What are airline miles worth? How should I use them?

Are frequent flyer credit cards a good deal?

Feb 7, 2009, New York

(NerdWallet) - Have you ever wondered whether you should choose a cash rewards credit card or an airline mileage card? If you could compute the $ value of an airline mile, the answer would be fairly straight forward - simply convert the airilne mile value to cash and compare apples to apples with a cash card.

However, this turns out to be a difficult task for two reasons. You must anticipate (i) how much you will spend on a future ticket, as well as (ii) how many frequent flyer miles the equivalent ticket would require. The difficulty is compounded for those who fly frequently, because most people only spend enough to earn one flight a year, so those who fly frequently are more likely to be able to participate at "Saver" rates, which are typically 25,000 miles for a domestic flight as opposed to 50,000 miles for "Anytime" tickets.

After compiling reams of data, we've come to a few generalizations about how you should value miles.

• Miles are 2-3x more valuable if you are flexible with travel dates, 2x for domestic and 3x for international. If you fly once a year during peak holiday dates, miles aren't worth much.
• Miles are more valuable for international flights.
• Miles are more valuable if you travel frequently, because you have the option of using your miles on a larger set of flights. The only flight that is relevant to your mileage value is the one you spend your miles on.

When is it a good idea to spend miles as opposed to paying for a flight? If you travel frequently, hold out for 1.5-2.0 cents / mile international flights (price out your ticket in miles and $s). If you travel infrequently, go ahead and use your miles at lower rates.

Type	Description	Mileage Value
No Travel	Do Not Fly	0.0 cents / mile
Domestic only, little flexibility	Travel domestically, but with little flexibility on dates and only during peak travel periods like Thanksgiving.	0.5 - 0.8 cents / mile
Domestic only, flexibilitiy	Travel domestically a few times a year. Work schedule allows flexible travel dates.	0.8 - 1.0 cents / mile
International, little flexibility	Travel abroad at least once every 1-3 years. Travel during peak seasons with little flexibility.	1.0 - 1.3 cents / mile
International, flexibility	Travel abroad at least once every 1-3 years. Flexible with travel dates.	1.3 - 1.6 cents / mile

Are frequent flyer credit cards a good deal? If your mileage value is greater than 1 cent, then yes! Hold out for deals where you get 25,000 miles or more for joining - this is the equivalent of a $250+ signing bonus and 1% cash back for you. Most cash rewards cards pay 1% with no signing bonus.

Happy traveling! See the table below for a snapshot of what we estimate miles are worth in Feb 2009.