How to decide whether to use cash or miles for airline tickets
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My family collects airline miles for a few different reasons. Often, we redeem miles for flights we otherwise couldn't comfortably afford to buy with cash. But we'll also redeem them to make certain flights far more comfortable by sitting up front, or for spontaneous trips that crop up — whether for fun or obligation.
However, we don't pay for every flight with miles, so we have to decide which ones get paid for with points and miles and which ones get paid for with cash.
Airline ticket pricing can be interesting. You may see incredible deals such as $21 one-way fares on full-service carriers or incredibly low-priced cross-country tickets. But that's only part of the story. Airlines are also reducing capacity at certain airports and leaving others altogether. New airlines and new routes are popping up. So, from some markets, airfare prices may be higher than what you've paid in the past. Your mileage will vary depending on the airports you fly from.
When cash prices are very high or very low, deciding when to use miles versus cash is often easy. But sometimes, it's a much harder decision. Here are the things we consider when deciding whether to pull out our credit card, frequent flyer number or credit card points when it comes time to book flights.
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Check award availability and prices
Using miles is only an option if there's decent award availability at a good price. Before you anguish over whether to use miles or cash, check to see if there is award availability when and where you want to travel. The more flexible your travel dates, the greater chance you will find saver award availability. However, with airlines increasingly moving to dynamic award pricing, "saver awards" may become less of a thing. Instead, you may need to check award prices since they'll vary by day.
Also, check the cash price for the flight. I like to use Google Flights to quickly spot airfare prices over a given period. Note that Southwest flights will not appear in Google Flights.
Check your cash and points balances
Once you know the prices for flights using either cash or miles, it's time for a reality check. Is spending the cash right now even an option for your budget? Do you have enough miles to cover the flights?
If your cash budget is tight, the scales may tip to using miles. On the flip side, they may tip to using cash if you are running short on miles or are saving them for a big redemption. Even if it is otherwise a relatively poor mileage redemption, if you don't have the available cash to pay for the ticket, miles might be the right call — and that is OK.
Calculate the cents per mile
Once you know the selling price of the ticket in both dollars and miles, and assuming that you have the luxury of choice when it comes to booking, you need to do some calculations. Most people who have been in the miles and points world for a while have a minimum amount of value they like to get for their airline miles. TPG makes it easy by providing monthly valuations to give you a sense of what you should hope to get for your miles.
Miles are not all worth the same amount. A United mile might be worth 1.11 cents, while an Alaska Airlines mile is worth 1.8 cents. You can use TPG's awards versus cash calculator to make a decision. But here's how to do your own math.
If you want to book a domestic round-trip airline ticket that is available for 25,000 airline miles and the selling price is $500, you're getting about 2 cents per mile in value if you book that award. That's typically a good deal ($500 divided by 25,000 miles). However, if the same ticket was $250 with the same 25,000 miles to book, your return is only 1 cent per mile. In that case, I would probably rather buy the ticket, save the miles and earn both redeemable and elite-qualifying miles on the trip. To get specific valuations, you also need to account for the taxes and fees charged to the awards — although that's splitting hairs on a domestic trip most of the time.
While TPG has point valuations, it helps to decide your own values. One quick way to get a decent idea of how much you value your miles is to decide how much that 25,000 miles domestic round-trip economy ticket would cost in miles instead of cash. Is it $500? $150? $350? If the answer is around $350, then you might be valuing your miles at 1.4 cents each. This calculation is trickier when redeeming for international or premium cabin travel, since many of us would never be able to pay for a $5,000 to $10,000 ticket with cash.
If you are working with airline points in a fixed-value program, such as Southwest or JetBlue, this decision gets a bit easier. The points already have a relatively fixed value within those programs, so you might as well use them most of the time unless you are working toward elite status.
Does elite status matter?
If you care about earning airline elite status by flying a certain number of paid miles each year, then factor that into the equation. It should be a close call based on the cents per mile, but if you need to keep racking up elite status, that may tip the scales to a paid ticket.
Sometimes I use cash to buy my airline tickets and use miles for the rest of the family to lower the overall cash price. This means we aren't on the same reservation, which makes things harder in the case of delays or canceled flights, but it is a strategy I use from time to time.
Are you saving for something big?
Even if the math works in favor of using miles, think through whether that would impact any of your long-range plans and dreams. Many times, there are ways to spend cash to take shorter domestic trips, even if that means flying Spirit Airlines. However, outside of using miles, there aren't many budget-friendly ways to take that big, fancy international business- or first-class flight.
If you are working toward a big redemption, consider sticking with that plan rather than bumping yourself further from the goal line with smaller redemptions.
Use companion tickets
Another thing to consider when deciding how to pay for a given trip is whether you might have a companion ticket available. For example, I get an Alaska Airlines companion fare, a $100 statement credit and 40,000 bonus miles from $121 ($99 fare plus taxes and fees from $22) via my Alaska Airlines Visa Signature® credit card each year. To qualify, make purchases of $2,000 or more within the first 90 days of opening your account. This perk allows someone to fly with me for a little over $100 — even to Hawaii.
We previously used that companion certificate to fly home from Hawaii. Paid tickets wouldn't have made sense normally but did when factoring in the discounted ticket. We've done similar things with the Delta companion fares. Frontier Airlines also offers Kids Fly Free deals and periodic Friends Fly Free offers. These cost savings should weigh into your decisions.
Best of both worlds: Fixed-value points
When you can't decide whether to spend miles or cash, the right answer might be Option C: none of the above. Many credit cards award fixed-value points that you can use to book your airfare. This allows you to take advance of good prices while keeping your money safely in your wallet. Plus, you'll still earn progress toward elite status and then aren't tied to award availability restrictions.
For example, you can book a paid fare with your Capital One Venture X Rewards Credit Card or Capital One Venture Rewards Credit Card and then use your miles to pay for all or part of that statement charge at a value of 1 cent per mile. If you've found a great deal on a cash ticket, you can still grab it without burning cash.
A final thought: Flexibility
A final element to consider when deciding whether to use miles or cash is whether using miles might provide more flexibility than cash. Perhaps you have elite status that allows you to change award reservations without penalty. Or, maybe you can book via a program that doesn't charge big fees for award flight changes or cancellations.
For example, if you book an American Airlines-operated award flight by redeeming Alaska Airlines miles and you need to cancel, you can do so for free if you do it at least the day before your scheduled departure. Just know that you might spend more miles if your new fare is higher than the old one.
If you book via Southwest Rapid Rewards and your plans change (or the price drops), you can refund or modify your award reservation without fees or penalties. Even cash reservations via Southwest can be modified without fees. If your new flight costs less and your ticket is refundable, they'll refund the difference to your original form of payment. If your ticket isn't refundable, you won't lose your money. They'll give you a voucher for the fare difference, which you can use to book future Southwest flights.
There isn't always a perfect answer on whether to use miles or cash for a given ticket, but these are some things my family considers when making that decision. By considering these aspects when booking your next ticket, you can make the right choice for you and your family.
Updated on 5/4/22.