Airline Miles Credit Cards - Are They Really Worth the Cost Per Mile?

In the current world of hotel points and frequent flier miles, one of the best ways for travelers to determine the value fetched by their credit card points is to calculate the cost per point or cost per mile. When they go about the act of redeeming their rewards and bonuses, they use these simple formulas to estimate exactly how much they would be getting per point; so as to reap high benefits from their accumulated points or miles.

Here, you get a closer look at how to figure out the cost per mile and whether your airline miles credit card is really worth it, or not.

Calculation for Cost per Mile

A roundtrip flight from New York to Los Angeles

Cost for flight: $300

Miles flown: 5,000

Cost per mile: 6 cents

If you use miles:

Cost for return flight: $300

Miles required for "free" flight: 25,000

Cost per mile is : 1.2 cents

So, is it really worth it?

What is cost per mile?

Cost per point as well as cost per mile is generally estimated in terms of travel - you need to divide the cost of a ticket or hotel room by the total number of points earned on the travel credit card from that particular flight or stay.

For instance, if you took a return cross-country flight from Los Angeles to New York and the ticket costs you $300, you would end up getting one frequent flier mile for every mile flown. This is the usual norm with most reputed U.S. carriers. In this case, you would earn approximately 5,000 miles in total, which would get you a cost per mile of 6 cents each.

The rates on the charts of airline awards vary across the spectrum, with a round-trip domestic redemption being around the mark of 25,000-miles. In line with the calculations above, if you choose to pay in frequent flier miles rather than cash, then you end up being charged 1.2 cents per mile for an award seat.

Hotel Points for every Dollar

The estimation of cost per mile is practically the same in case of hotels too. But then, hotel programs calculate the total number of points earned on the money that you spent. For example, while you may earn 10 base HHonors points per dollar spent at Hilton properties, you get only two Starpoints per dollar for your spending at Starwood Hotels and Resorts.

Here, the value of the points is dependent on the credit card used by you to pay for the stay, your elite status and/or your frequency of staying at the hotel. Many hotels (as well as airlines) offer special spending bonuses when clients use cobranded airline miles credit cards to pay for their stays or flights. As far as redemption is concerned, the method of calculation is the same as the determination of value received from each point. You have to take the price of the room you intend to reserve and divide it by the total number of points that you would need for getting a free night.

Credit Cards and their Worth in the Mix

The kind of points and miles earned and the rate of earning them are largely dependent on the kind of credit card that you have. Many cards provide bonus earning opportunities through cobranded airlines or hotels. These miles/points give varying values whenever you decide to redeem the same. The bonus features offered by certain credit card companies and real incentives issuers of credit cards can be converted into miles/ points for travel purposes. If you wish to estimate the cost per point/mile on your own, simply divide the amount spent in dollars by you by the number of miles/points that you would earn.

It is important to note that cost per mile works only when you decide to pay off your credit card bill every month. If you intend on keeping a balance, then you have to pay a high rate of interest; which in turn lessens the overall value and benefit that you could derive from your card. In a nutshell, you need to weigh the benefits of these rewards and determine how good it is for your budget and you.

We recommend you check out the best airline miles credit card on the market.


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