So I thought about making a BuzzFeed-Style title for today’s post. Here were a few ideas:
The 5 Worst Ways to Redeem Your Points and Miles (You’ll Never Believe #4)
He Tried to Redeem His Miles for What??
Man Tries to Buy a TV with Miles. What Happens Next Will Amaze You!
Don’t those titles make you want to click and find out what happens? I mean how could you continue along with your day without knowing what #4 is??
But then I remembered that you, my readers, are sophisticated individuals who don’t fall for those tricks. Which is why you would never think of redeeming frequent flyer miles/points for any of these 5 common traps:
1. Statement Credits
While some credit cards are specifically designed to provide cash back rewards in the form of statements credits (Chase Freedom, DiscoverIT, etc.), most credit card rewards are better spent on other redemptions.
Let’s take a look at the Chase Sapphire Preferred as an example.
You can redeem Ultimate Rewards Points (earned by your Sapphire Preferred) for statement credits at a rate of 1 cent per point. So for example, 40,000 points would give you $400 cash back.
When used to book travel, however, those same 40,000 points would give you $500 in travel booked through Chase and upwards of $3,000 of travel when you transfer them to one of Chase’s many transfer partners.
So when it comes to credit cards, cash is not always king.
2. Gift Cards/Merchandise
I get dozens of emails every week from “points gurus” who brag about redeeming their points for things like TV’s and restaurant gift cards. Every time I read one I am tempted to respond and thank them for wasting their points for such low value redemptions.
After all, their careless use of miles is one of the primary reasons why travel hacking exists.
Let’s take a look at an example.
You can buy a Microsoft Xbox 360 250GB Kinect Bundle for 108,100 United Miles via the United MileagePlus Mall.
That same product (with more storage space) costs just $299.99 on Microsoft.com.
This implies a value of just .2 cents per point, which is one of the lowest per point values that I have ever seen.
For comparison, I took an even smaller amount of United miles and showed you how you could use them to book a $5,816 ticket to 2 separate European destinations in April.
The per mile value of that ticket is almost 20 times greater than that of the Xbox.
3. Rental Cars/Hotels
Many people don’t realize that you can use frequent flyer miles to book hotel rooms and rental cars, and that is probably a good thing. Many times these redemptions value your miles at .7 to 1 cent a piece, which is well below their value when used for booking flights.
This is the same concept that applies to merchandise so I won’t waste your time covering it again.
20,600 American Miles for a $149 hotel room is a terrible value for your points.
4. Buying Cheap Flights with Miles
This subject came up last week while I was helping one of my clients book a trip to Hilton Head. He wanted to spend 40,000 US Airways miles to book a round trip flight from CLE to SAV. I ran a quick search and found his exact same itinerary for $394 on USAirways.com.
While getting a $394 flight for free is great, those 40,000 points could be redeemed for a number of more expensive flights. In fact, I was able to use the same amount of US Airways miles to score a flight to Paris that would have cost $982.
5. Transferring Miles/Points to Friends
Transferring points or miles to other people’s account is almost never a good idea. It typically costs 1 to 2 cents per mile to complete the transfer, which is likely more expensive than just paying for the flight with cash. Transfers are also hit with a number of other hidden fees that can really add up.
Most points/miles transfers are done by people who mistakenly think that they cannot book award flights for anyone but themselves. This is a rookie mistake, as just about every major airline in the world will allow you to use your points to book flights for other people.
That’s all for today.