The sale email hits your inbox, offering you the option to buy points and miles in your favorite program. Moreover, the deal is fantastic, and you are buying them at an excellent rate. So, should you buy points and miles?
The truth is that buying points and miles is at the very edge of the world of travel rewards and is something virtually all experts in the field do regularly. However, you must be careful to make the most of purchasing points and miles. Since if you are not careful you can get burned and end up wasting a load of cash.
Why Buy Points and Miles
The bottom line is that buying points and miles can be very lucrative compared to paying cash for your tickets. One of the biggest misconceptions about travel rewards is that points and miles are about free travel. The truth is that they are not; to maximize your rewards, you need to look at them as heavily discounted travel.
Many people think that you fly or get a co-brand credit card, earn miles, and then redeem them for award flights. While this works to a degree, it will never be that lucrative. Buying miles and redeeming them can be much better repeatable value in the long run. For instance, if you redeem points you purchased for $1,000 for a flight that would cost you $5,000, that is an effective saving of 80%, which is huge. In fact, if the airline was offering the ticket for that price, you would purchase it at that rate.
Real world Example
Air Canada Aeroplan recently ran a promotion giving you a 100% bonus when you purchase 60,000 points or more. Air Canada sells its points for a base rate of CAD$0.035 per point. Purchasing 60,000 points would give you 120,000 points with the bonus and cost you. CAD2,100 or $1,535. This works out at 1,27 USD cents per point.
A quick look at the Air Canada award chart shows that business class awards such as Air Canada’s stunning signature class will set you back from 60,000 points for flights between Europe and North America that are under 4,000 miles
A quick look at the route map shows that you have effectively purchased enough points for two business class awards in Air Canada Business class for a flight from Toronto to London LHR for $1,535.
Looking at the cash pricing of these awards, you see something interesting. Air Canada charges around CAD$6,218/USD4,547 for these flights. This seems to be the base price for these flights when we have looked across various dates.
Some quick math shows the astonishing savings that can be made using these types of point purchases. You have spent $1,535 to purchase enough points for a couple of flights that would have cost you a whopping $9,094. That is an astonishing saving of nearly 84%; Nothing can beat that deal!
Tips For Buying Points and Miles
Considering that you will be investing some of your hard-earned cash in points, you need to ensure that you can leverage them for their maximum value.
Start with a program you are familiar with. There is no point in joining a program you are not 100% sure about and then investing a considerable amount of money in it. Your best option is to begin your points and miles journey with a program you already know and use for earning and redemption.
Have flexibility with your travel dates. If your dates are fixed in stone, it can be very difficult to leverage your points and miles for great value. However, if you can work with the airline’s award availability, you can make substantial savings.
Buying points speculatively is generally a bad idea. Make sure you have regularly defined travel plans for which you can use your points and miles. This is crucial to ensure that you end up using your points and miles and they don’t go to waste. While you would buy points for a specific redemption in an ideal world, things don’t always work out like that in the real world. For instance, if you use a particular airline to visit family in a specific city several times per year. Buying points in a program you can use for those flights can be a good idea since even if you have no immediate plans, you know they will be used.
Stay in Control of Your Purchases
Overbuying points is not recommended, no matter how good the deal is. Temptation can lead us off the rational path when the deal is super sweet. While buying 100,000 points in one program may be reasonable, the deal is so good that 200,000 points would be better, right? Sadly, often this is not the case. Many points have an expiration date, so if you don’t use your points in time, they could expire and go to waste.
Secondly, having a massive balance of points in your account means they are at a significant risk of devaluation. One morning, you wake up, and your airline or hotel program has increased its award pricing effective immediately. Your points are now worth substantially less, and your travel rewards plans are potentially in chaos.
Do Your Research
Some individual research about what you are going to potentially use your points for is important. So, if you are going to commit to purchasing points, double-check that you will be able to leverage them well.
For instance, let’s assume you are an IHG member and regularly earn and burn points in the program. And the opportunity pops up to buy points for half a cent a piece (a relatively regular occurrence). Now let’s assume you are planning a trip to Ireland next summer and would like to buy some points to use for your hotel stays.
A quick search will show that there are only six IHG hotels in the country; worse, they are all located in Dublin.
Therefore, while you can use your points for some nights in Dublin, you will not be able to use them for stays in any place in the country. In this situation, buying a whole bunch of points may not be a great idea. However, buying a few points to redeem for the nights you are in Dublin can be an excellent option.
Use Points and Miles Purchase Promotions
One thing to note is that you should only buy large amounts of points and miles when there is a promotion offering you a healthy bonus. Many airlines offer regular promos, giving you a bonus when you buy points. This is the time you should strike and purchase points. The size and pattern of the bonus will vary by airline. For instance, Lufthansa just ran a promotion offering a 30% bonus, while Alaska recently offered a 50% bonus. However, Aeroplan, one of our favorite programs, recently ran a promotion that gave you a huge 100% bonus.
Final Thoughts
The bottom line is that if you are strategic and have regular travel plans that you can control, then purchasing points and miles can be very lucrative. If you are happy to tie up some of your hard-earned cash in points and miles, you can generally leverage them for far more than you have paid.
This is especially true if you are a fan of premium cabin travel. When you factor in taxes and fees, redeeming points and miles for economy airfares tend not to be worthwhile. But for business and first class, it can be fantastic.
One thing to keep in mind is that if you are going to buy points and miles, do your research and have solid travel plans that you are almost sure will happen.
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