Travel Loyalty Programs

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In the past, miles granted to a flyer in an airline loyalty program were based on miles flown.
However, that has since changed so that miles granted are related to purchase price of the ticket, not simply actual miles flown.
Regardless of whether units in a loyalty program are called miles, points, or some brand specific name, for the rest of this page I will refer to units in a loyalty program generically as points.
An airline or hotel chain may have a loyalty program that awards members points that can go towards future travel.
The loyalty program may or may not have tiers, where each higher tier provides greater benefits.
A consumer can advance through the tiers by meeting the requirements of each tier.

Earning Points

Points in a loyalty program can be "earned" in the following ways:

• Renting cars from a car rental company.
• Staying at a hotel in a hotel chain.
• Flying on an airline.
• Transferring points from a more general program such as American Express Membership Rewards or Chase Ultimate Rewards into a specific loyalty program.
  In the United States, there is an excise tax on transferring points to a domestic airline.
  Even with an excise tax, there can be favorable redemptions if airline points are used on an award sale.
• Sign up bonuses and spending on a co-branded credit card.
  In this case, instead of earning cash back as you would with a cash back credit card, you would be earning points in a loyalty program.
  The points from the co-branded credit card would be in addition to whatever points you would have otherwise been eligible for.

Buying Points

In addition to the ways listed above, you may also be able to purchase points.
The normal cash rate charged for points in a loyalty program is generally a poor value.
A travel loyalty program may or may not periodically have special offers that allow you to buy points at a reduced rate.
However, even with such offers, buying points is generally still a poor value.
The edge case where buying points, even at full price, can make sense is when you need a small number of points in addition to what you already have in order to have enough points for a specific redemption.

Devaluation

Just as with cash, the spending power of points may decline over time.