Dear Cashing In,
I have been trying to find a card that will allow me to use my points for upgrades on airline tickets. If I could use it for airlines and hotels, that would be even better.
There have been some important changes in recent years in how airlines handle upgrades. That, of course, changes the calculation for what kind of card you should have in your wallet if upgrades are important to you.
You also bring up hotel upgrades. Let's address those separately in a moment, then look at what cards might be best for airlines and hotels.
When it comes to choosing a rewards credit card, you might start by examining the cards that are available from the company that provides the reward you want. If you like redeeming for electronics, check out what cards are available through Best Buy. If you like free rooms at Hilton hotels, see what cards Hilton has available. These might not always be the best cards for your needs, but they often can be, because the companies that control the inventory that you're seeking -- whether it's retail items, hotel rooms or airplane seats -- tend to have more of an incentive to get you better deals.
So if you fly United a lot, for example, check out credit cards affiliated with its MileagePlus program to see if those could meet your needs. Of course, if you fly United or another carrier a lot already, you might qualify for [%Link?type=article&id=4072&text="elite-tier frequent flier status"%], which is another avenue to get upgrades.
Continuing with the United example, which is typical of most U.S. airlines, you qualify for its lowest elite level, Premier Silver, when you fly 25,000 miles or 30 flight segments and spend $2,500 with United in a calendar year. That status can get you complimentary upgrades on a space-available basis.
The other way to get upgrades is to buy them with frequent flier miles. For United upgrades from coach in the continental U.S., most cost 15,000 miles each way, depending on how much you paid for your ticket.
One new wrinkle is that airlines have started charging "co-pays" for upgrades, in addition to the miles. (I suppose "co-pay" sounds better than "fee," and it rightly suggests the existence of rules that are about as complicated as health insurance regulations.) Nevertheless, this could still be a good deal, compared with the 50,000 miles it usually costs to fly each way in business class, and compared with the $700 or more you would pay each way if you actually bought such a ticket.
Hotels are a different matter, because there are actually cards that will earn you room upgrades on a space-available basis just by virtue of having the card. For instance, Chase's Hyatt credit card ($75 annual fee, waived first year) gets you Platinum membership in Hyatt's rewards program, entitling you to "preferred" rooms that are bigger or on higher floors. Same if you spring for the American Express Platinum card ($450 annual fee), which gives you automatic Gold status with Starwood, which comes with an "enhanced room" when available.
Most other hotel cards work like airline cards -- you accumulate points based on purchases then use them for upgrades. In the case of Starwood, which encompasses popular brands such as Westin and Sheraton, room upgrades go for between 1,000 and 2,750 points, while upgrading to a suite costs between 3,000 and 35,000 points.
Finally, if it's flexibility in airline and hotel upgrades you're seeking, you might consider a card that has points transferrable to different travel providers, such as one with Chase Ultimate Rewards or American Express Membership Rewards. Also, the major hotel loyalty programs allow you to transfer points to airline programs. While that's not usually a great value, it does give you more options.