A new study says that travel overseas, especially to Europe and Asia, provides the best value when it comes to credit card rewards redemption.
IdeaWorks Company did a study to find out how much frequent flyer rewards were worth when booking travel though United Airlines’ United MileagePlus rewards program.
They made inquiries on over 170 different itineraries, comparing the value of each. What they found what that travelers could increase the value of their credit card reward miles from one cent per mile to over five cents per mile by booking first class or business class tickets.
In general, tickets to far-flung locations like Europe, Asia, and Hawaii offered a far better redemption value than an economy class domestic fare.
Domestic saver fares on United cost 25,000 frequent flyer miles. Although these fares are easy to find and seats are plentiful, average value for these redemptions was only 1.4 cents per mile.
United’s first class saver seats to Hawaii cost 40,000 miles each, and first class saver fares to Europe and Japan will cost you 135,000 miles, but the redemption value to Hawaii was an average of four cents per mile, while redemption value for Europe and Japan was more than five cents per mile.
Upgrading to the elite program of a frequent flyer program, such as United MileagePlus Premier, saves travelers even more. IdeaWorks said that savings for elite members were an average of 29% to 36%. Many co-branded credit cards offered by airlines in partnership with issuing banks, give cardmembers automatic elite status, or in some cases a lower spending threshold to achieve elite status.
Having a credit card co-branded with an airline offers the best frequent flyer value, as these cards let customers earn miles with every purchase. Many also give a sign-on bonus. United MileagePlus Explorer card from Chase offers new cardholders 30,000 bonus miles after a certain spending requirement is met within the given timeframe of three months.
Travel credit cards which are not branded by any particular airline can offer better value on domestic economy fares, according to the IdeaWorks study. These types of cards let customers earn points or miles that can be redeemed for either travel, gift cards, merchandise or cash back. Co-branded airline cards were a better deal for people planning to travel internationally, overseas, or using first class or business class.