This is a very valid question and one that keeps being asked. It is difficult to answer because there is really no right answer. If you pour over the various travel blogs out there, you will find some bloggers that will not redeem their miles for anything less than First/Business Class seats. You will find others that will use their miles for domestic economy flights. So, what to do?
The answer lies within YOUR situation. You can get a better feel for what you need to do by asking some questions.
- How many points/miles do you have?
- Can you afford to pay for the ticket out of pocket?
- How much is the ticket with miles vs. cash?
- How long did it take you to accrue the miles/points that you would use?
- What are your travel plans for the next 1-2 years?
- Do you think you can accrue more in that timeframe?
I know, that is a lot of questions, but many times, just one of those questions will be enough. “Can I afford to pay with cash?” If the answer is NO and you really need/want to go on the trip, then, by all means, use points. The cash question can be the pivot point quite often!
In my personal use, I try to only redeem miles for tickets when I am going to be getting over 2 cents per mile redemption rate. I know others will not settle for less than 5 cents, but a lot depends on the trip. For instance, I really have no problem using miles to go to Fargo since that trip is really not that far and I am getting a fairly good redemption rate. On the other hand, if I am going to Los Angeles and the ticket only costs $300, I will be buying that ticket.
This brings up another question that can be asked – What miles are you giving up by redeeming miles? Within the frequent flyer programs, there are multiple elite levels that can be reached. Those levels can only be reached on tickets that are purchased, not award tickets. So, in the instance of a Los Angeles ticket, I earn about 5400 elite miles by flying that route on a ticket purchased with cash. Not only do I receive those elite miles that count towards my renewing status, but I also accrue redeemable miles that can be used towards award travel. As a Diamond Medallion with Delta, I receive a 125% bonus on redeemable miles when flying on paid tickets. That means that, on a Los Angeles trip, I will accrue 12,150 miles towards award travel. That is half of the minimum miles needed for a round-trip ticket in the US! For another example, on an upcoming trip, I was planning on using miles because there were certain dates I had to be there and the price for a paid ticket was higher than I could afford (over $1,400). However, thanks to a brief decrease in taxes and fees on the ticket, I was able to get it for about $750 (which was paid for by a credit card deal – story for another time). So, not only did this save me from having to use a minimum of 80,000 miles to get there, but now I will be earning another 25,000 miles. In essence, I will be saving/earning a total of 105,000 miles by purchasing the ticket. So, when I look to obtain a ticket, I need to weigh the miles that I am giving up in addition the miles that I would need to use. This normally would apply to those who have elite status or are looking to obtain elite status.
The question that comes from that is, “Why are you accruing miles if you never use them?” Oh, there are many times that I do use them (and many times that I will). I just want to make sure that I am receiving the best redemption rate possible when I use my miles. One of the other questions above was about how long it took you to accrue the miles you are considering using. If you are only able to build up 25,000 miles in a year and that is due to your spending on one credit card, you would probably not want to use those miles on a ticket that only costs $200 out of pocket. It is taking you too long to save up all of that to splurge it on some cheap ticket. That being said, no one reading this blog should be accruing only 25,000 miles in a year! 🙂
So, it comes down to your personal needs. I would like to suggest that you never use your miles on tickets where your redemption rate is at 1 cent per mile. There are times when that will be necessary, but your goal should be to conserve them as it is very expensive to purchase miles from the airline when you are planning your big trip and find that you are low on the miles required. Sit down and plan out what your travel strategy is for the next two years and determine how many miles/points you will need for the big picture. Then treat those required points as if they are in a safe – don’t touch them! I have friends that think that just because I have all of these miles I can part with them for them or use them for this or that – a bulk of my miles have a specific function and for that reason, they are off-limits. If you do the same thing, you will have the points you need for your trip when the time comes. To someplace fantastic like, oh, I don’t know – maybe here? 🙂