Last year I paid $5000 in taxes with my Starwood American Express
card, which typically earns one point per dollar. Starwood points are
convertible to miles in the frequent flier programs of most major US
airlines.

The online payment service added a 2.49% "convenience" fee (is there
*anyone* not offended by that term?) So at first glance it might
seem like I paid $125 for 5000 airline miles. That would be worthwhile
if a mile were worth at least 2 1/2 cents. Most frequent flier junkies
wouldn't pay that much for miles, though, except to top off an account
to reach some almost-achieved award level.

But I actually got a much better deal. Starwood offer two-for-one on
some tax payments, so that's 10,000 points. Plus I earned 125 points
for paying the fee by credit card (the two-for-one deal doesn't apply
to that), so that's 10,125 points. Plus when Starwood points are
converted to airline miles in largish batches, Starwood kicks in an
extra 25%. So in the end that's a bit over 12600 miles at a cost of
$125: I paid just under 1 cent per mile.

Worth it? Yes, even if you value the miles quite conservatively. The
miles would almost exactly cover half of a domestic round-trip flight
in economy class. I fly mostly transcontinental, and my schedule is
rarely flexible enough to purchase the lowest fare that, say,
Travelocity might offer, so $125 for half a ticket (that's $250 for a
full ticket) sounds like a reasonably good deal to me, though not
exceptional.

But it gets better. I did not use the miles for an economy ticket:
I used them for business class. The 12600-plus miles covered about
30% of a 45,000-mile business class award ticket. Since I flew on
American I was able to fly business class from my home near San
Francisco to visit my dad in New York for a few days, then from New
York to Florida to visit my Mom, then back home. At $125 for 30% of a
ticket, you could say I was "paying" the equivalent of about $400 for
this 3-leg business class ticket. Now that's not marginal anymore: for
me this was a great deal. Had I purchased this ticket it would
have been well over $1000, maybe several thousand. I'd never actually
pay for something like that so I don't think of this as saving me
thousands. Instead, I think of it as getting me into business class --
which I'd never get to see otherwise -- for roughly the cost of economy.
Business class made the trip a whole lot more enjoyable, doubly so
knowing that through deals like this one, it cost me nothing.