How to ensure you don’t lose your Frequent Flyer points

DON’T let frequent flyer points expire or banks overcharge. Make the most of reward systems and get yourself the best deal every time.

Stretch your credit card further.

THE value of credit card rewards have been slashed, but a savvy few are getting their own back and more by gaming the system.

Some of them asked me to not write this story.

“They don’t want the best tips and tricks given to outsiders,” said the editor of Australian Business Traveller David Flynn.

Nor do the banks. In the past year, three of the four majors have reduced the value of points accumulated on credit card spending, according to financial products comparison site Mozo. A third of cards now have higher annual fees than can be earned in rewards by the average user. It was one in five only four years ago.

“These cards are not rewarding you. They are actually costing you money,” Mozo director Kirsty Lamont said.

Our ignorance is also a financial windfall for airlines. That’s why they try to get you to redeem $35,000 of spending on a $200 digital camera.

GET A BETTER DEAL ON CREDIT CARDS

So how do you turn the tables? Let’s start with the basics.

Don’t use rewards to fly economy with Qantas.

“The extra fuel charges – they’re not really taxes – still have to be paid, effectively reducing the value of your points,” said Australian Frequent Flyer founder Clifford Reichlin.

Go business. The fuel charge is the same and therefore your points are covering a larger proportion of the fare.

Don’t use points to fly between capital cities or to other popular destinations, Mr Reichlin said. Buy these flights on sale with cash. Use your points on less-frequented, rarely discounted routes.

And never pay interest on a rewards card. If you aren’t able to clear the balance each month, find a pair of scissors.

“As soon as you are being charged 20 per cent interest you lose,” said one insider, who has had 15 cards in the past two years and never paid a cent of interest. “Always pay your bills on time and in full each month,” the insider, who asked not to be named, said.

On to the more advanced advice. The insider has some.

Become a member of frequent flyer schemes that don’t add fuel surcharges on top of rewards bookings. Virgin doesn’t.

Also, exploit new credit cards featuring airline branding, the insider says. These often offer users lump sums of bonus points for spending over a set amount in the first three months. If you spend at least this amount – clearing the balance each month so there is no interest expense – then cut up the card once you get the bonus points, you will come out way in front.

Work for yourself? Pay your tax on Amex. Mr Reichlin does: “There will be a surcharge, but it’s a cent a point.”

Join frequent flyer schemes of foreign airlines that often sell points at up to 50 per cent off, as US Airways recently did. Those points can then be redeemed to fly from Australia – and not just to America – on Star Alliance carriers such as Singapore Airlines and Thai. Mr Reichlin says this trick can be used to fly Business Class to Europe for the price of an economy fare.

Another trick is to fly to the US via Guam, because flights from the west Pacific island are treated as domestic by American airlines.

Stretch your credit card further.

“There are lots of anomalies you can work on,” Mr Reichlin said.

If it’s lounge access you’re after, Australian Business Traveller editor David Flynn is the man for you.

Mr Flynn said you can get in to the Qantas First-Class lounge at Sydney or Melbourne airport for the cost of a Jetstar fare between the two cities, provided you have “platinum” Frequent Flyer status. Look for flights departing from the international terminal – usually planes destined for Bali or similar stopping in the other state capital to pick up more passengers. That domestic leg between the two cities is for sale. Yes, it means you’ll need to turn up earlier, but the Neil Perry cuisine and Payot day spa should make this more than bearable.

“And this last one is too good not to share,” Mr Flynn said.

Sign up to “Miles&Bonus”. This is the name of Greek airline Aegean’s free frequent flyer scheme, which has a very low threshold for attaining “gold” status. It can be reached in one Business Class return fare to Toronto on Air Canada or a similar flight with another Star Alliance member. Make sure to enter your Aegean frequent flyer number when booking that flight though. Once you’re gold status with Aegean you’re gold with all Star Alliance airlines, entitling you to lounge entry and improving your chances of getting an upgrade.

How to make sure you get the most from your rewards

1. Join frequent flyer schemes of foreign airlines (think US) that often sell points at up to 50 per cent off. Those points can then be used to fly from Australia – not just to America but Europe or elsewhere on their alliance partners. The founder of Australian Frequent Flyer Clifford Reichlin says this trick can be used to fly Business Class to Europe for the price of an economy fare.

2. You can get in to the Qantas First-Class lounge at Sydney or Melbourne airport for the cost of a Jetstar fare between the two cities, provided you have “platinum” Frequent Flyer status. Look for flights departing from the international terminal – usually planes destined for Bali or similar stopping in the other state capital to pick up more passengers. Yes, it means you’ll need to turn up earlier, but Australian Business Traveller editor David Flynn says the Neil Perry cuisine and Payot day spa should make this more than bearable.

3. Exploit new credit cards featuring airline branding. These often offer users lump sums of bonus points for spending a set amount in the first three months. If you spend this amount – clearing the balance each month to ensure there is no interest expense – then cut up the card once you get the points bonus, you will come out way in front.

4. Sign up to “Miles&Bonus”. This is the name of Greek airline Aegean’s free frequent flyer scheme, which has a very low threshold for attaining “gold” status. It can be reached in one Business Class return fare to Toronto on Air Canada. The same applies for other Star Alliance members. Make sure to enter your Aegean frequent flyer number when booking that flight though. Once you’re gold status with Aegean you’re gold with all Star Alliance airlines, entitling you to lounge entry and improving your chances of getting an upgrade.

5. Become a member of frequent flyer schemes that don’t add fuel surcharges on top of rewards bookings. Virgin doesn’t. Qantas does. Also, consider diversifying your points across both schemes in case (a) no rewards seats are available with one carrier on a route you’re planning to travel or (b) one decides to slash the value of your points, which can happen.

To get more cost savings sign up to MoneySaverHQ. It will harness the power of collective bargaining to save consumers money by getting a better deal on a range of financial services.