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Talk about blast from the past, right? During my “career” as a travel hacker, I’ve always frowned upon buying miles speculatively. Sure, I have once paid $45 to transfer 1,000 Avios from my brother-in-law’s account. There were other instances where I forked over a decent amount of cash in exchange for a pitiful number of miles. But there was always a common thread to those decisions. Namely, I had a specific use for miles and needed to lock in my redemption ASAP.
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But there was one time when I bought miles without a short-term goal in mind. I’ve never been a person who blames other bloggers for my own actions, so I hope it doesn’t come across that way in what I’m about to tell you. I’m a big gal and make my own decisions. That said, I am affected by peer pressure just like everyone else.
So, here is the story. Before the merger between American and US Airways became finalized, the latter used to have a promo on sharing miles. The cost worked out to be around 1.1 cent per mile if you transferred a large quantity. I was a newbie blogger and everyone around me was going gaga over this deal.
It was described as a no-brainer by almost everyone in the business. And to be fair, considering how generous the routing rules were in US Airways program, it probably was a no-brainer for frequent travelers who like to fly to Asia via Europe in business class, and make a few stops on the way.
The thing is, I’m most definitely not a frequent traveler and almost always redeem my miles on point A to point B economy tickets (with the shortest possible routing). But I’ve convinced myself that perhaps getting a stash of US Airways miles could make sense for an off-peak redemption from Europe to USA. We bring my parents here on a regular basis, so it seemed logical. After all, the tickets from Belarus were running at $1,300 per person in 2013. Instead, I could redeem 40k miles+$100 tax on Air Berlin flight from Moscow to Fort Myers. Yes, the Air Berlin that’s going out of business very soon.
So, I literally bet a good chunk of my money on three things: 1) 40k mileage redemption level will still be around by the time the merger is completed, 2) Air Berlin would be flying that route and have decent award availability, 3) the redemption rate would be favorable in comparison with other options. I was somewhat low on AA currency at the time, so I went ahead and bought 50,000 US Airways miles at a cost of $567. Did I mention that we are a middle-class family with limited savings?
To be honest, I had regrets almost immediately, but the purchase was final. So, I’ve convinced myself that it will all be worth it once I redeem miles on my parents’ tickets. Except I never did. Since then the airfare from Belarus has come down considerably, so I could purchase a ticket for $670 all-in. It simply made no sense for my parents to go all the way to Moscow and pay for hotels, plus train tickets. I ended up using bonuses from cards like Barclaycard Arrival Plus and US Bank Flexperks Visa to offset the airfare purchase.
Burning AA miles like there is no tomorrow
My miles kept sitting there doing nothing. In fact, I ended up signing up for several new credit cards, so by the time the merger was final, I was staring at over half a million of AA miles, with no plans to use them. No manufactured spending involved, those were the good old days.
So I went on a spending spree. We first redeemed AA miles on roundtrip sAAver first-class tickets from Tampa to Seattle. It wasn’t all that, but my large husband was very grateful for this splurge. I then burned 100k AA miles on a condo in the Keys. I got about 1 cent per mile, which to me was great since we needed a rental anyway. At that point, I just wanted to use them somewhere. Anywhere.
Then last year we got five one-way tickets from Orlando to Barcelona for 30k miles per person. There were some hiccups, since I ended up paying penalty to switch from Madrid to Barcelona, but that’s neither here nor there. Once again, not a spectacular use of miles because right around that time there were all kinds of crazy cheap sales to Spain.
Fast forward to June of this year. I had 60k AA miles left and planned to burn them on hotels. Finally, I would cash out those darn miles I bought in 2013. And then my in-laws came up with an idea of going to South Pacific, Australia and New Zealand. I had no flexible points left, plus AAdvantage was the best option for flying to Tahiti. And we needed at least 80k miles for two one-way economy tickets.
Fortunately, in May my husband was approved for 60k bonus on Citi AAdvantage Platinum Select MasterCard (the offer is currently back in affiliate network). He also got AAdvantage Aviator Red World Elite MasterCard with an offer of 50k miles (now 60k). That would give us enough for second ticket to Tahiti, plus two economy tickets to Auckland, New Zealand.
Ironically, as much of a planner as I am, I ended up scrambling to get the miles at the very last minute. I was fortunate that my husband was approved for both of those offers, but things could have gone differently. It’s really quite incredible that just his sign-up bonuses would cover two one-way economy flights to Tahiti, plus New Zealand (40k and 15k miles per person, respectively). After all these years, I’m still in awe of how lucrative this hobby is.
But having my stash meant that we could splurge on business class for Tahiti-New Zealand portion (30k miles per ticket). And that’s what I did. Will the juice be worth the squeeze? It will be for my husband and that’s all that matters. I redeemed the remaining AA miles on several one-way tickets within Australia, and consider it to be an excellent value.
So, that’s how I spent those 50K miles from 2013. It wasn’t a wise purchase, but things turned out alright in the end.
My business class splurge had actual $ cost associated with it
As you can see, the upgrade to business class was most certainly not free. I did get a rebate of 3,000 miles, so my cost was extra 27,000 miles total for two people. I have bought them for $305 back in the day. Would I pay cash if they offered us an upgrade at the airport for this $ amount? I’m not sure, but I splurged my miles and didn’t think twice.
My point is: all of our miles have a cost associated with them unless you earn them through flying. Sometimes it’s rather low, like when you get a sign-up bonus. That’s the lowest hanging fruit there is. Let’s say you sign up for AAdvantage Aviator Red World Elite MasterCard and collect 60k miles in exchange for paying $95 annual fee and making $1 purchase. You’ve essentially bought those miles for 0.16 cents apiece, which is dirt cheap. Other times, you participate in manufactured spending which takes up a good bit of time, plus requires liquidation fees and foregoing cash back rewards. The third, most expensive option, is when you buy miles outright.
Recently, you’ve probably seen Avianca miles offered at a rate of 1.3-1.5 cents apiece. Nope, nope, nope! Sure, if you need them immediately, it could definitely make sense to pull the trigger. But speculatively? No way, Jose. Read my post on dealing with Avianca if you are on the fence. Just an FYI, many bloggers make commission on you buying miles. That’s not inherently wrong, of course, just something for you to keep in mind.
The same principle applies when you plan on canceling a premium credit card with an annual fee and need to find a safe place for your flexible points. Transferring to Singapore KrisFlyer speculatively may be a good option for frequent flyers, sure. Just keep in mind that miles expire after three years and there is nothing you can do to prevent it.
Personally, I plan to never buy miles speculatively unless the rate is dirt cheap. And 1.3 cents per mile or even 1 cent is not dirt cheap, amigos. My lifestyle simply doesn’t align with this kind of a price. I’m a regular mom who goes on trips a few times per year. Most of them involve driving my minivan to the beach.
Speaking of, a year ago we let my in-laws trade in our Mazda5 and keep the money. In return, we got their old van. According to Blue Book trade-in values, it was close to an even exchange. Anyway, recently I heard my husband telling some friends of ours that in-laws just gave us the van for free. Huh?
Don’t get me wrong, I could never repay my in-laws for everything they do for us, but this wasn’t a case of charity. I reminded my husband that our old Mazda5 wasn’t free because we paid for it previously. As in real money. His response was that since we didn’t have to use cash, the in-laws’ van was free in his eyes.
Nope, honey, it’s not. Just like that business upgrade to New Zealand was not free. Just like miles and points are usually not free.
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.