Should You Buy American Miles Pre-Devaluation?

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American is back with yet another bonus on purchased miles, following their latest promotion, which ended over the weekend.

Through March 1, 2016, American is offering up to 42,500 bonus AAdvantage miles when buying miles. Furthermore, if you buy miles by February 8, 2016, you can get a 10% discount on the purchase price.

American-Miles-Bonus

The number of bonus miles varies based on how many you buy, as follows:

  • Buy 20,000-39,000 miles, get 7,000 bonus miles
  • Buy 40,000-59,000 miles, get 15,000 bonus miles
  • Buy 60,000-74,000 miles, get 22,500 bonus miles
  • Buy 75,000-99,000 miles, get 30,000 bonus miles
  • Buy 100,000-150,000 miles, get 42,500 bonus miles

American-Miles-Bonus-1

Given the tiered bonuses, you’ll achieve the lowest cent per mile cost if you purchase exactly 100,000 miles, since you’d be earning a 42.5% bonus on purchased miles. After factoring in the 10% discount which is available for the next week, the best deal you’ll get is for 142,500 miles at a cost of $2,884.13. That’s a rate of ~2.02 cents per mile.

American-Bonus

How does this promotion compare to past promotions from American on the purchase of miles?

As you can see, this is one of the better offers they’ve had, though not the case. At least that’s the case if you purchase in the next week while the 10% discount applies. Personally I wouldn’t be deciding on whether to take advantage of a promotion based on the slight difference in cost, but rather based on when you actually have a need for the miles.

As usual, AAdvantage accounts less than 30 days old aren’t eligible to purchase miles. Furthermore, there’s an annual cap of purchasing 150,000 AAdvantage miles per account per calendar year (pre-bonus), so that counter reset as of last month.

Is it a good deal?

Keep in mind that American will be hugely devaluing their award chart for bookings as of March 22, 2016, which will increase the cost of many of my favorite awards. This is both a reason to consider buying miles, and also a reason to avoid it. I wouldn’t be speculatively buying American miles under this offer if you won’t be able to redeem them in the coming weeks.

However, if you can redeem miles before the devaluation, I’d seriously consider taking advantage of this offer. The costs of some of my favorite awards are going up by almost 70%, which is all the more reason to buy miles under this offer, if you can plan now.

For example, 67,500 miles is enough for a one-way ticket in Cathay Pacific first class between the US and Asia, so for ~$1,350 out of pocket that’s not half bad.

Cathay-Pacific-First-Class-777 - 27
Cathay Pacific 777 First Class

40,000 miles will get you an award in an Etihad A380 First Class Apartment between Abu Dhabi and London, so for just ~$800 out of pocket, that’s a steal.

Etihad-A380
Etihad A380 First Class Apartments

There are tons of other similarly excellent redemption opportunities out there.

Which credit card should you buy miles with?

As of last year, American processes mileage purchases directly (rather than through points.com), which means the purchase of miles does qualify as airfare spend. Therefore you’ll want to consider using one of the following cards for your purchase, since they offer the following bonus miles for airfare spend:

Bottom line

With a specific use in mind, this can be a great value. I wouldn’t speculatively buy AAdvantage miles for ~2.02 cents each, especially in light of the upcoming devaluation, but if you have a short term premium cabin redemption on Cathay Pacific, Japan AirlinesEtihadQatar, etc., in mind, it’s tough to go wrong. If you’re looking to make a premium cabin redemption before the devaluation and don’t have enough miles, I’d seriously consider this offer.

Also keep in mind that American allows five day award holds (meaning you can hold an award ticket, purchase miles, and then ticket the reservation).

Do you plan on purchasing AAdvantage miles through this promotion before the devaluation kicks in?

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Comments

  1. I’ve never bought AA miles before, but since I want to take my sister on a 21st birthday vacation this summer, I just might buy some this week and set up the trip pre-devaluation. I hadn’t been thinking about using AA miles (because I have a huge stockpile of MR points), but now I kind of am. Of course, this means I should probably seriously consider where we’d be going, which I should probably do anyway. But now I’m just considering OW a bit more closely.

  2. @Lucky – somewhat offtopic but I have been trying very hard to get AA booking on Etihad first from USA all the way to India. For example I can do JFK-AUH-DOH-MAA with JFK-AUH on Etihad First and AUH-DOH-MAA on Qatar Business for 90K AA Miles, but AA is not able to do JFK-AUH-MAA or JFK-AUH-BOM-MAA with only Etihad all the way thru. They are only able to do this if I pay 90,000 AA miles for JFK-AUH route and then pay additional miles required for Middle east to India region in order to make it an all Etihad route.

    Not a big deal but scoring the AUH-BOM on A380 First again would make the whole trip sweeter.

  3. I would be very cautious about buying AA miles. Because a lot of folks who already hold a ton of AA miles are burning them on high-value routes (e.g. partner J/F redemptions), those tickets are drying up already. EY F is not easy to find.

  4. I would like to use my Platinum card to by points and get the $200 Airline Fee Credit. FT says this will work, but your article says it is airfare, so qualifies for a bonus category. This seems like a contradiction. Is it airfare, or a fee?

  5. I think my best option is to take Etihad First from Mumbai to London, also picking up the A380 Apartment. For only 40,000 points – that’s a ridiculous deal I’m sad I only took advantage of ONCE in the past.

    I believe any bookings made for the rest of the year before the devaluation count as standard?

  6. I’m looking to book either Japan Airlines or Cathay from US to Asia (TPE) in April but see nothing available on the BA website in business or first as of now. I do want to book before the devaluation. Any suggestions on what I could do?

  7. @Benny, CX and JL are some of the most in-demand redemptions pre-devaluation. My suggestion is look at other departure cities besides your own and then piece together positioning as part of the same award.

  8. I’m thinking of starting the miles game and I was looking at AAdvantage. I signed up for it with the dining program, however it seems like due to the devaluation of miles it won’t be that great of a program anymore. What other airline loyalty program should I start then?

  9. On the credit card – you are better charging against the Barclay aviator silver (if you have one) as it provides 3x on AA purchases. That alone is worth the extra $100 per year for the silver card.

  10. @_ar says – Agreed that reverse route works OK. This only happens when trying to book USA to India route via AA Australia. AA USA doesn’t even see those F availability.

  11. Hey Lucky,

    One could get these at 1.9 cents a mile if you split your purchase in two and maxed out to the 150,000 per year limit. 50,000+15,000=$1327.50 and 100,000+142,500=$2655.00. That’s 207,500 miles for $3982.50. And in case you were wondering, the bonus miles don’t towards the limit as per their terms and conditions. “Bonus miles earned do not count toward the annual limits.”

  12. @johnny – wow absolutely right, you can bring it down 1.85 if you use a Citi AA credit card or 1.81 cents/mile using the AA aviator card

  13. I few r/t FC on Cathay in December BOS to BKK with a stop in HKG (there is a non-stop BOS-HKG flight three times a week). It was an amazing trip, and the f/c experience with Cathay was outstanding both ways (although the outbound flight was a slightly lesser experience than the return due to an attentive return flight crew). I am seriously considering a return to HKG at some point in the next year as I only had a 24 stop-over to experience the city and would definitely try to find availability on the same flights again.

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