. The key is to make a plan and start keeping an eye out now for bookings you want to make down the line. If you see a great deal on a flight to Europe for late 2021 or 2022 that you know you’ll want to take, go ahead and book it (I recommend choosing a refundable ticket/booking for max flexibility). It can be tempting to hoard your points/miles, but they won’t do you much good sitting in your loyalty accounts.
(Gif Courstey of Wix.com)
