I should have just paid cash — reader mistake story
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Today, I want to share a story from TPG reader Alex, who forgot an important step before booking an award flight:
My friend was in Milan for the summer and had a few days before going back to Moscow for work; I had been wanting to show her New York, and this seemed like a good opportunity to do it right away. I had about 80,000 United miles from the sign-up bonus and spending on my United Explorer Business Card, and I found an open-jaw itinerary from Italy to NYC and back to Moscow for 60,000 miles and $127 in taxes, plus a $75 close-in booking fee.
It was the end of August and I assumed airfare would be skyrocketing, so I booked the award ticket and sent it to her. To my surprise, when I checked later I found that the exact same itinerary was available for just $620. I should have bought the ticket with cash and saved my miles. Lesson learned: Before redeeming miles, you should always check the cash rate.
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Part of maximizing your points and miles is learning when not to use them. Alex paid a reasonable rate for a round-trip, transatlantic award, but award rates don’t exist in a vacuum — to determine whether an award is a good deal, you have to calculate the redemption value. Accounting for the $202 in taxes and fees, Alex’s 60,000 miles only lowered the out-of-pocket cost by $418. That yields a redemption value of around 0.7 cents per mile, which is well below TPG’s latest valuation of 1.3 cents apiece for United miles. The return would have been subpar even without the taxes and fees, and Alex is spot on that paying cash would have been preferable in this case.
The cash cost of your ticket isn’t the only relevant variable, as the cost of other similar itineraries should factor into your decision too. If you can find a cheaper ticket with a comparable schedule and routing, use that (rather than an identical paid itinerary) as the basis for calculating the redemption value of your award. You should also account for the value of rewards earned on paid fares that aren’t earned on award tickets, including elite credits as well as redeemable points and miles. Booking an award becomes less attractive when it means missing out on valuable rewards and benefits.
Related: How to decide whether to use cash or miles for airline tickets
I appreciate this story, and I hope it can help other readers avoid making the same mistake. In appreciation for sharing this experience (and for allowing us to post it online), I’m sending Alex a gift card to enjoy on future travels, and I’d like to do the same for you. Please email your own travel mistake stories to info@thepointsguy.com, and put “Reader Mistake Story” in the subject line. Tell us how things went wrong, and (where applicable) how you made them right. Offer any wisdom you gained from the experience, and explain what the rest of us can do to avoid the same pitfalls.
Feel free to also submit your best travel success stories. If your story is published in either case, I’ll send you a gift to jump-start your next adventure. Due to the volume of submissions, we can’t respond to each story individually, but we’ll be in touch if yours is selected. I look forward to hearing from you, and until then, I wish you a safe and mistake-free journey!
Featured photo by Justin Sullivan/Getty Images.
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