Beware of this costly mistake when transferring travel rewards

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Don’t make a decision you’ll regret with your hard-earned travel rewards.

Main points

• Some credit cards offer rewards that can be transferred to various airline and hotel loyalty programs.
• These travel rewards are great for the flexibility they offer.
• Transfers are usually non-refundable, so be careful where you send your rewards.

Many of the most popular travel credit cards offer transferable rewards points. This means you can transfer those points to the card issuer’s travel partner loyalty program. For example, if Delta Air Lines partners with your credit card rewards program, you can transfer 50,000 points to your Delta SkyMiles account and turn them into 50,000 miles.

Transferable points can be extremely useful, which is why many travelers use them often. Being able to transfer your points to different airlines and hotels opens up many cheaper travel opportunities. But before you go through with the transfer, there is one big mistake you need to watch out for.

Don’t transfer without a plan

The most expensive mistake I see with travel rewards is transferring them without researching the booking options first.

Once you transfer points, it’s almost always irreversible. For better or worse, your rewards are now part of your chosen loyalty program. Even if you later decide you don’t like any of your choices in that loyalty program, you get nothing back.

Unfortunately, some people jump the gun here. You’ll see if there’s a bonus with a certain transfer partner, or if there’s an airline or hotel you frequent. They then transfer their points, thinking they can book something they like.

If you’re lucky, it works that way. But you can also get a very low price for your points like this. Here are some common examples of how transfers to a travel partner can go wrong:

• Rewards may be worth less in that loyalty program. That’s the case with many hotel loyalty programs, where rewards can be worth $0.005 per point or less. You can get more value by redeeming your points in other fashions.
• Higher award booking fees may apply. Certain loyalty programs, such as the British Airways Executive Club, are known for mitigating expensive fees made with travel awards.
• A travel partner may not have award space. You don’t want to transfer points, but only to find out there’s nothing you can hold.

When you have a travel credit card with transferable rewards, you have more options and flexibility. You can send them to any airline or hotel that is part of your card’s rewards program. Once you confirm a transfer, all those options and flexibility are gone. That’s why you should be 100% sure of what you are doing before entering points.

How to use points like a pro

There is an easy way to avoid this problem: Before transferring travel rewards, decide what you want to book.

For example, if you want to book a plane ticket and have points to transfer to United, first search the United website for flights that you can book with miles. If you get a good deal, transfer in enough points to cover the ticket.

The most challenging part is deciding what a good deal is, because it’s not always clear. What I like to do is find out the starting price for my travel rewards first. To manage that, I see how much I can get if I take them in cash.

With transferable rewards, card issuers typically give you the option to use rewards in a limited amount to pay in cash for certain types of purchases. For example, many card issuers allow you to redeem rewards for travel purchases at $0.01 per point, or $0.015 per point, or some other amount. The exact price depends on your credit card.

Let’s say you can redeem rewards at $0.01 per point toward travel. This means you can make a $500 travel purchase for 50,000 points using the card issuer’s travel portal. If so, only transfer your points if there is a chance to get a higher rate. Here are a few quick scenarios to better explain this:

• If you can book a $700 per night hotel for 25,000 points per night, pass it on! That’s roughly $0.03 in value.
• If a $1,000 award airline ticket costs 100,000 miles and $430 in taxes and fees, don’t transfer your awards. Continue searching for a better deal or redeem through the card issuer’s travel portal.

Finally, transferring travel rewards should be the last thing you do before booking. First find the award flight or hotel stay you want, and if you’re sure you’re ready to book, bring your rewards with you.