Frequent Flyer Tip – Assign Value Your Frequent Flyer Miles To Help Decide How to Use Them

Travel is NOT the easiest way to get miles. Credit Card sign ups with flyer miles programs are increasingly generous, so it’s not uncommon to get 50,000 or even more miles for a simple credit card sign up, often using cards sponsored by United Airlines, Delta Airlines, US Airways, British Airways, and more.

Thanks to credit card offers and frequent travel you may be sitting on a LOT of frequent flyers miles, but that doesn’t always mean you should use them up quickly.   Here are some tips on effective collection and use of frequent flyer programs and miles:

Collect more frequent flyer miles:
I’m amazed how many people don’t take advantage of frequent flyer programs, which will save a frequent traveler *tens of thousands* of dollars over a lifetime.     So the first tip is USE THESE PROGRAMS!      Second tip is  DON’T LET MILES EXPIRE!.      That usually involves simply spending a bit with credit card linked to your miles program, buying or gifting a few miles through the program, and other cheap approaches.    Even at the low valuation of a penny a mile, losing 25000 miles is like losing $250 cash and is often easily avoided.

Travel is NOT the easiest way to get miles.    Credit Card sign ups with flyer miles programs  are increasingly generous, so it’s not uncommon to get 50,000 or even more miles for a simple credit card sign up, often using cards sponsored by United Airlines, Delta Airlines, US Airways, British Airways, and more.     Although using these and other credit cards will often allow you to collect a few miles, a good trick if your record keeping is good is to cancel the cards after a year (before the fee kicks in) and then sign up again with the new offers that will come your way soon.    Depending on your credit and other factors, you can get hundreds of thousands of extra miles by simply signing up with different cards via different airlines over the course of a few years.   The best online resource I’ve found to help with this is The Points Guy.    Tips there are very helpful and he’s usually got the best offers current credit card offers highlighted and explained.

Using your miles wisely:
I like to assign a value to my miles to help compare offers.     I generally use a penny per mile but that may be somewhat low for most people.    I’d say .02 per mile would be on the high side.      For example if I can use 25,000 miles for a round trip but the ticket would cost me $350 I’d tend to use miles.    On the other hand if I’d need to use 50,000 miles for that $350 trip I’ll pay for the ticket.

Miles values will vary for different people since people have different levels of comfort (first class upgrades can be relatively cheap using miles vs cash), flexibility  (more flexibility means your miles will be a lot easier to use), inconvenience (miles are often somewhat trickier to use compared to booking a paid flight) and the fact that people’s time differs in value   (for example if you value your time at minimum wage and can spend more time looking for deals the miles may be worth *more* to you than if you value your time at, say,  $50+ per hour.

To get an idea of how many miles you’ll get for various trips, use the mileage calculator at Airport City Codes – just enter your two airports and add up the miles from different legs of the journey.


American Airlines AAdvantage Miles Expiration – extend mileage expiration with a donation

American Airlines Mileage donation program here:  is both a great cause and a good way to make sure your miles don’t expire unused.   Donations will extend your expiration date – usually to 18 months from the date of donation.     The minimum donation is only 1000 miles so this is probably the “cheapest” way to extend miles as the donation only “costs” you 1000 miles – a value of about $10-$15 depending on your flying and mileage program habits.      My personal rule of thumb *used to be* to use money when the cost of the ticket was LESS THAN a penny per mile used, but this has been complicated by the fact that I have a lot of miles now from credit card offers, ticket have become very expensive, miles tickets are HARD to get, etc.   I’m now inclined use miles whenever possible simply to avoid losing them.

In any case, be SURE to check your miles expiration if you have more than about 5000 miles in your account.   Fewer than that and it may not be worth the time to mess with miles now that tickets have become hard to get using these programs.    For those short on time and long on money I’d say under 10,000 miles may not be worth your hassle time, but obviously if you have over 25000 miles – basically a free round trip in the USA on many airlines – you’ll want to preserve those miles.

As always, the secretary disavows any knowledge of your mission.    Good Luck.

IMPORTANT: Defer the Expiration of your Frequent Flyer Miles

All the Airlines seem to be both giving away more and more frequent flyers miles but also making it harder to use the programs.    Through credit card offers, not to mention actually travelling on planes, you can rack up hundreds of thousands of miles – enough for many trips.   Unfortunately it’s not easy to use these so you’ll need to strategize a bit, plan travel far in the future to obtain most of the lowest miles deals, and MOST IMPORTANTLY, you’ll need to hang on to your miles.

I just used a nice offer by American Airlines to extend my wife’s miles for 18 months.   She gave away 1000 miles to the “Miles for Kids in Need” program at AA, and this kept her from losing the rest of them.  Here’s the link to AA’s charity miles giveaways:

Another way to preserve your miles is simply to buy 1000 miles for about $30 from AA.

One of the WORST things you can do is let them expire and then pay over a penny per mile to have them reinstated – unless you have a very specific use of your miles, in my opinion it’s not worth, say $200 to keep 20,000 miles.   Some would (wrongly) suggest that the calculation would be along these lines:    “You can get a $400-500 ticket for 25,000 miles so they are worth about .02 each”.    The problem, however, is that you usually CANNOT get a ticket easily with miles and also you won’t tend to have exactly the right number for a tickets, leaving some unused or you unable to use some.    So my rule of thumb is that miles are worth about 1-2 cents per mile assuming you travel and lot are will use them.

FYI “selling and buying miles” is a risky proposition.   I’ve not done this and the laws seem fairly complicated, but I think you risk losing miles if you try that game.

Calculating Value of Credit Card offers. Value of Mileage

As these tumultuous economic times continue many of us are once again seeing a flurry of credit card offers with many different sets of bonuses and conditions.

We thought it might be helpful to give a few simple rules of thumb for evaluating card offers.

1.  Just say NO to fees or high interest cards.    Even as general interest rates have fallen to some of the lowest levels in history, “normal” credit card interest rates and fees remain exorbitant and usurous in all but the legal sense. Credit card laws allow large fees for small trangression and huge interest rate caps, and are a great example of how market greed and government incompetence combine to create terrible conditions for most people even as they create opportunity for the clever among us).   Summary:  Avoid cards with annual fees.

2. PAY OFF your cards before due dates.    Even for credit cards with borrowing rates that are outrageous   (which, these days, is pretty much any rate over about 6%), you get a 0% loan from the time you buy to the time you pay IF you pay off the balance by the due date.     Do it.

3. DO NOT take “cash advances” on cards except at introductory rates and then ONLY if you’ll be paying it back as soon as the rates rise.   Cash advances, unlike purchases, usually start dinging you with interest the minute the check  or advance is processed.    Avoid these cash advances with one exception – low introductory rate offers can be used to your advantage if you are clever and calculating enough to pay off the balance as soon as it is due.  This is critical as the 0% offer can skyrocket to 20% or more overnight, leaving you with no deal whatsoever.    To complicate matters different cards have different dates calculations and often even representatives on the phone will not advise you correctly on when the rate skyrockets, so when in doubt pay early on these “cheap loans” from introductory rates.    ONLY do this if you have other sources (e.g.  low interest equity line of credit) from which to pay the card.   Letting an introductory rate “ride” as it skyrockets is a recipe for disaster.

4.  What are miles worth?    Consider mileage program miles to be worth about a penny when the program gives you a round trip USA plane ticket for 25,000 miles.   For example, if a card offers you 25,000 bonus miles consider this value to be $250 cash (.01 x 25000) .     Why this number?   Generally you can get a round trip ticket in the USA for 25,000 miles with some restrictions.     I compare the mileage ticket with paying 250-450 cash for a less restricted, easier to book ticket.    Also, cash is almost always better than less fungible forms of value like certificates so it is not reasonable to say a certificate worth a ticket is the same as the cash it would take to buy a ticket.  This is a rough measure, but it helps with the calculations when comparing credit card offers.

5.  SWITCH to “no fee” cards.    If you have a fee card or if you participate in an offer where the card is “free for the first year”, be aware that many cards will allow you to switch to “no fee” cards when you threaten to cancel.    Often, cards with a second year fee have great introductory offers  (we just signed up for 75,000 bonus miles from an AA Mileage card offer), but the catch is that after the first year you’ll be paying a huge fee.    In these cases consider avoiding the card altogether or, if the offer is great, call in after 11 months and insist on cancelling – often you’ll be offered a new “no fee” card.

6.  Keep good records.    Don’t play the credit card games unless you have good systems for keeping track of card due dates, offers, fees, etc.  Those with excellent credit can save thousands using introductory offers and rates, but only if they avoid the huge penalties and interest that follow mistakes in paying off cards or following directions.    Always remember that these offers are basically marketing tricks to get you “hooked”.  However unlike most other gambling environments there is a path here to net gains if you play carefully.