This is the first in The Braintrust series, where we find leaders in the FinTech and bank disrupting space and have them share their expertise with our members.

For years, it was a free toaster, but these days, banks have leaned on mileage and points to attract new customers. The idea of turning your standard credit card spend into an exotic trip is enticing — unfortunately, it takes an expertise in the system to make it at all worth your while. At Unifimoney, our card earns you instant cashback on your spend — by putting real money into an investment account, your earnings can actually grow.

Jeff O’Neill has spent a decade mastering the airline rewards systems and was nice enough to share some sage advice. He built Flyclever.co to help customers realize the best value on their stockpiled miles. His site works to successfully tip the scales away from the airlines and banks — it also shows just how little regard the current system has for the customer.

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Unifimoney: What is a breakage rate?

Jeff O’Neill: The breakage rate is the percentage of point holders that don’t redeem their miles or their loyalty currency. Right now, 37% is the average breakage rate. So, 37% of the points accrued are not used — the consumer either forgets about them or doesn’t know how to use them, and then the points might expire. We try to give a little bit of that power back to the consumer.

Unifimoney: How would you reorganize the system to give some of that power back?

O’Neill: The main problem is that there’s no liquidity. There’s no marketplace for me to tell you, ‘Hey, I have 20,000 Delta miles. I don’t want these. I want 15,000 American Airlines miles. Let’s make a trade. You have what I need and you need what I have.’

If the airlines were to create a marketplace, they could take a very small percentage of all the gross transactions and enable consumers to have more flexibility in how they redeem miles. But, of course, the reason they don’t do that is because that would reduce the breakage rate. I think it would go down to single digits. And that’s bad for their bottom line.

Our system isn’t rocket science, but it’s useful and valuable, because there is no liquidity. These miles and points don’t have an IRS designation. They don’t have a tradable fiat value. So, we’re just an advocate and an assistant to help people maximize that value.

Unifimoney: What’s the best way to maximize return on a travel credit card?

O’Neill: For people who have the ability to plan out their year, think about what trip you want to take, because points and miles are usually most helpful for hotels and airline tickets. So, figure out where you want to fly to and how much those tickets are gonna cost you in cash and then reverse engineer it. At Flyclever, we can tell you how much that trip will cost in miles and figure out your current monthly expenses. Then we try to find a card that maximizes the bonus on that type of spend to get to that number. A lot of times, a points or mileage card actually encourages people to overspend. So, what we like to do is have a very concrete plan.

It’s also important to remember that a lot of miles will devalue, because the airlines control the value of all the points they issue. They can create more supply, which then dilutes the value or they can just make the same airline tickets cost more in points or miles. Either way, they have full control on how much your points or miles are worth. So, if you’re trying to give power back to the consumer, you want them to be able to earn and then redeem as quickly as possible.

Unifimoney: What’s something people should know when choosing a card?

O’Neill: If I had a choice to use a Chase credit card that’s branded with United Airlines or just a very generic Chase credit card, I would always choose the generic one. On the generic card, the points I earn are put into a central pool and I can choose to transfer those to United when I want in whatever denominations I want. But if I’m earning points on a United Airlines credit card, all the points that I earn every month are automatically transferred to that account. There’s no flexibility. If I have all these points on United and United devalues, those points are instantly and arbitrarily worth less money.

Unifimoney: And finally, there are so many referral deals and mixed motivations in the banking world that it feels impossible to get good, unbiased information about credit cards online. Where should people go when trying to find the best card for them?

O’Neill: I know it sounds cliche, but I’d say Creditcards.com. They happen to have a tool there where you build a profile about yourself — what type of consumer you are, what you spend money on — and it creates a customized recommendation based on those inputs. But remember: those credit cards that are referred to you usually don’t have the best bonus offers. What I would recommend that you do is use their algorithm to basically match you to the perfect credit card and then copy and paste that credit card into Google and you’ll see all the best offers in terms of bonus points if you’re approved.

Often, those deals might be better if you apply directly from the bank issuer. But Creditcards.com gives you a broad overview of all the cards that are available to you as a consumer.

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