When Should You Buy Miles?

As I’ve explained in the past, there are generally three main ways I accrue points:

  • Through flying. I fly 400,000+ miles per year, and over half of those miles are flown on revenue tickets, which allows me to rack up quite a few miles that way.
  • Through credit card spend/sign-up bonuses. Through a combination of big credit card sign-up bonuses and maximizing credit card points through everyday spend, I rack up quite a few points that way.
  • Through buying miles. Often times airlines will sell miles at a discount, and in many cases it can represent a great value, in particular for international premium cabin award tickets.

So when people ask me about the best way to earn miles, I typically won’t say that flying is the best way to earn them. That’s because for the most part mileage running is “dead,” so my 200,000+ flown miles on revenue tickets are mostly for travel I have to make. In other words, I’d generally argue it doesn’t make sense to get on a plane to earn miles.

For American consumers with good credit and responsible spending habits, I’d argue credit cards are the single best way to earn points. There are many great sign-up bonuses out there, and also many cards which are extremely rewarding for everyday spend.

But what if you don’t usually travel a lot for work, and/or aren’t in the US with a good credit score? Well, in many cases airlines will sell miles at a discount, which can represent a fantastic value. When airlines sell miles at a discount, they typically retail for somewhere between 1.5 and 2.2 cents each.

So let’s talk a bit about that — how it works, who it makes sense for, etc. Note that in the below I’m going to do some generalizing. There are of course exceptions and I won’t be 100% thorough, but hopefully it points you guys in the right direction.

Who should buy miles at a discount?

As a general rule of thumb, the best use of miles is for international premium cabin tickets. To explain why, let’s use an example. Say you want to fly from New York to Hong Kong on Cathay Pacific. If paying cash, an economy ticket might cost ~$1,000 roundtrip:

Cathay-1

Meanwhile a first class ticket would cost ~$30,000:

Cathay-2

So first class is ~30x more expensive than economy in cash. However, if redeeming American AAdvantage miles for travel on Cathay Pacific, here are the rates:

Cathay-3

As you can see, economy would cost you 35,000 miles one-way, while first class would cost you 67,500 miles one-way. So while you’d pay ~30x more for first class than economy if paying cash, you’d pay less than 2x as much if redeeming miles.

Cathay-Pacific-First-Class-777-54

That’s what makes miles so awesome. Most of us could never afford to spend ~$30,000 on a roundtrip first class ticket — that’s the cost of a nice car. But if redeeming miles, and first class is less than twice as much as economy, why not?

Which programs sell miles most frequently?

With that in mind, which programs sell miles most frequently in a way which represents a good deal? In general there are four programs most worth considering, so below I’ll outline their general policies/procedures for buying miles. Note that in all cases you’ll want to have a frequent flyer account before the promotion starts, or else you may not be eligible for the promotion.

That’s why you should sign up for accounts with the below programs even if you don’t plan on buying miles immediately.

Alaska Mileage Plan | register for program | award chart

Average cost to buy miles on sale: 2.1-2.2 cents each
Limit to buying miles: no limit
Number of times per year promotion is offered: average of 4x per year
Residency requirements: must have address registered in US, Canada, or Mexico
Other cool things to note: Alaska allows stopovers on one way award tickets, making them one of the few airlines with such a policy

Alaska-Buy-Miles

Examples of one-way Alaska Mileage Plan award redemption costs:

Emirates-A380-First-Class-14

American AAdvantage | register for program | award chart

Average cost to buy miles on sale: 2.0-2.2 cents each
Limit to buying miles: 100,000 miles per account per calendar year (before any bonuses)
Number of times per year promotion is offered: average of 8x per year
Residency requirements: none
Other cool things to note: American allows five day holds on award tickets, so in theory you can hold award space and then purchase miles, which eliminates any risk of buying miles while award space disappears

AAdvantage-Buy-Bonus

Examples of one-way American AAdvantage award redemption costs:

Etihad-A380-First-Class-74

Avianca LifeMiles | register for program | award chart

Average cost to buy miles on sale: 1.65 cents each
Limit to buying miles: 150,000 miles per account per calendar year (including bonuses)
Number of times per year promotion is offered: average of 3-4x per year
Residency requirements: none
Other cool things to note: Avianca lets you purchase up to 60% of the miles needed for a ticket at the time of booking for as little as 1.5 cents each

LifeMiles-Promo

Examples of one-way Avianca LifeMiles award redemption costs:

ANA-first-class-2

Starwood Preferred Guest | register for program | award chart

Average cost to buy points on sale: 2.625 cents each
Limit to buying points: 20,000 points per account per calendar year
Number of times per year promotion is offered: 1x per year
Residency requirements: none
Other cool things to note: Starwood allows household transfers, whereby you can transfer Starpoints between accounts of people registered at the same address; which greatly increases the limit on the number of Starpoints you can acquire per account

Starpoints-Bonus

I feel like I should explain the practical uses of Starpoints as they relate to airline miles. Starpoints can be converted into airline miles in roughly a couple dozen frequent flyer programs. Points generally convert into airline miles at a 1:1 ratio, and for every 20,000 points you transfer you get a 5,000 point bonus. At the rate of 1.25 miles per Starpoint, that’s like paying 2.1 cents per mile. Given some of the awesome airline partners they have, that’s a pretty good rate at which to pick up airline miles.

Should you buy miles speculatively?

Miles aren’t something I generally recommend “investing” in. Racking up miles is sort of like racking up cash without accruing interest. In the short term they shouldn’t lose much value, but over time miles — just like most currencies — devalue. So in general I only recommend buying miles if you have an immediate or at least short term use in mind.

Keep in mind that the above programs sell miles with some frequency, so you really don’t need to speculatively buy them. If you can think of a good use in the near term then by all means buy them. If you can’t, then don’t… generally.

One other important thing to keep in mind is that there are two sides of the redemption equation. It’s not just a function of how many miles an airline charges, but also what award availability is like. In other words, you’ll want to research award availability before you buy miles based on a certain redemption opportunity.

Bottom line

Buying miles for the purposes of redeeming for international premium cabin tickets can be an absolute no brainer, assuming you place some value on flying comfortably. That being said, keep in mind the following before you pull the trigger on buying miles:

  • Don’t view buying miles as a long term investment. Miles devalue over time, so be sure you buy them with a reasonably short term use in mind.
  • Make sure you understand not just the redemption costs of award tickets, but also what availability looks like. Just because a certain price is published on an award chart, doesn’t mean space will be readily available.
  • Be sure to sign up for a frequent flyer account before a promotion on the purchase of miles launches, since typically it’s only available to those who are already members.

Assuming you keep the above in mind, purchasing miles can be an amazing way to basically buy first & business class international tickets at huge discounts, no matter where in the world you live.

Does anyone else buy miles as a means of funding international first & business class travel?

Comments

  1. I funded my ex’s and my first cx j trip to SE Asia through Alaska’s buy miles promotion. If you have no miles, that was well worth it.

  2. When? I will tell you when… when you are trying to fly a family of 4 on JAL first class but had to split the booking and half ticketed and other half on a ticketing on hold with AA and it’s about to expire any minute after waiting for almost a week for additional miles transfer from SPG to post. Good thing AA had a buy miles promotion at the time. Talk about freaking out.. Btw, miles transferred from SPG posted next morning…

  3. Very nice overview!

    To go a little bit further, I’d also recommend checking into revenue rates before deciding to buy a bunch of miles (especially, for business tickets which are on sale more frequently). Then you also have to consider any miles/points you are forgoing by not flying a paid ticket — especially important if there are some promotions or you need to reach status.

  4. Can I use alaska airlines miles to redeem yvr to hkg, or does it have to start/end in the US?

  5. Regarding you point that Alaska Miles you need to have a US/Canada/Mexico residence is a bit puzzling. I know it was like that in the past, but recently this does not seem to be an issue, nor can I see it in the Terms & Conditions when you sign up for Alaska Miles. I am not based in the US, nor do I have a us credit card, but was able to purchase Alaska miles disclosing my accurate details. I did not give out any false address in the US which I heard some people used to do in the past. Am I missing or overlooking something Ben?

  6. Thanks for this post Ben. It was really informative for me and especially as a follow up to yesterday’s United sale.

  7. Great 101 on buying miles. However……. I know you have a lot of new readers and I think they really need to pay attention to the second bullet point of your Bottom Line. Partner award availability is the problem now. Everyone wants to call up AA and book a couple EY First Apartments from JFK for 90K AAdvantage miles. Good luck with that! Ditto on QR and CX for long haul travel on many routes.

  8. Sorry for asking what I know the experts here will say is a stupid question…but would be very grateful if anyone who has bought miles on sales can explain to me as I don’t see how buying miles will greatly reduce the cost of purchasing first class cabin tickets in the AA case from the numbers provided in the article. If it costs about 20 cents to buy 1 mile on sale, and 67,500 miles for a one-way Cathay ticket, one will have to buy $27,000 worth of miles to redeem a round-trip first class ticket between NY and HK. It is only a 3.5% discount to purchasing a round-trip first class ticket with $28,000. In this case, it costs only 2x to purchase first-class tickets vs economy class tickets with miles whereas 30x for buying with cash only seems to show that it is ridiculously expensive to buy miles for economy class tickets but not that cheap to buy for first class tickets. I am probably not getting the full picture so would be grateful if anyone can point me to the right direction. Thanks a lot.

  9. My apologies. I just realised I couldn’t get it right because it is 2 cents but not 20 cents for one mile. So sorry about that. Now everything makes perfect sense. Thanks for the tips and the great article!

  10. Thanks so much for this article. My wife and I were discussing this last night. Anyone had any experience in buying Avios?

  11. Elan — in general Avios are a much better value for short haul redemptions than international business/first, so I would make very sure that the numbers add up if you’re looking to buy Avios in order to book a major trip

  12. I’m with BHill. I can’t see in the terms and conditions where there is a residency requirement for Alaska Mileage Plan and when registering there is a facility to change location from the US to just about anywhere, save on the dark side of the moon. I’m going for it.

    DarrylG

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