Member exclusive by Dasia Moore and Allison Schrager - PowerPoint Presentation

Member exclusive by Dasia Moore and Allison Schrager

Want to maximize your travel rewards program like a pro? First, think of airline points just like any other asset. Set goals, and then set strategies for earning and using points that will help you reach those goals. Think of points like any other asset After setting your travel rewards goals, you need to choose what type of credit card you’ll use to accumulate points: an airline-branded card or a bank’s general rewards card. You also need to know the best way to spend using your card based on your travel habits. For using points, you need to know how to get the most value possible out of what you’ve earned. We’ll walk you through these choices in the next few slides. These recommendations are rooted in deep experience and expertise: Allison has a PhD in economics from Columbia, has developed algorithms for the investment industry, and is obsessive about maximizing the value of points. Understand your options As you might have noticed, travel rewards programs have all sorts of names for the currency you earn through them— mostly variations on “miles” and “points.” We’re calling them all points in this deck for simplicity. 2

A specific goal will go a long way towards helping you choose which travel rewards program is the right fit for you. (And keep you sane and motivated through hours of carefully researching flights!) There are four basic reasons to use a travel rewards program:  To attain elite status. This is for the hardcore traveler who wants to be treated to valuable perks like lounge access and upgrades—plus all-around special treatment from your preferred airline. To purchase free trips. Your endgame is to go on a dream vacation without paying for the intercontinental flight.To enjoy other in-airport and in-flight perks. Maybe you don’t need lounge access every time you fly, but you wouldn’t mind complimentary beverages and discounted upgrades every now and then. To get non-flying perks. You’re a true generalist who would be equally happy spending your points on planes or trains, or even at your favorite online store. Set your goal 3

The first step—and most important decision—in your journey to rack up points like an economist is to decide whether to be loyal to a single airline. In other words, you have to decide whether to get a specific airline’s branded card or go with a generic rewards program. Accumulation: Decide whether to be loyal Frequent flyer membership + airline-branded cards (loyalty) General rewards cards (shopping around) Pros Faster points accumulation and better conversion rates A chance at the most exclusive perks, including status Gives you freedom to shop around for the best deals each time you fly You’re more likely to get bonus points for categories other than travel, like dining or groceries Cons Loyalty comes with a cost. You can’t choose the best deal for every flight you take because you can’t shop different airlines These cards require very frequent travel to get rewards that offset the cost of loyalty Shopping around takes time. You have to evaluate all of your options for flights that will give you the most or cost you the least points Converting points can be tricky. One point does not always equal one mile Loyalty also depends on your goals and travel habits. 4

Remember the four goals a travel rewards program could help you reach? Each requires a different approach: To attain elite status, be loyal. Only loyalty can get you this benefit. It’s about how much you spend or how often you fly with a single airline or its partners. To purchase free trips or discounted perks, you can do either. If you’re usually flying on a budget, it’s best not to be loyal. Even if it takes longer to earn a free flight, you’ll save in the meantime. But if you’re comfortable paying more for your regular travel or travel frequently, you could earn points (and the free flights they buy) more quickly as a loyal flyer. To get non-flying perks. You should use a general rewards card that lets you earn points across multiple categories and spend them in multiple places. Know what reaching your goal requires 5

Your travel habits play a big part in determining whether loyalty is the path for you. Elite status has multiple tiers. With most airlines, customers qualify for those tiers by flying a minimum number of miles each year. For example, Air India requires that you fly 25,000 miles/year to reach Silver Edge Club status. But to get top-tier Maharajah Club status—and receive the free upgrades and lounge access that come with it—you need to fly 75,000 miles/year.Many airlines also set annual spending minimums for each tier of elite status. With United, for example, you must fly 25,000 miles and spend $3,000 dollars in a year on flights to receive Premier Silver benefits. Note that this dollar minimum is about how much you spend with the carrier, not how much you charge to an airline credit card. Some airlines do waive this minimum for cardholders, though. Think about how much you travel and spend 6

Think about how much you travel and spend 66,706 miles If you flew the world’s 20 busiest national and 20 busiest international routes round trip , you would still fall short of 75,000 miles. Even if you regularly take the longest common international routes, hitting 75K is a challenge. It’s the equivalent of 11 round trips London-New York, 24 round trips Hong Kong-Singapore, or 28 round trips Tokyo-Taipei. This is why aspiring super-elite flyers often add layovers to get more mileage per trip. Don’t be loyal. You would qualify for the lowest tier of elite status, but the rewards aren’t really worth the extra money you’ll spend by staying loyal. It might be best to get a credit card that lets you earn rewards from non-airline spending. 25k miles/year 3k dollars/year $ and Consider loyalty. You’re close, but not a frequent enough flyer to reach the highest tiers of elite status. It’s only worth it if you can up your point earnings by taking layovers, flying business class, or supplementing with non-airline spending. 50k miles/year 6k dollars/year $ and Be loyal. You qualify for the most elite of elite statuses. Status depends on how much you fly or spend, so stick faithfully to one airline. And if you travel this much, you could probably use a little luxury treatment in the airport. 75k miles/year 9k dollars/year $ and 7

If you’re going to be loyal , you first have to commit to a carrier and its frequent flyer program. This should be easy if you live near an airline’s hub or already travel with one company. Second, get an airline-branded card that will help you earn miles even faster. A few examples of top-notch frequent flyer programs to get you started: Accumulation: Choosing your frequent flyer program Air France/KLM Flying Blue Delta SkyMiles Singapore Airlines KrisFlyer Starting rewards rate 4 points per euro spent on Air France/KLM and partners 5 points per dollar spent on Delta. Partner rates vary 50 to 100 points per mile flown with Singapore (based on ticket class). Partner rates vary Top tier elite status Flying Blue Platinum. Earn 8 points per euro, get free lounge access, use priority lanes in the airport, bring an extra checked bag, and more Medallion Tier Diamond. Earn up to 11 points per dollar, get upgrade certificates and gift cards with partners, CLEAR membership, and more PPS Club. Earn 25% more points, access Star Alliance Gold lounges, enjoy guaranteed reservations, get meal preference selection, and more Partners 21 airlines (SkyTeam +) 24 (SkyTeam +) 35 (Star Alliance +) Noteworthy benefit Bonus points on your account anniversary Rollover points that help you get a head start on qualifying for status the following year 1:1 transfers with several major rewards programs (note, accurate as of August 2019) 8

If you’re using a general rewards card , you have plenty of options. To narrow down your choices, consider the annual fee, sign-up bonus, and rewards rate. Some cards also partner with airlines to provide 1:1 point transfers, which lets you access some benefits of loyalty without the commitment. A few examples of top-notch rewards cards to get you started: Accumulation: Choosing your rewards card Chase Sapphire Reserve Capital One Venture Rewards The Platinum Card from American Express Annual fee $450 (but you get a $300 travel reimbursement credit) $95 ($0 first year) $550 (but you get a $200 airline fee reimbursement credit) Sign-up bonus 50,000 points for spending $4,000 in the first 3 months 50,000 points for spending $3,000 in the first 3 months 60,000 points for spending $5,000 in the first 3 months Rewards rate 3 points per dollar spent on travel and dining, 1 point per dollar on other spending 2 points per dollar on all spending 5 points per dollar spent on flights or hotels, 1 point per dollar on other spending Noteworthy benefit Complimentary membership with over 1,000 airport lounges worldwide A hard-to-beat 10 points per dollar spent at Hotels.com Lounge access in over 130 countries, complimentary benefits at select hotels (note, accurate as of August 2019) 9

Once you’re earning points, there are only three rules to follow for spending them: Know your conversions. One point or mile usually does not translate to one free mile of travel. Look up how your program converts points to miles or dollars. And if you’re not loyal, do your research to be sure you’re picking the airline with the best deal every time. Keep your goal in mind. If you want a free flight, try not to spend points on perks like discounted upgrades in the meantime. If your goal is to fly more comfortably, save your points for a first-class seat on a nine-hour flight instead of one on a two-hour flight. Basically, be smart and save up for what you really want.But let your points go! Points become less valuable over time for two reasons. One, if your program converts points to a fixed amount of money, your points lose value as flight prices climb. Two, airlines change their conversion rates all the time—and it’s usually not to the benefit of travelers. So save up for your goals, but don’t hoard. Using points: Spend smart 10

Want to know more? Check out this coverage from Quartz. How to collect airline miles and points A complete guide to frequent flyer miles and credit card points in India The best credit cards to have in your wallet How to meet all your travel goals this year You might also be interested in our member-exclusive Quartz guide to travel . Have questions about this presentation, or suggestions for us? Send us a note at  members@qz.com . 11