I have the option to pay an office rent of about $5,000 per month on a credit card for a 3% surcharge. On the surface, I thought this was too high. Then, I realized that the cc fee (3%) is tax deductible, so the net cost of the miles is closer to 1.85 cents/mile, which is a decent deal...so, I may elect to pay with my credit card after all.

OK - so...?

[QUOTE]Originally posted by nologic:
I have the option to pay an office rent of about $5,000 per month on a credit card for a 3% surcharge. On the surface, I thought this was too high. Then, I realized that the cc fee (3%) is tax deductible, so the net cost of the miles is closer to 1.85 cents/mile, which is a decent deal...so, I may elect to pay with my credit card after all.

[QUOTE]

You can buy "incentive" miles cheaper through your business, usually around 2.5 cents per mile. This too can be expensed, and applying the same percentage you used to calculate your net cost per mile, can be had for approximately 1.55 cents per mile.



[This message has been edited by flytoeat (edited 10-24-2003).]

$1.85 a mile is about twice what I think miles are worth at the moment. I've lowered my valuation a lot in the last year due to higher redemption requirements (both miles needed and cost of underlying tickets which can be upgraded), difficulty getting award and upgrade seats, and the tsunami of mileage promotions which suggest these factors will likely get worse down the road.

Everyone has a different opinion on mile worth but most folks seem to be much lower than they used to be. The "2 cents a mile" crowd ain't that crowded anymore.

Or on the other hand about 1/3rd of what they are worth if you prefer to fly first class on international flights. It really depends on how you use them. I save mine and use them on flights to Europe and Australia and fly Business or First class.
An award ticket through AS for a flight on Quantas is 80,000 coach, 105,000 business and 135,000 first class. Those same tickets cost $2,000+, $7,000+ and $13,000+ on Orbitz right now. It could be argued that the first class ticket is returning over 9 cents per mile. Granted you could maybe find a sale and probably not many people would pay to fly first class at those rates but the point is that the value of the points is dependant on how you use them. I for one will never put myself through another coach flight to Australia. I'll book an award ticket for Business Class at 105,000 points which would cost me a little over $7,000 or about 7 cents a mile.

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"A day without Points/Miles is like a day without SUNSHINE"

That's the case always presented for high mile valuations-free first class or maybe busniness class international trips. And if one truly cashes all their miles only for those trips, and values that travel for those amounts, then yes the math works. And we get the WSJ articles about paying 3% fees to put your taxes on a credit card. What a deal.

But I bet most awards, I would guess the overwhelming bulk of awards, aren't cashed for those types of travel. For one thing, there just aren't enough award seats to go around and there never will be. Try booking business class to Europe on CO and, unless you're a gold status member, you'll find there's never a seat with more than 30 days advance warning. I never had a job I could leave for a long vacation on a couple of weeks' notice and I doubt many people have the time to plan or take all those miles as a series of first-class trips to Europe. So they get used for other, less "valauble" trips, or saved for retirement. Meanwhile, required award amounts increase more and more.

To me its like the books on memorizing cards to win at blackjack. Can it be done? Yes, it can. Do a lot of people think they'll do it? Yes, a lot do. How many succeed? Well, 100% of the authors of the books do.

The difference is that you can't deduct the IRS fee, but I can deduct the rent surcharge.

And yes, I realize I could buy incentive miles and that's a slightly better deal, but I have to set up a program for that, which is a little bit of a pain, and there are inidividual uisage limits, but it made me realize that 2.5-3 cents/mile pre-tax is a pretty good deal if you can deduct the expense and use the miles for FC/BC internationally.

If payment can be made with an American Express card then I would suggest you pay with a Platinum Starwood Preferred Guest card. Their points are most certainly worth the $1.85.