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TPG reader Todd tweeted me this week:

@thepointsguy Do you have a rule of thumb for when it’s economical to pay for a ticket with miles?”

A lot of factors come into play here. The first is your budget. If you’re really cash-strapped but need to get somewhere and have a ton of miles, why not put them to use? Even if it’s not the absolute best, highest-value redemption, if you get where you want to go and it makes you happy and enhances your life, do it!

There’s no hard-and-fast rule that says your miles must be worth at least this amount. What counts is being able to use them when you need them – being able to do so is winning in my book.

Of course we all want to maximize our miles and get the most possible value out of them, but sometimes, especially for last-minute emergencies, where you might not have too many options, just do it.

Another factor to consider is if you’re aiming for elite status since any award flights you book won’t count towards earning it. So while you might want to redeem miles to go to Asia in first class, you won’t be earning any award miles or elite-qualifying miles on those flights. So if elite status is part of your strategy, you do need to figure out the trade-off between booking award travel and paying for certain tickets and/or upgrades in order to accrue the mileage you need to qualify. I recommend that you should spend money on tickets when you can afford it and earn the elite credit on those flights.

There are a lot of factors when deciding whether to pay or redeem miles.
There are a lot of factors when deciding whether to pay or redeem miles. Photo: Getty Images.

If I had to place a concrete value proposition on mileage redemptions, I try to get at least 2 cents per mile in value when I redeem my miles. If you’re not getting at least 2 cents per point/mile in value on your credit card purchases, then you might want to think about a card that gives you a fixed return rate that’s at least that high, like the Barclaycard Arrival, whose redemption return rate is 2.27% when you redeem for travel, or the Capital One Venture‘s 2% return on travel and cash back. So that’s something to consider if traditional miles and points aren’t working out in your favor.

So in general, 2 cents per mile is a good benchmark, but if you can redeem for the travel you want, then you’re doing okay. Above all, it doesn’t make sense to hoard miles because they won’t gain value over time, as we’ve seen from all these recent devaluations, so you should be putting them to use.

Let me know if you have any other questions by messaging me on FacebookTweeting me or emailing me at info@thepointsguy.com.

Chase Sapphire Preferred® Card

Even after the introduction of the Chase Sapphire Reserve, the Chase Sapphire Preferred is still a fantastic choice if you want to avoid the Reserve’s $450 annual fee, earn 2x on all travel & dining and earn a 50,000 point sign up bonus.

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More Things to Know
  • Earn 50,000 bonus points after you spend $4,000 on purchases in the first 3 months from account opening. That's $625 toward travel when you redeem through Chase Ultimate Rewards®
  • Named Best Credit Card for Flexible Travel Redemption - Kiplinger's Personal Finance, July 2016
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions - as long as there's a seat on the flight, you can book it through Chase Ultimate Rewards
Intro APR on Purchases
N/A
Regular APR
16.49% - 23.49% Variable
Annual Fee
Introductory Annual Fee of $0 the first year, then $95
Balance Transfer Fee
5.00%
Recommended Credit
Excellent Credit

Editorial Disclaimer: Opinions expressed here are author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all posts and/or questions are answered.