(Updated Novemeber 2016)With the holiday season upon us, thoughts turn to shopping and gift-giving. Whether it’s just keeping an eye out for a good deal or strategically targeting a sale, we all try to stretch and save a little money where we can. But, I always stop in my tracks when I read the title of an email from an airline, hotel, or travel rewards credit card that says something like, “Shop the Holiday Guide for Everything You Need this Season.” Here’s a past example of one I’ve received from United’s MileagePlus Program.
The promotion is to redeem your United airline miles to “pay” for award merchandise. At first glance, it sounds like a great way to save some money and get your family and friends the gifts they want. Similar schemes exist with Chase and American Express partnering with Amazon. Have you ever noticed when you’re checking out on Amazon it shows how many points you have with your Amex and Chase credit cards? There’s always an option showing you the total points needed to pay for the goods in your shopping cart.
However, savvy travel hackers value their airline miles as currency. Miles have a specific value, just as money does and you always want to make sure you’re getting the most out of your miles, particularly after you’ve worked so hard to earn them.
So, the elephant in the room is:
Should you redeem airline miles to buy merchandise?
Or hotel points? Or travel rewards credit card points for that matter?
Let’s take a closer look at what United is offering.
Each month, The Points Guy, reports on the monthly valuations of airline miles across a wide range of frequent flyer programs. He takes into account a variety of factors like award availability, how easy or difficult it is to earn the miles, and what value is achieved in redeeming the miles. It isn’t the definitive valuation, as other travel bloggers certainly debate and assign their relative valuation to award travel miles and points. Rather, it gives an estimated starting point as you determine how much your miles are worth.
The latest report is for November 2016. I’ll be using this calculated 1.5 cents per mile value of United miles to determine whether or not redeeming for merchandise would be a good use of your miles.
If you visit United’s MileagePlus website and click on use award miles, you’ll see an option to use miles to “shop” for popular products. One of the first gift ideas within the holiday gift tab is for a 10 piece All-Clad Stainless Steel Cookware Set.
You can purchase this gift set for 81,300 United miles. This includes all tax and delivery charges.
I did a simple Google search for a 10-piece All-Clad Stainless Steel Cookware set. Here’s what my results turned up.
It’s not surprising a range of stores sell similar cookware sets. After doing a quick price comparison, it was easy to estimate an average cost between $400-$700 depending on where you shopped and which set you chose. For example, this 10-piece All-Clad set selling on Amazon falls near the middle of this price range.
United’s “deal” is to redeem 81,300 of their miles and the All-Clad cookware set will be yours. But, when I multiplied the number of miles needed by the 1.5 cents per mile as per The Points Guy’s monthly valuations, I got a total value of $1,219.50. This is how much relative value in miles you’d be spending to get a product selling for at least half of this cost on a variety of merchant websites.
Simply put, you would be redeeming $1,219.50 worth of United airline miles (a.k.a 81,300 miles) for an item that can be purchased from Amazon for $599.95 + tax. You could also opt for an even better-priced option by referring back to the Google search results. Keep in mind, this also doesn’t take into consideration potential sales or coupon offers where the cookware set would be further discounted.
Where could you fly on an award ticket for 81,300 United miles? A round trip domestic saver award flight within the United States and Canada is 25,000 United miles! You and 2 others could fly to New York City and explore Manhattan! How about an incredible National Park trip out west to gems like Zion, Bryce, Arches, and Canyonlands? Or perhaps you’d like to head to Canada to drive the Icefields Parkway or ski at Mont Tremblant?
Dreaming of an international destination? 60,000 United miles can take you round trip to Santiago, Chile and other popular South American cities. For 80,000 miles, you could fly to Bangkok and other parts of Southeast Asia!
Would you rather get that cookware set or visit…
Doing some holiday shopping soon?
If the info in this post or on this site is useful, please consider buying your gifts through Amazon or at a few of my favorites like Columbia or Sierra Trading Post for clothes and gear or CityPass for an experience-based gift!
Not enough to convince you? Let’s look at another of the merchandise “deals” featured on the MileagePlus popular products holiday gift guide, Beats by Dr. Dre Studio Wireless Headphones. Undoubtedly a popular gift this holiday season for all ages!
You could use 43,700 United miles for this gift, again all taxes and delivery included.
Using the same method as above, 43,700 miles multiplied by 1.5 cents a piece equals $655.50 in relative value. Here are my simple Google search results for the Beats Headphones.
Again, a range of stores sell Beats Headphones. A quick price comparison estimated an average cost between $200-$400 depending on where you shopped and which set you chose. For example, this pair of Beats Headphones selling on Amazon is near the lower end of this price range.
What’s the bottom line?
If you used United miles for the Beats Headphones, you’d be spending $655.50 (a.k.a 43,700 miles) of relative value on a gift you could buy nearly $400 less!
Where could you fly on an award ticket for 43,700 United miles? A round trip flight from the U.S. to the Caribbean is 35,000 miles! A one-way award flight to iconic European cities like Paris, London, Prague, and Budapest costs just 30,000 United miles.
Let’s be honest here! Beats Headphones or……
Also, remember that with holiday spending on gifts and other essentials comes a lucrative opportunity to earn miles and get more value from the money you’re spending. Shopping portals increase your earn rate on every dollar spent. Credit card bonus categories maximize your money’s return value. Look out for quarterly or special bonus category promotions like Chase Freedom’s 5x the points on department stores, wholesale clubs, and drugstores and Discover It’s 5% cash back and Amex’s 3x the points earned at Amazon.
Finally, it’s always important to compare airfare prices with the value of your miles and points. If you can book a cheap discount flight on Southwest out west, it may not make sense to spend 25,000 United miles. Yes, it’s cliché for a teacher like me to say it, but always do your homework! 😉 You wouldn’t spend more money for an item your could get for less so be just as smart using your miles and points.
So, let’s return to the question we began with…
Should you redeem airline miles to buy merchandise?
No, No, No, and No! You are throwing away value (read:money)! Using your airline miles for merchandise is one of the worst ways to use your hard-earned airline miles.
This holiday season, save and stretch your money. Hunt for bargains! Comb through deal after deal. But, don’t use your precious airline miles (or hotel points or travel rewards credit card points) for merchandise!
Have you used miles and points for merchandise? What do you think is the best use of your miles and points?
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