Is buying miles a good deal when they have a 100% bonus? In my email box yesterday I received two different offers from both United Airlines and US Airways, each for an up to 100% bonus on purchased miles. Purchasing miles is something I haven’t covered much in the past so today I wanted to run the numbers to show when it makes sense and when it doesn’t.
The US Airways offer is a straightforward bonus offer for buying or gifting miles with an increasing percentage depending on how many miles you want to buy. For the purposes of this article I am going to look at the best case scenario and see when it makes financial sense.When you submit this screen, you see that they also add taxes onto the total so it becomes $1881.25 for 100,000 miles. This gives you a cost of $0.0188 per mile (or 1.88 cents per mile)
Looking at the United offer, it is set up as a social sharing promotion where when they reach a certain number of transactions (4500+) of people who buy miles, then they increase the bonus percentage. For the purposes of this article, I’m going to assume that it hits the highest level and gives the maximum 100% bonus. To make the comparison easier, I will assume you are buying 50,000 miles + 50,000 mile bonus (although you can buy up to 150,000+150,000 miles with the United offer.)
As you can see, you can get 100,000 miles for $1881.25 which is exactly the same price as the US Airways offer. Now to see if this is a good deal for you we need to consider how you will be using the miles.
Some possible ways to use these miles could be domestic coach (MIA to LAX), domestic first class (MIA-LAX), European coach (MIA-MAD), European business class (MIA-MAD), Asian coach (MIA-BKK), Asian business class (MIA-BKK). What I am going to do is compare the mileage cost to the average purchase price of a ticket to determine the cost per mile and compare that to the prices for buying the miles above with the bonuses.
As you can see, buying miles at these prices ($0.0188) only makes sense when you are redeeming for business class or better long haul flights. And these figures don’t include the fact that you will be earning miles for the purchased flights that you would not get with an award ticket.
Buying miles even at a 100% bonus rate only makes sense if you are short some small amount of miles to redeem for an award ticket, or will be redeeming for a long haul business class or better flight and you would have paid the cash price for the ticket. There is a reason that the airlines promote these miles sales so much and it isn’t because it is a good deal for the consumers. They would be happy for everyone to buy the maximum amount of miles because they know that most people won’t be able to extract more value than the price they are charging.
My advice is to skip these mile sales and instead look at Manufactured Spending methods of earning miles such as buying gift cards at Simon Malls. If you follow my advice you can earn miles at a rate of $0.0066 / mile which makes any of the redemptions I laid out above a good deal instead of a poor one.
Another option would be to just get the 40,000 mile bonus after spending $1 from the US Airways® Premier World MasterCard® or the 40,000 point bonus after spending $3000 from the Chase Sapphire Preferred card.
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