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The backend mechanics of points and award redemtpions
I’ve been reading One Mile At A Time for several months now, and I learned a ton. But I’ve been curiously wondering how does the backend system work when you redeem credit card points and book award flights.
For example, let’s say I transfer Amex points to United miles, and then use United Miles to book a Lufthansa award flight. Does my transaction trigger American Express to send cash to United, and then United sends cash to Lufthansa?
I also wondered how much do the credit card companies pay airlines for miles? iE. If I tansfer 100,000 Amex reward points to United miles, how much real money moves from Amex’s bank account to United’s bank account?
And then when I use those 100,000 United miles to book a Lufthansa flight, how much real money moves from United’s bank account to Lufthansa’s?
Or maybe they got some other deals?
I would like to know too!
I am very good at figuring out where to put my spend, Im still learning how to redeem….other than AVIOS for domestic, I kinda suck
Well, it depends on the banks and the airline agreements. If they are co-brand partners, they likely have better rates (like Chase and United), but they are fractions of a cent.
In terms of what the airlines pay each other for redemptions, see here: [URL]http://onemileatatime.boardingarea.com/2013/12/16/much-award-tickets-cost-airlines/[/URL]
Very interesting, thank you Tiffany!