A miles card may be exciting but should you use one? Probably not.
Here are four reasons why they may not be the best value for you.
Miles don’t really give you free flights
Contrary to what some travel bloggers may say, miles cards don’t actually give you free flights. You are giving up cashback for every mile you earn, and the amount can be substantial. For instance, if you spent on a 8% cashback card instead of a 4 mpd card, your cost per mile is actually 2 cents per mile.
Opportunity cost is still cost.
If you spent $47,500 on a 4 mpd card for 190,000 miles needed for a business class return ticket to San Francisco, you are actually giving up anywhere between $2,375 to over $3,000 depending on the cashback rate you could have gotten with cashback cards.
Moreover, you often need to pay additional fees like conversion fees and airport taxes when you use your miles.
You may not spend enough for miles to be worth it
It also requires a certain amount of spending to earn enough miles for valuable redemptions. If you spend little, you often can’t use your miles to great effect and might be better off with a cashback card.
Miles decrease in value over time
Unlike cash which can generate interest and be used for investment, miles lose their value over time as airlines increase the cost of redemptions. This has happened multiple times before, and it will certainly continue.
Miles can be very troublesome
The miles game is also quite troublesome and comes with a learning curve. You need to track expiry dates of your points, convert them to miles with your airline, pay the fees, waitlist for flights… it just isn’t as easy as a cashback card which credits you with cashback each statement month.
Who are miles cards for?
I personally do use miles cards, and they can be very useful in certain scenarios especially when my high-earn cashback cards are exhausted for a particular month.
People who should use miles cards include those who are willing to pay a premium for business class ticket and see miles as a way to get discounted tickets. They should also be able to put a significant amount of spending on credit cards to make it worth it, and for them to redeem their tickets before devaluation eats away the value of their miles. Lastly, they should understand and accept the hassle involved in the game of earning, managing, and redeeming miles
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