Travel Points Explained in 10 Minutes

You’ve seen the Instagram posts: friends sipping champagne in a lie-flat seat or staying at the Park Hyatt for “free.” You assume they are either rich or have a secret you don’t.

Here is the reality: They aren’t paying cash. They are paying with a different currency—one that most people throw away or use inefficiently (Travel Points).

I’ve spent the last decade treating loyalty programs like software systems to be optimized. This guide explains exactly how the machine works in under 10 minutes. No fluff. Just the mechanics.

Part 1: The Two “Buckets” of Points

Before you apply for a card, you must understand that not all points are created equal. In 2025, points generally fall into two buckets: Fixed-Value and Transferable.

1. Fixed-Value Points (The “Cash” Bucket)

These are simple. One point is worth a specific amount of money, usually 1 cent.

If you have a card like the Capital One Venture (when used for the “purchase eraser”) or a standard cash-back card, the math is static.

• The Math: 50,000 points = $500 in travel.
• Pros: immense flexibility. You can book any flight, any hotel, or any Airbnb.
• Cons: Zero upside. You will never get outsized value. A $10,000 business class flight will always cost you 1,000,000 points.

2. Transferable Points (The “Gold” Bucket)

This is where the magic happens. Banks like Chase, American Express, Citi, and Capital One issue points that are flexible. You can use them like cash (bad idea), OR you can transfer them to specific airline and hotel loyalty programs (good idea).

Why do this? Because airline award charts often have “fixed” prices in miles, regardless of the cash price of the ticket.

Part 2: The Golden Rule (Math Included)

To be a travel hacker, you must understand Cents Per Point (CPP). This is the metric that determines if a redemption is a “rip-off” or a “steal.” Please check out the Points vs. Cash Calculator to easily calculate the value of a redemption.

Here is the formula you must memorize:

Example A: The “Bad” Redemption

You use 50,000 Chase points to book a $500 flight through the Chase Travel Portal.

• Calculation: ($500 – $0) ÷ 50,000 = 1.0 cent per point.
• Verdict: Average. You broke even.

Example B: The “Travel Hacker” Redemption

You want to fly Business Class to Europe. The cash price is $4,000. instead of paying cash, you transfer 80,000 points to Air Canada Aeroplan (a partner) and book the exact same flight.

• Calculation: ($4,000 – $50 taxes) ÷ 80,000 = 4.9 cents per point.
• Verdict: Incredible. You effectively got 5x more value from the same points.

This arbitrage is why we never use points for toasters or gift cards.

Part 3: The Ecosystem

Think of the major banks as “central banks” and the airlines as “foreign countries.” You earn currency in the central bank (Chase, Amex), and when you are ready to travel, you convert that currency into the local money of the airline (United, Delta, British Airways).

Pro Tip: You do not need to fly British Airways to use British Airways Avios. Because of airline alliances like Oneworld, you can use British Airways points to book flights on American Airlines within the US. This is often cheaper than booking with American directly.

Part 4: Step-by-Step Execution Guide

Step 1: Pick Your Ecosystem

Don’t scatter your efforts. If you are new, start with one ecosystem. Chase is generally recommended for beginners because their points transfer to United Airlines and Hyatt, which are easy for US travelers to use.

Step 2: The Sign-Up Bonus (SUB)

This is the fastest way to earn points. A typical card might offer 60,000 to 100,000 points if you spend $4,000 in the first three months.

Do the math: If you earn 1 point per dollar on coffee, you need to spend $60,000 to get a free flight. If you get a Sign-Up Bonus, you get that same flight for spending $4,000 on groceries you were going to buy anyway.

See our guide to the Best Travel Credit Cards for current offers.

Step 3: Earn on Category Multipliers

Once you have the card, use it strategically. Most travel cards offer “multipliers” on specific categories.

• Dining: Often 3x or 4x points.
• Travel: Often 2x to 5x points.
• Groceries: Often 4x points (especially on Amex Gold).

I once paid for a group dinner of 10 friends on my card and had them Venmo me. I earned 4,000 points in one meal—that’s a free short-haul flight in Europe.

Step 4: Redeem via Transfer Partners

When you are ready to book, do not go to the bank’s travel portal first. Go to the airline’s website.

1. Find the flight on the airline’s site (select “Pay with Miles”).
2. Confirm the seat is available (“Saver” awards are best).
3. Log in to your bank account (Chase/Amex).
4. Select “Transfer Points” and send them to that airline.
5. Go back to the airline site and book the ticket.

Common Mistakes That Kill Value

1. Hoarding Points

Points are not a savings account. They are a depreciating asset. Airlines devalue their points constantly (raising the price of flights).

Strategy: “Earn and Burn.” Don’t sit on a million points. Take the trip.

2. Ignoring Annual Fees

Beginners fear annual fees. Pros do the math. A card with a $95 fee might give you a free hotel night certificate worth $250. That means the card is effectively paying you $155 to keep it.

3. Missing the “Saver” Availability

Airlines release a limited number of seats at the lowest point price (Saver level). If you don’t see the cheap price, check different dates. Flexibility is the key to high value.

Is It Worth The Effort?

If you only travel once a year in economy, a simple cash-back card might be better for your sanity. But if you want to fly Business Class for the price of Economy, or stay in 5-star hotels for free, this system is unbeatable.

For more details on specific redemption sweet spots, check out our Advanced Redemption Guide. Start with one card, hit the bonus, and book that first trip. The math doesn’t lie.