How Credit Card Miles Work?

How credit card miles work?

It is not uncommon these days to hear or see bonuses being given out for free travel. And indeed this has become a very competitive thing in the credit card industry. Much as these miles look good to the reader, just how do they work?

Everyone upon hearing that they can travel for free would love the idea but how does one get to benefit from these seemingly good offers? The truth is that, when you see these offers, most people don’t even travel as frequently as you would have to so you can get these free travel offers. So the obvious question still stands. How credit card miles work remains unanswered and this is what this article attempts to answer. Follow suit as we provide an insight into how things work, once you have an understanding of how they work, you will know how to work your way around it if this is something you really want to benefit from.

 

Credit Card Miles, what are they?

To start with, exactly what is meant by these credit card miles?

What normally happens is that, when you hear the word mile, it does not necessarily mean miles as in distance, this term is used in the credit card industry to denote points that can be redeemed in monetary value and then used to travel.

The real deal is that users of credit cards are supposed to spend money through their cards for travelling purposes. As they use these cards to pay for their airfares, book hotels, and rental cars, and eat at various restaurants, they are rewarded for spending. The rewards come in bonuses, or points and these are known as “miles”. When these have accumulated over a period of time, normally three months after you sign up or 12 months after you have opened the account with the issuing company. The accumulated points can then be redeemed in money value and that amount of money can be spent on travelling with an airline. What occurs is that some airlines usually give card users 1 reward point known as a mile for every dollar that is spent on each purchase each day. So for example in a day, it is possible to earn 3 or 4 credit card miles for some expenditures you make while travelling.

So how much is each credit card mile?

In evaluating the real monetary value of a credit card “mile” experts say each airline mile that is awarded is equivalent to USD 0.01.

There are certainly some “miles” of some credit card companies that might be worth more than that, while others are less than that. This is a competitive terrain so each company has a unique program for their customers.

The obvious question now becomes:

How many “miles” can you acquire to get a free flight?

Again, depending on the company that gave you the credit card, you could travel with more miles points or less.

For some companies, once you accumulate anything above 20,000 in points, you could travel. For others, the points have to be up to around 80,000.

When you are about to redeem the miles, your company will give you the rates at which their miles are converted to monetary value.

For some, 1 mile = USD 0.01, therefore, 20,000 miles = USD 200 and this could earn you a flight costing USD 200

This is based on the assumption that there is a flat rate conversion of the points into monetary value.

Depending on the type of flight, business class or economy class, a round trip, or even which part of the world you are flying to and as to whether the flight is domestic or international, all these might be taken into consideration when calculating the points or miles you have earned and how your points would be redeemed.

 

How can you get points with your card?

Basically, the underlining principle of getting points for travel is pretty simple, the more you travel, the more points you earn.

Sometimes, some companies do not only want you to spend money but might require something else. This implies that you have to understand how credit card rewards work so you can gain as many points as possible.

Here are a few tips to help

 

Acquire the right card for your usage.

Depending on how you use cards, not every card in the market will be good for you. If you like to travel with a particular airline, it is best and wise to get their card and this would place you in a better position to accumulate points from them.

 

Check bonuses for signing up.

One thing to watch is how many bonuses they give out for people who sign onto their cards. Some really offer some good deals. There are some companies that can give up to 50,000 bonus miles if you can afford to spend up to USD 3,000 within the first 90 days after you have opened your account.

Make referrals

Some companies like it when you recommend their services to others, and they reward you with points for referrals. Once these friends or loved ones you refer use their services, you also get points accrued and credited to you.

Now that you have points, how do you redeem them?

Here are a few points on how to redeem your points.

If you intend to use your points to travel, you have to book such flights on time and ahead.

Secondly, ensure that you are flying with the company that gave you the points, this makes arrangements very easy.

Lastly, make sure you are flexible when it comes to arrangements. For example, if you are bent on travelling a certain route and will not accept any connection or transit, you make it difficult for your points to be used.