Understanding Rewards Programs

People fly around the world for pennies. They say, "Oh, I booked with miles" and all you're thinking is, "LET ME IN on your secrets!!" Well, let's begin. You don't become rich with miles simply by collecting miles on flights you take. I mean, sure you get a few miles for that, but c'mon - going from New York to Florida would get you ~1000 miles, and 1000 miles will get you around... nothing in free airfare. Real miles collecting comes from opening up cc's that are associated with specific airlines and getting the big bonus enrollment offers they give you for signing up and spending a certain amount of money on the cc within a certain amount of time. You can fly to Florida and get 1000 miles, or open up a cc and get 50K miles. Capiche?

Now that we've established that opening up cards is the way to really collect miles, let's discuss what "miles" are exactly. You don't just open up a card, get 50K miles and now can travel wherever you want on any airline. Each airline (and hotel) brand/chain has their own mileage program. Some airlines are partners with others, and allow you to use miles on those partners, but other programs are separate and require a different miles currency. For example, ElAl [LY] is a partner with American [AA], and therefore you can use AA miles (which are much easier to collect as AA has cc's and LY doesn't) on an LY flight. In addition, many airlines are more than just partners; they are members of the same airline alliance. There are 3 major airline alliances:

• Star Alliance [*A] (most famous for United [UA]) 
• OneWorld [OW] (most famous for AA) OW can also refer to a one way ticket, so read it in context.
• SkyTeam [ST] (most famous for Delta [DL]) 

Most of the time being "just" a partner and not a shared alliance member won't be a factor in booking your ticket, but in some cases, like booking a OW Explorer award, there will be a difference - hopefully we'll get to that one day.

So, you need to collect the mileage currency of the airline or alliance you actually want to travel with. (Don't open up an AA cc expecting to fly on UA.) Most of the popular airlines have an affiliated cc. As we learned, every cc is connected to a particular bank. 4 banks are affiliated with the most popular airline/hotel cc's:

• Chase (UA [cc known as United MileagePlus Explorer card, or UMPE], British Airways [BA], SW, Hyatt, Marriott, Intercontinental [IHG], others)
• AMEX (DL, Starwood Preferred Guest [SPG], JetBlue [JB], others)
• Citi (a bunch of different AA cards, Hilton)
• Barclays (Lufthansa [LH], US Airways [US])

Each of those cards get linked to your frequent flyer number [FFN] for that particular airline. All of them offer at least 1 mile/point per $1 spent on the card and usually offer better ratios for specific spending, like on dining or gas stations. One day, I would love to publish a post explaining which cards are best for what types of purchases.

In addition to the airline/hotel cards, Chase and AMEX both have their own point currencies that can be collected with the following cc's:

• Chase Ultimate Rewards [UR] (Freedom, Sapphire Preferred [SP], Ink Bold [IB, in context can also refer to Iberia Airlines], Ink Plus [IP]) It's important to note that UR earned on a Freedom card, can only be redeemed for cash back [CB] unless you also have an SP or Ink card, in which case the UR becomes "travel" UR and not just CB. Transferring Freedom UR to a spouse that has an SP/Ink would accomplish the same goal.
• AMEX Membership Rewards [MR] (Platinum, Gold, Premier Rewards Gold [PRG], Green, Everyday, Mercedez-Benz Platinum [MB])

These programs, along with the SPG program, earn "generic" points that can be transferred to other rewards programs, making them extremely valuable. AMEX also often runs promos offering bonus miles for transferring to specific partners like gaining an extra 20% of the miles you transfer. Similarly SPG, aside from being able to use its points at its own hotels, offers a 5K bonus on transfers to many partners when transferring 20K SPG, netting you 25K of the partner's currency. These 3 programs transfer to the following partners:

• UR - UA, BA, SW, Korean, Virgin, Hyatt, Marriott, IHG, Ritz-Carlton, Amtrak (that's all the partners)
• MR - BA, DL, JB, LY (popular partners; complete list can be found here, click Hotel tab for hotel partners)
• SPG - UA, AA, BA, US, DL (popular partners; complete list can be found here)

UR transfers are in a 1:1 ratio, but MR and SPG transfers vary and some transfers even net you less miles than you started with (sometimes you're just that desperate). One day, I'd like to update this post listing the different transfer ratios and how long transfers take (some are instant, some can take days).

Okay then. I'm sure I'm missing points here, so please comment with content you think should be added or with any questions you have!