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TPG reader Adam emailed me to ask about buying discounted travel:
“What do you think of buying airfare from a points and miles broker?”
In January, I cautioned readers against selling travel rewards to mileage brokers, but when Adam’s question showed up in the TPG inbox, I realized I hadn’t addressed the other side of the equation.
The most valuable award redemptions (on a per-point basis) tend to be for premium flights and top-tier hotels. When a first-class flight that normally costs $12,000 can be had for 70,000 points and around $500 in taxes and fees (rates are a hair higher after Aeroplan’s recent devaluation), there’s tremendous value to be found. Even if you wouldn’t be willing to pay the normal cost, it’s clear that award travel creates opportunities to explore the world in ways that might otherwise be unaffordable.
Mileage brokers capitalize on this by purchasing points and miles (generally for much less than what they’re worth), and then selling premium awards at a steep discount from the retail price. For example, a broker might pay $1,000 for those 70,000 points mentioned above, and then sell that first-class ticket for $4,000. That seems like a pretty good deal for the buyer, and I’ll admit that purely in terms of value, buying from a broker is definitely better than selling to one. However, the downside is very much the same, and once again I advise strongly against it.
Loyalty programs frown on mileage brokering; if you’re caught, you may be penalized no matter which side of the transaction you’re on. For example, consider this section of the Delta SkyMiles rules and conditions:
“… tickets obtained through prohibited sale or barter transactions are VOID, invalid for travel, and will be confiscated. Persons trying to use such tickets will not be permitted to travel unless they purchase a ticket from Delta at the applicable fare.”
If you buy airfare through an unauthorized channel, it could be canceled. When that happens, you’ll be left with no ticket and the prospect of trying to get your money back from the broker. The discount doesn’t look nearly as attractive from that angle.
It’s easy for me to say this because I’ve been honing my award travel skills for years, but I think you’re way better off learning the ropes and figuring out how to book those premium awards for yourself. As the saying goes, if you sell people international first-class tickets for $4,000, they’ll fly wherever they want for a day; if you teach them how to play the award travel game, they’ll fly wherever they want for a lifetime!
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.
- 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