A couple of my relatives posed an interesting question to me the other day and I realized it had a complex answer that wasn't easy for me to explain over the phone. I thought a blog post might be just the thing since I could easily provide pictures and tables without worrying about what their email client does. They live in the LA area and have some American Airlines miles accumulated and, more recently, Chase Ultimate Rewards points which they can transfer to airlines because they have a Chase Sapphire Preferred card. Since I was the one who convinced them to get the Sapphire Preferred card in the first place, naturally, they asked me how to use those points since they were mostly familiar with using American Airlines miles for redemptions.

I recommended Chase Sapphire Preferred because Chase Ultimate Rewards (UR) points do not transfer to American, but instead transfer to United, Avios (British Airways), Korean Air, and Southwest. This allows them to diversify their miles to provide some more options when American isn't the best deal or isn't flying at the best times for them. The best part is that by redeeming Avios points through British Airways for domestic flights, they can get an American Airlines (oneworld alliance) or Alaska Airline (partner) award if they need it.

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HOWTO: Redeeming American Airlines AAdvantage Miles or Chase Ultimate Rewards for Los Angeles to Alaska

Over the years, I've heard a lot of different theories about how to increase your credit score. Most of them are grounded in some truth, but are based on incomplete knowledge. For example, a lot of people say that given the choice to buy a car with cash or finance it, you should finance the car to build credit. Although, that is generally true over time (in the short term, the auto loan will actually hurt most credit scores), there are often better ways to increase one's credit score without the initial negative effects and without having to pay real money on interest.

A credit score, such as the FICO score (produced by the Fair Isaac Corporation), is a numerical way for banks and lenders to determine if an individual is a credit risk. The scores generally range from 300 to 850 depending on which company and which method is being used to calculate the score. In theory, an individual with a 300 on this scale would be someone who would definitely default while an individual with a score of 850 would be guaranteed to not default. Since nothing is ever certain, the scores are designed so people will fall between these two extremes.

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Credit Scores and What Really Affects Them