Does it make sense to collect airline miles from credit card spend ?
Here is an example that shows it's not really worth it to accumulate airline miles from (organic/manufactured) credit card spending and it might make more sense to earn from cashback credit cards if it gives 2% cashback or more:
Objective: "free" award flight in business class
Example: Roundtrip award flight to Japan in business class
Using the miles path
Flexibility: poor, especially for travel with a partner
Learning curve: steep (time spent learning the programs, searching for availabily, etc..)
Typical Cost in miles: 130K to 150K miles (depending on award program) + $100 to $500 in taxes
Credit card spend required to earn the miles: $130 to $150K
Using a straight 2% cashback credit card like the MBNA Rewards World Elite card
Flexibility: good
Learning curve: easy, just a little bit of effort to watch for fare sales and promos
Typical cost in cash: $3500 aprox.
Credit card spend required to earn the cost of trip from 2% cashback credit card: $175K
So the difference in required spend is not that good for earning miles through credit card spend, considering the trade-offs in terms of flexibility and hassle.
For Economy seats, it even makes more sense to earn 2% cash-back than miles from cards that give 1 mile per dollar spent: You'd need to spend $50K to earn $1K in cashback, where as you'd need to spend $70K to earn 70K miles for a roundtrip award flight to Japan.
So a good strategy is: earn miles from credit card welcome bonuses, flight/hotel/rental/shopping and their promotions, but put credit card spend through a card that earns 2% cashback or more.
Objective: "free" award flight in business class
Example: Roundtrip award flight to Japan in business class
Using the miles path
Flexibility: poor, especially for travel with a partner
Learning curve: steep (time spent learning the programs, searching for availabily, etc..)
Typical Cost in miles: 130K to 150K miles (depending on award program) + $100 to $500 in taxes
Credit card spend required to earn the miles: $130 to $150K
Using a straight 2% cashback credit card like the MBNA Rewards World Elite card
Flexibility: good
Learning curve: easy, just a little bit of effort to watch for fare sales and promos
Typical cost in cash: $3500 aprox.
Credit card spend required to earn the cost of trip from 2% cashback credit card: $175K
So the difference in required spend is not that good for earning miles through credit card spend, considering the trade-offs in terms of flexibility and hassle.
For Economy seats, it even makes more sense to earn 2% cash-back than miles from cards that give 1 mile per dollar spent: You'd need to spend $50K to earn $1K in cashback, where as you'd need to spend $70K to earn 70K miles for a roundtrip award flight to Japan.
So a good strategy is: earn miles from credit card welcome bonuses, flight/hotel/rental/shopping and their promotions, but put credit card spend through a card that earns 2% cashback or more.
Last edited by SnoopDop on Nov 14th, 2016 3:27 pm, edited 2 times in total.
Part of the art of working in customer service, at any company, is the ability to invent plausible explanations for unexpected outcomes. An algorithm makes the decision. The agent does not necessarily know why.