Airline miles – How much are they worth?
Airline miles
How much are they worth?
How should you use them?
Are frequent flyer credit cards a good deal?
New York
(NerdWallet) – Have you ever wondered whether you should choose a cash rewards credit card or an airline mileage card? If you could compute the $ value of an airline mile, the answer would be fairly straight forward – simply convert the airilne mile value to cash and compare apples to apples with a cash card.
However, this turns out to be a difficult task for two reasons. You must anticipate (i) how much you will spend on a future ticket, as well as (ii) how many frequent flyer miles the equivalent ticket would require. The difficulty is compounded for those who fly frequently, because most people only spend enough to earn one flight a year, so those who fly frequently are more likely to be able to participate at “Saver” rates, which are typically 25,000 miles for a domestic flight as opposed to 50,000 miles for “Anytime” tickets.
After compiling reams of data, we’ve come to a few generalizations about how you should value miles.
When is it a good idea to spend miles as opposed to paying for a flight? If you travel frequently, hold out for 1.5-2.0 cents / mile international flights (price out your ticket in miles and $s). If you travel infrequently, go ahead and use your miles at lower rates.
TypeDescriptionMileage Value No Travel Do Not Fly 0.0 cents / mile Domestic only, little flexibility Travel domestically, but with little flexibility on dates and only during peak travel periods like Thanksgiving. 0.5 – 0.8 cents / mile Domestic only, flexibilitiy Travel domestically a few times a year. Work schedule allows flexible travel dates. 0.8 – 1.0 cents / mile International, little flexibility Travel abroad at least once every 1-3 years. Travel during peak seasons with little flexibility. 1.0 – 1.3 cents / mile International, flexibility Travel abroad at least once every 1-3 years. Flexible with travel dates. 1.3 – 1.6 cents / mile
Are frequent flyer credit cards a good deal? If your mileage value is greater than 1 cent, then yes! Hold out for deals where you get 25,000 miles or more for joining – this is the equivalent of a $250+ signing bonus and 1% cash back for you. Most cash rewards cards pay 1% with no signing bonus.
Happy traveling! See the table below for a snapshot of what we estimate miles are worth in Feb 2009.
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