Redeeming miles for gift cards: Usually, you lose

Use miles for travel to get the most value

Sienna Kossman
Personal finance writer
Statistics enthusiast focused on data-driven content

Why you shouldn't redeem your miles for gift cards

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Before you redeem a hefty cache of airline rewards points toward a gift card, think twice. Just because you can spend your miles on things besides travel doesn’t mean you should.

To get the most value of your hard-earned airline rewards, it’s usually best to use miles and points for what they were designed for: travel.

“Each airline or credit card provider will determine what the value proposition or benefits are for their own card, but flight rewards can indeed be advantageous in an airline credit card partnership since the airline is in control of its own costs and the credit card it is subsidizing,” said Caroline Papadatos, senior vice president of global solutions for LoyaltyOne.

How much are my miles worth? Let's do the math

The value math is pretty straightforward, according to Tim Winship, editor-at-large for SmarterTravel.com and founder of FrequentFlier.com. “Miles earned in an airline program and redeemed for flights are generally worth between 1.5 and 2 cents apiece,” he explained. “However, when those miles are redeemed for consumer goods or hotel stays, they're typically worth far less than a penny apiece.”

CreditCards.com research found in most cases, airline credit card rewards are worth twice – if not three times – as much when put toward flights or other travel redemption options. (See chart below.)

Travel writer Jenny McIver Brocious and her husband recently purchased flights to the Caribbean for February and were able to cut flight costs significantly by redeeming miles.

“The best fare on Delta was $750, but a mileage ticket was only 35,000 miles. That one is a no-brainer,” she said. “Assuming a $100 value per 10,000 miles, we got those flights to the Caribbean for less than half the normal price using our miles.”

Meanwhile, “a $250 Delta gift card goes for 35,700 miles, while a $250 Tiffany & Co. gift card goes for a whopping 52,000 miles,” she added.. “In both cases, you’d get a much greater value for the miles by redeeming them for flights.” 

The real cost of 'free' gift cards

Don’t forget that you have to spend money to earn miles. Most major airline credit card programs give cardholders 2 points or miles for each dollar spent on airline-branded purchases and related travel expenses, but then only 1 mile or point per dollar spent everywhere else.

For example, if you’re a Frontier Airlines World Mastercard holder and only use your card for Frontier travel purchases, you’ll have to spend $17,599 to earn enough miles for a $100 Target gift card. If you use that card for non-Frontier travel purchases, a $100 Target gift card could cost you upward of $30,000.

Suddenly, that “free” gift card isn’t so free after all.

However, there may be some circumstances in which redeeming travel rewards for non-travel purchases makes sense. Maybe you can’t spend enough money to achieve the travel award you want before your points expire, or maybe you just aren’t a frequent traveler anymore. Utilizing your miles and point redemption options for other types of purchases allows you to take advantage of the rewards you earned.  

“While travel is aspirational, you also have to be realistic about your lifestyle,” Papadatos said.

If you’re routinely seeking non-travel reward redemption options from an airline credit card, it might be time to apply for a new rewards credit card that better fits your spending habits, such as a general cash back credit card.

“If you travel for business, airline programs probably make sense, especially if you fly or spend enough to reach the highest status tiers where you truly get recognized,” Papadatos said.

For everyone else, there are other rewards cards better designed for you. “Look at the different offers from credit card providers and select one that is relevant to your lifestyle, your spending and your expectations,” she added.

Cost of gift cards using miles/points versus their value in flights

Still on the fence about using your miles for a gift card? To give you an idea of just how much your airline rewards aren’t worth when it comes to redeeming them for gift cards, we’ve made value comparisons based on major airline credit card programs. The chart below compares the miles or points cost of a gift card to the dollar value of the same rewards when put toward flights:

Card Type of gift card Cost in credit card miles/points How much do you have to spend with card to earn that many miles/points? What’s the monetary value of this many points/miles for flights?
Delta
(Gold, Platinum and Delta Reserve American Express credit cards)
$100 American Express gift card 21,500 SkyMiles  At least $10,750
(2 miles earned per $1 spent on Delta purchases, or 1 mile per $1 spent everywhere else)
Approximately $258, based on a November 2017 estimate that each mile is worth $0.012
Southwest Airlines
(Southwest Airlines Premier and Plus Rapid Rewards Visa credit cards)
$100 Amazon.com gift card 10,000 points

At least $5,000
(2 points earned per $1 spent on Southwest Airlines flights and hotel/rental card partner purchases, or 1 point per $1 spent everywhere else)

Approximately $150, based on a November 2017 estimate that each point is worth $0.015
American Airlines
(Citi AAdvantage Executive and AAdvantage Platinum Select, AAdvantage Gold, and AAdvantage Bronze Mastercards)
 $100 Target gift card  24,638 miles

At least $12,319
(Earn 2 miles for every $1 spent on eligible American Airlines purchases, or 1 mile per $1 spent everywhere else)

Approximately $344.93, based on a November 2017 estimate that each mile is worth $0.014

Frontier
(Frontier World Mastercard w/ annual fee and Mastercard w/out annual fee cards from Barclaycard)

 $100 Target gift card  35,198 EarlyReturns miles

 At least $17,599
(Earn 2 miles per $1 on FlyFrontier.com purchases, and 1 mile per $1 on all other purchases or 1 mile per $2 spent using no annual fee card)

Approximately $387.18, based on a November 2017 estimate that each mile is worth $0.011

United
(United MileagePlus Explorer card and MileagePlus Club cards from Chase)

 $100 Amazon.com gift card  15,625 miles

At least $7,813
(Earn 2 miles for every $1 spent on tickets purchased from United, or 1 mile per $1 spent on all other purchases (1.5 miles for Club card holders)

Approximately $234.38, based on a November 2017 estimate that each mile is worth $0.015

Source: Gift card cost information retrieved from major airline and card issuer websites and spokespeople. Points and miles valuation estimates courtesy of ThePointsGuy.com’s November 2017 valuations.

Note: Alaska Airlines and JetBlue do not offer a miles redemption option for gift cards.

Cost of gift cards using miles/points versus their value in flights

Still on the fence about using your miles for a gift card? To give you an idea of just how much your airline rewards aren’t worth when it comes to redeeming them for gift cards, we’ve made value comparisons based on major airline credit card programs. The chart below compares the miles or points cost of a gift card to the dollar value of the same rewards when put toward flights:

Card Gift card Cost in mile or points Spend required / Monetary value
Delta
(Gold, Platinum and Delta Reserve American Express credit cards)
$100 American Express gift card 21,500 SkyMiles $10,750 / $258
Southwest Airlines
(Southwest Airlines Premier and Plus Rapid Rewards Visa credit cards)
$100 Amazon.com gift card 10,000 points $5,000 / $150
American Airlines
(Citi AAdvantage Executive and AAdvantage Platinum Select, AAdvantage Gold, and AAdvantage Bronze Mastercards)
 $100 Target gift card  24,638 miles $12,319 / $345

Frontier
(Frontier World Mastercard w/ annual fee and Mastercard w/out annual fee cards from Barclaycard)

$100 Target gift card 35,198 EarlyReturns miles $17,599 / $387

United
(United MileagePlus Explorer card and MileagePlus Club cards from Chase)

$100 Amazon.com gift card 15,625 miles $7,813 / $234

Source: Gift card cost information retrieved from major airline and card issuer websites and company representatives. Points and miles valuation estimates courtesy of ThePointsGuy.com November 2017 valuations.

Note: Alaska Airlines and JetBlue do not offer a miles redemption option for gift cards.

See related: Giving the gift of flight with airline gift cards, Rack up card rewards with holiday bonuses, perks


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Updated: 10-22-2018