Worth it to Pursue Miles?
 

A few years ago I looked into mileage programs, how to accrue miles, how many miles can be used for a flight, and signed up for a bunch of frequent flyer programs. The issue was that I only traveled a couple times a year and so it didn't seem worth it to pursue things.

Now in addition to the 2-3 times/year I fly for personal reasons I am flying to 2 conferences this year, might make another business trip, and have an international flight later this year. I flew first class (business class?) on Delta once a couple years ago and it was an amazing experience compared to coach, and have flown in first class on Airtran a couple of times which is basically the same as coach, but it occurred to me that I would really like to fly business class more often as the ride is much more pleasant, productivity is higher, I can save time in airports, etc. I looked at business class tickets online over the next many months and was shocked to find them starting at $900 each which I would rather not pay and the thought occurred to me to try to accumulate miles.

The issue was that I didn't find in the past that it was beneficial to pursue miles because with credit cards, the better airline ones have an annual fee, and if I don't continue to fly frequently in the future it might not be worth it and to cancel the card would be even worse due to the hit to the credit which is probably worth much more than I would save with the card. In addition when I compared credit cards the best I found was a 2% cashback on everything + Discover's 5% back in certain categories which is far more than what I could get in miles. Also with redeeming miles it seems that x miles = UP TO x dollars to book on a particular website but the flights I can find online are always much cheaper than the upper limit, so essentially I am wasting miles. I have joined other special promotions like getting extra miles to eat at certain restaurants but if I wouldn't have eaten there anyway I am just wasting money and there are a lot of deals to buy things online but it is always more expensive than if I did a search on the Internet or bought something in a store.

I have generally not flown with any one carrier as I just look for the cheapest deal each time (the idea being that I would save more this way than what I would receive in extra miles) and recently I have flown with Airtran and Jetblue but in the past have flown Delta, AA, United, Continental, Air Canada, Skybus, some international carriers, etc. I have miles in quite a few programs but I would have to check to see how many.

Am I thinking about this correctly or should I try to consolidate with 1 carrier or try something else? Appreciate everyone's thoughts/discussion!

Dude! Are you seriously asking this crowd whether it's worth using a FF program? Really?

If you expect to continue flying 6-7 times a year, including internationally, and you'd like at least some of those to be in business/first class, then I suggest you sign up for a FF program (or two) and try and be loyal to it (or both) for at least a year or two.

As for other ways of earning miles, I've never eaten out, or eaten at a particular restaurant, just to get miles. But when I do get miles for eating out, or renting a car, or staying at a hotel, or buying my wife a present, I'm happy to take them.

I'm not asking whether it's worth it to join a FF program. I am a member of practically all of them. I am asking whether it is worth it to PURSUE miles. Eg, is there a credit card that will give more return than the 2% cash back (or 5% in certain categories) that I can currently get? How do you think about paying a lifetime annual fee (given the credit score issue) for an airline card? How much extra are you willing to pay to fly on 1 airline rather than compare everyone for each flight?

How should I be thinking about this, eg, should I try to get to Silver on a particular airline? Which one?

You mention that when you eat out, rent a car, or stay at a hotel, it's nice to get miles, but wouldn't you be better off getting 2-5% cash back?

Thanks for the clarification. I am sorry I misunderstood the original posting.

I don't know the answer to your question, frankly. I've never had a cash back card and so have nothing to compare my experience too. But I fly a lot at this point of my life, most of it on very long flights. So the ability to use a lounge, to board first, not to pay a checked bag fee, to upgrade to first class, to be fed and given drinks on flights: all of that is considerable. And when I stay at hotels, to get a slightly nicer room is a similar perk of a life spent on the road much of the year.

But your point is well-taken and I personally am not "all in" the miles game. I have just one credit card (linked to an airline) and one debit card because I am still slowly rebuilding a credit history damaged by irresponsible college behavior. :( I choose hotels mainly for their convenience and cost rather than miles potential (though if those are equal...). And, if a competitor gives me a vastly better price/route than my preferred airline (DL in my case), I take it (for instance, when I fly to Chicago, I use Southwest; just makes sense to do so). But if the difference is just $50 and I know I'll get upgraded to first, I'll fly DL. That's worth it to me too.

YMMV.

my DH and i were discover people getting 2-5% back according to what was purchased. then i started playing the FF miles game very actively and we went to italy First class for $90 each. then i figured out how much we would have had to spend on cash backs to pay for the trip and it came to over $300,000. no way did i spend even close to a sixth of that. i don't get my points from just using the CC, i eat, shop on line and everything else to get points.

i am teaching a class this week on how start flying for free.

so my DH converted to use the credit card i tell him to use if there is a promo(like now AA getting 50% more )

i would continue to pursue.

This is going to sound kind of weird. A "perfectly rational" economic actor would make decisions about miles vs. cash back based on their economic needs and what value the miles are. Of course, there's no easy way to assign value to miles (this has been debated ad nauseum).

What I will say, is that for me accruing miles has a lot of value because I ONLY redeem them for travel. In a way it forces me to get out and see the world. It's so easy to just take that cash back, sock it away in a retirement account or buy the latest tech fad (iPad 2). But having miles makes me travel, and for that alone I love them. In the end that is much more valuable than the cash.

I have about 400,000 miles now, and I'm in my late twenties. I dream about the vacations I will take and where I want to go. Sure that could be $4,000 or so in cash, but I know that I would spend that money on car payments, or gadgets, or other stupid things. Miles are an investment in life experiences, and they give very good return on investment.

And even from an economic perspective, many here redeem miles at LEAST at 2cpm, often as high as 8-9cpm. Effectively that is as good as a very good cashback card, plus huge signup bonuses are common.

Not to detract from the ongoing discussion or my original questions, but let me ask another: I am flying Turkish Airlines this December and the total miles of all legs including stopovers is just over 15,000 miles. I don't know if the conversion from trip miles to FF miles is the same but I recall them asking on the form about a couple of American FF programs that I think I can get miles on instead of Turkish, I will find out which they are. I have 2 more roundtrip domestic flights to book this year.

As far as I can tell to qualify for various elite statuses, all the travel has to occur in 1 calendar year. Is there any way I can make something of these miles I will be accruing? I think this is the goal, right, I want to try to get some kind of elite status in a FF program?

Not to detract from the ongoing discussion or my original questions, but let me ask another: I am flying Turkish Airlines this December and the total miles of all legs including stopovers is just over 15,000 miles. I don't know if the conversion from trip miles to FF miles is the same but I recall them asking on the form about a couple of American FF programs that I think I can get miles on instead of Turkish, I will find out which they are. I have 2 more roundtrip domestic flights to book this year.

[/QUOTE]

US based FF programs are, generally speaking, the most generous. US, CO/UA are the 2 American programs that you can credit your Turkish Airlines flight to. Careful though. Depending on the fare bucket, you might not get 1:1 credit.


US based carriers are on a 1 JAN-31 DEC qualifying year. One goal is to have status. The other is to have enough miles to get seats in a premium cabin. You might use the miles for a free ticket in F/J, or use them to upgrade. If you travel in a premium cabin, you get many of the benefits of status, such as priority check-in lines, lounges on certain flights, priority baggage handling. Of course award tix don't earn miles.

Yes, one calendar year.

Elite status is one possible goal.

However, if you are simply looking to fly one premium class trip per year, you can accomplish your goals with only credit card signup bonuses. For example, right now, sign up for the two AA credit cards and you'll have 150k+ miles, plenty to ride in business/first class. You could probably do something similar 3 or 4 times with the bonuses out there now. When you can use points to go directly to the front of the plane, elite status matters much less.

But you shouldn't ignore the possibility for elite status. If you're flying 15k miles on Turkish, that will get you well on the way to elite status in Star Alliance. If you can make it to 25k this year, you'll have Premier status. The major perk is unlimited space available upgrades on domestic flights and nearly guaranteed Economy Plus seating on all flights. Makes flying much, much more pleasant.

Take some time to learn about United's Mileage Plus. Also, on the United site, there is a list of which fare classes on Turkish will earn credit in Mileage Plus (most will).

No, you didn't. You went for $90 PLUS the opportunity cost of earning all the points. If you did it with spend versus sign-up bonuses then the opportunity cost there is not trivial.

Points make a lot of sense if you're earning 25K+ each year. Anything below that and shopping on price and saving the extra you would have paid into a "travel fund" is going to offer a better RoI.

I hope that when you teach the class next week you offer full disclosure on both the costs and the benefits of this game, not just the upside.

When flying a partner airline on a paid ticket be sure your particular fare class and metal (if the flight is on a subsidiary) match the requirements for awarding of miles. I made several flights on Turkish a couple of years ago that did NOT earn miles, to my disappointment. Loved Turkey, but that was a sad surprise.

It's a hobby. I do this during some downtime/free time, like watching sports (it's really easy to read these boards and blogs during baseball). I fly less than you OP, and I have over 15K miles for US Air, and 10K Hilton. I've spent less than $50 on things I didn't need or paid a dollar or two more for a purchase just to get the miles. People would probably tell me that my miles will devalue, but for me it's a hobby. I'll keep the accounts active as best I can, maybe sign up for a credit card or two eventually, and someday take some free trips. If you're time is too valuable (and only you can decide that), then it's not worth it.

I went in - all in - about 15 months ago.... I had 0 miles in February 2010. I have "earned" over 750,000 miles and hotel points as of today. (not including mint miles) I followed Flyertalk and took advantage of every single offer I saw available including multiple "free" trips using the Expedia deal last November on DL getting DEQM and bonuses from RDU which also had the added benefit of quickly getting me to Gold in Delta then took advantage of another Delta offer to fly 2 paid R/T totaling less than $800 to get to Plat thru 2/2013. I have spent less than $3000 total towards this hobby that I wouldn't have otherwise spent yet have traveled lots and lots just for fun and every bit up front as I am flexible. I do watch flyertalk constantly to catch the best deals, something most sane people are not willing to do...

I have not found this to cause my FICO to go down at all. I am actually a few points higher than I was when I started, due to lower utilization.

You don't HAVE to go all in, you could just sign up for a couple of credit cards and take one big trip a year up front which might be all you want to do... on the other hand.... Its a fun hobby and can be quite addictive.... so be careful ;)

I think for me and most other people it is worth to pursue miles thru credit cards rather than flying. I dont fly much at all but thanks to credit cards I am able to take nice trips by redeeming my miles

Signing up for more credit cards will not make your FICO score go down in the long-term, what I was referring to is that canceling cards will make your score go down and if you sign up for a CC with an annual fee then you basically have to think of it as a lifetime card. I may look into the best airline cards without an annual fee.

If I get Premier status this year, does that do anything for the future or do I have to try to get 25,000 miles each year? What are the options for getting a lifetime higher status? There are a lot of posts here that were started even 7 years ago that are very detailed in the OPs but probably outdated, and are still going on now but the last few pages are not very detailed and maybe missing a lot of the offers. It would be nice if this kind of information was in a Wiki or an external page that could be updated as a thread is not the best place for information that has to be continually updated. For all of the offers that I may sign up for, do these all qualify for elite status or is it just miles flown?

Will look into Star Alliance and airlines you have mentioned...

Edit: found some answers, elite status generally seems to be for the current and next year, AA is only one that offers lifetime elite without actual flown miles, usually 1,000,000 miles for any carrier for lifetime.

Why would canceling a "newer" card hurt your score except for the util
ization aspect?

A key component of FICO scoring is the average account age. If you cancel any credit card, then the average account age will reflect that shorter history along with all of your other credit cards, and will continue to do so until 7 years after you canceled the card after which it will drop off and not be considered part of the average account age. Since persons have a variety of short-term factors that will affect the credit score, such as a car mortgage, student loans, etc, these are automatically decreasing the average account age, so to mitigate this 1 can hold credit cards for a long-time to increase the average.

Are most of your 400,000 miles with 1 airline and how did you get the majority of them?

From doing some reading it seems that AA is the only 1 that offers lifetime elite and you would have a chance of reaching this. I could qualify for an elite status this year but don't know if I would on a regular basis although it's possible and this makes me want to lean toward AA as the preferred airline although I don't think I have many miles with them now.

This is the key distinction. The OP seemed to be looking at it in terms of which credit card to actually use on an ongoing basis for purchases - is it worthwhile to use a mileage earning card, or are there better choices? That's a decision that has no one answer. The key to mileage credit cards these days, however, is really the bonuses that can be earned upon acquiring one, usually with some minimum spending requirements. These pay off handsomely for most people willing to devote a small amount of time to them, and form the basis for most of the buzz on this website. I just got back from a free trip to China due to one card bonus, and am planning my next one to Russia due to another.

I am NOT a credit expert by any means so I am really trying to understand... please be patiant :) Wouldn't canceling any "newer" cards actually HELP the average history then?

I have 3 cards that are almost 20 years old and lots of newer cards. I know not to cancel the older cards of course but I plan on canceling most of my newer cards in the next few months, I guess I will see what it does to my credit as I go... My credit score averages about 730-750ish and don't want it below that, don't think I will ever get it much beyond there however, I inherited several properties so no need for a mortgage and never had a car loan, hard to boost your score without a mortgage. I really don't understand WHY having a car loan or a mortgage should make my score go up but have been told time and again that it would.... bleh...

For ongoing purchases I will be using my Plat Amex. It has been the best overall card for me for daily use. It gets you lounge access pretty much anywhere in the world, which makes flying nicer and in the last year has had some GREAT bonuses for transferring miles..... much better than the SPG amex in my opinion. However, it is the sign-up bonuses that give the most bang for your buck. If things change, I will change with it.

It may not necessarily go up with getting a car loan or a mortage, that depends on how many different types of accounts you already have so it depends on your individual situation.

Say you have the 3 cards that are 20 yrs old and 1 newer card of 1 yr. The average account age of these 4 is 15.25 years. You cancel the 1 yr card. The average account for the 1 yr card is still included in the calculations for the next 7 years and considers that card to be a 1 yr card. So the average account age is still 15.25 yrs, or even less if you have more short-term cards.

ah.... gotcha. That was what I was missing. Thanks!

There is an answer, it just depends on a comparison of the various cards available.

This is my question, do they really pay off handsomely, or do they just seem to? If you had a no annual fee 2% cash back on everything card + a 5% cash back in certain categories card, would you have been better off than getting miles? It seems that your miles were accumulated from initial bonuses, are these annual fee cards, how much do you pay, and are you planning on keeping them open indefinitely or are you willing to take the hit to the credit score when you cancel them after a few years? If you have to keep getting new cards to keep getting bonuses then this is decreasing your credit score also which can have a financial impact.

I think it seems to everyone that getting these airline cards is a good deal and it's nice to accumulate miles and get free trips, and there is a big marketing component, but it could actually turn out to be a bad deal and more expensive than what you would have gotten elsewhere.

NC Girl, no problem, they certainly haven't made this stuff obvious!

It isn't clear to me when miles from NOT FLYING work toward elite status or toward lifetime elite, and when can miles be used for upgrades vs. only go toward elite status? Does anyone know of a page that explains these? It seems that I would need to know these to determine which airline I want to try to use if it will make more sense to use 1 instead of compare them all for each flight which I have usually done, and would be nice to achieve lifetime elite if there is a possibility of doing it at some point without exclusively flying, or by somehow buying it, although maybe eventually I could get there with flying alone based on my current flying habits.

fikio: Welcome to FT! I am sure you understand that it is always good to get the miles from your flights or any other activities you'd be undertaking anyway. Moreover, it is also good to concentrate them in one airline (so fly them or their partners as much as possible). I think that much is obvious.

Now we come to whether it makes sense to pursue the miles? To me that means more than simply "not leaving them unclaimed on the table"; instead you'd undertake extra trouble and expense with the purpose of getting more miles.

That to me is worth it if and only if I would (i) fly enough to achieve elite status (25K miles on most carriers), and (ii) fly enough after that to utilize the benefits of that elite status. If either condition is not met, then I would still let the miles accumulate as they do and use them as I can, but I won't undertake any special trouble/expense in pursuing them.

Please note that this decision is carrier by carrier. For example, I actively pursue AA miles and status, but take UA miles only as I happen to fly them. Others may and do choose differently.

Elite status and upgrade policies vary by the carrier, but as a common rule, only flown miles count towards elite status. So you must fly at least 25,000 miles per year to achieve elite status. However, all miles from all sources (bonuses, credit cards, online surveys, etc) can be used to buy award flights or upgrade purchased tickets.

Awards and upgrades are capacity controlled, come with byzantine web of rules that differ for each carrier, and are not always easy to get. However, people do get them; just be prepared for occasional disappointment. With awards it is generally a matter of advance planning. With upgrades, they are harder to get when you have no status but become easier as you progress up the elite ladder.

Good luck!

I believe FICO looks at the amount of time since the account was opened, not the amount of time the account was open. Please correct me if this is wrong?

However, a closed account's credit line no longer factors in to the debt-to-credit-line ratio. If you have average balances of $5,000 (easy to do if you do pay off each month, but pay as many bills/living expenses on cards as possible) and had $50,000 in open credit, and then close a $20,000 card, your ratio would change 1:10 to 1:6.

With a specific number(s) in mind of cash back you can get, you'll obviously have to place certain values on miles/points to make a comparison. That depends largely on your personal goals and uses for the miles/points and can vary wildly among FT members.

While the credit card landscape is constantly changing, the UnRoadWarrior blog has a pretty good 3-part series comparing cash back cards with miles/points cards that you might find useful.

http://boardingarea.com/blogs/unroad...-carry-part-i/

A few comments prompted by posts in this thread:

Don't overemphasize the cost of an annual fee. This is especially true for hotel cards. You can easily recoup the fee with the yearly bonus. For example, Priority Club Visa has a $49 annual fee but gives you a free night certificate at any IHG hotel. Easily worth it. (Similar with Marriott)

In your particular case, the United Explorer card might be worth it, especially if you can't make it to Premier. The first checked bag free, priority boarding, and two lounge passes might be worth the $95 annual fee.

Also, while cancelling cards might have a negative impact, you're probably overestimating it. By a lot. There are many, many people here who "churn" through lots of cards and it doesn't have much impact. If you are not applying for a mortgage where the interest rate of the loan is important, then the negative impact probably doesn't even matter.

For someone like you, who doesn't travel much but wants to sit in the front, there really isn't much of an option but churning credit card bonuses. It'll take years to earn enough from the spend alone.

Let's take a hypothetical example. Let's say you spend $2000/month. You want American Airlines miles. If you use an AA card, you'll earn 2000x12=24000 miles per year. That's just short of 1/2 of a ticket in Business Class to Europe.

Instead, if you used $5500 of that spend to fulfill the signup requirements for the two AA cards, then put the remaining $18500 on a 2% cash back card, you'd have 155500 AA miles PLUS $370 in cash. That's THREE Business Class tickets to Europe plus $370 in your pocket when you get there.

You can easily do even better than that. In my book, that's worth a potential small ding to my credit score from cancelling in a year or two.

The data in the credit report are primarily used as proof that you will manage credit well, using your past activities as evidence. If you have never had a mortgage then there is no evidence, either way, as to how you will manage a mortgage. However, if you have had one for years and always paid on time, there is lots of evidence. That evidence translates into additional overall score points.

Until you prove you can handle it, the score reflects (some of) the risk that you can't.

There are many, many people on this board who successfully cancel their airline cards within the first year and still maintain excellent credit scores. In fact, there are many who did that with multiple cards in a year and still have great credit scores. Of course, everything in moderation and if you are planning on obtaining a mortgage or something similar in the next year or two, be even more careful. Otherwise, one of the primary ways that people around here build up their frequent flier accounts is by obtaining sign-up bonuses on credit cards. Often these have a first year fee waiver. Many then cancel before the card renews and they have to ever pay the annual fee.

To get started, I would just select one airline card (or hotel) that gives a nice sign-up bonus to get you going. Then, use that card for purchases you were going to make anyways and watch the points stack up. Register for dining programs and shop through shopping portals when making purchases online. If you find overtime that you don't seem to be getting a good value out of doing this, stop. If you find that it is a great value, keep going. Maybe even get another card or two with great sign-up bonuses as time goes on. Good luck!

Yes, I am going off topic here, sorry...

I have had CC credit lines as high as some mortgages, this should show I handle money responsibly. One banker told me that "homeowners" are seen as being more responsible. Well, I am a homeowner, I own several homes, I just don't have mortgages! Why does having a mortgage mean you are more credit worthy???? I really want to know the answer to that... I get quite perturbed at this line of reasoning quite frankly! Seems to me that many people I know with mortgages are a lot more likely to get into trouble with a few miss paychecks than those without such a huge monthly commitment.

Anyway, I was told that having a mortgage for several years would up my Fico by 40-50 points or so. I wonder if taking out a HELOC (but not using it) would have the same effect? Having some extra points would give me a lot more leeway to play the game and not worry about minor hits to my credit as much.

You already know the answer. :D

FICO is just a number, calculated automatically by a model. ~10% is "Types of credit used". It is what it is.

If it makes you feel any better, we think you can handle credit just fine.

Yea, well thanks and all that, but "we" err. "you" don't count where it really matters!

:)

I never met a mile I didn't like, or a loyalty program or coupon offer etc. etc. and I've never felt that attitude has been anything but "worth it". I hope you get into it too, OP.

Thanks for the correction, it is calculated from the time the account was opened. So my numbers aren't right, but this is still a negative since there is a short card or multiple short cards that are lowering the average until they drop off.

Agree, I also think you can handle credit fine, but they think that a mortgage is evidence of credit-worthiness. Also though, they want to see how you can manage risk and aren't interested in how you manage cash.

If you really want to increase your score, you can buy an official FICO score and a score report which will give you some information on how you can improve your score (or more accurately, they will give some general statements on how they got to your current score, and you have to figure out whether it can be increased and how to do it), but it is becoming more difficult to find because other companies are selling scores that are not actually FICO scores but are branded as them and have much less helpful advice. If you are going to buy an official score I might drop by a FICO forum first to make sure you are buying the right one.

I got one from myfico.com and its only negative point was that I had no mortgage. :(

Oh well, I have only been turned down for credit once and was able to get them to reconsider when I called in, Its just that the whole mortgage thing is a sore point with me. OK. OK. Gripe completed...... lol

Yes it's worth it!

But only if.... you acquire the miles at next to nothing and/or you have skills at getting a high redemption rate using them for awards. Otherwise, save hours out of your days and take the 2% rebate.

Most of the accumulation comes from signup bonuses and from flying, not from spend.