How to Decide if You Should Use Airline Miles

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I write very frequently about earning airline miles via methods like using rewards credit cards, doing online shopping via shopping portals, via actual travel, various promotions, and more, but that is only half the equation.  There is a very strong argument that earning is actually the easy half of the equation, and the larger challenge is deciding when and how to redeem those miles.  It doesn’t take a genius to swipe a rewards earning card to rack up miles for purchases, but it absolutely takes strategy to redeem them for their maximum value (though thankfully for me genius status is not required for that either).

While everyone’s situation will always be different and there is no 100% fool-proof equation on when you should and should not redeem miles, here are five things to take into consideration when you decide if you should use airline miles for your airfare purchase.

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Do you have the cash for the ticket(s)?

First things first, let’s be practical.  I know very well how tight budgets can get, and the first thing to consider when deciding whether or not to use miles or cash for an airline ticket purchase is to simply decide if you have the cash for the tickets at all.  If your budget does not currently allow for an out-of-pocket airline ticket purchase then nothing else I’m going to mention matters if you need/want to travel now.

Especially during the months that my husband was between jobs and we either had a baby on the way or were caring for a newborn, the decision to use cash or miles was very easy since it was use miles/points or don’t make the purchase.  I loved that miles made it possible to do things that otherwise would have literally been absolutely off-the-table during that time.

What is the selling price of the ticket and the related cents per mile (CPM) value of the redemption?

Once you have determined that you could use cash for the tickets if you wanted, it is time to do a little math.  You need to determine the value you are getting for your miles if you use them.  Sometimes this is a fixed value where points are always worth one cent each towards airfare purchases.  However, if you are using traditional airline miles such as United or American miles then they don’t have a fixed value, but instead awards are priced using award chart zones.  To add some complexity there are also usually at least two different potential award prices for the same ticket – a standard and saver price, though some airlines have gone to having many potential prices for the same origin and destination.

This means that if you are using traditional airline miles then price out what the exact award you want will cost on your preferred dates/times, and then also price out what the ticket would cost if you were to purchase it with cash.  Unless you would only travel on that exact award flight, I would price out all acceptable cash options so that you can really determine the cheapest cash price compared to using miles.

Once you have the cash and mileage totals then take the cash price of the lowest priced flights that would work, and divide it by the number of miles your award will cost you.  If the airline ticket would cost you $370.00 or 25,000 miles then that gives you a cents per mile value of about 1.48 cents after you divide the price by the mileage cost.  In other words, your miles are worth 1.48 cents each towards that award.  Depending on what type of airline miles you are using that is neither a horrible or wonderful redemption value –  it is one of those redemption that is right on the line as to whether or not I would personally use cash or miles.

While this will vary from person to person, in general I would not redeem airline miles for less than one cent each unless there was absolutely no other way for me to secure the ticket.  The closer you get to two cents in value per mile the better.  Anything close to 1.5 cents in value is probably a decent use for most miles and points collectors that aren’t exclusively interested in premium cabin redemptions.

Was this the intended purpose for the miles?

Another thing to consider is whether or not this trip is what the miles were earned for.  I recommend to beginners that your ability to effectively collect airline miles will be directly tied to setting your goals for how you want to use them.  Once you get a few redemptions under your belt this becomes less crucial, but even I often have some trips in mind with my various types of airline miles.

When deciding if you want to redeem miles make sure and think through whether or not this will make it harder for you to then secure another award you may be working towards.  For example, if you want to use miles to go to Orlando and you have United or Southwest points to work with, but you also want to use miles in a few months to go to Europe, then stop for a minute and make sure that you won’t be messing up your Europe redemption by using United miles to get to Orlando.  Instead you may want to use your Southwest points for Orlando since they can’t help you with Europe, and then and save your United miles for their intended purpose.

Are you missing out on miles, promotions, or elite status?

When you redeem miles you are often then not earning miles towards a future redemption, a promotion, or towards elite status.  For infrequent leisure travelers this really isn’t a big deal, but if you travel frequently, are looking at a long haul flight that would earn lots of miles in a traditional frequent flyer program, or you are working towards elite status this is a real factor to consider.  Some people like to take the number of miles the flight would have earned and include that total when calculating the CPM return we mentioned earlier.

In the example above let’s assume the $370 flight would earn 1,500 frequent flyer miles.  Then, instead of dividing $370 by the 25,000 miles the award will cost you instead divide by 26,500 miles since that is the actual difference in miles for your account between purchasing the ticket or redeeming.  In that case your CPM drops to 1.39 from the original 1.48.  If you are new to miles and points don’t worry too much about that, but just be aware that there is usually an opportunity cost for redeeming miles since you are then usually not earning.

 

Are you using the best type of mile possible?

Rarely is there only one type of mile that you can use for a particular award, so when deciding whether to use miles at all it helps to be sure that you are using the best type of mile possible for that particular award.  Again, if you are brand new to miles don’t get hung up on this, but it is something to consider as you learn more about the various programs.

I’ll use a real life example as we recently used miles to book my mother-in-law to Texas to help out with Baby S.  Using cash was ruled out quickly as we have recently spent quite a bit on airfare and need to chill out on that front for a bit, plus tickets were about $350 for her dates which isn’t exactly a bargain basement price.  She needed to get from Kansas to Houston, and I had all of the popular types of miles to work with.  Her one-way flight down would have been 12,500 American miles or 10,000 United miles via saver awards.  It would have actually been fewer Southwest points, but since I am the one doing the airport pick-ups/drop-offs, I ruled out driving through Houston and into Hobby since my baby HATES the car and a couple hours of screaming is not worth it when there is a closer option.

By maximizing various award charts, we were able to fly her on American Airlines operated flights into our preferred airport for fewer than the 12,500 American miles quoted above by using the British Airways Avios distance based chart and spending just 9,000 Avios for the exact same flights.  So, instead of spending 12,500 miles we spent just 9,000 and as a result were able to maximize our award as much as possible and conserve more miles for future trips.

I would also add when deciding if you are using the best type of mile to factor in cancellation and redeposit fees, especially if you think your flight plans may not be 100% certain.

Now that you know the five things I like to consider when deciding whether to use miles for a particular trip, I’d love to know how you make the decision!

Editorial Note: The opinions expressed here are mine and not provided, reviewed, by any bank, card issuer, or other company unless otherwise stated.

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Comments

  1. Good advice in this post.

    I’m surprised (or maybe not) that you didn’t use Spirit points for the KC to Houston flight since it’s a non-stop and not that expensive. I’m sure it crossed your mind.

  2. I wouldn’t calculate the cpm the way you do. You say “If the airline ticket would cost you $370.00 or 25,000 miles then that gives you a cents per mile value of about 1.48 cents after you divide the price by the mileage cost”

    When redeeming miles, there is most likely a cheaper flight on *another* airline. You need to take *that* cheapest price and divide by the miles used, instead of using the price for your award flight

    The way you calculate it, you will often be fooling yourself that you are getting better value than you actually are

    • Cogswell, I do talk about that in the post and agree with you in principle. Perhaps I over-simplified that sentence, but you are right that you should take the cheapest flight you would be willing to take and use that amount to get a very accurate number of what you are saving. Sometimes it will be the same flight you are redeeming for and sometimes it won’t be.

  3. Although I think it would be fair to compare to the cheapest flight you would actually take – meaning if you are comparing a direct with miles to an indirect or to a very long routing on cash, but wouldn’t take it, I think it’s fair to calculate the savings vs. the direct (if that is what you would have bought). So not necessarily cheapest, but the cheapest that you would have bought even if on another airline.

  4. MP, it makes sense to revive this topic again since you last covered it a few years ago in your blog for the newbies on this site.

  5. Planning a trip to NYC. Budget is tight so using points even tho flight is cheap (under $400). Can’t transfer for anything decent so I’m going to pay with UR points on virgin america. Get some points. Cost me about 2000 points more than transferring to mileage plus, but get points and a non stop flight on a schedule I want. Happy not happy. Ha

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