Are you throwing money away by not making the most of airline, hotel and credit card reward programs that you may already belong to?
Lots of people are, according to a recent survey by NextAdvisor, a company that provides advice about credit cards and other services. It found that people are confused by reward programs, and many don’t know how to redeem their rewards or know how many potential rewards they’ve accumulated.
That’s not surprising, because loyalty programs can be complicated. Lots of things are complicated — the tax code, compound interest, how mortgages work — but they’re also worth learning about because that knowledge can save money.
Regular readers of this column have likely seen my stories about all the ways I’ve saved money with airline and hotel reward programs and with credit card incentives. Those things have made vacations possible, eased the cost of having a child in college out-of-state and put some cash in my back account.
For example, I used Chase credit card Ultimate Rewards points to pay for more than a week of hotel nights on a recent vacation, and used American Airlines miles to pay for some of the air travel. To accumulate points, I sign up for credits cards that offer large point bonuses, and more points for spending, and make sure to not carry a balance or pay interest charges.
Here are some tips for casual participants in reward programs:
The key points to know about any reward program are how the rewards are earned, how they can be redeemed, what they are worth and whether they expire. Keep track of rewards that can expire, as is common with some airline and hotel programs, so that they don’t vanish.
What are rewards worth? In most cases rewards amount to rebates, in the form of cash back or points that can be redeemed for products and services. Cash-back credit cards are not complicated because the rewards are in the form of money, typically amounting to between one and two percent of spending, but points and miles can be more challenging.
Take, for example, two airlines. One of them requires certain amounts of reward miles for a ticket, but limits how many tickets can be purchased with miles while charging fees for checked luggage. Another allows its reward points to be used like money, to buy any ticket on any flight, and doesn’t charge baggage fees.
There could be different ways to calculate what each airline’s rewards are worth, in terms of pennies per mile or point, but there’s real value in the more flexible airline program, because you’re more likely to be able to use the rewards.
How can rewards be used? Almost certainly, more ways than you think, so it’s worth taking a look at the rules when you join a program.
For example airline rewards can be redeemed for air travel, as one would expect, but depending on the program they might also be redeemable for rental cars, magazine subscriptions, or retail gift cards. Hotel points can be used for free hotel nights, but in some programs they can redeemed for tickets to concerts and sporting events, or for gift cards, and they can also be transferred to airline reward programs.
With credit cards, rewards may be limited to cash back, but some credit cards have expansive points programs, with multiple ways to turn points into cash, goods or services.
Reach David Slade at 843-937-5552. Follow him on Twitter @DSladeNews.