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How Much are Frequent Flyer Miles Worth?

Written by Nickel - 10 Comments

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How Much are Frequent Flyer Miles Worth?

After years of using a cash back rewards card as my primary credit card, I switched over to a mileage card – the Platinum Delta SkyMiles Credit Card from American Express – last summer. I’m earning a mile per eligible dollar spent, with double miles for every eligible dollar spent on Delta Air Lines and Delta vacation purchases, and bonus chunks of MQM miles for specified spending tiers.

So far, I’ve been able to bump myself up in terms of flyer status thanks to the MQM miles, and I’ve also piled up a ton of miles that can be used toward free flights. But how much are these miles really worth?

In the past, I’ve valued miles at about $0.01/each, which would mean that this is essentially a 1% cash back credit card. But with airfares on the rise, I’ve started to re-think this valuation even though airlines have been making reward tickets harder to find and/or devaluing the miles by increasing the number of miles required

Last fall, I booked my wife a $450 ticket for 25,000 miles. More recently, I was able to book a couple of $760 tickets for 32,500 miles apiece. In the first case, I got 1.8 cents/mile. In the second case, I got 2.3 cents per mile.

In other words, I’ve been getting in the neighborhood of $0.02/mile, which is the equivalent of 2% cash back – not too shabby. Of course, I’m paying a $150 annual fee for this card, but that’s well worth it to me when you consider the additional perks…

For starters, I get a “companion” certificate each year upon my Cardmembership anniversary (government taxes and fees are my responsibility to pay) as well as free checked bags when I fly Delta (includes up to nine people on my reservation). On top of that, the improved flyer status thanks to the bonus MQM miles gets me the occasional upgrade, access to exit row seats (I’m tall, so this matters), pre-boarding privileges, etc.

What about you? How much are your frequent flyer miles worth to you? Do you have any tips for maximizing their value? Please share your thoughts in the comments.

*Note: While the prices listed above sound a bit high, those were the going rates for the routes in question regardless of which airline we chose. In both cases, these were relatively expensive routes, and the purchases were somewhat last minute. Unfortunately, we didn’t have the flexibility to choose our dates.

Published on February 16th, 2011 - 10 Comments
Filed under: Credit Cards,Travel

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Comments (scroll down to add your own):

  1. Nickel,

    I have become a mileage junkie the last few years. I am from Australia and fly back there once a year on average. I like to save my miles for getting a business class ticket there every couple of years. At 135,000 miles these tickets aren’t cheap, but at $6,000 for a seat I am getting 4.4c a mile.

    Before there was competition on the Australia-US routes, business class tickets were north of $12,000, so it was around 9c a mile. I don’t use them for domestic travel at all, simply because at 4.4c a mile that is the best deal. I will even purchase miles if I am a little short. I have been saving miles the past couple of years and next year I am flying my family of four down for free in business class (over $24,000 worth).

    Comment by Anonymous — Feb 16th 2011 @ 7:52 am
  2. I also switched from a cashback card, but to a hotel points card as my main card (SPG AmEx). It’s easier to redeem points for hotel rooms. There are usually several hotels to choose from in a city. Hotels rarely sell out.

    Comment by Anonymous — Feb 16th 2011 @ 9:40 am
  3. You should ask to get the annual fee wavied. I have been able to get my annual fee on a similar credit card waived because I was using it for all of my purchases. It took was a simple 5 minute phone call. All I had to do was ask.

    If you frequently use the card, the company makes enough money from transaction fees to justify waving the annual fee.

    Comment by Anonymous — Feb 16th 2011 @ 11:12 am
  4. I use a mileage card as well, and have found the key to amassing miles is taking advantage of all the bonus offers. As long as you purchase goods you would have bought anyway, and don’t fall into debt, 30-40 miles per dollar spent add up quickly. Also, sometimes I just take a survey or sign up for emails lists and get 1000-5000 mile bonuses. Check out this guy for serious frequent flier tips.

    Comment by Anonymous — Feb 16th 2011 @ 12:03 pm
  5. I have a points card that allows me to purchase airline tickets. In 2009, I was able to purchase an airline ticket for my daughter to fly with me to see my sister for only 15,000 points. Since then, I have earned over 25,000 points on the card. Because I’m working on paying off and closing my cards, I looked to see how many more points I needed before I could fly both me and my daughter to my sister’s again. I was dismayed to find out that my points were worth exactly as you stated … $.01 toward a ticket. Because the cost of a ticket is now $454.32 I need 45,432 points to purchase 1 ticket.

    Since I won’t be there any time soon (and since I am frustrated with the bank that issued the card), I am taking the cash value of the points I have (or $250) and will be closing the card. Turns out my air miles were exactly $.01.

    Comment by Anonymous — Feb 16th 2011 @ 12:35 pm
  6. 1-2¢ per mile is about right. Just depends on what flight you get and the normal price for it.

    Comment by Anonymous — Feb 16th 2011 @ 7:59 pm
  7. I’m surprised you’ve had such good luck booking Delta flights with miles. The SkyMiles program is notorious for poor award availability and terrible redemption rates. There’s a lot of discussion about it on FlyerTalk.

    I recently got three airline credit cards for the bonus miles. However, I don’t value miles enough to put spending on these cards rather than taking 2-5% cash back from my other credit cards.

    One mileage earning opportunity I do find worthwhile is the BankDirect mileage checking account. It earns 0.1 AAdvantage mile per dollar per month. The miles are not taxed. The taxable equivalent interest rate is around 1.9% for someone who values miles at 1 cent each and pays 25% federal / 9.5% state taxes on marginal income. I don’t know of any bank accounts which match this yield.

    Comment by Anonymous — Feb 20th 2011 @ 1:47 pm
  8. Don\\\’t forget about hotel rewards. With the right program like Starwood Preferred Guest or Hyatt, you can easily achieve 2 to 3 cents or better in return for your mile credit card spending.

    Comment by Anonymous — Jul 8th 2011 @ 8:01 pm
  9. I have used a Delta mileage card for the past fifteen or so years. Mileage has enabled me to attend graduations, baptisms and marriages I could not afford otherwise. Your article makes me consider the platinum card as my husband and I do a fair amount of travel. The card has come in handy there too!

    Comment by Anonymous — Aug 20th 2011 @ 1:14 pm
  10. I always use my mile points for my travel. They are really useful and help me a lot in saving my money.

    Comment by Anonymous — Apr 22nd 2013 @ 6:57 am

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