The Critical Points: 'Adam Ruins Everything' Misses Many Marks On Miles
Each week in his column "The Critical Points," TPG Senior Points and Miles Contributor Richard Kerr presents his opinion on a loyalty program, card product or recent news that he believes is overlooked, unsung or the result of groupthink taking mass opinion in a direction with which he doesn't agree. His goal is not necessarily to convince you to agree with his position but rather to induce critical thought for each of the topics and positions he covers.
CollegeHumor.com sketch comic Adam Conover published his latest video Thursday, entitled "Frequent Flyer Miles Are Actually Costing You Money." If you haven't watched it, grab a pen and as you watch, make a few notes of the different arguments made against frequent flyer programs and credit cards.
As a pinnacle nerd of the loyalty program space, I thoroughly enjoyed the video and the obvious research some staff writers went through to piece this together. That being said, Adam did stretch the truth a bit (for comedic purposes, I'm sure), so today I'm going to go through several of the points the video makes to support the argument that miles are a rip-off and costing you money. I'll give a response to each one, either confirming or rebuffing it, all the while ensuring that you keep the faith that airline miles are still wonderful things.
Argument: Airlines control when and how you use your miles.
Response: Mostly True
Legacy carriers control award inventory and rule it with a tight fist. Finding low-level award seats around holidays and peak travel dates can prove difficult and is probably the largest frustration of people looking to use their miles. The exception would be airlines like JetBlue and Southwest, where all seats are available for award bookings and priced based on the revenue cost of a ticket.
All that said, if you are willing to spend a higher amount of miles, you can typically still travel pretty much any time you want.
Argument: Airlines can rewrite rules to change the value of miles at any time.
Over the last few years, airline programs have reminded us (time and time again) that they, and they alone, have complete authority and autonomy over the rules and benefits of their programs. They can change benefits and award charts without notification and have done so more times than I care to mention. Reading straight from Delta.com:
"These rules are subject to change at any time. Unless otherwise stated, the current rules in effect at the time of your travel or request for a benefit or other transaction will govern that transaction. Delta has the sole right to interpret and apply this Membership Guide and Program Rules. Please check back frequently for program updates or rule changes."
Such autonomy and customer-unfriendly moves have created rumblings from lawmakers that the time to regulate these programs is coming, but no serious moves have been made in such a direction.
Argument: Airlines base the miles you earn on ticket price.
Response: There's a lot missing here.
Yes, the three main legacy carriers now award redeemable miles for their own flights based on your ticket price, but elite status also plays a key role. Alaska Airlines still awards miles based on distance flown; Southwest and JetBlue have long since awarded miles based on the cost of your ticket. However, you can still earn miles in legacy carriers' programs for the distance of your flights by utilizing partner flights and crediting back to the legacy program. In addition, elite-qualifying miles are still earned based on the distance of a flight, a key point the video leaves out. This fact is crucial (and unchanged) for road warriors and business travelers.
Argument: If you want to earn a lot of miles, you have to buy the most expensive seats.
You can earn hundreds of thousands of miles through credit card sign-ups, monthly personal spend, business spend, hotel partners, car rental partners, annual spend thresholds, shopping portals, dining programs, apps and limited-time offers. I certainly don't buy the most expensive seats and I have plenty of miles to burn. Even TPG Senior Editor Nick Ewen, who officially hung up his road warrior shoes when his daughter was born at the end of 2014, is able to earn hundreds of thousands of points and miles every year by carefully maximizing his spending.
Argument: If you don't fly often enough, you might not get to use your miles at all.
The vast majority of airline miles either don't expire at all (Delta and JetBlue), don't expire if you hold a co-branded card (United) or only require one qualifying activity every 18 - 36 months to extend your expiration date. A shopping-portal purchase, charity donation or transfer of miles from a hotel or transferable point currency to your account will reset the clock. There's absolutely no reason the person who flies infrequently can't use their miles. Only a few programs have miles that are not extendable (Singapore) and must be used within three years of earning them.
An even better option is to sign up for AwardWallet and get expiration alerts in your email a month before your miles are going to expire. If you don't use the tools out there to monitor your programs and let miles expire, that's squarely on you.
For additional details, check out our guide to keep your points and miles from expiring.
Argument: Airlines will revoke your miles if you do anything to violate their 'specific, sneaky terms'.
Response: You have to be pretty egregious to be kicked out of a program.
Airline terms and conditions are pretty clear when it comes to the offenses that could get you kicked out of a program and forfeit your miles. There's nothing sneaky waiting to catch you which would risk your membership. If you sell your miles, trade upgrade instruments or somehow figure out ways to manipulate vouchers or an airline's IT, you're probably aware what you're doing is wrong and you've decided to risk your membership with the frequent flyer program. There's no risk to the average member that an airline will suddenly and unilaterally revoke your miles.
Argument: Most Americans don't understand how programs work or know how many miles they have.
Response: This is great news for you and me.
If everyone was aware of all the great ways to earn and use miles, competition for award space would be even fiercer, and programs would devalue at a faster rate. If most Americans aren't willing to put time and effort into learning the ins and outs of frequent flyer programs, that's on them. Saying frequent flyer programs are a rip-off because Americans don't spend the time to learn them is akin to calling a car worthless because someone doesn't want to learn how to drive. Many are perfectly comfortable paying with cash or debit cards. I'm not one of them.
Argument: Programs are a ripoff because people can't control their spending.
Response: Has little to do with making frequent flyer programs worthless.
Adam makes the argument that because people who carry balances, pay fees and incur high interest charges get little benefit out of the rewards, frequent flyer programs and credit cards are pretty worthless. I don't see the correlation. You should absolutely never carry a balance or spend beyond your means. If you do, you'll indeed get negative value from the rewards earned (and also take a credit score hit), but just because someone else can't control his/her personal spending, this doesn't mean the programs are worthless to someone like me who never carries a balance.
Argument: "The Rewards Dude" gives whatever info makes him the most money.
I'm afraid Adam has created a bit of a video paradox here. The video uses The Points Guy as a source for its data (2:05 mark) then a few minutes later takes a dig at "The Rewards Dude" by arguing that blogs with credit card referral links exist not to provide good info but just to make money selling credit cards. Because the video itself sources our good info to help in its argument, then says we don't provide good info, we arrive at an illogical impasse.
(Side note: Vibranium status should be the new top-tier status level for Marriott's Bonvoy program.)
The Points Guy makes money through credit card affiliate links, a fact that is clearly disclosed at the top of every page on the site. This does not preclude us from independent editorial opinions and information we believe is best for our readers. As our disclosure states:
"Opinions expressed here are the 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."
Argument: Credit card processing fees pay for miles and raise the price of tickets.
Response: They are a part of every good and service today.
It's true card issuers charge merchants anywhere from 1 to 3% in order to have the ability to accept credit cards as payment. This is a part of every industry today, and usually merchants pass this fee on to customers. This has little to do with making frequent flyer programs a rip-off compared to anything else you buy in day-to-day life. If card processing fees make frequent flyer programs a rip-off, then so are the apples I buy at the grocery store when the store passes the processing fees to the customer.
Argument: The way to beat the system is to be a free agent.
Response: This has merit, but not entirely.
Frequent flyer programs often do make smart people turn dumb, and there are certainly benefits to not being loyal to a specific airline. However, being a free agent doesn't mean you shouldn't collect points and miles with as many airlines as possible. Diversification is important, but you don't want to over-diversify to where you're spread too thinly. Airline elite status can be valuable to many, but if you're not one of them, book the cheapest, most convenient itinerary each time, collect those miles from the flight, then combine them with miles earned from a cobranded card or transferable points currency. Now you have three, four or five different airlines to chose from instead of one next time you need an award ticket.
How do you ensure frequent flyer miles are benefiting you rather than costing you? First and foremost, pay off your credit card every month and protect your credit score. If you can't do that, you shouldn't be attempting to collect points and miles with credit products. Second, spend the requisite amount of time required to understand these programs and how to best use your miles. There's no such thing as a free lunch, so if you want to get real value and stay ahead of potential devaluations, you have to be involved in and keep up with this space.
The loyal TPG reader should ultimately net hundreds (if not thousands) of dollars in value every year from rewards programs. If you're invested in the game, there's simply no case to be made that frequent flyer miles are a ripoff.