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“Let me put it on my card…I need the miles.” ~ Mileage Monkey

This is just one of the many wonderful phrases you may hear from a devout mileage credit card holder. What is it about airline miles that these mileage monkeys love so much? Perhaps it was the fact that once upon a time they could be used as a flexible, free way to book airline tickets. Unfortunately, those days are gone and airline miles today are a shadow of their former glory. They have been greatly devalued, lack flexibility, and only cover a portion of the flight cost. I’m writing this article to put a stop to all the madness and tell everyone to drop their mileage credit cards.

Now before I go any further, let me first say that airline miles have some value and that if I was to acquire enough of them by making multiple flights, I would definitely redeem them for a ticket of some sort. My real beef with airline miles is their cult like popularity amongst credit card users over the much more fungible option of cold hard cash. Here are my top reasons for why I prefer cash over miles every day of the week and twice on Fridays –

Inflation

Most people don’t associate inflation with airline miles, but this is exactly what has happened with their recent devaluation. Since the inception of airline miles, the cost of a ticket in the continental US has always been 25,000 miles. Today, you would have better luck beating LeBron James in a game of one-on-one basketball than booking a free ticket with a decent schedule for only 25,000 miles. A couple years ago, the airlines all decided to implement a new “unrestricted” class of mileage ticket that was not limited to a specific number of reserved seats per flight and had a price tag of 50,000 miles. In lockstep, they also reduced the number of restricted mileage tickets (the old 25,000 variety) to only a handful if any per flight, making the new effective cost of a mileage ticket closer to two times as much as it use to be. This type of inflationary devaluation is akin to developing country with weak financial governance like the Mexican Peso of the early 1990’s.

Lack of Flexibility

In the past, one of the major advantages of airline miles was the ability to book a last minute ticket. Booking a ticket a couple days before a flight is typically a costly endeavor, so major savings could be locked in by using miles instead of cash. But just like the old 25,000 mile ticket, this too has come to an end. Bargain hunters that don’t want to pay 2x the miles to book a free flight are now forced to redeem mileage tickets months (if not an entire year) in advance with less than ideal scheduling (how does an extra layover and 3 hours added to your trip sound?) because of the lack of available restricted tickets.

Ain’t Nothin For Free

My last beef isn’t so much with the mileage programs as much as it is with the new cost structure to fly. For years, airlines have been losing money. Fierce competition and rising costs (both fuel and labor) put most of the airlines in the red. At the beginning of this year, energy prices (including jet fuel) were making new all time highs, so the airlines decided to incentivize their customers to carry less luggage by charging a fee for checked baggage. This is just one of the many fees you may be responsible for paying if you book a ticket with mileage. Just last year, I booked two international tickets with miles and had to pay several hundred dollars in airport taxes. So even if you are lucky enough to find a ticket for 25,000 miles, you still won’t escape the airport without forking over some cold hard cash.

The fact of the matter is that airline miles are a pseudo currency with no system of checks and balances. The airline the issues the mileage credit has the control to devalue them, change the rules, or start charging extra fees as they see fit. I’ve already done the math on the true economic value of one airline mile showing that you would be better off collecting cash rewards than airline miles. For all these reasons, I would much rather acquire cash for all my credit card purchases than airline miles. To add insult to injury, most cash back reward cards have no annual fee, whereas the typical mileage card will cost somewhere between $60 to $100 a year for the “privilege” of ownership. With all this evidence, the choice is clear…don’t be a mileage monkey. Just say no to mileage cards and say yes to cash back credit cards.

Ciao,

Frugal Franco

P.S. As a disclaimer, I have had very good luck with Southwest’s rewards program which is based on trips taken, not miles flown. I was commenting just the other day to Mrs. Franco how it is funny that Southwest was once considered the “discount airline,” and I now see it as a luxury liner (free checked bags, curbside check in, snacks, no booking fees, and a decent rewards program).

Don’t Be a Mileage Monkey

Don't Be a Mileage Monkey