It’s the struggle of every rewards traveler: points or cash?
For some flights, it’s obvious — like that first-class ticket to Hong Kong you’d never pay cash for.
But what about a winter trip to Mexico? Or that upcoming wedding in Montana?
When to use airline miles vs. cash
The first thing to remember is not to hoard your points. Unlike an investment account, points don’t grow more valuable with age.
In fact, because of frequent devaluations, airline miles and points will only decrease in value. So, when in doubt, use ‘em!
Here are a few more considerations.
If you’re flying first-class international: Miles or points
I’ll illustrate this point in-depth below, but suffice it to say that if you’re flying business or first-class overseas, you usually can get a better deal through your frequent flyer miles.
If you need flexibility: Miles or points
When you use airline miles, you get the added bonus of flexibility. You often can change or cancel a rewards flight for less than it would cost to change a cash flight. So, if you’re not sure about your travel plans, it’s smarter to buy tickets with miles.
If a budget carrier flies that route: Cash
Search for budget carriers that travel your desired route. When I used to fly between Florida and New York, I used Allegiant Air, a budget carrier that cost me around $150 round trip. In that situation, I never even thought about using points — the prices were way too low!
If the award ticket has high taxes and fees: Cash
When you book an award ticket, the taxes and fees can be a nasty surprise. They vary based on the carrier and route, so if you run into outrageous prices, it might be better to use cash. Plus, unlike a rewards flight, you’ll earn miles on any flight for which you pay cash.
The best use of airline miles or points
In general, experts agree that the best use of airline miles or points is for long-haul premium flights, such as first-class or business flights to Asia or Australia.
That’s because — although these flights cost exponentially more than, say, a domestic round trip — you don’t need exponentially more miles.
In other words? You’ll get a lot more value out of your points.
One blogger, for example, redeems her airline miles only if she can get a value of at least two cents per mile or point. Other bloggers assign individual values to each program’s points — and presumably redeem those points only if they get that perceived value.
Once you dive further into the world of travel rewards, you’ll determine how much each point currency is worth to you. In the meantime, you can use cents-per-mile calculations to help you decide whether a flight is worth it.
To show you how it shakes out, let’s compare two different trips.
1. Round-trip economy flight from JFK to SFO: 25,000 miles or $272
$272 ÷ 25,000 miles = $.01/mile
By dividing the price by the miles or points required, you can determine the value of each mile. In this case, each mile is worth approximately 1 cent. Not awful, but not good.
2. First-class flight from JFK to Hong Kong (one way): 62,500 miles or $18,070
$18,070 ÷ 62,500 miles = $.28/mile
Even though it costs nearly triple the miles, this flight is so expensive that the value of each mile is 28 cents! As you can see, it’s a more valuable way to use your miles than the domestic flight.
And how many miles do you need for a free flight? That depends on a lot of factors. One way to check is with RewardExpert’s new flight search engine.
You can filter your search by program and then easily see how many points or miles you’d need with each. It also offers cash prices, courtesy of Skyscanner.
Should you use points or cash?
Through all these calculations, the most important thing to remember is that the decision is up to you.
If your redemption gets you only half a cent per mile but you’re tight on cash and want to use your miles anyway, go for it. If you don’t want to save your miles for a trip across an ocean and would rather use them to visit your aunt in Omaha, Nebraska, do it.
Just don’t forget to send me a postcard from wherever you end up!
Interested in refinancing student loans?Here are the top 6 lenders of 2018!
|Lender||Variable APR||Eligible Degrees|
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1 Important Disclosures for Earnest.
To qualify, you must be a U.S. citizen or possess a 10-year (non-conditional) Permanent Resident Card, reside in a state Earnest lends in, and satisfy our minimum eligibility criteria. You may find more information on loan eligibility here: https://www.earnest.com/eligibility. Not all applicants will be approved for a loan, and not all applicants will qualify for the lowest rate. Approval and interest rate depend on the review of a complete application.
Earnest fixed rate loan rates range from 3.89% APR (with Auto Pay) to 5.87% APR (with Auto Pay). Variable rate loan rates range from 2.47% APR (with Auto Pay) to 5.87% APR (with Auto Pay). For variable rate loans, although the interest rate will vary after you are approved, the interest rate will never exceed 8.95% for loan terms 10 years or less. For loan terms of 10 years to 15 years, the interest rate will never exceed 9.95%. For loan terms over 15 years, the interest rate will never exceed 11.95% (the maximum rates for these loans). Earnest variable interest rate loans are based on a publicly available index, the one month London Interbank Offered Rate (LIBOR). Your rate will be calculated each month by adding a margin between 1.82% and 5.50% to the one month LIBOR. The rate will not increase more than once per month. Earnest rate ranges are current as of Month/Day/Year, and are subject to change based on market conditions and borrower eligibility.
Auto Pay discount: If you make monthly principal and interest payments by an automatic, monthly deduction from a savings or checking account, your rate will be reduced by one quarter of one percent (0.25%) for so long as you continue to make automatic, electronic monthly payments. This benefit is suspended during periods of deferment and forbearance.
The information provided on this page is updated as of 08/21/18. Earnest reserves the right to change, pause, or terminate product offerings at any time without notice. Earnest loans are originated by Earnest Operations LLC. California Finance Lender License 6054788. NMLS # 1204917. Earnest Operations LLC is located at 302 2nd Street, Suite 401N, San Francisco, CA 94107. Terms and Conditions apply. Visit https://www.earnest.com/terms-of-service, email us at email@example.com, or call 888-601-2801 for more information on ourstudent loan refinance product.
© 2018 Earnest LLC. All rights reserved. Earnest LLC and its subsidiaries, including Earnest Operations LLC, are not sponsored by or agencies of the United States of America.
2 Important Disclosures for Laurel Road.
Laurel Road Disclosures
Savings example: average savings calculated based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were disclosed. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
Application detail: 5 minutes indicates typical time it takes to complete application with applicant information readily available. It does not include time taken to provide underwriting decision or funding of the loan.
Instant rates mean a delivery of personalized rates for those individuals who provide sufficient information to return a rate. For instant rates a soft credit pull will be conducted, which will not affect your credit score. To proceed with an application, a hard credit pull will be required, which may affect your credit score.
Total savings calculated by aggregating individual average savings across total borrower population from 9/2013 to 12/2017. Individual average savings calculation based on single loans refinanced from 9/2013 to 12/2017 where borrowers’ previous rates were provided. Assumes same loan terms for previous and refinanced loans, and payments made to maturity with no prepayments. Actual savings for individual loans vary based on loan balance, interest rates, and other factors.
3 Important Disclosures for SoFi.
4 Important Disclosures for LendKey.
Refinancing via LendKey.com is only available for applicants with qualified private education loans from an eligible institution. Loans that were used for exam preparation classes, including, but not limited to, loans for LSAT, MCAT, GMAT, and GRE preparation, are not eligible for refinancing with a lender via LendKey.com. If you currently have any of these exam preparation loans, you should not include them in an application to refinance your student loans on this website. Applicants must be either U.S. citizens or Permanent Residents in an eligible state to qualify for a loan. Certain membership requirements (including the opening of a share account and any applicable association fees in connection with membership) may apply in the event that an applicant wishes to accept a loan offer from a credit union lender. Lenders participating on LendKey.com reserve the right to modify or discontinue the products, terms, and benefits offered on this website at any time without notice. LendKey Technologies, Inc. is not affiliated with, nor does it endorse, any educational institution.
5 Important Disclosures for CommonBond.
6 Important Disclosures for Citizens Bank.
Citizens Bank Disclosures
|2.47% – 6.99%3||Undergrad & Graduate||Visit SoFi|
|2.47% – 5.87%1||Undergrad & Graduate||Visit Earnest|
|2.47% – 8.03%4||Undergrad & Graduate||Visit Lendkey|
|2.95% – 6.37%2||Undergrad & Graduate||Visit Laurel Road|
|2.48% – 6.25%5||Undergrad & Graduate||Visit CommonBond|
|2.72% – 8.32%6||Undergrad & Graduate||Visit Citizens|