Spending Miles and Points

Getting miles and points are great but ultimately useless if you don’t understand the value of each point you’re redeeming.  Although you could figure out the cost with old school math, I don’t believe it paints the entire picture.  There is a difference in how much a point is worth vs. how much you value a point.  For example, a picture frame made by your child may have very little monetary value but is something you cherish and can’t put a price tag on. The same (although not as extreme an example) could be made for the price tag of points and their value to you.  If you have a family emergency and you don’t have the money to fly out to see them, those points are extremely valuable since it gives you the chance of being somewhere you may not otherwise be able to go.  However, someone else travelling to the same destination under a completely different circumstance may find it a better value to save the points and redeem them for something more worthwhile to them.  

The math is simple.  Take the retail cost of the flight and divide that by the number of miles/points needed to redeem.  So a flight that costs $500 with cash and 25,000 points has a mathematical value of $0.02 meaning each point is worth two cents in this case.  So is that good or bad?  That all depends on your situation.  We won’t get into how many miles you would earn with a bought ticket vs. unearned miles from a flight redeemed via miles.  Let’s keep it simple for now.  

Would you rather spend $500 cash to purchase the flight or save the cash and use points? 

Another thing to remember is that although ticket prices fluctuate with the time of purchase, point redemptions remain fairly constant.  Many airlines assign point values based on zones or regions and the time of travel isn’t a factor.  So a flight from the continental US to Asia will (typically) have the same point value redemption months before or a day before departure.  So, if you have a profession where you can’t really foresee vacation time too far in advance, this would a great way to get a vacation for a set price regardless of time.  Of course, the reverse it also true.  If you see a great special sale price, you might be more inclined to pay for the flight and save the points.

Overall, it’s up to you to decide what a mile or point is worth.  The only thing I would caution against is losing sight of the reason behind earning points.  I think you should work toward a goal and then redeem them.  There’s no point in hoarding points just for the sake of hoarding them and you never know when the airlines may change the redemption value of those points.  Basically, if you have a ton of miles stockpiled and the airline suddenly decides to increase the redemption value, your buying power has greatly diminished.  

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