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Article How Much are Frequent Flier Miles Really Worth? NYTimes

Cameron

500+ Posts
Big airlines are now rewarding based on dollars spent, rather than miles flown. Some of their partners still reward based on mileage.

Article in the NY Times.

The reporter talked to The Points Guy:

I’m a frugal traveler, and even if I had noticed this, I still would have booked the ticket because it was the best rate I could find. But I reached out to Brian Kelly, founder of the website The Points Guy, which helps travelers maximize their frequent flier miles, to see if there was anything I could have done differently.

Mr. Kelly said the travelers hit hardest by the new reward configurations are people like me, budget travelers who take long haul, international flights. But he maintains that travelers still shouldn’t hesitate to book the lowest fare they can find.

“I never thought I’d be saying this, since I’m the Points Guy, but it’s still better to forgo the miles if you’re going to get significant savings, because cash is king,” he said. “Just be aware that discount carriers charge more for bags, seat selection and so on.”
 
Some bloggers post their estimates of the value of points and miles in different programs. Here is a post from the blog that I regularly follow, View from the Wing, where the author lists his latest valuations compared to other bloggers. It's useful in considering how much the opening bonus for a credit card is worth, among other things.
 
Years ago, when I had to work for a living, I belonged to several airline FF programs. For about 20 years, I never paid for a flight myself to go anywhere on vacation. All done on FF points. I recall vividly when my points finally ran out about 5 years after I retired and I had to buy my first ticket. Talk about 'sticker shock'.

My take on Airline FF programs(not to be confused with Air Miles) is that they are a plus if you are in fact a 'frequent flyer'. But that means someone who flies a LOT. Getting FF miles really has no downside regardless of how much or how little they are actually worth in $ terms supposing you can actually define that.

However, the average person who gets Air Miles when they buy groceries or gas is not going to accumulate enough miles fast enough to really be significant. And that does not take into account the ridiculously low real $ value that they have compared to alternatives.

Most people who collect Air Miles do so through loyalty cards (supermarket or gas station chain) and credit cards. But there is an alternative to those and that is 'cash back' cards. We use a credit card issued by a grocery store chain which also has it's own bank and gas stations here in Canada. As a 'preferred member' (meaning we spend more than the average using the card), we get an average of 3% 'cash back'. No one gets 3% in Air Miles. I worked out the actual cash value for Air Miles which are provided by a competitor grocery chain. It works out to under .5%!
 
While cash-back cards are the better deal for what you get back per dollar, miles-affiliated cards are attractive for their opening and ongoing bonuses. Often the opening bonus on an airline card will get a free transatlantic trip, it's enticing to keep spending towards other trips, and there are benefits such as free checked bags. The Ultimate Rewards-affiliated cards from Chase are nice for giving a choice between a cash rebate and adding points/miles to other programs to top off awards.

For mostly U.S.-domestic travel, the opening bonus of two cards from Southwest got me most of the way to a Companion Pass, giving lots of points for trips for me and letting my wife go with me at no cost in money or points. The required opening spending on the two cards, $4000 that I would have spent anyway, would have given me $80 on a 2% cash-back card, but here it gave me thousands of dollars worth of flights.
 
I am in a different market from the USA and we are feeling the changes being brought in by the banking sector at the moment. All the big banks are diluting the earn rate and then the transfer rate, so points per dollar are effectively being halved (or more) right now. I have just transferred millions of points over before the cut off date.

I run all our business expenses through our cc and we have been able to earn large numbers of points through this.

The value doesn't really come in for redeeming until you begin booking flights in business class, or above. Points per dollar is always less value in economy. The value of cashing in for gift cards etc is pretty poor in comparison.

Sojourner, I can only dream of a 3% cash return! That would be amazing with our spend rate. You guys in the US have amazing deals that's for sure!

We are a family so unless I can get 4pax in J from Australia (tricky) it's not worth us using the points. I am becoming more savvy and it does take work, just booked us to Rome next year and we fly out to Asia next month.

For us, it's definitely worth it.
 
I have had 2 around the world business class trips with Qantas on my husbands FF miles although it was a while ago now.
He has retired so not as many overseas flights. We now look for the cheapest business class fares and aren't loyal to any airline. Qantas is too dear but we have travelled with Qatar airlines a few times lately and like them.
Business class from Australia is an extravagance, but I regard it as part of the overall cost of our holiday.
 
This is the first time in many, many years that I'm buying a transatlantic ticket instead of having enough FF miles from American Airlines. My late husband was over 1 million (cumulative) and I accrued over 500,000 during the heavy flying years. My FF balance right now is 75k miles. I've never used FF miles for domestic tickets, because the value wasn't there.
 
A visit to the Flyertalk forum will quickly show how many people make a hobby (job?) out of chasing the latest sign-up bonuses, etc. Andrew although it is primarily a USA thing. Not doable in many countries. To me it is like 'couponer's who happily spend hours clipping coupons from supermarket flyers to go and get $200 worth of groceries and spend just $20. I don't question it is doable, I just question whether it is best use of my time. I prefer to find the best deal around and then stick with it for several years at least before I take another look around.

Also, I don't know about in the USA, but applying for credit cards repeatedly, can result in lowering your credit score in many countries. That may or may not matter to someone.

I am in Canada misstravelbug, not the USA. We pay for almost everything on our credit card and then pay in full each month. So the 3% does indeed add up over the course of a year. What's more, a fair percentage of what goes on our card also results in us 'double dipping'. That is when a purchase results in getting points/cash back from more than one source. This happens when we buy gas from a specific chain, a supermarket chain and a drugstore chain.

FF points are a no lose proposition as I said, but not to be confused with Air Miles which is entirely different. If someone does fly frequently, it makes sense to join airline FF programs. The question is whether it makes sense to join Air Mile programs.
 
I agree, not to apply for cards for mileage -- I've had the same CitiCard for 20 years! I'm very careful about where/when/how I use that card.

I also have a Capital One card with a lower limit, which is the one I carry around when traveling away from home.
 

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