I often see attempts at valuing miles. On an airline like Southwest or JetBlue, it’s easy to do, since the price of a ticket in points is based on the cash cost of the ticket. Higher cash cost equals more points, and it tends to be a pretty consistent ratio.
It’s harder to do with the legacy carriers, where mileage awards are based on where you are flying. You may get a ton of value out of using miles for an expensive ticket, or very little value by using miles on a cheap ticket. But the old adage that airline miles are worth $.02 each no longer holds true. On average, that number should be somewhat lower, as programs have devalued the points over time.
United Offering Miles At 1.8-1.9 Cents Each
It’s not a terrible offer if you need the miles right now to book a trip. United is offering miles as low as about 1.9 cents each, depending on how many you buy. Naturally, the more you buy, the better your rate, with the best price per mile available when you max out the deal:
There’s a pretty easy answer to the question of whether you should buy miles. Answer the following question: Is the flight that I want available right now and would paying for it with miles be less costly than paying for it with cash?* If the answer is yes, feel free to move ahead.
Don’t Bank Miles
Miles don’t earn interest. They devalue over time, as the supply of miles greatly exceeds what the airlines allow you to do with them at a reasonable cost.
Also, don’t get fooled by the 75% bonus, 100% bonus or whatever else the airline is offering you. Your final purchase price should be how much you pay per mile, nothing else. A month ago, American Airlines offered a 75% bonus on its top purchase. In the end, though, the cost per mile with a 75% bonus was almost exactly the same as the price with United’s 100% bonus, since the base rates are different.
*Beginner’s Hint: There are two other things to remember. First, if you fly using miles, you don’t earn miles, so be sure to add back the number of miles that you would have earned if you do end up purchasing miles. Second, check with the airline to see when your miles will hit your account. The last thing you want to do is spend thousands of dollars for miles, only to have that great reward ticket disappear.
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