What is a transfer bonus?

When people ask me what credit card they should sign up for or what points and miles they should collect, my answer is constant: cards with transferable points and miles. 

Simply put, transferable points allow you to choose whether you want to have different hotel points or airline miles. The same Chase Ultimate Reward point could be a British Airways avios, a United Airlines mile or a Hyatt point, providing a lot of potential value. 

Transfer bonuses are valuable because it means that your one transferable point is worth even more when you transfer it to a specific airline or hotel with the bonus.

Redemptions Cost Less

Without a transfer bonus, transferring one transferable point would be worth one individual program’s point (or whatever the set ratio is), but with the bonus, one transferable point could be worth 1.3 individual program points. Last month, Chase Ultimate Rewards offered a 30% bonus when you transfer points to Air Canada Aeroplan creating more value with your points. 

For simplicity, let’s say that you were looking to book an Aeroplan ticket that costs 13,000 miles, but you didn’t have any Aeroplan points. So, you decided to transfer points from Chase. Luckily enough, Chase was offering a 30% bonus, so instead of having to transfer 13,000 points, you only needed to transfer 10,000 points and they would add the 30%, 3,000 point bonus to get you the required 13,000 miles. 

How Many Points Do I Need?

In order to calculate how many points you need to transfer, taking into account the bonus granted after the transfer, start with the total cost of your redemption. For this example, using Aeroplan points to fly business class to Europe costs as little as 60,000 points. 

How many points you need to transfer works out to be an equation as follows:

Program’s Points Needed / (Current Ratio + Bonus) = Transferable Points Needed 

With a 30% transfer bonus for this Aeroplan redemption, the total number of transferable points needed comes out to:

60,000 Aeroplan Points / (1 + 30%) = 46,154 Chase UR

However, you typically cannot transfer points in smaller increments than 1,000, so by transferring 47,000 Chase points to Aeroplan, you will have enough rewards to book your 60,000 mile redemption and fly business class to Europe. 

The Last Point

Maximizing points and miles transfer bonuses allows you to do more with the same number of rewards since it effectively reduces the total cost of your redemption. These are essentially discount sales on the price of your award travel, not a bad option. 

Although you won’t be able to always rely on there being a transfer bonus, leveraging it to your advantage when the timing works will help drive more value from your points.