I’m thinking of changing credit cards. The card I use now gives me one mile for every dollar I spend. The one I’m looking at gives me one cent cash back for every mile.
Which is a better deal?
I understand that this could be subjective. One person might use the miles on a domestic route which costs a lot; someone else might use them on a route that’s much cheaper. FWIW I think we’re most likely to save them up for a splurge vacation: first class tickets to Europe or something like that.
I only use my Frequent Flyer miles for business or First Class travel overseas for precisely the reason you mention. Every program is different, so it’s hard to generalize. As a specific example, last year I used 140,000 miles for a First Class ticket from Chicago to Shanghai. The retail cost of that ticket was $14,001. What the FF miles really did for me is give me a comfortable trip. I could have squandered the same miles on about 6 domestic flights costing, in theory, as little as $50-100 each. So it becomes difficult to decide a real value.
I personally think the best bang for the miles is upgraded cabins on overseas flights. Even business class usually costs north of $5,000 to many destinations.
I had a credit card which essentially returned an airline ticket value of a maximum pf 2 cents/dollar spent; I used that one to buy a couple of tickets to Tanzania but 160,000 points (1 point per dollar) only got me $3,200 toward my tickets. I don’t even know if their reimbursement is that high anymore; I have not cashed in any more points off my balance of 100,000 or so.
I used to figure an airline mile was worth around $0.025, but it’s less now because of the restrictions, and it’s worth a lot less if you’re not an elite flyer because the restrictions are even more burdensome and expensive. The best use of miles is usually upgraded cabins. Buy a full fare coach ticket and use the miles to upgrade to business class. You’ll end up with a business class ticket for around a third of the price, but use half as many miles as buying it outright using miles.
For the airlines I fly, it usually works out that you can trade 20,000 miles for a round-trip domestic coach ticket, though I think there are some restrictions. I’ve been paying an average of $300 for round trip fares, so in my case each mile is worth $0.015 (or less, depending on how I can use these miles once I get enough…)
Now, if you’re interested in this sort of thing, airlines will pretty frequently run promotions where you can get a ticket for maybe 10,000 or 15,000 miles to some random place, sometimes car rental or hotel stays bundled in as well. Usually it’s a less popular or off season tourist destination. Not a bad deal if you can take spontaneous vacations and aren’t too picky about the destination.
Frequent flier programs seem to me to be like a more complicated version of that card you punch every time you buy a donut from the corner shop. Every twenty flights, get one FREE!
When I last worked as an asst. controller in a hotel, in 2006, the major airlines charged us 1.8¢ per mile. So almost 2¢ per mile. (This was Northwest, Delta, United and American)
If a guest stayed with us we’d give them (on qualifying rates) 1 mile per dollar spent.
So if a guest’s rate came to $199/night and they stayed 5 nights or $995 dollars we’d give them 995 airline miles. (We did not give miles for anything but room rate. We didn’t give miles for tax or room service or phone or whatever)
So 995 x 1.8¢ = $17.91 it’d cost the hotel
Since 2006 it’s probably gone up a bit.
So using this as a guide 25,000 airline miles is $450.00 (25,000 X .018)