According to a study conducted by personal finance site NerdWallet, it sometimes makes more sense to hold onto your frequent flyer points and use cash to pay for your plane ticket. The new summer travel study showed that in a few specific circumstances, using reward points is a financial mistake.
NerdWallet examined 20 of the country’s most popular flights, including domestic and international, on four US airlines: Southwest, Delta, American and United. On those routes they then looked at the fares for 320 different individual trips, in order to get a broad overview of domestic, international, peak season, off-season, economy, business and first class ticket costs.
What they found is that on short flights in business class, point values were not high enough to justify their use. They concluded that travelers should just pay in cash for their tickets.
Here’s the reason why. Obviously, the value of each point varies, depending on the cost of the flight and the number of points you need to purchase a ticket. For instance, if a flight from New York to Los Angeles requires 50,000 points, the value of each point changes with the cost of the flight. A $1000 flight is a much better deal than if the flight only cost $300.
The Points Guy is a site that gives advice on using points for plane tickets, hotels and other types of loyalty programs. The site is extremely helpful to consumers since it posts up-to-date valuations each month for how much airline points are worth at that time.
NerdWallet found that for business and first-class flights less than 1,000 miles, the value of each point was only 0.72 cents. Compare that with an average of 1.13 cents per mile on flights longer than 1,000 miles. Paying for the shorter flights makes sense since you can save your miles for those longer flights next time.
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