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Doesn’t everyone love airline miles? Many people see them as free points to make flights cheaper or to cover them all together. This perspective leads to many wasting their hard-earned airline miles on flights that should have been purchased with cash.
Deciding between using your saved-up points and money in the bank is no trivial task, yet it can lead to a lot of savings.
When evaluating the best method for paying for a particular flight, there are a number of factors to consider in order to make the best decision for you.
1. What is CPM Of The Trip?
This may scare off many not-so-mathematically inclined travelers but knowing what your miles are worth is at the crux of deciding whether to use them. This is also important when choosing between travel to a co-branded airline card.
CPM is the gold standard for evaluating the value of your trip with miles. Cent Per Mile (CPM) is calculated by dividing the cost of the flight in cash by the cost of the flight in miles.
CPM = Amount of cash/number of miles
Let’s see how this works in practice. A round trip flight from New York (EWR) to LA (LAX) on United Airlines costs $304 according to Google Flights. If you were to purchase the same flight in miles through United, it would cost 15k miles plus a fee of $5.60. Using the formula above, the CPM of this trip would be about $0.02. How does this help me make my decision?
I’ll touch on this a little later. For those who don’t want to do the math manually, use The Points Guy Miles to Cash Calculator. This handy tool will give you the monetary value of your miles. In the scenario above, the value of the points is $188, meaning if the flight is less than $188, it should be purchased with cash, but if it is more like in this situation, it should be bought with miles.
2. What Airline Am I Flying?
For those who want to do the CPM calculations yourself, the next most important question is what airline are you flying. You want to get the best deal possible, so comparing the CPM of your trip versus the value of one mile is the best way to easily see this.
However, this is easier said than done as not all airline miles are created equal! Each airline values its miles differently and they often make it difficult to calculate this. The extensive work done on this topic has made this search easier, and the table below courtesy of NerdWallet provides an easy reference to compare your CPM to.
A general rule of thumb is if your CPM is higher than the average, it’s a good deal and you should pay with miles!
Let’s go back to the scenario above. We calculated the CPM of the trip to be just above $0.02. Since we are flying United, we need to compare the CPM to the average value of one United Mile, which is 1.2 cents or $0.012.
As this is less than the CPM of the trip, we see that we are getting more out of our miles than we would with cash, so paying with miles would be the better choice. Using the rule of thumb, the CPM is higher than the figure in the table, so miles should be used.
3. Am I Flexible?
Being flexible with your travel plans can tip the scales towards booking with points. Having extremely rigid travel plans leaves you with few or no options when picking a flight, and you may be forced to pay more than you should.
However, if you have a range of days where you could fly, there may be a sneaky deal in there where you can take advantage. Being flexible allows for more optionality, and when you’re trying to get the most bang for your buck, more options is vital.
Using miles to book flights also helps with flexibility, as flights paid for with miles are typically refunded. This means that all of your points spent will be deposited back into your account, instead of being given a travel credit, which is typical of tickets paid for with cash.
This is helpful in situations where your plans change, as travel credits are often restricted to the original purchase.
For example, a person who bought a plane ticket to Europe from America in February 2020 would be very unhappy with a travel credit, as they wouldn’t be able to use the credit for years because of the pandemic.
If the purchase was made in miles, they could use the re-deposited miles for several domestic trips. Whether they want this or not, it simply gives more options.
4. Do I Have Any Big Trips Coming Up?
Another essential question you should ask yourself before booking a flight with miles is do you have any big plans coming up? Generally, you get better deals when you use miles for big international trips rather than smaller domestic trips.
As an example, I calculated the CPM of two different trips that leave on the same date at roughly the same time. The CPM of a United flight from Newark to Boston on November 4th is $0.0084 while the CPM of a United flight from Newark to London on November 4th is $0.0224. You are getting almost three times the cost savings by using the miles for the more expensive international flight.
There are also more options when flying domestically with the popularity of discount airlines, namely Spirit and Frontier. These cheaper alternatives are not available for international flights, so you are typically stuck with the much more expensive airline, where using miles is a much more efficient usage of resources.
Miles or Cash: Tips to Decide Which Is Better
Besides asking the right question to understand which option is better, there are a couple of tips that can be helpful:
Tip 1: Check, Check, and Check again!
I cannot understate how important checking on all websites to find the best deal possible. There are many places you can look, but I’d recommend Google Flights as the main resource to use, as they compile data from several different websites.
Airfare changes rapidly, so the best way to do research is to monitor prices for a few days and get an understanding of what prices typically are. Once you have a solid understanding, choose the flight that works best for you and is the lowest cost. Deciding whether to use miles or cash for this flight should be easy now with the CPM calculation!
If after checking repeatedly for the best flight at the lowest cost, and you pay with miles, your search doesn’t stop there. Since miles are refundable, keep looking around seeing if you can find a better deal after the flight is purchased.
If you happen to find a cheaper flight, you can rebook the flight and you wind up in the same spot as before, just with a few extra dollars in your pocket! Scouring the web in as many places as possible gives you the best chance to find a ticket in your price range.
Tip 2: If You See A Deal, Don’t Wait!
If a deal looks too good to be true, it may be, but take advantage of it. Airline prices change extremely quickly and certain circumstances can yield situations where airfare is much cheaper than it usually would be.
If you come across a situation like this, don’t wait to see if the price will stay at that level, because it likely will not. As long as where you are looking is a reputable site, such as Google Flights, I recommend snatching up that deal as quickly as you can.
In these situations when you find an incredible deal, purchasing with cash is the better option, as the CPM won’t be worth it. Check the CPM first just to be safe, but you will typically pay in cash.
Tip 3: Start Booking Early
Similarly, with being flexible on dates and time of your trip, starting to book your trip as early as possible gives you more optionality.
Prices typically go up as you get closer to the departure date, so booking early will get you a lower price compared to if you wait. This is obviously more beneficial for you, but it also gives you more opportunity to survey the market for tickets.
As I talked about in tip 1, having a solid understanding of what flights typically cost gives you a better opportunity to get a good deal. With more time looking at prices, you are more likely to find a once in a lifetime deal!
Tip 4: Check Your Cash And Points Balances
Before you spend any money or miles, its important to know what your current standing is. Based on how many miles or cash in the bank you currently have, your process of deciding whether to use miles or cash may be very different.
If you’re going through a rough patch and tight on cash but have a ton of miles saved up from all that traveling you’ve done over the years, you would have a lower threshold for using miles.
In other words, if the CPM of your American Airlines trip is $0.012, you may still want to book in miles even though the value is less than the average value of an American Airlines Mile.
If you have a limited number of miles and plan on saving them for when you can get the most bang for your buck, the CPM of your trip better be above, if not way above the average value of a mile for that airline.
For an American flight, I’d recommend only using miles for trips with a CPM above $0.02 if you are placing an emphasis on conserving miles.
Tip 5: Use Cash When Flights Are Cheap
While this may be fairly intuitive based on the structure of the CPM formula, its important to reiterate this point.
When flights are cheaper than typical levels, paying with cash gets you more value. This general rule is based on the idea that you want to purchase flights with miles when CPM is the highest. The inverse of this is to use cash when CPM is lowest.
Unlike airline prices denominated in cash that change rapidly, prices in points remain fairly constant. This means that the only real variable input in the CPM calculation is the airline price in cash and this causes there to be a direct correlation between CPM and the cash price of a flight.
You get a better deal on your flights using miles when the cash price is above the average rate, so use them!
Which Credit Card Travel Portal Provides The Best Value?
Another tool that I recommend using for booking flights are the travel portals of credit card companies. These portals provide a way to book flights with points given by credit card companies as well as a chance to earn extra rewards from booking on the portal.
The four most used travel portals are the ones I will be discussing; these include Chase Travel Portal, Citi ThankYou Travel Portal, Amex Travel, and Capital One Travel Portal.
These portals pull data directly from travel websites and aggregate them to allow you to choose the best flight at the best price. Although the portals perform the same function, they do so in different ways, and at different effectiveness levels.
Many people have credit cards with more than one of the companies that offer portals, so you need to decide which one is best for you. First and foremost, you want to get the best savings possible by using the travel portal, which means that whichever portal can provide the lowest cost flights would likely be the preferred portal.
Research provided by Nerdwallet shows that Chase, Citi, and Capital One all have prices that are roughly the same while redeeming points for flights with Amex is more expensive.
Most of the discrepancy can be chalked up to Amex not providing basic economy fares in its outputs, but this is still significant. If you are solely focused on finding the cheapest flight, the Amex travel portal is not your destination.
Usability is another important factor to consider. The Capital One Travel Portal is known for being extremely user-friendly. This travel portal has been integrated with Hopper, which is a travel booking app, making it much more high quality than its competitors.
The Capital One Travel Portal has a number of features that improve the user experience such as pricing heat maps, price prediction, and price alerts.
Compare Travel Portals For Best Value
Each portal has its own unique features and offers something a little different, so I’ll briefly touch on each.
Chase Ultimate Rewards
Capital One Travel Portal
There is no set number of miles you need for a free flight. After accruing 5,000 miles, you can begin using Delta miles to pay for flights. As long as the cost of the flight is less than the number of miles you have in your account, you can get a free flight!
The minimum number of miles for a free United flight is 10,000. The least amount of miles any United Airlines flight is going to cost is 10,000, but most will cost more than that. For an international flight for example, you will need closer to 50,000 for a free trip.
For AAnytime awards, the minimum number of miles for a free flight is 20,000. Silver awards allow for a minimum of 7,500 miles to be used, but most people are not apart of this program and most flights are above 7,500 miles.
You can begin booking Alaskan Airlines flights with miles after you have accumulated 5,000. Similarly with the other airlines, most flights will cost more than this, but 5,000 is just the minimum amount where you could find a free flight by using miles
In general, you will not earn miles on flights booked with miles. When airlines are not receiving direct revenue from your purchase, they will not award you with benefits. This means that the only way to earn miles when flying is to book with cash.