One day, you are going to have to make a decision! You're staring blankly at the flight checkout page: on one hand, you have the credit card in one click and on the other, 'use your miles'! All of a sudden, it feels like you're playing a 'do or die' game of "Choose Your Own Adventure" with those two buttons. One ticket leads to a postcard-perfect tropical paradise dream, whilst the other leads to a mild case of buyer's remorse!
The big question
is: When should you redeem United miles for cash, and when should you just open your wallet?
The short answer: Redeem United miles when the cent-per-mile
value goes over your personal threshold (primarily in the vicinity of 1.2-1.5
cents). If the cash price of the flight is peanuts, use cash and hang onto your
miles. For a last-minute, business-class flight or perhaps some throne-like
arrangements, however, considering taking wings of the miles is fair.
Let me break down the
math and the strategy for you so that you no longer second-guess your decisions
to travel.
Quick Math for 10 seconds (No
Calculator Needed)
In short, your worth
of United miles is equal to the ticket cost minus the monetary value of the
award flight taxes divided by the miles of your redemption.
If a flight costs $300
or 25,000 miles, you’re getting 1.2 cents per mile. That’s a "fair"
deal. If that same flight costs $600 but still only 25,000 miles? Now you’re
getting 2.4 cents, which is a total steal. However, if your math shows your miles
are worth less than a stick of airport gum, it’s a sign to close the laptop and
just pay the cash.
When Cash is King (Keep Your Miles in
the Vault)
There are times when
using miles is actually a bad financial move. Here is when you should reach for
your credit card instead:
The "Fare Deal" Trap
Airlines occasionally
have massive sales. If you find a round-trip flight to Europe for $400, using
60,000 miles is a terrible trade. Using a $100 bill to pay for a $5 burger is a
bold choice, but not exactly a smart one. In this case, pay the $400 and save
those miles for a day when that same flight costs $1,200.
The "Double Dip" You’re
Missing
When you pay cash, you
earn miles on that flight. When you redeem United Miles for a ticket, you
typically don’t earn anything back. Plus, if you’re chasing elite status to get
those sweet, sweet upgrades and shorter security lines, you usually need "paid"
flights to hit your goals. Sometimes, paying $150 for a flight is better than
spending 25,000 miles because those saved miles are your "future business
class" fund.
When Miles are Magic (The "I
Win" Scenario)
This is where the
magic happens. There are three specific times when you should redeem United
Miles without a second thought:
The Premium Cabin Play
International business
and first-class seats are the undisputed champions of mileage value. A seat
that costs $8,000 in cash might only cost 80,000 to 100,000 miles. That gives
you a valuation of 8 to 10 cents per mile! Unless you have a secret money tree
in your backyard, miles are the only way most of us are ever going to
experience a lie-flat bed at 35,000 feet.
The Last-Minute Saviour
Life happens. Maybe
you have a sudden work emergency or a family event that requires a flight three
days from now. Airlines love to charge $900 for a one-hour flight when they
know you’re desperate. Often, that same flight is still available for a reasonable
number of miles. This is where your mileage stash acts like an emergency fund
that keeps your bank account from flatlining.
The Refundability Edge
Most "cheap"
cash fares are non-refundable. If your plans change, you’re stuck with a
voucher. However, award tickets are often much more flexible. If you need the
ability to cancel and get your "currency" back into your account,
miles are the way to go.
The Big Picture Strategy
Don’t get so caught up
in the spreadsheets that you forget to actually travel. If you have plenty of
miles but you’re short on cash this month, redeem United Miles even if the math
is just "okay." The best redemption is the one that actually gets you
on the plane without stressing about your rent money.
Conversely, if you are
saving up for a "bucket list" trip to Japan or a honeymoon in Italy,
don't waste 10,000 miles here and there on short domestic hops. Be a mileage
dragon—hoard them until you can spend them on something truly spectacular.
Summary: Your 3-Step Decision Matrix
Before you book, ask
yourself:
1.
Is the
value over 1.2 cents per mile? (If yes, proceed.
2.
Am I
saving these for a bigger international trip? (If yes, pay cash now.
3.
Will
paying cash today hurt my bank account? (If yes, use the miles!).
At the day's end,
miles are meant to be savoured. Travelling is in the memory. It is not in the
calculations. If you are willing to trade anything in exchange for memory and
destinations that you find exciting, walk away—they win.
Ready to find the best way to spend?
Now, since you are
aware of when you should fire the shot, you must know the best way to drive it
home. Make sure you don't miss my next post, Best Methods to Redeem United Miles for Cash Value. We'll move past the "if" stage and enter into
the "how" territory and actually come across the platforms that
squeeze the absolute maximum out of your account for you: If you thoroughly
believe that your way of redemption is impeccable, don't miss anything from me
on this!
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