Diversification is a good idea in the stock market, but it is a bad idea as far as frequent flyer programs go.
In order to maximize award travel, you need to concentrate your earning strategy on one or maybe two frequent flyer programs.
Miles and points have no value if they are not used. Zilch. So there is little value in gathering a few miles here and a few miles there unless you will have enough to redeem for an award ticket or hotel room.
Miles and Points Programs Are Loyalty Programs
Frequent flyer and hotel programs are loyalty programs so it stands to reason that they reward loyalty. If you spread your spending around, the less likely you are to accrue enough points in any one program to redeem an award, or to benefit from elite status. Now I am not one for elite status, but if you are doing a lot of traveling, and can arrange your travel to concentrate on a particular airline or hotel chain, you may accelerate your points earning as you move up the loyalty program ladder.
35,000 Miles Won’t Get Me Where I Want to Go
Let me give an example. Last year, I opened a The US Airways Premier World MasterCard® for a bonus of 35K miles. I thought this was a great deal because the miles were awarded after making my first purchase — there was no minimum spend requirement. Free miles, I thought. (The offer now is for $30K miles after your first purchase, with an annual fee of $89.)
US Airways fit into our family’s travel plans, because they had a lot of flights from Washington National (DCA) to Hartford (BDL). The US Airways card came with two $99 companion passes, so I thought it would be a good way for our family of three to save on travel expenses. Furthermore, it allowed award redemptions for 5,000 fewer points. (Economy awards on US Airways normally cost 25K miles, but if you have The US Airways Premier World MasterCard®, they cost only 20K miles.)
When it came time to book our travel, there was ready award availability at the “economy” level for flights from DC to Hartford.
So what’s the problem?
The flights were routed through Philadelphia (PHL) with flight times of four hours on average. A four hour flight to Hartford made no sense whatsoever! By the time we drove to the airport, found parking, checked in, went through security — you know the drill — we’d be halfway to Hartford if we had just driven!
There were plenty of seats for paid tickets on nonstop flights with fight times of just one hour, but these were “standard” awards that required 50K miles, or 45K for cardholders. The only “economy” award seats were for the nonstop flight that left at 7:30 am, and we needed to leave in the afternoon.
In the eight months I have had The US Airways Premier World MasterCard®, I’ve managed to accumulate just 38K miles in the US Airways Dividend Miles program. If I could get to 45K miles, maybe I would have enough for a free domestic ticket that I could actually use.
But I am not there yet, probably because I have so many other airline-branded credit cards that I am putting spend on: specifically United; Southwest; and American Airlines.
I don’t have enough miles in any one of these programs to book a free trip for both myself and my husband.
Pick One Frequent Flyer Program and Stick With It
A smarter strategy for someone like me would be to concentrate on one or two airlines, such as Southwest and United, along with one transfer partner such as Chase Bank’s Ultimate Rewards program, that allows you to transfer points into Southwest Rapid Rewards and United Mileage Plus.
Both of these airlines offer numerous credit card options, which would allow one to accrue massive mileage balances over time. Southwest, for example has four different branded credit cards (two personal, and two business) that frequently offer 50K bonus miles each. United Airlines has six different credit cards. And there are multiple cards that earn Ultimate Reward Points that can feed in to both these programs.
The same is true for US Airways and American Airlines. They both offer numerous credit card options, and the Amex Starwood Preferred Guest (SPG) card is a transfer partner. I think it is best for those just starting out to pick one carrier (based on your home airport) and stick with it.
Don’t Leave Miles on the Table
I am conflicted about what to do moving forward.
One strategy might be to do another round of credit card applications to earn enough miles on American Airlines and US Airways to pay for a family trip on each airline, or in the hopes of combining the miles when the merger is complete. The ultimate goal would be to spend down the miles, without leaving unused miles on the table.
This approach would contradict my own advice!
On the other hand, it might make more sense for me to concentrate my earning opportunities on United Airlines. Dulles International Airport (IAD) near my home is a hub for United, and their routings work for my business and personal travel.
This much is clear: I don’t need to rush into a decision. Good credit card sign up offers seem to pop up all the time.
Here’s Where I Come Out
You have to stay focused on your travel goals.
If you are new to miles and points, you can find a lot of high value opportunities with various domestic airlines. Judiciously opening credit cards can earn you a lot of frequent flyer miles on the major carriers.
Different banks tend to represent different airlines, so you may be lured into spreading your applications out over the various banks — such as Citi, Barclays, Amex, and Chase.
Once you have experienced the opportunity to fly for free, it is easy to get sucked in to opening more and more credit card accounts for the free travel.
But if you are just starting out, you will accrue more free travel by concentrating your travel and your credit card applications on a single airline and its transfer partner.
Note: I am not suggesting that you fly your preferred airline if you can get cheaper tickets on another carrier. Certainly not!
Eventually, I plan to phase out the airline-specific credit cards and focus on collecting Ultimate Reward Points, which have many different redemption options, including for cash.
What is your strategy? Do you prefer to concentrate on one program or to diversify?
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