NerdWallet's Smart Money Podcast - ‘This or That’: Loyalty to One Travel Brand or Diversify?

Episode Date: March 24, 2023

So you’re deep in the points game (or want to be). Are you better off focusing your points earning and spending efforts on one brand, or diversifying your points? This episode, Sean talks with travel Nerd Elina Geller about which is better and why.  To send the Nerds your money questions, call or text the Nerd hotline at 901-730-6373 or email [e-mail]. Like what you hear? Please leave us a review and tell a friend.

Welcome to the NerdWallet Smart Money Podcast, where you send us your money questions and we answer them with the help of our genius nerds. I'm Sean Piles. The past couple of weeks in our This or That Travel series, we've talked about when to spend points and how to earn them with a travel credit card. But one important question remains. Should you stay loyal to one hotel or airline or diversify your points game? Travel writer Alina Geller is here today to help you figure out your points strategy. Alina, thanks for being here. Thanks for having me. Before we get into this conversation, a quick disclaimer that we're going to talk about a few credit cards in this episode that are NerdWallet partners, but that does not affect how we talk about them. Okay. Well, Alina, first off, where do your loyalties lie? Are there any

travel brands that you're especially loyal to? Yes. I'm loyal to United because I have United Silver status and I feel like I get a lot of perks out of that. A lot of people think that Silver status, which is the lowest level, is so insignificant. But to me, it's huge. What do you get from that? So I get a free checked bag up to 70 pounds. But I feel like my bag is always weighing more than 50 pounds, just like a chronic overpacker. So that extra allowance that I get from my status saves me a lot of money. The other thing is when you have silver status 24

hours before the flight. So basically when you're able to check in, you could select the free economy plus seat. And those seats are usually close to the front of the plane. They have more leg room. They're in general, just like more comfortable and more spacious. And I love those seats. And I don't like paying for things as you you know. It's just like another way for me to get something for free, even though I obviously had to spend money to achieve the status. Right. And you travel internationally really frequently, staying at one location for a month, another location for a month. So you kind of need to bring all of that stuff, 70 pounds worth of stuff with you. Exactly. Not only do I travel a lot like this, but also

I'm an overpacker because I'd like to bring all my toiletries with me and just like in my blow dryer. So like all these things weigh a lot, you know, and plus like the having clothes for different climates, I really need that extra baggage allowance. I am a loud and proud over Packer, so I can completely relate. But anyway, are there any other brands that you're especially loyal to? Yes, Hilton, because I have diamond status because I have the Hilton Aspire card, and I feel like I get a lot of value out of that. Because obviously, you get the free breakfast. And also, every time I stay at a Hilton property, I get a really nice upgrade to even a suite, like the do have to spend a certain amount of money with these companies to achieve that level.

It's not like you're saying, oh, I want to spend 100 bucks to get diamond status. It's more cumulative based on how you spend money with these brands, right? It depends. A Hilton diamond you get just from holding the Hilton Aspire credit card. Interesting. All right. Well, it seems like you have a number of brands that you're loyal to. I could see some people wanting to stick to just one brand's program, one brand's points system. What are some of the reasons that you would recommend maybe staying loyal to a single brand versus many? could continue to earn your points with that specific brand. So for example, when I fly with United, a lot of times I use my points because I have a whole strategy for this. Obviously,

like I always fly in first or business class when I'm flying internationally. But when I fly domestically, if it's a short flight, then I usually will fly an economy. And a lot of times I'll just pay for it in cash versus using points because I have United Travel Bank credits from like different credit cards. And in general, I have credits still remaining from when I had to cancel flights because of COVID. So I'm trying to like reduce those credits because those expire soon. So when I'm buying economy tickets, that extra baggage allowance and that free seat selection are perks. But in addition, I'm earning miles on that flight. So I feel like by having loyalty to a specific airline or even hotel, it's cumulative, right? Like you get obviously the perks that your status affords you, but also your loyalty to them allows you to continue to accumulate points and miles with that program.

It seems like it would also be a lot easier to keep track of. You don't have to worry about, oh, am I getting points for this company this time or this one the next time? You just know that you're generally working with the same system and can continue to build up points and use those points as you shop and do whatever with them. Exactly. Okay. Well, are there any cons to being loyal to just one program? If you're loyal to one program, you can pigeonhole yourself, right? Because if you only have points with one program, you may not be able to fly with other programs points. But let's say you're living near

an airport and Delta is the local airline and it flies to all the destinations you want. So you earn and redeem points with Delta and you have a Delta credit card, right? If like that is your main credit card, what happens if one day you want to travel somewhere and Delta doesn't fly there or it costs so many points, you're kind of out of options. So this is why people should be diversified. But also having loyalty is important. Yeah, you want to give yourself some flexibility. So you have more options, but you also want to be able to navigate these systems in a way that works for how you use them. Yeah, exactly. So Alina, do you think one route is better, maybe focusing on one card or taking the more diversified approach?

I think it's definitely better to diversify because getting a transferable point credit card is going to give you a lot of perks, the most important perks being able to transfer your points to airlines and hotels. So right away, that's going to give you many more options than let's say if you would have something like the United credit card, which is only going to allow you to earn points with United. Are there any downsides to that approach though? So the thing is, when you get a transferable point credit card, you're not going to get specific perks for that airline. So

for example, let's say you have the Chase Sapphire Reserve. So that card earns three points per dollar on travel and dining. One of the big perks is being able to transfer your points to airlines and hotels, right? But with the United Explorer card, yes, you're going to earn extra points with United, but then you're also going to get a free check bag. You're not going to get that free check bag with the Chase Sapphire Reserve. So I would say if you're very loyal to one airline, it could be a good strategy to also have that co-branded card in addition to having a general credit card. So you could get parks for traveling with that airline. And a co-branded card is like one that you mentioned, the United Explorer card, and that's just a credit card put out by United.

People get offers for these from the flight attendants when they're about to land, right? People come around and offer application pamphlets. Yes, exactly. But that's not where you should be getting your credit card application in unless it's the most amazing offer. Can you elaborate on that a little bit? Why shouldn't folks apply then and there? They make it sound pretty enticing sometimes when you're on the flight.

It just really depends. You have to investigate and see if that's the best publicly available offer. Sometimes there could be a limited time offer that's available online. And maybe what they're handing out on the plane is just a different application. So maybe the bonus is going to be lower on the airline. Maybe it's going to be higher. It really depends. So I would just say applying on the airline, maybe that's something only you should do if you are very familiar with the current sign of bonus and if you see something that's completely outstanding. Yeah.

And if you're not, maybe use that pamphlet as part of your research, but don't be pressured into making a decision and applying right then and there. Exactly. Okay. Well, even choosing a travel credit card with transferable points involves some degree of brand loyalty because not all credit card programs have the same transfer partners, right? There is some overlap between some of the programs. So for example, like Marriott is a transfer partner, both Amex and Chase, but there's also other airlines that are unique. For example, Southwest is only a transfer partner of Chase. Well, are there any companies, hotels, airlines that aren't transfer partners with any of the credit card programs? Yes, there are. Not every single airline and hotel is going to be a transfer partner. So before you decide to apply

for a transferable point card, check out the list of transfer partners to see which ones align with your travels. For example, American Airlines is an example of an airline that is not a transfer partner of any of the programs. So if you're trying to get American Airline miles, you'll have to get an American Airlines credit card. Okay. So it sounds like no matter what, you will have to do some evaluation of brands. What should people consider when they're looking for a brand to be loyal to? So the first thing is convenience. Which airlines have a lot of flights out of your local airport? Let's say you're looking at JetBlue, but then JetBlue doesn't fly out of your local airport to the destinations that you want. That's not going to be an airline for you. So

first, just look at what airline has a hub where you're flying out of. Okay. And what else should people keep in mind? Maybe for hotels? For hotels, also availability, because the kind of hotels that you stay at matter in terms of what credit card you would want to get to stay at those hotels. So let's say you really like staying at Hilton's, right? You'd probably want to get a credit card that earns Hilton points. Or if you really like Marriott's properties, maybe it makes sense to get a Marriott credit card. So the kind of properties that you like to stay at and also the hotel brands individually

are different and also not all hotels are located in all different destinations. So for example, let's say you really like staying at boutique hotels while your options are going to be different than if you prefer to stay at chains. Okay. I was going to ask about boutique hotels because some people want to stay at them versus larger chains. Can they access programs, rewards like this for boutique hotels because some people want to stay at them versus larger chains. Can they access programs, rewards like this for boutique hotels through their credit cards,

or is that not so much an option? Some, but it really depends if that boutique hotel participates in the program. For example, there's like Amex Fine Hotels and Resorts. There's also small luxury hotels. These hotel groups allow some independent properties to participate within them. So maybe that's a way for you to get some loyalty out of that. But it really just depends. Alina, how do you think things like rewards rate and elite status perks come into play when people are shopping around? Yeah, so my team actually looked at all these things like elite status perks and rewards rates when we did our best of this year. So you could find all of those ratings on the NerdWallet website. We'll have a link to that in the show notes post at nerdwallet.com slash podcast. Okay, and so that covers hotels. What do you think people should be

looking for when they are considering an airline to partner with potentially? So I think availability at your home airport and also how easy and cheap it is to redeem points. So for example, I'm from New York, and there's many airlines that choose JFK and Newark and LaGuardia as their home airports. But if I were to compare two of the big airlines that are in New York, United and Delta, I choose United because I think the redemption rate for award tickets is much better than Delta, which has ridiculously high redemption rates. But we already talked about getting a travel credit card as a way to diversify points.

But is there a way to use credit cards if your goal is loyalty to one airline or hotel? Yes, absolutely. Getting co-branded credit cards. So for example, I have the Hilton Aspire card. So if I ever stay at a Hilton, I will charge everything to my room and then use my credit card to settle the bill because I'm also going to be earning extra points for using that credit card at a Hilton property. Okay. Another question for you. Sometimes when you're going to book a flight through your preferred brand, you'll find that the flight or the hotel or whatever is going to be more expensive than if you went with another option. When do you think it would be worth it to book that more expensive option, even though it's just the brand that you're loyal to? Yeah, so this is something that I feel like I

face pretty often. Because let's say I want to stay somewhere and maybe I want to pay, because paying is going to be more cost effective than using points because it's not such a good redemption rate. But at the same time, maybe paying to stay at let's say that Hilton property and even getting the free breakfast and the upgrade is still going to cost me more if let's say I stayed a comparable property that is not affiliated with Hilton or anyone else. So I feel like this could happen. And you really just kind of have to do the math and see what makes sense for you. Because like, yes, if I stay at the cheaper property, but then if it doesn't have free breakfast, I'm going to have to pay to take myself out to breakfast, right? So these are kind of all the things that you need to take into consideration.

And sometimes the convenience of going with a brand that you're loyal to can be worth it. It can be, right? But also on the flip side, maybe it's not worth it. Because yes, you're going to earn some extra points out of that. But if it's going to cost you a lot of money to earn those extra points, it may not make sense. So again, it's just like on a case by case basis. So then another thing to keep in mind when you're evaluating these options is are you trying to go for elite status with the hotel or with the airline, right? Because let's say you're close to earning status, or you're close to achieving the next level of status, that's something that you need to consider. Because if staying at that hotel or taking

that flight that could be slightly more expensive than the competitor is going to get you closer to that status or is going to help you achieve that next level of status, then that obviously is worth more than just saving some money. Okay, so you have to think about your individual circumstances and goals right now. Always. Yeah. Great. Well, Alina, thanks for sharing all of your insights with us. Can you tell us your takeaway tips, please? Yeah, so first know the trade offs. Obviously, if you stay loyal to one brand, that's going to help you earn points and elite status faster, but it may limit your options. You may not have enough points to fly with other airlines or stay at other hotels. So that's why you want to give yourself flexibility, which is my second takeaway tip, is to have a credit card that earns transferable points because

you can transfer those points to multiple airlines and hotels. And I would say my third point would be to understand that loyalty programs are designed to incentivize you to stick with that brand. So keep in mind that any rewards that you're earning, they may be worth less than the money you're spending to earn that reward. So again, just do the math and make sure it makes sense for you. All right. Thanks so much, Alina. You're welcome. Thank you for having me. That is all we have for this episode. If you have a money question of your own,

turn to the nerds and call or text us your questions at 901-730-6373. That's 901-730-NERD. You can also email us at podcast at nerdwallet.com. Visit nerdwallet.com slash podcast for more info on this episode. And remember to follow, rate, and review us wherever you're getting this podcast. This episode is produced by Megan Coyle. We had editing help from Tess Vigeland and me, Sean Piles. Kaylee Monaghan mixed our audio. And a big thank you to the pros on the NerdWallet copy desk. Here is our brief disclaimer. We are not financial or investment advisors. This nerdy info is provided for general educational and entertainment purposes and may not apply to your specific circumstances. And with that said, until next time, turn to the nerds.