When I booked two round-trip airline tickets this month using frequent-flier points, I was reminded that there’s an often-overlooked benefit in loyalty programs.
Airline and hotel loyalty programs can allow people to get free plane tickets and hotel nights, and it’s hard to beat free. The hidden benefit is that those free rooms and flights can be worth more than they seem, which means your frequent-flier miles and hotel points may be more valuable than you think.
When you book airline tickets using frequent-flier miles or reward points, you aren’t charged some of the fees added to tickets you buy with dollars.
Typically, the only thing you’ll pay out of pocket with a domestic frequent-flier ticket is the Sept. 11 security fee imposed by the government, which adds $10 or less to a plane ticket.
With some airline loyalty programs, such as Southwest’s Rapid Rewards, points (frequent-flier miles) are used like money to buy tickets. So, excluding some of the usual fees essentially makes the ticket less expensive, because fewer points are required to buy it.
For example, the two tickets I booked would have included $42 in passenger facility charges and segment fees, if I paid with dollars.
Passenger facility charges apply only to “revenue passengers” and you aren’t one of those if you pay with frequent-flier miles. The same is true for segment fees, currently $4 for every takeoff.
This makes a difference with frequent-flier programs where points or miles are used like currency, because a less expensive ticket requires fewer miles. In frequent-flier programs where a fixed amount of miles are needed to get a ticket, it doesn’t make a difference.
With hotels, the hidden benefit can be large because room taxes in cities that are popular with tourists (including Charleston) can be substantial. It also can be more obvious, because travel-pricing websites typically do not include taxes and fees when they display hotel rates, but they do include them when showing airfares.
To create an example, I checked out some hotel rates in Charleston for a Friday night in March. One of the better downtown options was a room for $319, but that didn’t include $44.19 in taxes that would be added if you booked the room.
So, if you were to use hotel points to book a free night in that room, you would be saving not $319, but $363.19.
This sort of thing makes a difference if you’re trying to figure out what a hotel point or airline mile is really worth. If I count the value of the fees I avoided, my Southwest points were worth 1.73 cents each.
There are lots of ways to accumulate airline miles and hotel points, and many of them don’t involve flying anywhere or staying in a hotel. If you have a favorite airline or hotel chain, visit their website and look at all the ways to earn points in their loyalty program.
You can get points for dining out, for ordering flowers, for signing up for email notices, for shopping online through their shopping portals; and, of course, by signing up for their branded credit cards.
The points that paid for my two plane tickets came from signing up for a Southwest credit card, which cost $69 and gave me 50,000 Rapid Rewards points. If you never carry a balance, and pay no interest charges, such deals can be very rewarding.
As of mid-January, Southwest was offering that deal once again.
On an unrelated note, this column often recommends that people shop around from time to time for better deals on loans, banking and insurance.
So, it’s worth mentioning that South Carolina Federal Credit Union has been advertising a promotion where new checking account customers who will regularly direct-deposit funds can get $100 for opening an account. The same credit union is offering $100 for transferring a car loan with a balance of $10,000 or more, and is offering rates as low as 1.99 percent.
Reach David Slade at 937-5552
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