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Once a great tool for building customer loyalty, rewards programs allowing customers to earn free flights are now more often a source of customer frustration. Although satisfaction varies from airline to airline, customers trying to use frequent flier miles with a larger carrier, like Delta or United, are only successful 61% of the time. Unfortunately, with mergers shaking up rewards programs and airlines cutting flights, it’s only getting harder to redeem miles. Instead, airlines are increasingly offering customers the ability to use them toward merchandise.
Miles are essentially free money, but there’s no reason not to look for the best deal possible when redeeming them. Is buying merchandise with miles a good idea?
Is using points for merchandise a good idea?
In short, no, merchandise or gift cards are almost never a good use of your miles or credit card points. Consider that the average frequent flier program offers a domestic round-trip ticket for about 25,000 miles. Now say that you successfully redeem your points for a flight from New York to Los Angeles and back. This is a $400 value on Delta, so your miles are valued at around 1.6 cents each.
Now, what if you couldn’t find a flight you wanted, and instead, purchased a Garmin Navigator from the Delta store for 71,700 miles, or a Brother Computerized Sewing Machine for 67,000 miles? These items currently retail for $187.70 and $149, respectively, on Amazon. In the case of the Garmin, your points would be valued at .26 cents each. The sewing machine is even worse. Each point is worth .22 cents. Occasionally you can find a decent deal, but that takes a lot of searching and you'll probably still get a better value elsewhere.
What else can you buy with points?
Okay, merchandise is usually a bad idea, but that’s not the only non-flight thing you can buy with points. Some airlines also allow you to use points or miles toward:
Hotel stays. American Airlines’ AAdvantage program offers rooms at the DoubleTree by Hilton in Downtown Los Angeles for 35,700 points per night. On Kayak, however, rooms sell for $188. Each point is worth .52 cents, so a hotel stay offers about twice the value of a Garmin, but half that of a flight.
Car rentals. 5,100 AAdvantage points gets you a Ford Focus for a day in Los Angeles. You could also rent one yourself a similar compact car for $22 per day. This gets you about .43 cents per point.
Experiences. Most recently, companies have begun to offer customers opportunities to use their points to buy – or bid on – experiences, like exclusive concerts or celebrity encounters. Last year, United auctioned off the chance to meet Rod Stewart and attend one of his Las Vegas shows. The experience ended up costing one member 305,000 miles.
Some carriers also allow you to redeem points for perks like access to airline lounges. These rewards can be difficult to quantify in monetary terms. If you fly regularly for business – or really, really love Rod Stewart – an experiential reward might be a great value. Hotels or car rentals, though, almost never are.
What if you don’t want to spend your points?
If you’d really prefer not to leave your house, and you’re convinced that buying a coffee maker with your miles is a rotten deal, you can always:
Donate your points. Most airlines offer members the ability to donate their miles to partnered charities, who can use them to fly volunteers or beneficiaries. For example, the American Red Cross uses miles to fly volunteers to conduct disaster relief efforts.
Gift your points. Most airlines also allow you to give your points to someone else. Do you know anyone who wants to take a trip? If family members have been badgering you to visit, maybe you can fly them to see you.
Cash out your points. Some airlines even allow you to cash out your points, which offers some advantages. You can use that money to find the best possible deal on the trip you want to take or merchandise you’d like to buy, with no restrictions on dates or partnered companies. However, you'll probably take a hit on your redemption value.
It’s worth noting that donating points does not provide any tax advantages. If that’s what you’re after, you might get a better value by redeeming for hotel stays or something higher-value and donating the cash value to charity.
The bottom line
Flights – particularly first- or business-class – are almost always the best value per point. But perhaps you truly can’t get away from work or other obligations, or would prefer to stay home, rather than travel. Or maybe you’ve changed loyalties, and would like to concentrate on earning points with another airline. Then simply using up your points may be worth more to you than getting the best bang for your buck, and a night at a hotel – or even a sewing machine – might not be such a bad idea.
Plane image via Shutterstock.