NYTimes On Non-Airline Redemptions
Over at the New York Times, they seem to have discovered that airline miles can be used for non-airline awards. Actually, this would suit me perfectly, as I acquire few miles from actually traveling, why should my awards be travel related. In reality, the author learns that the third party awards from chocolate to hotel stays, rarely produce value comparable to an air travel award. This is true unless you compare your third party award to an overpriced standard award, rather than the traditional awards.
These days, many awards are so rare and/or overpriced, that the mileage program becomes pointless for air travel. I am looking at you Delta. Converting your useless miles into merchandise only makes sense when you are accumulating miles through actual travel. If you have been getting miles through credit card spend, you are wasting your time redeeming miles for merchandise at .6 cents per mile. You would have been better off with a cash back credit card, or at least switching to an airline that still has decent award seat inventory, like Southwest.
The author mentions hotel and rental car awards. Hotel awards from airline programs are rarely a good deal when compared to the discounts commonly available. As I have shown, you should never rent a car with a loyalty point award, as your credit card will not provide insurance. Since purchasing additional insurance negates the value of the award, what is the point?
Surprisingly, the best use of non-airline award redemptions is clearing out orphan miles. The cardinal rule of airline miles is that they loose value every year. Worse, they expire with little or no notice. Let’s say you have 25,000 Delta miles laying around, and you are not planning on flying with them anytime soon. You check their award reservations system only to find that the theoretically “low” priced awards are just that, theoretical. Sure, you might be able to take that vacation to Buffalo in the winter, but a gift card seems like a better option. Sadly, you will find out that Delta offers $50 gift cards for an astounding 17,500 SkyPesos. That is a mere .28 cents per mile, but have you been to Buffalo in the winter?
If you have a Delta SkyMiles credit card, Gold or higher, you can use the “pay with miles’ option to get an entire cent per mile of value off of a Delta ticket. The only drawback is that you shouldn’t receive frequent flier miles for your flight, even if the vast majority of it was paid with cash. (I say shouldn’t, because the last time I used pay with miles, I actually did get the miles.)
The moral of the story is that you should always consider the value of your awards. Do you do a lot of flying? Or do you do more shopping? Certainly, if you fly more than three or four times a year, you may want to stick with Airline reward cards. But, in todays economy, sometimes gift cards and merchandise make more sense that airline travel.
