Is The Value Of Miles Absolute Or Relative?

Over the past few months we’ve seen several devaluations in the loyalty program industry, which is hardly surprising for several reasons.

For one, the economy is recovering, causing the number of empty airplane seats and empty hotel rooms to decrease drastically. As a result, the cost of providing rewards has gone up substantially. At the same time, more and more miles and points are being issued to consumers by the day, so you have more people competing for fewer seats and rooms. Given all that, we really shouldn’t be surprised by the devaluations we’re seeing.

So the logical question is whether it’s even worth playing the mileage game anymore. Is it worth collecting miles and points when you could instead be earning cash back?

For example, it’s tough to argue with the value proposition of the Barclaycard Arrival Plus™ World Elite Mastercard®, which is one of the most rewarding travel cash back credit cards out there. The card essentially offers the equivalent of 2.2 cents cash back towards travel per dollar spent, and has a very reasonable annual fee which is waived the first year.

Purely from a valuation perspective, I think the “return” per dollar spent on the card is similar to that offered by the Starwood Preferred Guest® Credit Card from American Express, since I value Starpoints at roughly 2.2 cents each as well (which is the highest value I give to any “points” currency).

Given the choice between 2.2 cents “cash” and a point valued at 2.2 cents, I think most would argue you’re better off taking the “sure thing” (cash) over a point that could go up or (most likely) down in value.

But to me this raises an interesting question — is the value of miles and points absolute or relative?

Let me explain.

In March of 2013 I valued airline miles across various programs, and said that United miles were worth 1.8 cents each while US Airways miles were worth 1.6 cents each. United has a huge devaluation happening on February 1, so assuming nothing changes with the valuation of US Airways miles by then (admittedly they’re leaving Star Alliance two months later, but lets forget that for a minute), would their value go up?

Surely the valuation of United miles would go down, since the number of miles required for most partner awards will go up drastically. But does it also change the value of US Airways miles, given that US Airways miles will become the best points currency to use for many types of Star Alliance awards?

I’d probably argue yes. I guess it comes down to the elasticity of demand for premium cabin travel. Let’s say I value a business class ticket to Asia at $2,000. Why? Because I don’t have to value it any higher. If I can redeem 90,000 US Airways miles for business class to Asia with amazing availability, why would I value it at more than that?

EVA_Air_Royal_Laurel03
EVA Air’s Royal Laurel Business class offers flat-bed seats and Dom Perignon, and is readily available with miles.

But if next week the cheapest business class award offered to Asia by any airline required 150,000 miles, would I still ultimately “only” be willing to pay $2,000 “worth” of miles for the ticket?

To be clear, I don’t have an answer here, I’m just trying to start a conversation. Ultimately I don’t think we’re much worse off than we were before, since at the end of the day this is a “game” that stays in equilibrium for those that stay ahead of the curve. The airlines and hotels raise award costs, it becomes easier to earn miles and points, they raise award costs again, etc.

But this also isn’t the “good old days” where Lufthansa and Swiss first class award space was easier to snag, and we’re no doubt being pushed to our limits in terms of our willingness to pay.

Going back a few years the concept of paying a fuel surcharge on an award ticket issued by a US airline seemed almost unthinkable. And while it’s still not common (and I don’t think it will become the “norm” anytime soon), burning miles plus paying fuel surcharges for a first class award ticket doesn’t seem like that horrible of a value anymore.

For example, on United’s new devalued partner award chart, roundtrip first class to Europe will cost 220,000 miles. By comparison, does paying 120,000 British Airways Avios plus $800 in fuel surcharges seem like that bad of a value?

Sorry for rambling, but I guess my point comes down to this — cash back cards can make a lot of sense and can be an amazing value, but miles can be used to purchase a luxury good that most of us could never afford.

A transatlantic first class ticket can retail for ~$20,000, so whether you’re redeeming 120,000 or 220,000 miles for that ticket, you’re getting well more than 2.2 cents of value “at retail.” The question is what you value that ~$20,000 ticket at.

I’d be curious to hear what you guys think. Have we been valuing miles so low simply because we’ve had it so good, or are you close to your maximum willingness to pay (in miles) for premium cabin international tickets and more interested in cash back cards at this point?

(In the interest of full disclosure, I earn a referral bonus for anyone approved through some of the above links. All are for the best available offers. Thanks for your support!)

Comments

  1. I think one under-appreciated aspect of value is the effort required to obtain miles. The Vanilla reload chase is fun and lucrative for those who live in close proximity to good card availability and who have lots of time on their hands to play the financial shell game. But for those who do not and/or cannot, it’s an expensive undertaking in time and perhaps fuel. Or….American and US Air’s miles may be the most valuable out there, but if your flying patterns are inconsistent with their route structure, again, earning those points (no less elite status) becomes very expensive in time if not cost.

    One thing the points and miles community often seems to overlook is that their lives and travel patterns may not resemble that of most of their readers. When your professional life (and personal life) is built around travel and points and miles, the value proposition looks very different than it does when travel, points, and miles is merely a means to make your free time more pleasurable.

  2. I think it’s irrelevant at what rate I personally value a premium cabin redemption – it’s a function of the retail price (as I can’t get it for less than that).

    I may only “value” the CX J award seats I got at ~$2,500 or so (what I’d pay at the most, hypothetically), but since they actually cost $8,000, I redeemed for over 7 CPM (not ~2 CPM).

    And that’s why I’ll never do a cash back card!

  3. I would rather do a cash back card and then BUY miles when they come on sale.
    It makes more sense for 50k spend to get 1000$ cash back a year and do the US air share promo x 10 or even 20 than accumulating 50k US miles (worth 567$)

    However, this does not take into account sign up bonuses. That reduces the cpm to below 0.5 and as long as there are enw products with bonuses, just accumulate them indiscriminately and keep on going.
    So for the same 50k spend

    5k 50k bonus Chase Ink Plus lost cash back 100$
    5k 50k bonus Chase Ink Bold lost cash back 100$
    3k 40k bonus Chase Sapphire lost cash back 60$
    3k 50k bonus Citi AA Plat lost cash back 60$
    1k 50k bonus Alaska lost cash back 20$+75 Fee

    total just with this is 17k spend = 340$ cash lost, 75$ fee = 415$ for 256k miles = 0.2c each
    At THAT price I am a buyer. I do not care about devaluations, and I just put up with devaluations as a needed “market correction”

    It is not based on what I redeem for, but exactly what I paid for it.

  4. @UA-NYC

    We have to think in terms of the average value for a flight rather than just the retail value. If an airline has eight seats in first class and sells 2 @ $8,000, 2 @ $7,000, 2 @ $5,000 and 2 award seats, does the person who paid $8,000 get more for their money than any of the others? I would argue that every seat in the first class cabin offers the same service and comfort. So for that particular flight, the average first class value would be the total amount paid divided by the total number of seats filled. In this case, each seat would have a value of $5,000 ($40,000/8) since that is what the market dictated.

    The same is true for hotels. If a hotel has 100 of the same rooms and books a group in 90 of the rooms at $100 per room and then prices the last 10 at $500 to prop up their ADR, the value of the room does not suddenly become $500 since that is what the hotel is asking. Instead, the value of the room would be what the market dictated, which if all the remaining rooms sold at $500 would be $140 (90 rooms at $100, 10 rooms at $500 = $14,000/100 = $140).

  5. Ben – I always appreciate your insight and help. Here are my thoughts.

    I think there is a component here that may go overlooked. If earning ALL miles was a choice between cash and miles/points the discussion would be much more interesting, but at no point is an airline or hotel going to give me cash (X cents) per mile flown instead of miles in their program. With that added dynamic in the equation I look at the earning on my cards as enhancement to the program earning I am already doing, and without the enhancement it will take me longer to get the rewards that I want. The miles/points earned via hotel stays or butt in seat are a sunk value to the user and thus could be valued at nothing until there is enough to make the points valuable for something you want.

    Here is my example using SPG points. Last year I earned 174,167 SPG Points, using $.022 cents the value is $3,831.67. The points however were earned via a combination of hotel activity 95,430 points ($2099.64) and SPG Cards 78737 points ($1,732.21). I have redeemed a significant portion of the earnings for a pool suite at the St. Regis Bali later this year for 5 nights (using 5th night free) for 135,250 points. The best available rate is currently $4,513 meaning I am spending my points at a rate of $.033. not the greatest, but good enough for me. Viewing this situation from my perspective though, 95,000 of the points were FREE. I did not give up anything to earn them, the only alternative to these points was points at another hotel, not money. So if you change the perspective here, I am using 39820 of points earned via the credit card with an alternate value of $876.04. As you can see from this perspective the value quickly changes: My perspective is that I have only given up $876.04 in value for a $4513 stay. Meaning that the points earned via the card could really be valued at $.294 cents per point.

    Yes I understand staying at SPG properties do mean I am spending to earn the points, and yes I could stay somewhere cheaper or use the points for something else. But on a day to day basis, a significant portion of my travel is paid for by work, I believe SPG rewards me for my loyalty and I am really just focused on maximizing earning across all options: credit cards, stays or miles flown as well as shopping portals etc. If every point/mile I earned could be turned into cash at $.022, I would probably take the money, but since that is not possible, I am going to earn points/miles anyway I can and spend them on what I want. Meaning the value is ultimately what I decide. All I know is at the end of the day, while people in my office are working and taking labor day at the Delaware beaches, I am flying Lufthansa and Thai first to Bali where I am staying at the St. Regis with the only out of pocket being taxes and meals. This is what this hobby is about and I think I am getting great value most fo it with your help along the way. Thanks as always for the great advice and insight.

  6. I think your “Amazing Availability” and mine may differ. Perhaps that is why many of us are valuing miles less these days. First and Business class availability is getting hard to find.

    I was looking at Eva Air availability for a couple traveling San Francisco to Taipei. There is three random days available from now until June. I don’t call that amazing availability as you say.

    Looking at British Airways, there used to be half the days available as awards in a year. Lately, you are lucky if you can find a single day with first class availability from San Francisco. So it doesn’t matter how many points you have the value can approach ZERO if there just is no flights available.

    So my value fluctuates from about 1.5 CPM –> ZERO where there is no availability. I find its getting about as easy to find $2500 fares in Business to Asia or $2000 fares to Europe as it is finding available seats.

  7. Ben,
    With US jumping ship and bunking up with AA, might I suggest an article on how to maximize *A point utilization to Asia now. Cheers, Levy (Brussels).

  8. You folks are a lot more analytical than I am! My first First was BA NY to Paris using Cathay Pacific miles I got from transferring Starwood points. Cost 90,000 Cathay miles versus 150,000 BA miles.

    That was 10+ years ago. Back then I was considered a major earner since I was able to use credit cards to pay business expenses. Nowadays, EVERYONE can be a major earner with credit card bonuses. And not only are all these points our there, the airlines have ceased making awards as predictably available as in the good old days. Heck, some award are no longer available, period. I well remember Air France, Swiss and Lufthansa First and treasure those memories.

    I still have lots of miles and I still prefer using them for long-distance travel in the front of the plane. If it is no longer the “very front”, I can certainly accept that. But the bottom line is that for 100,000 miles or so, I can travel to Europe Business Class (tho with BA there will be a surcharge). I can afford the surcharge but would certainly not be routinely shelling out $3500 x 2 for cash tickets. And to use the cash-back card, I would have to charge $160,000 to get that ticket and $320,000 for two.

    That said, I’m old enough to be getting tired of it all and now looking at a place in Florida. If most of my vacation flights are now NY to Florida, the cash-back card is not a bad deal at all and offers a hell of a lot more flexibility to fly when I want to and not when the airline feels it will have problems selling tickets.

    Boy, the good old days sure were good!

  9. For me it is mostly about thinking (perhaps overconfidently) that I can beat the average on the redemption side. When CSP is givng 2 points for dining, I see that as over 3 cents of value that I should be able to push to four or better with creativity. And that creativity is fun. The Arrival card at 2.2222222 cents per dollar spent just doesn’t have the same appeal.

  10. **Like many others’ my comment is looong as well**
    IMO, totally depends on the kind of travel and the kind of “needs”ou have.
    Within the US I travel less and travel to India once every 9 months on an average. Before this “game” I was buying tickets to India from the eastcoast RT on an avg $1400. That is MY starting point of determining a CPM. The same ticket in Biz would go up to $4500 at least. Do I want to sit in Biz and go to India? YES. Will I pay OOP and sit in Biz? NO. Ideally I want to get a Biz Class for the same price as that of Economy, but if I find a way to get the Biz Seats for a small premium more than the Economy, I would still consider that route depending on how much the premium is. If a website or a travel agent sells the Biz ticket for 2000$, I will buy them. At that rate, with UA’s current award chart the CPM is 1.6cents. With the new chart, I say 1.25cents. I have not considered future price increases and adjustment of currency at all.
    I am a huge fan of the Ink Bold 5X-Staples-Bluebird process and that way I keep my CPM contained to 1c a mile.
    Right now, with UA’s award chart, RT to South Asia (inc India) is 120K and I shell 1200$ OOP to get those miles. On an avg the taxes are 80$. So the total round trip cost is $1280 in BUSINESS CLASS. The same in economy award will be roughly around 850-900$. This is what Ben is exactly talking about: Upgrade your life style without burning a hole in your pocket than what you actually spend. Of course you still have to be creative, flexible, should not forget the hardwork, time and effort you’ve put in to get those miles. After all you are doing this to reward yourself for a premium way to travel.
    With the new chart, the dollar numbers go to 1680$ in Biz Class and $950 max in Economy for RT to India. These are still decent $ ranges for the kind of tickets I have to buy. For economy I would rather purchase a 1100$ revenue ticket if available and get some BIS miles.
    But the mile accruing patterns have still remained the same.
    I personally will continue to earn with the 5X game and redeem on UA, as long as UA doesn’t start fuel charges. The day I do not feel $1680+Flexibility+Effort is not worth sitting in Biz Class (which is no sooner), I will slide to one way economy and one way Biz.
    With this much effort, I will not consider the approach much for local NA travel. I do not mind sitting in economy even for a 6 hour Trans Con flight.

  11. Cash back cards are great in theory but unless I was very careful with my accounting I’d end up using the money to buy new golf clubs or to pay for my step-daughter’s braces.

    Acquiring miles is a form of ‘forced savings’ that I use to ensure that I have a “1st Class vacation for less than the price others pay for a budget holiday” (as Ben previously observed) at least once a year. IMO, after you’ve gained a certain amount of experience in the mileage game, it’s not that difficult or time consuming to assemble a strategy that will allow you to get to the places you want to go…you may not always get your first choice of carrier, and you may ‘pay’ a bit more than you’d like, but you’ll still see the world in style for a fraction of the cash cost. I’m too busy diversifying my mileage holdings and racking up new credit card bonuses to complain about how it was in the good old days! 

  12. Once a solid basis for valuation is determined, then an economic value can be determined and used for making decisions.

    When we start assigning a fuzzy value as a basis is where confusion and variation start taking place, and fuzzy valuations can be introduced anywhere along a related valuation chain.

    Any blogger and post can declare any value as long as it seems reasonable and can be rationalized, but over time the real economic value will eventually be revealed in your bank account, won/lost opportunity, etc.

    A proprietary valuation may reveal an advantage in the existing marketplace and allow you to avoid loss or gain opportunity.

    When mistake fares ensue, you can ignore valuation methods and just purchase a ticket. Sort of like a Black Swan event.

    Brut force valuations based on simulation of the airline market should be possible and may reveal some good statistics, but probably not worth the time involved.

    Then there are crowd sourced valuation methods, that I have used for gambling in sports with good results, that can be reasonably setup.

    Cheers

  13. These analyses are too complicated.

    Very simply, the fair value of a round-trip business seat to Europe or Asia is about $2,000; for first, it’s a bit under $3,000. The retail price, which is often 5x [business] or 10x [first] of an economy seat, is something virtually no retail customer pays for. Those prices are, frankly, silly and meaningless for 99.9% of the population. (Yawning disparity levels have made private jet the more attractive option for the 0.1%.)

    The widespread practice of selling miles makes it clear that the airlines are aware of what the product is really worth, and have found an efficient way to price-discriminate amongst customers. If you are putting in this much effort to sit up front, you most likely are not a candidate for a full-price ticket, but the airlines still to sell you an otherwise empty seat. They’re able to get it by making the system sufficiently complex so as to protect high-yield traffic, whose time is probably worth far more than what might otherwise be saved through the mileage game.

    (I note that the only airlines that consistently have full cabins up front seem to be SQ and LX, and they don’t release award seats. This is not a coincidence.)

  14. To the actual point, the value of miles is relative because different people view the value and necessity of air travel and hotel stays differently, whether premium or basic level. Since this travel is usually discretionary, there is no absolute value available even though there are retail prices available.

    To illustrate for myself, I value the package of ground and air services over economy value for “good” business class (CX, SQ, EY, etc)one way at $100 for every 7 hrs or so. “Eh” business class in US legacies or similar at $50 for the same length. “Good” first class $175, “Eh” first class $100 per 7 hrs. I add these values to the economy tickets that I generally MUST buy to visit family overseas, which works out to $500-$800 per 7 hrs, and then compare this Y base+premium up charge to get a “value” for any given redemption in air travel. Also, for hotel stays, a similar process where I use Priceline 4 star price bids as base values and then something like $30-$50 per night for upgrades and breakfast and lounge access.

    Using this process and the new award charts, NET OF THE TIME AND EFFORT required in sign ups for cards/other promos, keeping track of accounts and opportunities, finding rooms and seats, I have REDEMPTION values of 1 to 1.25 cents for most airline miles and bank points and Hyatt, with Starpoints and Alaska miles at 1.5 cents. Other hotel points are somewhere around 0.5 cents per point for Marriott and Hilton and Carlson and IHG.

    As ffi said in comment 3, sign up bonuses make ACQUISITION costs of 0.2 cents per AA/UA/Hyatt type point (or slightly more around 0.3 cents in my experience) currently possible for say 250K points per year per regular person without getting into Ben or Gary levels of points activity.

    Getting 1.2 cents of “real” redemption value per my prior calculations less the 0.3 cent acquisition cost times the 250K per year times 2 for me and my spouse means I personally feel I am better off by $4500 of real travel experiences per year.

    In real terms, that equates to 2 high end adventures and a couple of family visits every year in return for paying attention to points/miles and keeping my credit clean and the same amount of cash I would have spent on just the basic family visits.

    That’s a good deal, but only so because of sign up bonuses, MS and 5x or better opportunities from bonus categories and shopping portals. Regular spend needs to go on cash back 2% and don’t pay any annual fees that wipe out any bonus category benefits, not even your beloved Chase Sapphire!

  15. Takeaways from my opus above:

    Have a personal valuation for air travel or hotel stays based on your own essential travel needs + your own valuation of the premium versions

    Use these personal valuations of travel and award charts and your value of time and effort to redeem to come up with redemption values for the various types of points

    Use sign up bonuses, MS and bonus spend opportunities to figure out a low acquisition cost of points, and estimate how many points you can reasonably generate at these low acquisition costs net of your time and effort to acquire

    The spread between redemption and acquisition costs times the points you can reasonably acquire = your travel profit

    More importantly, what travel experience are you able to generate with the points acquired, and is that worth a lot more to you than the acquisition cost

    FINALLY, for me, if the redemption values keep falling at 2013 rates due to increased effort and point costs, and the acquisition costs stay the same, then the spread will not be sufficient soon to pay attention to points and it will be time to go 2% cash back no fee!

  16. @AJ – show me where you can consistently find a TPAC biz seat for $2K. While that’s a “fair value”, it’s not reality.

    Unless you have a corporate discount, if you’re buying the seat, you’re paying retail.

  17. A lot more analysis here than seems required. This question is not a matter of “rocket surgery” 😉

    If what you are looking for is a r/t ORD to Vegas econ seat, and you are able to book it in advance with a S/W sale fare, what you want is a cash back card. No more discussion needed.

    Perhaps the same case for someone who has lots of personal and business spend, and is willing to fly TATL crammed in economy, and go during the “low season” for sale fares.

    I personally will not fly 10 hours overnight in the back of the plane, only to get to Paris in February when the daily high is 40 degrees. {Been there, done that, but not anymore}.

    If, as is the case with me, you are looking for a yearly TATL FC summer/fall trip to Europe for 2, for average spending levels a cash back card will not get you there even once.

    For that you need lots of churnable ccs for bonus miles, miles in lots of programs to make it easier to find availability for when/where you want to go, and sadly lots of time for research and record keeping to get those awards.

    It’s irrelevant to me what the retail cost for TATL FC, or even J, is as I cannot pay that on an annual basis. Not along with the land costs for several weeks once I get there.

    Up until now I have always found a way to fly us entirely on miles, at the Saver rate without having to go off season. And most of our hotel stays, while not truly free due to cc AFs, VR fees, etc. end up costing us @ $20 a night net, frequently with free breakfast.

    For right now, as much as I complain about the devaluations, and the difficulty finding award seats, I am still getting us there for “free”, and staying almost entirely in “free” hotel rooms.

    Yes, I am finding I have to work much harder to do that, and to acquire award miles on multiple airlines, some of which like LH I have not ever flown on.

    But it is still working, and since this is my only option for going in the style to which I have become accustomed, cents per mile or point is not something I even think about. I do however consider the cost of acquiring miles and points, and try to keep those costs as low as possible. So I’m on my second AF waived, no minimum spend US Air cc. And we each just got another Citi HH 50K points no fee cc.

    When the time comes that I cannot get enough miles for 2 award tickets, or I cannot find any premium seat award availability, I will have to find another game to play. Perhaps then I will consider cash back cards. That time is not now…. 🙂

  18. I use generally accepted values for hotel points (such as 2.2 cents for Starwood and 0.5 cents for Hilton). I much prefer the points to cash cuz I can often get out-sized non-aspirational hotel values in expensive cities such as New York and London with SPG (a room that would cost $500 a night cash for $265 or less in points) and in random places with Hilton (such as a room in Minneapolis that would have cost $1100 cash for 5 nights for $600 worth of points). And the Club Carlson “last night free” bonus offers unbelievable value.

    For airlines, I highly value the flexibility of award tickets vs. revenue fares. For example, Southwest points bookings are de facto fully refundable (yes, revenue fares have no change fee, but there are significant “gotchas” in re-using the ticket value). And UA makes changes and cancellations free or low cost for elites. The BA/Chase Sapphire Preferred short-haul redemption options on AA and AS also offer out-sized value.

  19. Aspirational First class rewards makes the whole valuation meaningless……..it’s all about the aspiration that keeps the wheels moving on all these programs……..

  20. @JustSaying 100% correct. Also why the devaluations have to end at some point otherwise the airlines will kill aspiration.

    Project forward 10 years – is it reasonable for an airline to say it costs 1 million miles to fly to Europe in F? Maybe, if credit card bonuses are much higher than they are today. But for people not playing this game when you tell them it will take a million miles to go to Europe, they’ll just stop collecting miles. Even for most frequent flyers, a million miles is a lot of miles.

    So something is going to have to give. In the meantime, in order to keep playing you have to stay ahead of the curve and be smarter than 99% of the flying public. No different than beating inflation. You have to keep your salary rising faster than what it costs to keep you in the style in which you’re accustomed.

  21. Ben, interesting thoughts.
    You mentioned you value business class and first class at certain dollar value. Is that what you are willing to pay for the seats? Let’s say $2000 business class to Asia. It doesn’t matter that how you value them, airline is going to sell you a cash ticket for $2000 in business class to Asia.
    Where are these values coming from?
    I would think the most you would have to pay would be cost of purchasing miles for the required tickets or cash ticket, whichever is less.
    And where did you come up starpoints at 2.2 c or any values? Except for us share miles, you can never purchase miles at the value you put on them.

  22. Personally, I only want to travel international First or Business, MNL or SGN for example. The value to me is the average retail ticket price I’d likely pay divided by the qty of miles to get it as an award ticket instead. My guesstimation is approx 5 cents per mile value to me. Fair?

  23. There is no one-size-fits-all answer to this question. Some of my best value CPM mileage redemptions have come on highly obscure routes (Lilongwe to Zanzibar via Nairobi for 7500 miles – revenue ticket was $1100) where a cash back card wouldn’t have helped me at all. Conversely, there are other times where a cash back card provided me with better value.

    I am fortunate enough to have the flexibility to hold multiple types of cards with healthy enough points balances to be able to choose my preferred routing and means of payment for most personal trips I take. THAT flexibility is what I value. I’ve flown millions of miles in premium cabins and quite honestly, I don’t value them as much anymore. I’d rather have a cost efficient, comfortable and conveniently scheduled economy class experience than to jump through hoops for a premium experience at weird hours of day or with strange routings. Travel for me has become less about the journey and more about the destination, in contrast to where I was maybe 10 years ago.

    That’s the beauty of this game. Everyone who plays it defines a win differently. So its possible for everyone to win! 🙂

  24. MS using cash cards could be as rewarding as miles. Say you have a 2% cash card. MS 100k means 200 cards at 3.99 a card. That is $2000 USD – $800 = $1200 plus time , mileage. That is basically what used to be paid for 100k US ( probably gone for good ). Granted you could cheat and get more miles.

    But MS for miles gives you more flexibility ( SPG, UR, AA etc )
    Now if you were lucky to get the Citi TYP at 5p then your answer is there!

    Moral of the story: App-rama is king!

  25. I look at this a bit differently. In the UK, the ‘game’ is much harder to play as we simply don’t have the same range of offers and promotions, nor is there the same competition (in the air anyway).

    My last redemption was LHR-GIG-LHR in BA First for two passengers. Using a BA 2-4-1 voucher issued via AMEX is cost a total of £1177 + 180,000 miles for both. If I’d paid cash, it would have cost just over £12,000, an economy fare was £1594 for both.

    I earned the miles fairly simply by a few credit card churns, Tesco Clubcard points and everyday spend. I took advantage of a few bonus offers and used what is now BA Gate 365.

    For me, the mileage ‘game’ is great. I’m happy to fly economy short haul around Europe, in fact, I sometimes prefer it as I can fly from my local airports, but for the annual big holiday, I can play the ‘game’ enough to get by to ensure that we fly in Business or First.

  26. My standard is highly personal, but I think that is how anyone should do it. and from the posts above I have read, that is mostly how everyone does it. That is to say, how do you personally plan on using the miles? In my case, I use them to pay for my wife and daughter to visit my in-laws in Japan every year. ANA has the best route for this. I agree with one of the initial posters that one should use the going cash price of the flight and class of service in question. Therefore, cost of a round-trip flight even in coach comes to an equivalent of about 3.0 to even 3.6 cents per point in value. So for me, a cash back card has a very high hurdle rate. I am willing to consider it, but consider it improbable these will ever make sense for me.

    For star points, I cannot remember the last time I redeemed for less than 2 cents a point equivalent value. Often for more.

    The value each of us should use should be based on how each of us will spend the points.

  27. @Phatmiles While I agree with much of what you said and have signed up for loads of credit cards and done a decent amount of MS, I can’t help but think that you have to reflect the opportunity cost of using a 2% cash back card in your cost of those miles through 100% MS.

    For example let’s compare the acquisition cost (100% from MS) of 100,000 miles using an Ink card at Staples. It’d cost you $695 ($6.95 a card x 100 cards) to get $20,000 in spend. I’m ignoring the earnings on card cost for both equations for simplicity sake.

    Now let’s say you spent the same $20,000 on a Fidelity Amex to earn 2% cash back buying VRs. That’d require 40 cards at $3.95 a card or $158 cash outlay. There are no valuation issues with the cash thus you’d have earned $400 less cost of $158 equals a profit of $242.

    Your cost is determined in the Ink 5x example. The Ink’s cost of $695 is 4.4x the cost of the Fidelity method. Thus you’d need a profit of $242 x 4.4 or $1065 to be even. With a cost of $695 you’d need your earnings to be worth $1760 which requires you to value a UR point at 1.76 cents/point. I think that’s hard to do these days after UA/Hyatt deval.

    Thus going back to my original statement, I think in this situation while the 100K UR points may have only cost $695 out of pocket, I think the fact that you could have earned $1065 PROFIT for the same $695 cost means at a minimum your cost of those miles is $1065.

    So I think its certainly reasonable to do if you want to redeem for say business to Europe but just keep that in mind.

    I still agree with Ben & Gary’s points that this game lets you travel in luxury for less and makes this sort of travel possible which is why I play it, but keeping in mind the above makes me put more on my 2% cash cards these days (also due to building up a huge stash this past year). Again as others have said though, when you have a huge signup bonus, that will trump any 2% and often even 5% card.

  28. It all depends on personal circumstances. I tavel a bit for work, but I must put all of those travel expenses on a corporate card that earns no points. So basically I don’t have many travel “expenses.” I also fly primarily Delta domestically with a few random United / Virgin / Alaska itineraries, so I always have Delta miles around. I don’t have many United or AA points, which people say are the best. I also don’t do manufactured spend (have no time).

    I do have substantial regular spend in a variety of categories. I split that among Barclaycard Arrival, Amex PRG and Chase Freedom. I transfer MR points to Delta to top of domestic rewars and to Avois for short hauls and international travel. I use Barclaycard miles to pay for “fuel surcharges.” I just booked flights to London and Berlin with Avois and paid the substantial surcharges via Arrival, resulting in $0 out of pocket costs. I have also transferred MR points to AsiaMiles, Virgin America and Delta in the past. I don’t force myself to fly premium cabins internationally, and I’ve done those flights in coach. Overall I value flexibility, ease of use, and likelihood of use, which lends itself to Avois, MR, cash back and Barclays “points” for me at least

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