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I first started paying attention to the world of miles and points back in 2013. I had an upcoming family reunion scheduled for Lake Tahoe in the Summer of 2014, and I knew that 8 cross-country plane tickets were going to cost at least $3000. I had heard of miles, points and frequent flyer miles before, but that trip was the impetus for me to get serious about it. I opened a few credit cards, and used the signup bonuses to accrue 140,000 Southwest Rapid Rewards points to get a free flight for my family of 8 to Lake Tahoe and back.

Just about every airline, hotel and bank has their own loyalty program, credit card, elite status and other components of their own frequent flyer program. In this article, we will take a look into what are frequent flyer miles, how frequent flyer miles work and why airline credit cards have become so crucial into frequent flyer programs.

What are frequent flyer miles?

Frequent flyer miles are a generic term for the currency of an airline’s frequent flyer program. When airline frequent flyer programs were first introduced, you would typically get one frequent flyer mile for every actual mile that you flew. Over time, as airline programs have evolved, the amount of frequent flyer miles that you get from flying will now often depend on the cost of your ticket, your elite status, whether you have the airline credit card and other factors.

Hotels, banks and credit card companies are also in the game, though the currency of their programs is often referred to as “points”. Thus, it’s common for people to refer to frequent flyer miles and the different types of loyalty currency as “miles and points”

(SEE ALSO: Credit Card Rewards: Points versus Miles)

How do frequent flyer miles work?

Frequent flyer miles are a currency specific to the loyalty program of a particular airline. So if you are collecting miles on American Airlines, you will earn AAdvantage miles. In one sense, miles and points are a loyalty currency similar to real cash money. One major difference is that generally speaking, you can only spend frequent flyer miles on the airline in question. Unlike cash, your American Airlines miles can’t help you fly on Delta, stay at a Marriott hotel or buy groceries. Airline miles and hotel points are also a deflationary currency, meaning that it’s very rare for the value of your miles to go UP. So it’s not a good idea to hoard your frequent flyer miles – instead spend them as you earn them.

Airlines also are the sole arbiters of their loyalty programs and currency. If American Airlines decides you’ve violated their terms and conditions or decides they don’t like you, they can take your miles and there’s nothing you can do about it. If you die, airlines will try to keep you from transferring your miles to your heirs. (Instead just use their account to book travel for yourself).

How much is a frequent flyer mile typically worth?

Many people, especially those that travel a lot for work and have racked up a lot of frequent flyer miles and hotel points wonder how much is a frequent flyer mile worth. Unfortunately, the different kinds of miles and points out there are all worth different amounts, so there is not one specific answer.

If you are wondering how you would calculate the value of frequent flyer miles, one good way is to compare the cost of redeeming your miles and points to paying cash for the same flight or hotel stay. If you can redeem 25,000 Delta Sky Miles for a flight that costs $400, then you are choosing to value your miles at a rate of 1.6 cents per mile (40,000 / 25,000). While the cents per mile or CPM methodology has some flaws, it is useful as a rule of thumb.

Some airlines, hotels, and banks tie the value of their frequent flyer programs directly to the cash value of a ticket. Two airline examples of this are Southwest Airlines and JetBlue points. As the cash value of a ticket on these two airlines goes up, the cost to redeem in points also goes up, and vice versa. So for these two airlines, it’s fairly straightforward to say that those frequent flier miles are worth around 1.3 cents per point (JetBlue True Blue) and 1.4 cents per point (Southwest Rapid Rewards)

(SEE ALSO: The difference between “points” points and “cash” points (and why it’s important))

Another program that has a fixed amount for points is if you redeem your points through the Chase Ultimate Rewards travel portal. There, points are worth between 1 and 1.5 cents per point, depending on which Chase credit card you have. If you have the Chase Sapphire Reserve, your redemptions through the Ultimate Rewards travel portal will be at 1.5 cents per point, no matter what you redeem for. Chase Sapphire Preferred or Chase Ink Preferred cardholders redeem for 1.25 cents per point, and all other Chase cardholders redeem at a flat 1 cent per point.

What type of everyday spending earns frequent flyer miles?

Historically, the way that you earned airline miles was through actually flying on the airline in question. That’s why they’re called “miles” after all! But now, it’s much more important to have the airline credit card and spend money on it. If you’re wondering how to accrue frequent flyer miles without flying, it’s quite easy with the airline credit card. Most airlines, hotels, and banks have credit cards that help you earn more miles.

The ways that you can use your everyday spending to earn frequent flier miles depends on the airline loyalty program and airline credit card in question. Different cards earn different amounts. Some earn a flat percentage on all spending, while others give bonuses for spending in specific categories. To know how to choose the right card to earn frequent flyer miles, you’ll want to analyze your own spending and travel patterns and find the best card that works for you.

One of the best ways to earn frequent flyer miles is via spending – much more so than actual traveling. Of course, if you are a frequent traveler (especially if your work or someone else is paying for it), you will also want to maximize your earning through staying at hotels and flying with airlines. This can also be an effective way to get more miles and points, if you’re wondering how do you earn travel rewards without a credit card.

What are the benefits of frequent flyer miles?

There are many benefits of frequent flyer miles. The biggest benefit would be to get a free flight without spending your hard-earned cash. Now, the flight isn’t exactly “free”, since a) there may be taxes and fees that you still have to pay in cash and b) it’s important to be aware of the opportunity cost of other rewards you could have earned instead of frequent flyer miles. Still, there are few better feelings than getting a free flight with miles, especially if it’s in business class, first-class or another premium cabin!

Frequent flyer miles and programs can also help you with elite status on airlines, and many airline credit cards offer perks like bonus miles, free checked bags, improved boarding area and other things to make your travel experience more pleasant.

How to redeem frequent flyer miles

If you want to know how to redeem frequent flyer miles, there are many different ways to redeem frequent flyer miles. Generally, you will get the best value for redeeming your frequent flyer miles for flights on the airline in question (or one of their alliance partners). It’s important to keep in mind what mistakes you should avoid when redeeming airline miles. One of the biggest mistakes is trying to use convert airline miles into either cash, other forms of travel (hotel or car rentals), gift cards, or merchandise. It’s very rarely a good way to redeem points or miles in that regard. It’s much better to use your airline miles for an award ticket through the same frequent flyer program. If you have American Airlines miles, use them at to book a flight on American Airlines or their partner. If you have Delta Sky Miles, book a flight through Delta’s site, etc.

It is sometimes POSSIBLE to transfer miles between airline loyalty programs, but it’s rarely a good idea.

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