When You Should Think About Buying Miles

If you have a US Airways Frequent Flyer Account, it seems every month you get offers for a 100% Bonus on Purchased Miles. In fact, just yesterday Morning I received the following email.

99% of the time these offers are still a terrible deal so I don’t even open them. This time however, I decided to check it out so I opened the link in the email.

It did ask me to Log-In, so the offer might be targeted but I am not sure.

Normally US Airways sells Miles for 3.5 Cents per a Mile, so 100,000 Miles would cost you around $3,500 + Tax.

With this promotion, you get a 100% Bonus, so if you purchase 50,000 Miles for $1,750, then you get an additional bonus of 50,000 Miles. Basically you are buying 100,000 Miles for $1,750 + $131.25 in Taxes and Fees, so a Grand Total of $1,881.25.

The basic rule of thumb when buying Miles is that anything under 1 Cent per a Mile is a great deal.

At 1.88 Cents per a Mile, even with this 100% Bonus, for most people it still doesn’t really make sense to buy the Miles given how easy it is to earn Miles via Credit Cards.

When It DOES Make Sense To Buy Miles

That being said, there are a few times when it does make sense to purchase Miles at a discount.

1. Top Off An Account

For any of you that recently signed up for the US Airways Card and got 40,000 Miles after spending $1 on the Card, you may be wondering how to effectively use those Miles.

While 40,000 Miles is more than enough for an Off-Peak Award to Europe for 35,000 Miles, if you want to go to Europe in the Summer, it will cost you 60,000 Miles.

With this 100% Bonus, an additional 20,000 Miles (10k + 10k) would cost you $350 + Taxes & Fees. Although that does sounds like a lot, a typical Summer Economy Fare to Europe can be anywhere from $1,000 to $1,500, so $350 is still a steep discount.

2. Miles For Family Members

As easy as it is to get Miles from Credit Cards, there certainly are limitations on how many times you can get the same Card, etc, which may limit how many Miles you can earn. 

On the majority of Trips that I go on, when I take someone with me, I usually end up paying for their Ticket with Miles because the price of a Revenue Ticket is outrageous.

Although I earned over 500,000 Miles last year, spending 100,000 – 140,000 Miles per a trip on Award Tickets can quickly deplete your balance.

Therefore I can only imagine if you are trying to use Miles and are traveling with a Family of 4.

Although the 2 Adults in the Family can sign up for Credit Cards, the Children obviously cannot.

For example if you wanted to take your Family of 4 on a Domestic Trip, that would set you back at least 100,000 Miles (25,000 Miles each).

For a trip to Europe, that would cost you at least 240,000 Miles (60,000 Miles each).

And for Asia, that would be at least 320,000 Miles (80,000 Miles each).

While it is possible to earn that many Miles in a single program solely with Credit Cards, it can be difficult. 

When my Parents and I went to India in Business Class this past December, it was 120,000 Miles EACH, so 360,000 Miles total. All 3 of us had signed up for Credit Cards, so it wasn’t a big deal, but if my younger Brother wanted to come, we certainly wouldn’t have had enough Miles for him since that would be an additional 120,000 Miles.

The reason I bring all this up is because with these targeted 100% Bonuses, many times it is cheaper or close to the same price to buy 100,000 Miles rather than purchase an Economy Ticket.

Many of my Parents Friends go with their Families to visit India every year. Even in my Parent’s case, when we were younger and would go to India, they would use Miles for 1 ticket, and then purchase 3 tickets out of pocket. Back then it was around $1,000 a ticket in Economy, so at least $3,000 out of pocket.

In recent years though, the price of Airfare has gone up substantially.

For example, if you were going to India in June, the cheapest Economy Ticket is $1,871.

However if you bought Miles via this US Airways Promotions, it would be around $2,100 for 120,000 Miles (Although there are yearly caps on how many Miles you can buy, so be sure to check that first).

So for about $200 more than what you were going to pay for a Coach Ticket, you could be flying in Business Class!

For Europe in the Summer it is a similar situation, the cheapest Flight I could find in June was $1,602.

Of course you could just spend $1,750 + Tax on this US Airways promotion and fly in Business Class for 100,000 Miles. Also there are cheap Paid Business Class fares to Europe in the Summer as The Points Guy pointed out.

3. You Live Outside The United States

My Cousin and her Husband, who live in Australia, want to come visit the U.S this Summer. Since it will technically be their Winter when they want to come, fares coming out of Australia are really expensive! I had another Friend who lives in Sydney that came back to visit last Summer and his Economy ticket was $2,500.

Since the majority of FFU Readers are Americans, it is easy to forget how lucky we are to get these INSANE Credit Card Sign Up Bonuses. No one else in the World gets offers like these. If you don’t believe me, just ask any Canadian Readers.

That being said the cheapest Sydney -> Chicago fare in August is $2,374 FOR AN ECONOMY TICKET!

Looking at the US Airways Award Chart, I can see that it is only 110,000 Miles in Business Class from the South Pacific to USA. So for around $1,925, they can each buy the 110,000 Miles they need and actually pay less to NOT fly in Economy!

Limitations

While for a few hundred dollars more, it is a no brainer to buy Miles and fly Business Class rather than pay the same price and fly in Economy, there are some limitations when doing this.

1. Yearly Caps On How Many Miles You Can Buy

Each Airline has their own caps on how many Miles you can buy in a year. US Airways from what I have read DOES NOT have this cap (please correct me if I am mistaken) and they seem to run promotions every month, so it shouldn’t be hard to reach the 120,000 Miles or however many that you need in each Account.

2. Award Availability

Unlike a Revenue Ticket, Award Availability changes on a whim and may not be able for the exact dates you are looking for. Additionally, depending on the Airline and when you are flying, 4 Business Class may not always be available.

When my Parents and I went to India, I flew back separately from them because there wasn’t 3 Award Seats available on any flights out of India.

Recap

While 99% of the time buying Miles is not a good idea, as you can see there are certain instances when it does make sense.

As always, the key here is long term planning. If you know you have a Family Trip to Europe coming up later in 2013, NOW would be the time to buy the miles and book it.

-Parag

Don’t ever miss another FFU Update or Travel Deal!

Follow me on Facebook, Twitter, RSS, or Email!