What Are Points and Miles?

Loyalty currencies, in plain language

Points and miles are reward currencies issued by airlines, hotel chains, and banks. You earn them by flying, staying, and — most powerfully — by spending on rewards credit cards. You spend them on travel: flights, hotel nights, and sometimes upgrades or other perks.

The word "miles" is historical. Airline programs originally rewarded distance flown, so the currency was called miles. Today most programs reward dollars spent, but the name stuck. Functionally, airline miles and hotel or bank points work the same way: they are balances in an account that can be exchanged for travel.

The three families of currency

Almost everything in this hobby involves one of three currency types, and knowing which one you're holding is the first skill to build.

• ◆Airline miles — issued by a specific airline's program and mostly redeemable for flights on that airline and its partners.
• ◆Hotel points — issued by a hotel chain's program and mostly redeemable for nights at that chain's properties.
• ◆Transferable points — issued by banks through their rewards programs, movable to many different airline and hotel partners. These are the most flexible and the center of most modern strategies.

Why people bother

Used casually, points shave a little off a trip. Used deliberately, they change what kind of travel is possible: business class seats that sell for thousands of dollars, hotel stays that would blow a vacation budget, or simply a family's worth of flights each year without the airfare bill.

The catch is that value is uneven. The same 50,000 points might be worth $400 in one redemption and $2,000 in another. That gap — between careless and deliberate redemption — is the entire reason a points strategy is worth having, and it's what the rest of this hub teaches.