Why I rate ‘flexible points programs’ – a beginner intro to flexible points currencies and the credit card rewards programs that offer them

As part of my beginners course to earning more points I cover off the value of flexible points programs in a fair bit of detail.

I realised I’ve never really explained the basic concepts of this on the site, although advanced points-collectors are likely to understand this as a matter of course – flexible points programs are where it’s at when it comes to ‘levelling-up’ your points collecting game.

This is a cut-down version of the introduction to flexible points programs introduction in the course – if you’ve ever wondered why Amex Membership Rewards Altitude Rewards, Citi Rewards, and ANZ Rewards are some of the the best points program options when it comes to credit card points earn, this should help.

What’s a flexible points currency?

Put simply, it’s where you can hold your points balance in a program that partners with other rewards programs, and allows you to transfer your points to these other partner program currencies – or use them in a variety of other ways.

This flexibility gives you more value on per point basis. Why?​

Each flexible points program currency has a transfer rate – like an exchange rate – between their currency and their partners currencies. This allows you to transfer your points over to partner programs at fixed, and generally stable, transfer rates.

This means:

  1. You can hold onto your points now, to make a decision on how and where you use them later
  2. You can research the best points program price and actual availability for your intended route, once you know where and when you want to fly, and what points seats are available for those dates
  3. You will protect yourself from rewards program devaluations – at least you have the option to move your points to a different rewards program if another devalues
  4. You can take advantage of transfer bonuses from one currency to another
  5. You could cash out your points for other kinds of redemptions that can’t be offered by an airline or other partner program – such as for card statement credits, or experiential redemptions

A note on point 3 above – we just saw only last week with the recent Citi changes (that were reversed, temporarily at least) that flexible points programs can change their value too.

I guess there’s no solution to this in the long-term – Citi’s issues with their proposed changes (lack of notice and communication primarily) however shouldn’t be representative of the way that other flexible points currencies operate.

Qantas Points are one of the least friendly currencies to flexible points programs

Qantas Frequent Flyer made the strategic decision several years ago to pull out of most of their agreements with flexible points programs, and are no longer partners with most of them.

This is why you see Qantas-branded cards being marketed alongside banks’ own brand credit cards – it’s what’s needed for a bank to run their own rewards program, while still offering other customers the opportunity to earn Qantas Points.

Qantas Frequent Flyer, and Qantas Points as a result, therefore have their own flavour of lock-in – if you want to earn Qantas Points in bulk, then a Qantas-branded card is the most popular way to do it.

But that leaves you tied to Qantas Points. If Qantas feels like devaluing their program and increasing points prices (as they did with partner redemptions last year) – they can do it, and there’s nothing you can do about it. Your Qantas Points have to be used with Qantas redemption opportunities only.

That’s not to say Qantas Points have no use or value – they do.

It’s more that you should be aware of locking yourself into Qantas Points as your main points currency, and to understand that if you are going after Qantas Points, then you are focusing on their program in entirety.

Velocity and KrisFlyer, by comparison, work with a range of banks as flexible points program partners, and have engineered a partnership that allows them to offer points transfers between their programs too.

What are some examples of flexible points currencies?

Most credit card rewards programs are flexible points currencies. ANZ Rewards, American Express Membership Rewards, Commonwealth Bank Rewards, Citi Rewards, Westpac Altitude Rewards and St. George/Bank of Melbourne/BankSA Amplify Rewards (and others) are flexible currencies of differing value and flexible to different extents.

Most frequent flyer programs, globally, are fixed currencies with no outbound transfer partners. I’m asked all the time if it’s possible to merge frequent flyer point balances across different programs, and 99% of the time the answer is no.

Most hotel loyalty programs are flexible currencies. Hilton HHonors, Starwood Preferred Guest, Hyatt Gold Passport, Accor LeClub and Marriott Rewards all allow you to earn points in their own currencies and then transfer them to airline rewards. Whether this is a good deal depends on a number of factors – often it’s not though.

Most banks and credit card companies have their own rewards program

Most of you will know that there are a range of different credit cards to choose from. You ar probably also aware that there are several branded airline cards associated with Qantas Frequent Flyer, Velocity and Emirates and with the bank’s own points program cards.

The biggest providers of flexible points programs are the big banks, as I outlined before. If you want to get into the details of each of them, you can read full guides to these here:

A guide to Commonwealth Awards is missing, but coming at some point soon. It’s not at the top of my list as it’s pretty poor value by comparison to others above.

Which is the best flexible points credit card program?

Ah, the million dollar question, to which, unfortunately, the only answer is – ‘for what?

It depends on the credit card you pick from that bank’s range, and what you intend to use the points for.

Here are some of the facts though:

  • Most flexible points programs offer at least as many points on a point per $ basis as airline branded credit cards (with some exceptions you need to look out for)
  • American Express Membership Rewards has the widest range of airline transfer partners across their full card range, including the main three of value for our region – Velocity, KrisFlyer and Asia Miles, but also Etihad, Emirates, Starwood and many others
  • ANZ Rewards, Citi Rewards and Westpac Altitude Rewards all partner with KrisFlyer and Velocity across their full card range
  • ANZ Rewards and Westpac Altitude Rewards also partner with Cathay Pacific’s Asia Miles program. Citi Rewards only does this for it’s most expensive card (the Citi Prestige)
  • Citi Rewards partners with a huge number of foreign airline partners with their Citi Prestige card, but only a few of them make any sense to use
  • American Express and Westpac also offer Business cards tied into their loyalty programs. Business spend is one of the best ways to earn the most points from credit card use

What are the downsides to flexible points programs?

There aren’t too many. In short, flexible points programs add complexity to your strategy:

  1. You’ll spend time and mental overhead keeping on top of where you should transfer your points (but I’m a nerd, or masochist, and enjoy it)
  2. Although you can transfer your points on demand over to partner programs, this can take anywhere from 24-72 hours, or sometimes more

Flexible program currencies often involve much more mental overhead to work out which will earn you the most points from your spend – and what the actual, effective point per $ on a comparison basis is.

Then, the time spent waiting for points to transfer over to the partner once you’ve made a decision to redeem them for a specific flight can be nail-biting, with the possibility of those flights being booked by someone else until the points arrive in your frequent flyer account.

Summing up – flexible points programs

  • Flexible points programs are primarily associated with credit cards and hotel programs
  • The flexibility also adds value to the points you can earn in these programs versus earning points directly into a frequent flyer account
  • Flexibility can also help protect you against some of the headaches of frequent flyer programs – devaluations or lack of award seats with one airline programs vs another
  • You’ll trade off that flexibility for time and mental overhead in managing these points, research in understanding their partners, and deciding where to transfer them when you want to redeem them.

There’s no right or wrong approach though – if you prefer earning points directly into frequent flyer programs from your credit card for simplicity (and often, points maximisation into that program from your spend) then go for it.

Which flexible points program is in your wallet? Are you happy to trade-off earning directly over flexibility in your points?