When choosing an airline reward card, or deciding where to concentrate your card usage, you have to know what your points are worth. In the case of frequent flyer miles or points, airline industry guru Rick Seaney has composed this handy guide to the major U.s. airline program’s awards and “redemption fees”.

The missing information is what the reward is worth in dollars. In my experience, many of the entry level coach rewards, typically 25,000 miles, are increasingly worthless. I have had many frustrating experiences where, even when booking long in advance and being highly flexible, the airlines have essentially blocked out huge swaths of flights to many destinations. As travel writer Joe Brancatelli observed, “airlines have essentially turned frequent flier programs into unregulated lotteries: You never know when — or even if — you can use the miles for airline seats.”

These days, the 50,000 mile “premium” award is necessary to have any reasonable chance of reserving a domestic award. The good news, if you can it that, is that the skyrocketing cost of air travel has increased the value of mileage earned from a reward card. Conversely, earning miles by actually flying places has become less advantageous by comparison.

The best case for using your airline reward card is when you are flying in business or first class internationally. When you redeem 25,000 or 50,000 miles for a domestic coach award, it is typically worth $500 to $1000, or 2-4 cents per mile. Your overseas ticket in business class, typically costs 100,000 – 200,000 miles, yet would cost you $4,000 – $10,000, or about 4-6 cents per mile. Obviously, this is a vast simplification and there are too many factors involved to mention here, but as a rule, premium international travel almost always has more value per mile or point than any domestic award. To see for yourself, check out the airfare in each class of service to your chosen destination, and then look up the points required for their corresponding award. It is a safe bet the fare to points ratio will always be higher in business and first class.

The downside

Premium travel awards are not for everyone. Sure, we would all prefer to travel up front, but there are several rational reason to fly coach. For example, those with more vacation time than points might rather take two trips overseas in coach, rather than one in business. Premium travel, while a better deal, still requires over 100,000 miles in most cases, which is often well beyond the means to of many travelers ability to accumulate in the long term. Finally, some just don’t see such a huge advantage of siting in big seat for a few hours and a fancier airline meal. Those include families traveling with children, people with special dietary needs, and those passengers lucky enough not to fill up their coach seat.

Conclusion

If you are planning on purchasing premium international travel, earning miles on your reward card is almost always more valuable than earning a cash reward. For the rest of us, as they say, your mileage may vary.

This entry was posted on Friday, September 12th, 2008 at 22:00 and is filed under Maximize your Credit Card Rewards. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.