Mileage cards. Worth it?
 

Really dumb question here but, I’m relatively new to the travel world. I’m planning a trip to Hawaii this year for me and my mother and a trip to New Zealand(instead of Australia) in 2020 for just me. Would it be worth it to get a United MileagePlus card for the 40,000 points to use on the New Zealand trip or should I just plan to buy the ticket outright? I would be flying from Charlotte, NC so tickets can be kinda pricey.

Since accumulating miles on a mileage card is basically free (ex the annual fee of $75 to $100, using one makes a lot of sense to me. If you carry a balance and have to pay interest then the cost goes up as with any CC.

The problem using miles though is ticket availability. Before you get your heart set on using miles to get to HI or NZ, check out the availability of seats on United's website. - they would not show up now for a 2020 flight but you could check some random 2019 dates to get a feel. I have no problem using my UA miles to travel East to West across the US connecting through Chicago, Newark, or DC, even on short notice. For a longer route with more limited flight options you may find it hard to get seats.

Also keep an eye out for special deals. From time to time airlines will offer bonus miles for signing up on a new cc and I've even heard UA recently hawking the cards on board a flight. You may be able to bank more miles that way very easily.

Mileage seats are limited in number and dates and destinations. Get a card with cash back and buy what and when you want. Better yet, get a card that also has no foreign transaction fees and save after you go abroad. Better yet, get that card when they are offering a bonus, such as when you use the card for enough money or for travel. Flight miles are only attractive until you try to get two seats together for a round trip on the dates when you want to travel.

Cash is always useful. Mrs. P and I got cards over the last two years where the cash back paid for one ticket for one of our trips with bonuses alone, while the regular cash back paid for the other ticket. We went on the airline and dates and destination of our choice. And there were no foreign transaction fees, saving 3% on what we spent overseas.

Unfortunately there's no "right" answer for everybody. But some things to consider...

1. Where do you want to go and how many miles would it take? For example, a round trip in coach from the US to New Zealand takes 80,000 United miles. It's important to understand how many miles it takes to go places; this is job one if you're using a mileage card.

2. What's the annual fee and how much would you use the card? 40,000 miles might sound like a lot, but most people who play the game put a cash value on the miles, generally any where between 1 and 2 cents, then use that to decide if spending miles is "worth it" compared to the actual price of the tickets. The airlines generally sell miles for around 2.5c apiece, with occasional sales taking the price below 2c. If you earn 1 mile for every dollar spent, then getting the additional 40,000 miles for the NZ trip would mean you'd have to spend $40K on the card. Would you?

3. Where do you travel and how frequently? Do you travel in economy or in business or first class? Generally speaking, most airlines have reduced the frequent flyer benefits for travelers who fly in economy, and boosted the value for people who ride in the pointy end.

4. Think about airline partners. When you sign up for a United frequent flyer account, you can earn and use your miles on any of United's partners - Star Alliance members, etc. Sometimes you can find more available seats on partner flights than on the airline you're earning miles with.

5. Think about a card that allows you to transfer your points to several airlines. For example, Marriott/Starwood points can be transferred to frequent flyer accounts in numerous airlines, so when it comes time to redeem miles for flights, you can be a more aggressive shopper. Maybe United doesn't have seats available to X, but American does (or one of American's partners, say British Airways.) With a card that lets you move points to other airlines, you can be more opportunistic.

6. No free lunch. Between annual credit card fees, taxes and "carrier fees" collected when you book using miles (which are buried in the purchase price when you use cash) you need to be aware of what the "true" cost is for that "free" trip. Often the combined annual and transactional fees turn the value of the miles into a pittance, even negative.

7. Do your homework. Start by looking at Lucky's website, One Mile at a Time https://onemileatatime.com/ . There are many such, run by people who know a helluva lot about this weird business.

One thing to remember: Frequent flyer mileage programs are the airlines' leading cash cows. They sell billions of miles for some secret price per mile to the banks and credit card companies, who then re-sell them to you. As with gift certificates and gift cards, the airlines rely on a significant "leakage" factor - miles that expire before they're used, or people having too few ("orphan") miles in their accounts to use, so some big percentage (guesses abound) of the total miles the airlines sell to the credit card people never get used, just like the last $3 on your $100 Macy's gift certificate. A few years ago, Air Canada was facing bankruptcy and sold off its Aeroplan mileage program to outside investors. At the time, the mileage program was worth more than the rest of the airline combined. That should tell you something.

Gardyloo: In other words, unless your time doing those calculations has no value, skip the miles and take the cash.

Au contraire.

I can go today to American's website and buy 172,000 AA miles for $2900. Even if I don't have any miles to begin with, that's a round trip in business class from Seattle to anywhere in Europe (110,000 miles) with enough left over for a first class round trip from Seattle to anywhere on the east coast. Think I could buy both those tickets for $2900? How much time did it take to figure that out?

Most of us who participate in this game don't waste miles on coach trips; they come into their own on premium long-haul ones. I've probably redeemed a couple of million miles for pointy end trips - South America, Europe, Africa, Asia - with very few dollars out of pocket. Personal choice and all that.

Thanks! The only reason I am considering a card is because they are offering the 40,000 miles for signing up and spending the $2,000 in 2/3 months (can’t remember which). I’ll probably end up just using cash. It seems like it will be less of a headache, but I always like to consider all options.

We have mileage cards and use them all the time for all our purchases. In addition to the Mileage explorer card I have the Chase Sapphire preferred and got I think 60k bonus miles plus another 5k when i got a card for my wife. Sue got the Chase reserve card with 100K miles and got another bonus for adding me, then she dropped her preferred card and her own mileage plus for which she also got a bonus, 40 I think. What have we received so far from flying out of Chicago?
R/T economy tickets x 3 to Hawaii,
R/T economy x3 to Copenhagen
R/T economy X 3 to Florida.
R/T biz x2 to Hong Kong.
R/T biz x2 to Delhi twice so 4 tickets in all.
R/T biz x 2 to Sydney (from LAX)
The reserve card gives triple miles for travel and restaurants. It has an annual fee of $450.00 but $300.00 of that goes to travel which even includes Uber and tollway fees and if you apply for global entry the $100.00 fee for 5 yrs. is waived. It does not even go towards your travel allowance.
For UA if you can book 331 days in advance of your return you can increase your chances of getting a saver award which for our trip to Sydney cost us both in biz 320K miles as opposed to 350K standard award for one.

Given the air categories we've flown and the distances and time of year I figured the cost out of pocket would have been about 40k give or take. We just paid the taxes.

It works big time for us.

In the beginning, it was all about the miles. Now you need to also factor in other perks that come with airline affinity cards, like waived checked bag fees. Just one trip avoiding bag fees can offset the annual fee for the lower priced cards.
BTW if it is United you are targeting, there are offers for more than 40K miles out there - up to 60 or 70K. Check out chase.com for the currently available offers

If you travel frequently (and with the same airline), the mileage cards can be helpful because they mostly also given you early boarding and free checked bags. To me, that's the real value in the cards, more than the mileage itself. So I'm with @Seamus on this.

If you aren't a frequent flier and don't favor a particular airline, then the miles themselves have relatively limited value. United miles, for example, would be very helpful if you fly out of a big United hub like ORD, LAX, or EWR, but if you lived in Atlanta, then Delta miles would be of much more help to you.

I don't think it's worth it for one trip one time. If you are going to do it, as others are getting at, you learn to "play the game" to make it work over time to your benefit.

For me I don't travel enough, I don't want to pay an annual fee, and sometimes I carry a balance (and those type of rewards cards usually have high interest rates).

I think I'd get a card even if just to collect the miles for these trips in addition to sign-up bonus. And as Gardyloo says, there's a whole points/miles world out there with some good sites for learning the ropes. Personally I like the Chase program with Ultimate Rewards, or the American express Membership Points program which are tranaferrable to multiple airlines.

Oh BTW with any cc do try to not carry a balance as the interest rates can be very high. We charge everything now but that wasn't the case in the past but as expenses dropped (house paid, son out of school, etc.) and income rose then it was ok to do so.