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My family collects airline miles so that we can pay for flights we otherwise couldn’t afford to buy with cash and make certain flights far more comfortable than they otherwise would be. However, not every single flight we take is paid for with miles, so we have to decide which ones get paid for with miles and which ones get paid for with cash every time we book a trip.
Sometimes it is very easy to decide which flights to buy with miles or cash, but sometimes it is a much harder call. Here are the things we consider when deciding whether to pull out our credit card or our frequent flyer account number when it comes time to pay for the flights.
Check Award Availability and Prices:
Using miles is only an option if there is award availability (hopefully saver availability), so before you anguish over whether to use miles or cash, check to see if there is award availability to where you want to go. If your dates are flexible, then there will be a greater likelihood of there being saver award availability than if you need to travel on a certain date. While you are checking for award availability, also double check to see how many miles are required for the award you need.
Another thing to check early on is the selling price of the flight. A pretty easy site to use to compare airfare prices is hipmunk.com. I also like to use ITA Matrix, especially when I have flexible dates.
How Many Miles and Dollars Do You Have:
Once you know the prices for using cash and miles, you need to decide if you have that amount to spend. For example, if your budget is pretty tight right now then the scales may tip to using miles, whereas the scales may tip to using cash if you are running short on miles or are saving them for a specific future redemption. Even if it is otherwise a relatively poor mileage redemption, if you don’t have the available cash to pay for the ticket then miles might be the only way to get the ticket you need.
Calculate the Cents per Mile:
Once you know the selling price of the ticket in both dollars and miles, and assuming that you have either the cash or miles to pay for the ticket, you need to do some calculations. Most people who have been in the miles world have a minimum amount of value they like to get for their miles in order to use them. For me that minimum is around 2 cents per mile for an airline mile, but for some it is closer to about 1.5 cents. For easy math, I’m going to go with 2 cents per mile for these calculations.
What this means is that say you want to book a domestic round trip airline ticket that is available for 25,000 airline miles, the selling price of the ticket would need to be about $500 for me to want to spend miles for the trip. If the selling price is $500 and the number of miles required is 25,000, then that is getting 2 cents of value per mile ($500 divided by 25,000 miles). I’m not going to spend 25,000 airline miles that are quite valuable to me on a domestic round trip ticket that is selling for $250 and giving me a return of 1 cent per mile. In that case, I would rather buy the ticket, save the miles, and earn both redeemable and elite qualifying miles on the trip.
You need to decide what your minimum value is for airline miles as that will make these type of decisions a bit easier, and it will also help when deciding whether to earn miles vs. using a cash back or fixed value points type of card for purchases. One quick way to get a decent idea of how you value your miles is to decide how much that 25,000 miles domestic round trip ticket would have to cost in order for you to want to use miles. For me, it is close to $500. If for you it is about $350, then you might be valuing your miles at around 1.4 cents each. This calculation is trickier when redeeming for international or premium cabin travel.
I do want to add that if you are working with points in a fixed value program such as Southwest, JetBlue, etc. then this decision is a bit easier as the points already have a fixed value within the program, so you don’t have to come up with one on your own.
Take Into Account Elite Status and Earning Miles:
This one won’t apply to everyone, but it does apply to some of us who do fly a fair amount on paid tickets each year. One thing that I like to do when tickets that are on the line of whether to use miles or cash is to use cash to buy my tickets, and use miles for my daughter and/or husband’s ticket to keep the overall cash price lower. I have elite status with United, and use that status to the benefit of my whole family when we travel, so I need to fly a certain number of miles on United to keep status. I also earn a 100% bonus on redeemable miles on United thanks to my elite status, so flying on paid tickets is more rewarding to me than to my daughter who has no status. Those facts means that I’m willing to spend a little more on my paid tickets than on my daughter’s since she doesn’t have (or need) elite status. This does mean we aren’t on the same reservation, so that can make some things harder, but it is a strategy I use from time to time.
Use Companion Tickets:
Another thing to consider when deciding how to pay for a given trip is whether you might have a discounted companion ticket you can use for your family members to fly for less thanks to one of your rewards credit cards. For example, each year I get a $99 companion ticket via my US Airways MasterCard that will allow up to two people to fly with me for $99 + taxes/fees each on US Airways operated flights in the lower 48 and/or Canada.
We used this last year to fly to North Carolina during peak summer prices. My ticket cost about $450 round trip on US Airways, which is on my line for using miles or cash, but since I was able to get my daughter and husband’s tickets for a little over $100 each, it made sense to buy the three tickets for $700 total than spend 75,000 miles and get less than one cent per mile value for our miles.
Use Fixed Value Points:
Another really good option to consider when deciding whether to buy the ticket with cash or miles is to take the middle road and use fixed value points. This way you can take advantage of when airfares are lower, earn redeemable and elite qualifying miles, and still keep your cash firmly in your wallet. Two cards we have that provide that option are the Barclaycard Arrival Plus™ World Elite MasterCard® or US Bank FlexPerks Travel Rewards Visa Signature.
The FlexPerks card is a bit trickier to maximize as you get the most value for your points when you are redeeming for an airline ticket that costs as close to $400, $600, or $800, etc. as possible. Anytime an airline ticket is close to $400 my thoughts turn to using these points as that is when you get the best value from them. The Barclaycard points are even easier to use as you can redeem them toward any travel expense, including airfare, in any amount starting at $25. You don’t have to have enough points to cover the whole cost of the airfare charged on your Barclaycard, as long as you are using at least 2,500 points ($25 value) toward the ticket. You also will then get 10% of the redeemed miles back when you are using them toward travel expenses.
Miles Might Give More Flexibility:
A final thing I consider in deciding whether to use miles or cash is whether I might get more flexibility if I use miles than cash in some situations. Thanks to my elite status I don’t have any fees for cancelling, changing, or redepositing awards with United so that is very helpful if I’m not 100% certain about my plans. Even if you don’t have elite status, there can be some cases where miles are more flexible than most reservations purchased with cash. For example, with Southwest you can just refund or change your points reservation with no fees or penalties. Even with cash reservations via Southwest you can change with no fees, but they aren’t going to just give you your money back if you are cancelling or changing to a less expensive reservation (you will get a voucher in your name to use for future travel).
There isn’t always a perfect answer on whether to use miles or cash for a given ticket, but these are some of the things we consider when making that decision. How does your family decide whether to use cash or miles?
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