Why flexible points are the way to go

A beginner's guide to flexible points currencies and the credit card rewards programs that offer them

GUIDE: Earning Points
DIFFICULTY: Intermediate
TIME TO READ: 4 minutes
POSTED: March 5, 2018
UPDATED: March 2, 2018
LOYALTY PROGRAMS: Relevant to Multiple Programs

As part of my free beginner’s course to earning more points, I cover off the value of flexible points programs in a fair bit of detail.

Although advanced points-collectors are likely to understand this as a matter of course, in this post, I explore the basic concept of why flexible points programs are where it’s at when it comes to ‘levelling-up’ your points collecting game.

This is a cut-down version of the introduction to flexible points programs introduction in the course. If you’ve ever wondered why programs like American Express Membership Rewards are some of the best points program options when it comes to credit card points earn, this should help.

What’s a flexible points currency?

Put simply, it’s where you can hold your points balance in a program that partners with other rewards programs, and allows you to transfer your points to these other partner program currencies or use them in a variety of other ways.

This flexibility gives you more value on per-point basis—why?

Each flexible points program currency has a transfer rate, like an exchange rate, between their currency and their partners’ currencies. This allows you to transfer your points over to partner programs at fixed, and generally stable, transfer rates.

For example, 175 bank rewards program points may transfer to 1 Airpoints Dollar (this would be represented as a 175:1 ratio).

Advantages of flexible points

  • You can hold onto your points now, to make a decision on how and where you use them later
  • You can research the best points program price and actual award availability for your intended route and dates—AwardAce, Award Maximizer and AwardHacker are good pricing comparison websites

Did you know it’s usually cheaper to use Cathay Pacific’s Asia Miles rather than Qantas points on Qantas flights?

  • You will protect yourself from frequent flyer program devaluations, e.g. Singapore Airlines’ KrisFlyer—at least you have the option to move your points to a different rewards program if another devalues
  • You could cash out your points for other kinds of redemptions that can’t be offered by an airline program, such as for card statement credits or experiential redemptions—just don’t use your points to buy a blender

Air New Zealand’s Airpoints partner with a few flexible currencies

While Airpoints itself is not a flexible points program, Air New Zealand do at least partner with a few of the flexible points currencies out there, including American Express Membership Rewards, Starwood Preferred Guest and many other hotel reward programs.

This means you can consider earning points in another currency, and transferring them over to Air New Zealand as an option. There may be value-based reasons not to do this – like we cover here – but it’s handy to at least have as a possibility, say if you’re topping up your balance to make a redemption.

What are some examples of flexible points currencies?

American Express is the only New Zealand financial institution that offer a flexible points currency through their Membership Rewards program, with the ability to transfer points to numerous different airlines and hotel partners.

Likewise, most hotel loyalty programs are flexible currencies—Starwood Preferred Guest, AccorHotels, Marriott Rewards, Hilton Honors and World of Hyatt all allow you to earn points in their own currencies and then transfer them to airline rewards. Whether this is a good deal depends on a number of factors—often it’s not though.

Did you know you can transfer your Amex points to SPG and then onward to Alaska Airlines Mileage Plan to fly Qantas 787 Business Class from Australia to New York with a free stopover in LA?

Most frequent flyer programs, globally, are fixed currencies with no outbound transfer partners. I’m asked all the time if it’s possible to merge frequent flyer point balances across different programs and 99% of the time the answer is no. However, between Velocity and KrisFlyer as well as British Airways Executive Club and Iberia Plus are notable exceptions.

If you can’t find award availability for Singapore Airlines flights through Velocity but you can through KrisFlyer, you can transfer your points from the former to the latter

What are the downsides to flexible points programs?

There aren’t too many. In short, flexible points programs add complexity to your strategy:

  • You’ll spend time and mental overhead keeping on top of where you should transfer your points (but I’m a nerd, or masochist, and enjoy it)
  • Although you can transfer your points on demand over to partner programs, this can often take anywhere from 24-72 hours (or sometimes more)

Flexible program currencies often involve much more mental overhead to work out which will earn you the most points from your spend and what the actual, effective point per $ spent on a comparison basis is.

Then, the time spent waiting for points to transfer over to the partner once you’ve made a decision to redeem them for a specific flight can be nailbiting, with the possibility of those flights being booked by someone else before the points arrive in your frequent flyer account.

If you are waiting on points to transfer over to Qantas or Asia Miles for travel on a oneworld partner, try placing a free hold on the award seat through AAdvantage

Summing up – flexible points programs

  • Flexible points programs for New Zealand are associated with the American Express Membership Rewards program, and numerous hotel programs
  • The added flexibility also adds value to the points you can earn in these programs versus earning points directly into a frequent flyer account
  • Flexibility can also help protect you against some of the headaches of frequent flyer programs – devaluations or lack of award seats with one airline programs vs another
  • You’ll trade off that flexibility for time and mental overhead in managing these points, research in understanding their partners, and deciding where to transfer them when you want to redeem them.

There’s no right or wrong approach though – if you prefer earning points directly into frequent flyer programs from your credit card for simplicity (and often, points maximisation into that program from your spend) then go for it. However in New Zealand, that’s almost strictly limited to earning points with Air New Zealand Airpoints, and might not provide you with the full range of opportunities for award flight redemptions.

Which flexible points program is in your wallet? Are you happy to trade-off earning directly over flexibility in your points?

Why flexible points are the way to go was last modified: March 2nd, 2018 by Daniel Kinnoch