Frequent flyers often cringe at the idea of burning through their miles, but are they actually worth it? The short answer is yes. This calculator will help you figure out how much your frequent flyer points are worth in dollars and cents.
The “points value calculator” is a tool that helps users calculate how many points they will earn on their frequent flyer miles. The tool has been created by the Frequent Flyer Club.
Recalculating the value of frequent flyer miles
on December 6, 2021 by Gary Leff
The Points Guy made an intriguing attempt at valuing frequent flyer points using statistics.
They don’t disclose enough information about each airline’s routes. They only looked at trips that will take place within the following three months. They only looked at roundtrips from Thursday to Thursday, excluding basic economy rates. And it doesn’t seem that partner redemptions are included. As a result, the approach and data aren’t completely clear or complete.
Despite this, they got to some intriguing results. I would have had no objection if they had just said, “We’re estimating how much airfare your points will purchase in the next three months.”
- They valued American miles at 1.68 cents each mile, up from 1.4 cents before (I value AAdvantage miles at 1.3 cents)
- They increased the value of Delta miles to 1.48 cents each mile, up from 1.1 cents before. Delta miles are worth one penny to me.)
- They valued United miles at 1.13 cents each mile, down from 1.3 cents before (I value United miles at 1.3 cents)
The issue is that, as I describe in more detail below, they are looking at how much airfare a mile can buy, not ‘how much a mile is worth.’ You can’t buy nearly as much with miles as you can with cash (and get lower value for things other than travel when you redeem that way). Your miles do not earn you any interest. Miles have a higher chance of depreciation.
The Points Guy failed to account for all of the reasons that make miles less valuable than cash when calculating how much flight a mile might purchase. Surprisingly, they forgot to decrease their estimate based on the miles earned traveling on a purchased ticket against the miles gained flying on a redemption ticket, as well as the miles earned paying for a ticket using a credit card versus not using the card.
Here’s an attempt to quantify the discounts you should take into account when turning ‘how much airfare do miles buy’ into ‘how much are miles worth?’
- Let’s assume an average redemption time of 24 months, with a present value discount of 2.7 percent based on the 10-year Treasury rate of 1.4 percent.
- You should account for not just time but also depreciation risk, which we’ll say (generously) 5% over those two years.
- And since all miles are gained by ordinary members, the distance obtained is reduced by 5%. (rather than 11 percent for a top elite)
- When you don’t purchase the paid ticket, you’re giving up 2% of your credit card earnings (even though Membership Rewards are worth 1.7 cents apiece so 5x earning with a Platinum card would mean giving up 8.5 percent ).
- Also, keep in mind that miles that may be redeemed for flights aren’t worth as much as cash. I’d accept a 10% discount here, but in a genuine market, you’d take a 20% discount when selling American Airlines gift cards, but just a 4% reduction when buying them at face value. Let’s say it’s just 4% of the total.
So let’s give the valuations a generous 19.7% discount – however a top tier elite buying with an Amex Platinum card may get a 32.2 percent discount.
The following is how a 19.7% discount affects their valuations:
- 1.35 cents each for American AAdvantage
- Delta SkyMiles are worth 1.2 cents each.
- 0.009 cents per mile with United MileagePlus
As I have said, the savings here are likely insufficient, but AAdvantage miles and SkyMiles begin to appear more affordable when you consider factors other than ‘how much travel can these points purchase in the next three months?’
MileagePlus miles, on the other hand, seem to be valued lower than they should be, in my opinion, since the value of those miles is determined by international business class awards on partner airlines, which the TPG study does not appear to take into account. They’re ideal for Lufthansa, Turkish Airlines, and American Airlines rewards.
However, their study would be more useful to someone who did not redeem miles in this manner. However, this should affect the advise a site like that offers on which credit card to use for consistency’s sake. In most cases, a person who values miles the way they’ve spelled out should be earning cash back.
More From the Wing’s Perspective
Watch This Video-
The “how much are aadvantage miles worth” is a question that has many answers. The answer will depend on the type of frequent flyer miles and the airline.
Frequently Asked Questions
How much is a frequent flyer mile worth?
A: That is a tricky question because the value of frequent flyer miles can fluctuate depending on what airline you are flying with. Some airlines might offer additional perks that make their miles more valuable than others, and also how often you fly with them.
How much is 40000 flyer miles worth?
A: You can use this tool to find the answer, https://www.mileagecalculator.net/
How much is 500000 miles worth?
A: 5,000 miles is worth about $3.
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