If you're looking to travel the world on a budget, then collecting points and miles can be a good way to reduce your costs. Surprisingly this can be true, even if you're not a frequent flyer or regular hotel guest.
Points and miles schemes effectively provide an opportunity to build up travel credit, sometimes with a specific brand (e.g. Hilton Honors hotel points) and sometimes with the potential to transfer across multiple partners (e.g. American Express Membership Reward points). Once you have enough points, you can then exchange them for reward flights or hotel nights. Here are my top tips for earning and redeeming points and miles...
Tips for Earning Points
1) Find a good travel rewards credit card and earn points on your everyday spending.
This is my favourite way to earn points, because it doesn't have to cost you anything more than your usual spending. With a reward credit card, you earn points for every £/$/€ spent and often a decent points bonus on top, for meeting a new customer spend target. As long as this spend target is consistent with what you'd normally spend anyway, then you can get points to use for travel, just by putting your money through a different card.
My favourite cards are those which allow you the flexibility to transfer points to multiple partners, but there are also some cards which are specifically linked to a hotel brand or airline. It's also worth noting that you can earn bonuses on more than one card, and these bonuses can be quite attractive. So often people will apply for additional cards to earn one bonus after another - some caution should be applied in relation to the potential impact on credit ratings though. My advice would be to start with one card and aim to earn a flight or hotel stay and then learn about the points systems as you go. Usually it's quite possible to earn a short haul return reward flight or a night or two hotel stay on a good travel rewards credit card.
It is also important to remember to pay your statement in full each month if you're using a reward credit card - otherwise the interest you pay will outweigh the benefit of the rewards you earn.
2) Register to earn points, and elite status, with any hotels brands or airlines you use regularly.
The more obvious way to earn points is by actually using the hotels or airlines. If you travel for work or leisure, consistently using certain brands will allow you to build up points quickly. In addition, most brands have a 'status' system, when after a certain number of stays/flights/points, you earn additional benefits and increase the number of points you earn per booking. For example, after 20 Hilton stays you receive gold status, the benefits of which include free breakfast, upgraded rooms where available and an 80% points bonus.
3) Do both of the above!
If you really want to rack up points, you can use a rewards credit card for your travel bookings. Particularly if the schemes are linked, you can earn points on both, and sometimes get an additional bonus. For example in the UK flights booked with American Express Gold/Platinum cards earn double points (plus any points with the airline). Some cards also give automatic status levels with certain airlines or hotels, which will add benefits and enhance the points earned on each booking.
Tips for Redeeming Points
1) Know the Difference Between Flight and Hotel Schemes
There's a major difference between flight and hotel schemes. Hotel reward nights are usually completely free - once you have enough points you exchange them for a reward night and, typically, pay nothing in addition. Reward flights however, can be more complicated. Taxes and fees usually still apply for a reward flight, and these can vary greatly. It's possible to get some very good deals on reward flights, but effectively these should always be viewed as a discount, rather than a completely free flight.
For example many British Airways short haul flights from the UK are capped at £17.50 taxes plus 7,500 Avios points (one way), which can represent a great deal. With other airlines, and for longer routes, the taxes may by £/$100's though.
2) Check Whether You're Getting a Good Deal
It's important to check the points price (including taxes) against the cash price you would be paying. A quick Google search will tell you what to expect in terms of value per point, and you can then divide the cash price by the points required to check against that.
This is really important as redemptions can vary significantly - in fact it's not unheard of to see the taxes on a reward flight costing as much as the current cash price. That said, there are also some fantastic deals to be found, where you can save significant sums.
Also avoid 'gifts and giftcard' redemptions with travel points - they are almost always a poor deal (i.e. they offer 50%+ less value for your points)
3) Look Out for Points Promotions
This one applies to both earning and redeeming points really. By following points blogs, plus the schemes/brands you're interested in, you'll find out about the latest promotions. Usually you have to 'opt in' to these and once you do you'll earn bonus points and/or get discounted points redemptions. For example Hilton currently have a promotion where you can earn an extra 2,000 points per stay, and IHG run a pointsbreak promotion each year, where you can book certain hotels for a discounted points rate.
Points and miles systems can seem complicated, but if you start simple and earn your first flight or hotel stay you'll see the potential for some good savings on your travel. If you follow a few of the points blogs you'll also quickly pick up some useful tips.