A reader asks:

I’m confused. United mileage Plus visa card, which allows you to use points for travel, such as 55,000 points for travel to Europe. So no matter how much the flight costs it is always 55,000 points. So if I have 110,000 miles, I could take 2 trips to Europe.

Carolyn

My Answer

Well Carolyn, you have touched on the heart of the matter when it comes to reward cards. There are essentially two types of travel reward programs in my book, Service Based and Value Based. In a Service Based program, such as United’s you earn a reward good for a service. In your example, the service is a round trip flight to Europe, such is what is offered by United and their Visa card. The other type, Value Based, gives you an award with a fixed value. In your example with Capitol One, the value is $50 for 5,000 miles. I can deduce that the airfare that Capitol One quoted you 80,000 miles for was $800, about average for a flight to Europe these days.

Which is a better deal? It may seem obvious that United is the better deal. In theory, the two tickets for 110,000 miles are better than one for 80,000. Unfortunately, the situation is actually more complex. I have had some serious problems with United Airlines Mileage Plus program, and the operation of the airline in general. So much so, that I have warned people never to fly with them as their customer service is of the quality you would expect from a third world carrier. As for their Mileage Plus program, I find their award availability to be dismall, and their practice of blocking availible awards on their partners to be abhorent. To learn more about this practice search on the term Starnet Blocking. If all this wasn’t bad enough, keep in mind that 55,000 miles is merely a “reduced award”, one that has very limited availibility, often none at all for months on end. Their “Standard Award” is actually 110,000. Think of it as if you are pulling up to a gas station that is advertising gas at $2.00 a gallong. When you swipe your credit card, they then tell you that they are out of gas at the “reduced” price, but you are free to buy gas at the “standard” price of $4.00 a gallon. It gets worse. United then charges you a $25 booking fee for online award redemptions, or $30 for telephone redemptions. Furthermore, their website is very buggy, and their telephone representatives are poorly trained, overseas based agents that are often difficult to comprehend.

My Advice

I recommend going with a flexible reward card such as the Starwood Preferred Guest American Express or a Membership Reward points earning American Express card. With either of these cards, you can earn points over time, and not be locked into a single program. As bad as United is, they could become even worse next year, if they are still in business at all. When I earn points on my Starwood, I have the option of both value based and service based awards. Value based awards are not always bad, especially when airfare prices are at all time lows, as they are now. With Starwood or Membership rewards, you can earn your points now, and then trade them in for miles on whatever carrier has the best redemption rates and award availiblity when you are ready to travel. If you play your cards right, you will easily do better than one cent in award value per dollar spent, and leave Capitol One in the dust. Save your Capitol One card for when Amex is not accepted, or when traveling overseas, as they do not charge ridiculous foreign transaction fees.

Good luck on earning your travel rewards Carolyn.

This entry was posted on Thursday, April 9th, 2009 at 23:44 and is filed under News. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.