If it don’t save dollars then it don’t make sense. Miles, points, Avios and all the other terms used to describe frequent flyer miles, credit card points and loyalty points have value. In most cases that value is not fixed. There are optimal ways to use miles, less optimal ways, and abysmal ways. The fundamental concept to ensure you are at the very least finding somewhat optimal ways, is to calculate cents per mile…
Cents per mile is fairly straight forward. How many miles are you spending versus how many dollars would you have needed to spend for the same flights, hotels, whatever. The companies that offer these points generally offer a baseline value of one cent per mile for which to gauge your decisions. In other words, if you’d like to take $500 off a $1000 flight, they’d charge you 50,000 miles, points, whatever. In almost every instance that’s a bad deal. You can and you should do better…
Miles are most useful to cover flights that are either prohibitively expensive, such as dreamy first and business class seats, or pesky expensive flights that would cost a fortune in cash, but perhaps a small stack of miles. As a side note, remember, you can often use your miles on your airline’s partners, opening up new cabins, seats, routes and possibilities. Let’s go back to that baseline figure of one cent per mile. If you ever use more than 25,000 miles to cover a ticket that would’ve cost you $250 outright, you’re getting a bad value while simultaneously missing the opportunity to earn more miles. In fact, in this example you should just buy the ticket. If however you use 25,000 miles or less, to cover a ticket that’s going for $750, that’s more like it. One example? Short flights can require as little as 9,000 miles round trip, while the cash price may fetch as high as $900 during peak weeks. Using miles in this instance is brilliant.
I choose to use my miles for seats I would not pay for in most instances. In my current life, I’m not going to fork out over $5,000 per person for business class tickets to Asia. I can however fork over 100,000-140,000 miles per person to cover those tickets. In that example, if you take a total of 200,000 miles for two people, to cover $10,000 worth of tickets, I’m getting about five cents per mile. An excellent return compared to the one cent. Of course when you make your calculations, you’ll want to consider any taxes, surcharges or fees added to that ticket using miles. In my example above they amounted to roughly $280 between the two of us, bringing us just under five cents per mile, still an excellent rate. On the other end of the spectrum, sure, a ticket from London to New York in economy using 25,000 miles round trip might sound good, but add in $650 in surcharges and it’s a bad deal, when you could likely spend $650, buy a ticket without using any miles, and in fact, earn miles in the process.
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