By the same logic, my Starpoints are worth 12 cents each!! (I used 'em for a suite once that had $1200/nt. printed on the notice on the back of the door.)

:D

As Supreme Court justices sometimes do, I concur in part and dissent in part with your opinion about the value of miles.

I agree that one can substantially "overvalue" them by picking the highest [ticket price]/[redeemable miles] ratio when can come up with, especially if they will not be taking down such a ticket. Those very high ratios (I have booked a 13 cpm one) exist because the tickets are priced in the first place with price-insensitive flyers (including award redeeming ones) in mind by the carriers.

I disagree, though, that "unless you would (absent an award) have paid that much of your own money for the ticket, which is hardly ever the case, the true value of the miles is far less." And while it is inarguably logical to say, as you have, the measure should be "what fare would leave you on the fence between purchasing it and redeemding miles for the award," that isn't the way people generally value luxury goods, which these expensive international tickets are.

When I am earning miles, whether by flying or accruing them with a credit card or by other means, I figure their worth at 1.2 cpm, and at some point in the future expect to redeem them for substantially more (never, never less than 1.5 cpm, usually 2 cpm or greater, sometimes much more than 2 cpm). Yesterday, I pulled down 270K miles to send a friend and his family transcon in first, and I expect to replenish my account with the use of credit cards to pay taxes and get double miles (1.25 cpm) for doing it. That should give me back a considerable number of miles at pretty close to my own cap for buying, and also yield 5K of EQM to me and my wife. So, I wouldn't have chosen to pay for those first class tickets (my friend might have done so), but with miles there was a big step up in value to all of us from what the miles were "bought" at and what they are being redeemed at.

You raise an excellent point, though using awards that you would pay for doesn't necessarily reduce the true value of a mile below the 1.2 cents/point break-even point (2.49/2 with a double miles promotion).

To use a routine example where I would otherwise pay cash: A weekend night at a LAN Sheraton was $114 (with tax), or 3,000 points. That's a return of 3.8 cents/point - more than two times the 1.2 cents/point convenience fee.

In reference to the NYT piece, we all know that mass publications are for the masses - information that's true for most people. The article is probably correct for most airline cards. But for Starwood the math is straightforward: 10K points will cost $124.50. Will a 10K-point room cost you more than $124.50?

Split Tax Payment
 

For those who have paid their taxes with a credit card in the past, is it possible to pay part of your taxes with a credit card and the remaining amount by check? If so, what are the mechanics?

After paying $5,000 in taxes by credit card, there isn't much point in paying additional $'s unless you value your points/miles at more than $0.0249 per point/mile.

Yes, I've done that. You can even do two cc payments, plus cash, which I've also done. The IRS cares only that they add up to the appropriate amount.

You may have SPG AmEx in mind when you allude to that $5K cap on the double miles offer. However, that is not the only card to offer it. And UA Platinum Visa doesn't limit one to a $5K payment for 10K miles. Plus, the UA card offers the possibility of earning 5K of priceless EQM, when one charges >$35K to the card in a year.

I still think the ~$140 extra you spend could be used towards a MR or other trips.

1.4 cpm($140/10,000 miles) is ok, but it's still not eqm... and even if it put you over the top to get the 5,000 eqms thats 2.8 cents per eqm. I think that's too high to say it's worth it.

Just to be clear - the $140 brings in addition to the upfront 25K of RDM and 5K of EQM, with the possibility of another 10K of non-BIS EQM, 5K of it with an annual spend of >$35K and 5K of it matching united.com spends of up to 5K. So it is not $140/10,000 miles, unless the 10,000 in your denominator is the difference in RDM between a no-fee card and the $140 one. And if you are going to treat those "extra" 10K RDM as though they were being purchased for $140, that is at 1.4 cpm, then you ought not at the same time treat the upfront 5K of EQM as costing 2.8 cpm, because you are in effect double counting analyzing it that way.

Would you buy RDM at 1 cpm? If you would, then perhaps you should allot $100 of the $140 to purchase of RDM, leaving $40 to be counted against the purchase of 5K EQM, with the potential to earn more non-BIS EQM. 1 cpm for RPM and .8 cpm for EQM appeals to me. (Re-jigger it all the way down to an absurdly cheap .5 cpm for RDM and you will still have non-BIS EQM, the stuff that 1K-lite is made of, at 1.8 cpm, a reasonable cost.)

Hello, all - I'm a reporter and would like to write about this pay taxes/get miles situation for my travel tips column. Would anyone who has gone through this process like to speak with me about how it works? I'm trying to follow all of these numbers and acronyms, but I might need a little help. Please email me if you've got a handle on it.

Thanks,
Jessica Mintz
[email protected]

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.

RDM = redeemable miles. Miles that you can redeem for awards.

EQM = elite qualifying miles. Miles that can earn you elite status in the program.

Most mile-earning credit card purchases do not earn EQM.
You can earn awards through such purchases, but not elite status.

I've seen this argument here many times, but I must confess that I don't really understand it. If I'm unwilling to pay $1M for a Ferrari Enzo, that doesn't mean that the car is worth less than $1M if there are enough other people who are willing to pay that much for it.

What does make sense to me is that a saver award ticket is worth somewhat less than a discount (e.g., Z class) revenue ticket because it is (more) capacity controlled and doesn't earn miles. But I don't understand why it's worth much less than that. By the same measure, why isn't a standard award ticket worth somewhere between a discounted and full-fare revenue ticket -- regardless of whether I'd be willing to pay for the revenue ticket?

I should note that I am sadly under-educated on economic and finance matters. So I'm happy to learn from the better informed about how to value miles.

Haven't done it yet but this is what i intend to do when i come back from my trip. (leaving Thursday to BOB/RFP via JFK from BOS on TN...cant wait :D ) Planning to put 5k on amex spg and 5k on delta amex... the rest, cut a check.
What do y'all think I should do? I reckon only double miles is worth an extra 249beeps... no??

If you could acquire for $400K a luxury car that retails for $1M, it would make sense to do so, even if you would have no interest in owning such a car at a much reduced price. It would make sense because though you might not be able to resell the car for the same $1M that the dealership can sell it for, it probably would not be hard to resell it for $700K, and thus you could realize a substantial profit by flipping the deal ($700K - $400K = $300K profit). That is a quite different matter from buying frequent flyer miles and imputing to those miles a very high value based on use for international first when you wouldn't fly international first otherwise.

The airline miles you would buy by paying the "convenience fee" required to use a credit card for taxes can't be resold like that deeply discounted Ferrari, or not easily and without risk. So if you are buying them the analysis should be what are they worth to you, not what might they be worth to someone else.

I don't agree entirely with the "pragmatic" analysis put forward by Efrem, but I do think he has a point about not overvaluing these miles and using a more reasonable measure of their value than the absolute highest value they could be put to.

Welcome to FlyerTalk, JessJournalist, if this is your first time participating.