09/30/2011 08:59 am ET Updated Nov 30, 2011

All About Transferable Miles (And What To Do When Your Program Changes)

Diversify Your Portfolio

Miles and points are kind of like investments -- you want to diversify your portfolio to hedge your risk and be sure you can reap the most value possible out of them. That may seem contrary to the common strategy of consolidating your points and miles in a single program. However, since programs can change at a moment's notice, you don't want to have all of your eggs in the same basket and be left with a points account that can't get you where you need to go.

The best way to implement this diversification strategy is to accrue transferable points. These points allow members the most flexibility since they accrue points to a central account and then you can transfer them to several different airlines or hotels of choice whenever you like, often with big bonuses.

Use Your Credit Cards

The two main credit card programs for transferable points are:

American Express Membership Rewards: In Amex's flagship points program, points are accrued automatically if you have a Green, Gold, Premier Rewards Gold, Platinum or Centurion card, both for the personal and the business/corporate versions of each. Points are accrued into your central account and can then be transferred to a variety of airline and hotel partners.

The airline partners are: Air Canada Aeroplan, Continental (until September 30, 2011), Singapore and ANA in the Star Alliance; British Airways and Iberia in Oneworld; Delta, Air France/KLM Flying Blue, Alitalia and Aeromexico in SkyTeam; and non-allied airlines like Airtran, Virgin Atlantic, El Al, Frontier, JetBlue, Hawaiian, and Virgin America (starting October 5, 2011).

American Express Membership Rewards points also transfer to a number of hotel groups, though the ratio of transfer is not always one-to-one. Here's a breakdown of the transfer ratios of Amex Membership Rewards points to the following hotel loyalty programs:

Starwood: 3 Amex points to 1 Starwood Preferred Guest point
Hilton: 1 Amex point to 1.3 Hilton HHonors points
Best Western: 1 Amex point to 1 Best Western point
Priority Club: 1 Amex point to 1 Priority Club point
Jumeirah: 23 Amex points to 1 Jumeirah point

Chase Ultimate Rewards: In Chase's transferable points program, points are accrued automatically if you have a Sapphire Preferred personal card or an Ink Bold Plus business card. Points are accrued in a central account and can then be transferred to a variety of partners--though they are more limited than American Express Membership Rewards points.

The card's airline partners are Continental in the Star Alliance (for now), Korean Air in the Skyteam Alliance and British Airways in Oneworld. The card's hotel partners are Hyatt, Marriott and Priority Club, all of which accept transfers of Chase Ultimate Rewards points at a 1:1 ratio. These points also transfer to Amtrak.

Why They Work

The great thing about both of these programs is that they allow you to transfer as little as 1,000 points to your individual frequent flyer accounts, so if you need a couple thousand extra miles to qualify for an award, you don't have to buy them at expensive prices from the airline, but can just top up your account.

Here's another insider tip: Both American Express and Chase allow you to transfer points to other people's accounts, so if a family member or friend needs some points, you can instantly send them...which has made me a hero on many occasions.

What To Do When Transfer Programs Change

Unfortunately, these programs are constantly changing, and it's just something that frequent travelers have to deal with. Here's a preview of some upcoming changes that will affect your points portfolios with these cards.

American Express: Thanks to its merger with United, Continental will no longer be a transfer partner with Amex starting September 30, 2011. However, you can still transfer points to Continental's other Star Alliance partners to book Continental flights. The good news is that American Express is adding Virgin America as a new transfer partner starting October 5, 2011. However, the ratio at which Membership Rewards points will transfer to Virgin America's Elevate program is still to be announced. Even if it is 1:1, it won't fill the void that Continental is leaving.

Chase: British Airways announced major changes to their program (with few details so far), so starting November 16, 2011 the option to transfer Ultimate Rewards points to British Airways miles might be much less desirable. Stay tuned. Also, as I noted above, Continental's frequent flyer program is being merged into United on January 1, 2012. But there has been no announcement yet whether United will be an Ultimate Rewards transfer partner. My guess is that it will, but it's still to be determined. Those are two major changes that could jeopardize the value of the program.

Despite these changes--some of them quite dramatic--the great think about transferable points is that you will always have choices of the programs to which you transfer them, and that greatly increases the odds of your being able to use your hard-earned points for what you need.

In general though, my advice is to keep your points in your central accounts so that you can transfer to the airline or hotel program that best fits your needs at the time your travels require. That way, you'll keep the flexibility of having transferable points and be able t