Buying airline miles usually doesn't pay, but might now
Some soon-to-expire deals may be worthwhile
Dear Cashing In,
I have miles in four different frequent flier programs, but not enough in any of them to take the trip I'm planning. I'm thinking about buying some miles. I know that's not the most economical way to get miles, but isn't it cheaper than buying the ticket outright? I'm sick of trying to keep them all from expiring. -- Cash Strapped
Dear Cash Strapped,
Buying miles is not usually a great return on your investment, compared to earning them the old-fashioned way (flying) or by using an airline reward credit card. If you can't justify signing up for an airline credit card to collect the bonus miles -- that'll get you your ticket fast -- your best bet is to get in on one of those limited-time deals airlines sometimes offer on miles purchases. There are a couple going on now.
If US Airways is among the airlines you have frequent flier miles with, you may be in luck. The airline just announced a deal where you can get a 100 percent bonus for miles purchased, but you only have until the end of this month to take advantage. You don't have to register for this deal, but you do have to have been a Dividend Miles member for at least 12 days and the deal ends on Nov. 30.
Dividend Miles sell for $0.035 per mile plus 7.5 percent in tax in the U.S. Let's say you're 6,000 miles short of a domestic fare on US Airways. If you buy 3,000 miles this month, you get the next 3,000 "free" -- for a total of $105. Is that worth it? It depends on the price of the plane fare, for one thing. If it's a $500 ticket and you're not likely to be getting those extra miles any time soon by flying, then you just saved yourself almost $400. By the way, you can get up to 25,000 bonus miles by signing up for a US Airways MasterCard, which comes with a $49 annual fee -- that's more than enough to get you a domestic fare.
Here's an even shorter deadline: American Airlines is offering a 33 percent bonus for buying AAdvantage miles through Thursday (Nov. 15). This is better than the 25 percent they were offering last month. The minimum purchase is 6,000 miles, which gets you a 2,000-mile bonus. Total cost for those 8,000 miles is $165, not including taxes and a $35 transaction fee. So, if one of your frequent flier accounts is with American Airlines and you happen to have 17,000 miles in it, $200 would give you enough to purchase a first-tier domestic fare (25,000 miles). To put this in perspective, Citi AAdvantage Visa and MasterCard both offer up to 30,000 sign-up miles for a $95 annual fee (waived for the first year).
If you have to buy miles, you might consider shopping through a portal that will score you some extra points to use on miles. Deals fluctuate here, too, but one option is to buy them through OpenSky at the shopping portal MyPoints. In September, you could get 150 points per dollar shopping this way. At the moment, the offer is 50 points per dollar. According to Gary Leff at View From the Wing, 10,100 MyPoints convert to 5,000 United miles. That exchange costs a lot less two months ago when a $67 purchase via MyPoints would get you 5,000 miles (you now have to buy $202 worth of merchandise through MyPoints to get those same 5,000 United miles).
Right now, MyPoints is offering 2,500 MileagePlus miles for 5,200 points. That means it will take $208 in purchases (through their portal) to get 5,000 United miles, but you're at least you're buying something in addition to miles for your 200 bucks -- instead of just buying miles.See related: Buying airline miles: Is it worth the cost?
Meet CreditCards.com's reader Q&A experts
Does a personal finance problem have you worried? Monday through Saturday, CreditCards.com's Q&A experts answer questions from readers. Ask a question, or click on any expert to see their previous answers.
- Split travel cost between two rewards cards: Is your trip covered? – If you want to split the cost of a trip between two rewards credit cards, you might, or might not, receive full travel protection from both. To find out, read the terms and conditions of each card, or contact your issuer ...
- Can I be charged a fee for paying a low-fare flight with credit card? – If you buy a low-cost flight through an online travel agency, you might be charged a fee for paying with credit card -- even if the agency claims to have no "hidden" fees ...
- How long should you wait to apply again for an airline card you closed? – Interested in applying for the same airline credit card you closed in order to reap a sign-up bonus? Some card issuers offer no restrictions, but you might want to consider other card options first ...