Saturday, May 21, 2011


Here in the States most everyone has some sort of loyalty program affiliation. It might be the little key tag from the supermarket, membership in a hotel branded or airline branded program, a car rental program, a hardware store loyalty program or a credit card that somehow rewards you with either cashback, points or something else.

Even small independent businesses are getting into this. Some will just “know” who their regular customers are while others are going a bit “high-tech” and using cards and computers to track your purchases.

Of course when you think about it, a lot of these programs date back to saloons/bars where the barkeeper would give you a free drink after a while to keep your interest (and get more of your money.) This, of course eventually extended to places like Atlantic City and Las Vegas where you might get “comped” meals or a room and to banks that gave away toasters, etc back in the day in order to get your accounts.

But the programs that can have an impact on almost everyone these days are the cashback and travel programs.

The question is, of course, how to maximize your “earnings.”

Lots of people join every program out there. When travelling they then look for the absolute cheapest place to stay and end up with a myriad of points scattered all over the place. This means they end up with many points but not enough in any one program to claim a reward (other than perhaps a free magazine subscription.)

What many people do not know is that a lot of programs have affiliations in themselves. Almost all hotels will let you earn their own points or miles for airline travel. Some programs, such as the Hilton Honors will let you earn both at the same time as one of their options. Others will let you redeem the points from their program into miles.

Airlines are where you can really make out like the proverbial bandit. There are three major airline alliances: oneworld, SkyTeam and Star Alliance. The majority of the world’s global airlines belong to one or another of them. Advantages of these alliances for individual travellers is they can travel on one airline while earning miles in their preferred program when both airlines are in the same program. Since the miles are usually based on travel distances one can look at different airlines and possibly save money by finding lower fares.

For the airlines the biggest advantage is code-sharing. This is when you purchase a ticket on one airline but it turns out that you are actually flying on another airline’s plane. The biggest advantage of this is that, instead of having to deal with multiple airlines, one airline becomes responsible for your trip from start to finish. Code-sharing also lets airlines offer more flights under their name and actually can foster competition with a wider variety of pricing on the same flight.

Some smaller independent airlines have separate agreements with larger airlines independently of the global alliances which can let one earn mileage on various alliance programs. An example of this would be Alaska Airlines which lets you earn mileage on your choice of certain (not all) SkyTeam member or oneworld member programs.

Many airlines and hotel chain programs even have their own credit cards which will let you earn free travel without ever taking a trip! The points can add up fast if you are disciplined. That means you pay your credit card bill in a very timely manner and also make a point of charging everything to it including those $1.00 video rentals and bills where you can.

However you do need to be careful – some loyalty cards do charge an annual fee and that fee can be costly. A prime example of this is the American Express Centurion Card which runs $2500 per year! Of course there are much cheaper cards out there such as the Chase Freedom Card (no annual fee and revolving 5 percent cash back rewards) which lets you earn points you can redeem for a wide variety of items including airline miles. The trick is to research the loyalty programs and the various cards before you apply for them in order to see which program will give you the most bang for your buck. Remember that many loyalty programs have sign-up bonuses as well that can give you free hotel nights or airline tickets right off the bat. The best example of that would be British Airways recent promotion that gave you 100,000 miles – enough for two coach tickets to Europe from the States) once approved. (It has since gone back down to 50,000 miles.)

You need to also look at other terms of the programs. Do the miles or points expire? As of today Priority Club points never expire – even if your account goes inactive while Hilton Honors points will expire if there is no activity on your account for more than 12 months. (The way around that is to either purchase points or something through their shopping mall once every 12 months.) Airlines are a bit tricky – some will let you keep your miles indefinitely as long as there is some activity on the account every 12 to 18 months, others let you keep your miles forever and others have set expirations on mileage once earned.

Other things to look for are renewal bonuses on credit cards which can be mileage, points, free nights or companion tickets. Also remember that if you are flying on the airline that issued your credit card or staying in a hotel that is affiliated with the loyalty program that issued that credit card you can double dip and earn points for the transaction as well as for the flight or stay!

Does your loyalty program participate in other bonus programs?

Alaskan Airlines, American Airlines, Best Buy Reward Zone, Delta, eScrip, Hilton Honors, American Express, United Airlines, Priority Club,Southwest Airlines, UPromise and US Airways all participate in the Dining Rewards Network program. You can sign up all your credit cards with one program through the airline, hotel or retailer website or spread them out amongst the various programs you belong to and earn points each time you dine at certain restaurants. If you eat out just once a month and choose the right restaurants the points can add up quickly. Just be sure that the location you are dining at is a participant.

Then you come down to using your miles or points. Again, one has to weigh the variables. Is it better to use your mileage for a free ticket or is it better to purchase a coach seat and then use mileage to upgrade to business or first class? Should you spend your hotel points on free nights at a hotel while visiting friends or relatives or save them to spend on a vacation package?

Loyalty can pay dividends in other ways as well. Many programs have different status levels. With an airline the higher your status the better your chances of getting a free upgrade, priority boarding, no checked bag fees, access to their airport clubs and more. With hotels it can translate into a room upgrade, free meals or internet and other perks. Many upper status levels will also earn you extra miles or points at an accelerated rate so instead of getting only 1 point/mile per dollar you might get 5 or 8 or 10.

Finally – before you join any loyalty program remember to check the redemption policies even though they can change at any time.

Questions to ask include:
What are the fees involved with redeeming points/miles?
If you do not use the award do you lose it or can you redeposit it into your account?
If you can redeposit it, what fees are involved?

Yes – even though you may be getting something for free, you have to be careful because you can be nickel and dimed to death with fees!
Next time we will deal with other ways to earn rewards and incentives!


  1. Oh my goodness- so many many choices!!! What I often dislike about the airline miles is that when you go to get a ticket with your mileage points- suddenly it is a peak season and what normally would have cost 25,000 miles ends up costing 50,000 miles!! UGH!!

  2. That's true but not all airlines and cards do that. It's just a question of doing research and choosing the right program. Never an easy task.