Finding the constellation of rewards programs that's right for you

I do very little speculative earning of miles and points, which doesn't mean that I always earn miles and points with specific redemptions in mind. Rather, it means I earn the points that I know I'm consistently going to be able to redeem for good value and for the kinds of trips I want to take.

When I see a large balance sitting in an account for an extended period of time, it usually means I'm doing something wrong, since it means I earned those points instead of the cash back I could have earned instead — cash back that I know I would have been able to use by now. That's why speculative acquisition of miles and points, even at seemingly cheap prices, usually looks very expensive to me.

Of course there are exceptions: I participated in the IHG Priceless Surprises promotion without any specific plan or intention to redeem the resulting points, mainly because gambling is fun (and I won a sound system!). When I had the Bank of America Alaska Airlines debit card, I cheerfully earned Mileage Plan miles at rock-bottom prices, tens of thousands of which I have yet to redeem even now, years later. Now THAT'S speculative!

Still, my general rule is: I prefer to focus on a few programs, where I tend to rapidly cycle my points balances up and down, rather than spread myself thin chasing every increased credit card signup bonus that comes along.

Find travel rewards programs that work together

If you don't collect miles and points speculatively, then it helps to focus on miles and points that work together, rather than at cross-purposes.

For example, Starwood Preferred Guest runs an excellent hotel loyalty program, and allows Starpoints to be transferred to many airlines at a 1-to-1 ratio, with an additional 5,000 bonus miles added each time you transfer multiples of 20,000 Starpoints. But Starpoint transfers to United Airlines MileagePlus miles are at a mere 2-to-1 ratio! That makes it more expensive for Starwood Preferred Guest to be your main hotel chain if United is your primary airline, since you'll give up more potential hotel nights when transferring Starpoints to United than you would to American, Delta, or Alaska.

On the other hand, since Chase Ultimate Rewards points transfer to Hyatt Gold Passport and both Southwest Airlines and United Airlines, focusing your mile earning and redemption on one of those airlines, and your hotel point earning with Hyatt, allows you to top up both your primary travel rewards accounts with points in a single Ultimate Rewards account.

Find credit cards that work together

It's not just travel rewards programs that can work together, but credit cards as well.

For example:

• Your primary premium Ultimate Rewards account might be linked to a Chase Ink Plus card, which allows you to earn 350,000 Ultimate Rewards points per year in its bonus categories of office supply stores and gas stations.
• Knowing it's one of the best cards out there for earning Ultimate Rewards points, you can apply for a Chase Freedom card as well, and earn an additional 15,000-30,000 Ultimate Rewards points per year, depending on the year's bonus categories.
• Next, tempted by the signup bonus, you might apply for a Chase Sapphire Preferred. After meeting the minimum spend requirement and waiting a suitable period of time, you can product change the Sapphire Preferred to another Freedom card and double each year's bonus Ultimate Rewards points.
• Finally, you can take out a 0% interest rate loan from the Chase Slate, and at the end of the promotional period product change that card to Freedom as well.

This procedure would give you access to a huge pool of bonus and annually recurring Ultimate Rewards points, and would at no point violate Chase's strict "5/24" rule for approval of their own-brand credit cards.

I've written before about other potentially lucrative card combinations, like combining the Citi Premier and Prestige cards, or the American Express EveryDay Preferred and Business Platinum cards, for manufactured spend at gas stations.

If you use United MileagePlus as your primary airline rewards program, it can even be worth signing up for one of their co-branded credit cards just for access to last-seat "Standard"-level award availability, even if you never spend a dollar on the card, since access to those Standard awards can increase the value of Ultimate Rewards points transferred in from Chase.

If Hilton is your primary hotel program, you could carry both the American Express Hilton HHonors Surpass card and the Citi Hilton HHonors Reserve card. While manufacturing gas station and grocery store spend with the Surpass, you could add on $10,000 per calendar year in unbonused spend to the Reserve card and earn 30,000 HHonors points and a free weekend night certificate on each account anniversary.

I'm not the biggest fan of the Citi Hilton HHonors Reserve card because of its $95 annual fee. However, if you consistently redeem your HHonors points and free night certificates at top-tier properties, then paying $95 in cash and $200 in foregone cash back offers a 29% discount compared to manufacturing 125,000 additional HHonors points on the Surpass (which bears $416 in opportunity cost compared to a 2% cash back card).

The breakeven point comes when redeeming the Reserve's free night certificate at 60,000-point properties: at that point you see a wash between manufacturing $15,000 on the Surpass (earning 90,000 HHonors points and foregoing $300 in cash back) or paying a $95 annual fee and manufacturing $10,000 on the Reserve (earning the equivalent of 90,000 HHonors points, paying a $95 annual fee, and foregoing $200 in cash back).

The point here is that it can be worth carrying co-branded cards that see little or no use if they provide ancillary benefits that supplement the value of your other activity.

Conclusion

As I wrote on Monday, in general I find high balances in a few programs to be more valuable than small balances spread across a number of programs. In fact, even when a narrow earning focus causes you to pay more for a flight or room than you would if you had access to the "right" points currency, you can still be saving money after taking into account the annual fees you'd pay for that access.

And of course, most people are busy, and cramming more and more knowledge of increasingly esoteric loyalty programs into your head will eventually reach a point of diminishing returns. That point may come sooner or it may come later, but knowing when you've reached it is the beginning of travel hacking wisdom.