The Problem with Saying What a Mile or Point Is Worth

I’ve seen a few articles recently where the writer/blogger is putting a value on the mile or point for each program (ie, a Starwood point is worth 3 cents, or whatever). It certainly is helpful to have a rough value for each point earned, but unfortunately it’s not that simple. Why? Because frequent flyer miles have very little value when you only have a few, and a large amount of value as you acquire more. In other words, it’s the opposite of diminishing returns: the more you have, the more valuable they become.

If you have 4,000 miles on United, for example, those miles are redeemable for roughly nothing (a magazine subscription, perhaps?). On their own, their value is approximately $0. If that is the sum total of all of the miles you will accrue, you should not pay 1.5 cents each for them, as they are not worth $60 — you cannot exchange 4,000 miles for $60 worth of anything. At that level, those miles have no value at all.

However, if you want a trip to Europe in business class, and you have 96,000 miles already, those last 4,000 miles are the difference between flying in coach and having some miles left over, and flying in business class. Those last 4,000 miles have a bunch of value.

Miles are not the same as money – there are distinct awards you can buy with points — there is, perhaps, an 80,000 mile award and a 90,000 mile award. But if you have 80k miles and you get another 4,000 miles, but you’ll never earn any more miles, those 4,000 miles are worth zero. They are exchangeable for nothing.

Or look at it this way: 25,000 miles will get you a domestic coach ticket in the US — that’s probably a $400 value. US Airways will let you exchange 35,000 miles for a $900 (or so) ticket to Europe during January. Those 10,000 miles have a value of $500, while the first 10,000 miles have a value of roughly nothing. Those “top off” miles can absolutely be worth paying more for (which is why sometimes you are willing to pay an airline 3.5 cents a mile to buy the last couple of thousand miles to get you to an award — because those last miles are incredibly valuable).

My point: start with a travel goal. Have a trip in mind. You want to go to Hawaii in coach? Great. You know the ticket would cost roughly $800 or cost 40,000 miles. You should be willing to pay 2 cents a mile (or perhaps you’d be better off with a 2% cash back credit card).

I don’t believe you should ever buy miles in advance because you think they’re worth a certain amount. How you use the miles, and whether they’re incremental to miles you already have, will determine their value. Pick a trip, and earn to that trip. You’ll be happy when you’re sitting on a beach in Hawaii, instead of sitting at home with a giant pile of miles you’ll never use.


  1. very good commentary. that’s why I visit your blog every day, in addition to the handful of famous ones that offer copycat CC posts.

  2. Great post. Those last 4,000 points in your example are the exact reason why you should always do the free mile offers and cheap mile offers like 4,000 miles for $8 via Netflix. It may not seem like 4,000 miles are valuable at the time, but for anyone who has been a couple thousand miles short when booking an award, it makes all the difference.

  3. I agree that posts valuing miles generically are pretty silly, and agree with your assessment, Jared.

    In addition, I would add that as a former airline employee, we had a general rule of thumb: miles are worth nothing until they are redeemed or exchanged. Only then do they have a value. This becomes particularly apparent when airlines change their redemption or accrual rules; when they offer larger and more frequent bonuses to certain members (eg elites or credit card holders), potentially diluting their value; or, worse, when an airline goes bankrupt and those miles that you have accrued become instantly worthless (and yes, this has happened to me, and many others that I know).

    Like currency exchange rates, the value of miles might best be based on the primary or secondary market for those miles. Unlike currency exchanges, though, the market for miles is pretty opaque and distorted, as it’s dominated by the company offering them. As such, it’s pretty hard to “value” them until you try to sell them or spend them.

  4. I disagree for a couple of reasons:

    1- the person with 4,000 miles (or points) is probably not reading travel blogs, and
    2- there has to be a value assigned to a mile (or point) to enable a “play or pay” calculation. For instance, take your example. Instead of getting a value of 1.6 cents/mile (25,000 miles for a $400 ticket), you’re suggesting “topping off” at 3.5 cents/mile to get a value of roughly 2.5 cents/mile. Depending on how many miles you need to “top off,” that may or may not make sense. (Might be overall cheaper to buy the ticket which, of course, also adds miles to your account.)

    The question of how much to value each mile or point is really up to the individual. Having someone give you a starting point (which is what those blog writers are attempting to do) helps a lot; especially with hotel points (which are a lot easier to quantify than airline miles).

  5. I like this post…makes sense to me. A typical family who spends $1K/month on credit cards won’t get too far at the end of the year with 12K SPG pts, contrary to popular travel blog propaganda.

  6. Jared, great point as always. What makes valuing miles especially hard is that people (particularly bloggers) love to use them to “purchase” types of trips they would never pay dollars for. Let’s take that trip to Europe in business class as an example. Say you can spend 100,000 miles to get a tickets that sells for $5,000. That seems like a great value, except you would never actually pay $5,000 for that ticket (would you?). So can you really say you’re getting 5 cents per mile in this case? It’s a lot more clear when you use 25,000 miles for a $400 ticket that you would have bought with real dollars otherwise.

    • @Jimmy: This is a great point. I’ve thought about writing a post about how to value business class. I always see people say, “well, I bought 100k miles for $1400 and it was a great deal because a biz class ticket costs $5,000.” But you wouldn’t pay $5,000.

      Given that airlines charge 1.5X – 2X the number of coach miles required for a business class ticket, I tend to “value” business class at about 1.5-2x the cost of coach.

  7. I keep track of how much value I have received from points/miles redeemed in two calculations. How much would I have paid for in economy class + any incidentals such as baggage fees. How much would I have paid for as used in say business class. The actual value must be somewhere between the two values, likely closer to the former.

  8. “In other words, it’s the opposite of diminishing returns: the more you have, the more valuable they become.”

    There is quite a bit of truth to the above statement. I always heard some relatives of my saying they never get to use their miles/points. This is because they have limited amount of miles in only a few programs. For me, I have a number of miles in different programs. So, most of the time, I have been able to use miles/points for flights that I wanted.

  9. There is a lot to agree with in this post.

    The one case I can think of where it is generally valid to assign a cents per mile is if you are a frequent paying passenger and significant miles accumulation is a given. So for me, where I know I will accumulate well over 50k miles just from flights a year knowing the value of a mile has meaning. Which is why I never purchase the ‘top-up’ miles even when at 2.5 cents or less. To some extent this will also be true for many readers who accumulate as many miles a year through card churning.