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American has just announced the details of their latest promotion on purchased miles. Through May 31, 2018, American is offering up to 35% off when you purchase AAdvantage miles. While their last bonus on purchased miles (which ended yesterday) was the best of the year, this promotion isn’t nearly as good.
With this promotion you get a tiered discounted on purchased miles, depending on how many you buy:
- Buy 4,000-10,000 miles, get 5% off
- Buy 11,000-20,000 miles, get 10% off
- Buy 21,000-30,000 miles, get 15% off
- Buy 31,000-50,000 miles, get 20% off
- Buy 51,000-100,000 miles, get 30% off
- Buy 101,000-150,000 miles, get 35% off
In this case you’ll receive the lowest cost per mile by purchasing anywhere between 101,000 and 150,000 miles. For example, if you purchased exactly 150,000 miles you’d end up paying $3,122, which is a cost of ~2.08 cents per mile.
As usual, AAdvantage accounts less than 30 days old aren’t eligible to purchase miles. Furthermore, there’s a cap of purchasing 150,000 AAdvantage miles per account per calendar year.
When it comes to American’s bonuses and discounts on purchased miles, this is one of the worse ones we’ve seen this year:
- In April American offered miles for as little as 1.81 cents each
- In February American offered miles for as little as 2.02 cents each
- In January American sold miles for as little as 2.13 cents each
Is buying American miles a good deal?
When American devalued their award chart in early 2016, my valuation of AAdvantage miles decreased from ~1.8 cents to ~1.5 cents each. My valuation of American miles has further dropped from ~1.5 cents to ~1.3 cents earlier last year. Ever since the big devaluation, the cost of international first class awards went up in price by the most, by as much as 70% in some instances.
Meanwhile the cost of most business class awards increased as well, though not nearly as drastically. As a reminder, here’s the cost of first and business class awards originating in the U.S. under the current program:
|Contiguous 48 U.S. To:||Business Class||First Class|
|Contiguous 48 U.S. States||25,000||50,000|
|Canada & Alaska||30,000||55,000|
|South America Zone 1||30,000||55,000|
|South America Zone 2||57,500||85,000|
|Middle East / India||70,000||115,000|
|Asia Zone 1||60,000||80,000|
|Asia Zone 2||70,000||110,000|
Qatar Airways business class continues to be a great use of American miles
I find the cost of business class redemptions to still be reasonable in most cases. There are instances where it could make sense to pick up miles during a promotion with a short term use in mind. However, if you can I’d recommend holding off on buying miles, as I’m sure we’ll see a lower cost on purchased miles again soon.
Which credit card should you buy miles with?
American processes mileage purchases directly, 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:
|Card||Points earned on airfare spend|
|The Platinum Card® from American Express||5x Membership Rewards points per dollar spent|
|Chase Sapphire Reserve®||3x Ultimate Rewards points per dollar spent|
|Premier Rewards Gold Card from American Express||3x Membership Rewards points per dollar spent|
|Citi ThankYou® Premier Card||3x ThankYou points per dollar spent|
|Chase Sapphire Preferred® Card||2x Ultimate Rewards points per dollar spent|
|Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®||2 AAdvantage® miles per $1 spent on eligible American Airlines purchases|
|CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®||2 AAdvantage® miles per $1 spent on eligible American Airlines purchases|
Redeem American miles for JAL business class
For example, I value Membership Rewards points at 1.7 cents each, so I view that as an 8.5% return on this spend if you use The Platinum Card® from American Express. So if you used that card and paid ~1.81 cents per mile and valued the 5x points at 8.5%, that would lower your real cost of acquiring these miles to ~1.66 cents each, which is even better.
Better options for acquiring American miles
If you’re looking to acquire American miles in smaller increments, there’s a better deal out there that allows you to acquire these miles for just 1.46 cents each. Specifically, you can buy Starpoints for 35% off, bringing down the cost per purchased Starpoint to 2.275 cents.
Then you get a 5,000 point bonus for every 20,000 points transferred, and on top of that, American is currently offering a further bonus of 25% when you convert hotel points into airline miles. This means you could buy 20,000 Starpoints for $455, and they’d convert into 31,250 American miles. That’s a great deal, and significantly cheaper than you’ll ever see American sell miles directly.
Alternatively, keep in mind that several credit cards offer big sign-up bonuses that can earn you AAdvantage miles, including the Citi® / AAdvantage® Platinum Select® World Elite™ Mastercard®, the CitiBusiness® / AAdvantage® Platinum Select® World Mastercard®, and the Citi® / AAdvantage® Executive World Elite™ Mastercard®.
In general there are circumstances under which it could make sense to buy American miles, though the current promotion is one of the less attractive offers we’ve seen on purchased American miles. So if you need to buy miles in large quantities and can hold off, I’d recommend waiting.
The much better deal here is to buy Starpoints for 35% off plus take advantage of the 25% transfer bonus, which allows you to acquire American miles for just 1.46 cents each. That’s a very good deal.