Why You Shouldn't Buy AAdvantage Frequent Flyer Miles - NerdWallet
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Why You Shouldn’t Buy AAdvantage Frequent Flyer Miles

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I got an email from American Airlines a couple of weeks back begging me to buy some extra frequent flyer miles for my AAdvantage account, and they’re offering bonus miles on top of whatever I buy until February 28, 2011. The cute graphic even has a picture of a loving couple holding hands on the beach, and a tagline meant to inspire dreams of jet setting. The only problem is, it’s not a good deal.

As a general rule, if an airline is trying to sell you frequent flyer miles, it is probably a bad idea to buy them. They give away miles like they’re candy with travel miles credit cards and other bonuses that travel hackers and rewards junkies like to exploit to no end. And when it’s time to make up for all those free miles they’re giving away? They try to convince the rest of us to pay too much for more miles, so they can recoup some of the cost.

The proof

To make sure I wasn’t just being cynical, I pulled up AA’s site and checked how much they charge for miles, and even after the temporary bonuses, the prices of the miles are crazy.  Here’s the breakdown:

Miles to buy Bonus miles Dollar cost Cost per mile
2000 500 $55 2.20
6000 2000 $150 1.88
12000 4000 $300 1.88
40000 15000 $1,000 1.82

So they’re effectively charging two cents for every mile.  A traveler with a grand to spend can manage a low-low 1.8 cents per mile. Now let’s put this in perspective.

When it comes time for you to redeem your reward for travel, you will need at least 25,000 miles to earn a roundtrip domestic ticket, or at least 50,000 miles to earn a roundtrip international ticket.  I say “at least” because these types of tickets are notoriously difficult to find, so you generally end up having to use more, but I’ll give AA the benefit of the doubt for now.

In order to buy 25,000 miles with these bonuses, you’ll have to pay $525 (the cost of 21,000 miles, plus the 4,000 mile bonus).  Any domestic ticket in the 25,000 mile bracket would cost much less than that, so you’re better off just paying cash.  Similarly, to reach 50,000 miles you’ll have to pay $1,000 (40,000 + 15,000 bonus). Again, you’re probably better off paying cash for the flight.

As a rule of thumb, airline miles are rarely worth more than one cent (unless you’re a much savvier travel hacker than I am). And we did some extensive research a while back and created an infographic depicting the values of frequent flyer miles across a number of airlines, based on average ticket prices, only to find that American Airlines only averages about 0.76 cents per mile. So paying two cents for a mile is effectively throwing money away.

How to get those miles at a better rate

With the Citi® / AAdvantage® Platinum Select® MasterCard®, you can earn a signup bonus: For a limited time, earn 50,000 American Airlines AAdvantage® bonus miles after making $3,000 in purchases within the first 3 months of account opening*. The card’s annual fee is $95, waived for first 12 months*, but if you’re loyal to American Airlines, you’re likely to come out ahead.

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  • MisMillas

    This depends…. I just used this offer for a gain. The cost of my international ticket is 40k miles or $1400.
    I bought from American the 40k miles for $1100, got 15k bonus miles, plus $1105 for using my advantage credit card. In summary, I saved $300 and kept $16k miles.

    • MisMillas

      A correction. I got 1105 miles for having paid with credit card.

      • http://www.nerdwallet.com Jake

        Good to know! These kinds of deals definitely aren’t impossible to come by. In particular, frequent travelers and those with flexible travel plans are able to get plane tickets for much lower than average mile values. 40,000 miles for an $1,100 plane ticket is a steal!

  • http://www.stevelarsen.co.uk Steve

    If you’re traveling internationally one-way the value becomes even greater and it’s cheaper to buy miles outright for the flight. Booking a flight right now, ORD-LHR for mid April, it would cost me just over $1,200 and give me about 4,000 AA miles. Buying 20,000 miles needed for this will only set me back $530. Even if I cost my lost miles at the same value of .06/mi then add another $240 and I’m still ahead over $430

    • http://www.nerdwallet.com NerdWallet

      Awesome tips, keep them coming!

  • Anonymous

    i use my miles to get first class tickets on Cathay Pacific, which would go for easily 10K dollars each way. Cost ? 62.5K miles. You are almost there buying the miles. 40k plus 15k bonus, 55K (which is international business one way and easily 6K dollars), thats’ how I see them worth it.

  • http://halloweentown.com Thomas

    Purchasing Miles for upgrades can cost effective compared to business/first class tickets