I should have just paid cash — reader mistake story

Jan 10, 2020

This post contains references to products from one or more of our advertisers. We may receive compensation when you click on links to those products. Terms apply to the offers listed on this page. For an explanation of our Advertising Policy, visit this page.

Update: Some offers mentioned below are no longer available. View the current offers here.

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.

For more TPG news delivered each morning to your inbox, sign up for our daily newsletter.

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.

Delta SkyMiles® Platinum American Express Card

Earn 90,000 bonus miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new card in the first three months of card membership. Offer ends 11/10/2021.

With Status Boost™, earn 10,000 Medallion Qualification Miles (MQMs) after you spend $25,000 in purchases on your Card in a calendar year, up to two times per year getting you closer to Medallion Status. Earn 3X Miles on Delta purchases and purchases made directly with hotels, 2X Miles at restaurants and at U.S. supermarkets and earn 1X Mile on all other eligible purchases. Terms Apply.

Apply Now
More Things to Know
  • Limited Time Offer: Earn 90,000 Bonus Miles and 10,000 Medallion® Qualification Miles (MQMs) after you spend $3,000 in purchases on your new Card in your first 3 months. Offer expires 11/10/2021.
  • Earn up to 20,000 Medallion® Qualification Miles (MQMs) with Status Boost® per year. After you spend $25,000 in purchases on your Card in a calendar year, you can earn 10,000 MQMs two times per year, getting you closer to Medallion® Status. MQMs are used to determine Medallion® Status and are different than miles you earn toward flights.
  • Earn 3X Miles on Delta purchases and purchases made directly with hotels.
  • Earn 2X Miles at restaurants worldwide, including takeout and delivery and at U.S. supermarkets.
  • Earn 1X Miles on all other eligible purchases.
  • Receive a Domestic Main Cabin round-trip companion certificate each year upon renewal of your Card. *Payment of the government imposed taxes and fees of no more than $75 for roundtrip domestic flights (for itineraries with up to four flight segments) is required. Baggage charges and other restrictions apply. See terms and conditions for details.
  • Enjoy your first checked bag free on Delta flights.
  • Fee Credit for Global Entry or TSA Pre✓®.
  • Enjoy an exclusive rate of $39 per person per visit to enter the Delta Sky Club® for you and up to two guests when traveling on a Delta flight.
  • No Foreign Transaction Fees.
  • $250 Annual Fee.
  • Terms Apply.
  • See Rates & Fees
Regular APR
15.74%-24.74% Variable
Annual Fee
$250
Balance Transfer Fee
N/A
Recommended Credit
Excellent/Good
Terms and restrictions apply. See rates & fees.

Editorial Disclaimer: 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.

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.