The Smartest Way to Handle Frequent Flier Miles

January 10, 2016, 2:00 PM UTC
Ronald Reagan Washington National Airport
Ronald Reagan Washington National Airport (DCA) Washington, D.C.
Courtesy of Washington Reagan Airport

For many travelers, simply finding a flight that can be booked with frequent flyer miles instead of cash is cause for celebration. But advanced flyers have pretty complicated decisions to make when it comes to loyalty points.

They generally want to maximize the value of their miles—why spend 50,000 miles on a $300 flight when the same stash can get you a $1,500 first-class ticket? Frequent flyers also treasure elite airline status, which you only get by earning a certain number of qualifying (meaning “paid-for”) miles each year. Elite status gets you valuable perks like free upgrades and preferential treatment (for instance, when flights are canceled, the airline generally rebook elites first). Plus, points hackers know that when they use points to book tickets, they’re missing out on other bonuses.

With so many factors to consider, it can be easy to get paralyzed. Here’s how I decide when to pay and when to redeem.

Calculate the value of the miles you’ll give up by redeeming miles.

When you use miles to book a flight, you’re getting a free ticket, but you’re also foregoing the valuable elite-qualifying miles you would have earned by paying for your seat.

Let’s say I want to fly round-trip from New York to Los Angeles on American Airlines. If I paid for the flight, I’d earn 4,950 AAdvanage miles based on the distance of the trip and a bonus 4,950 because I’m an Executive Platinum member with elite status, for a total of 9,900 miles. I value American’s miles at about 1.7 cents each. I base that on the dollar value of an award ticket I can generally get, divided by the number of miles the ticket costs; I know that for 100,000 miles, I can get at least $1,700 worth of flights. (For more on valuations, see the monthly chart at The Points Guy.) Multiply that by 1.7 cents for $168.30 in value I get from buying my ticket instead of redeeming points.

Consider your elite goals.

I’ll admit, elite status isn’t as great as it used to be. Perks like first-class upgrades and priority boarding are being sold to regular customers, so there are fewer upgrade opportunities and longer lines for elites. But if you’re a frequent traveler it can be really nice to be an elite flyer—especially at the top tier. For example, as an AAdvantage Executive Platinum member, each year I get eight EVIPS—credits that let me upgrade one class for free on any paid fare. I figure each of those is worth $500 each, for a total of $4,000 in value. I get at least $1,000 in other benefits from my Executive Platinum status, including complimentary domestic upgrades and priority rebooking when flights are canceled. So my platinum membership is easily worth $5,000. To stay platinum, I need to rack up 100,000 elite- qualifying miles (EQMs) per year. In other words, for every EQM I’m gaining 5 cents in elite “value” ($5,000/100,000). In the JFK-LAX example, using miles to book my ticket and foregoing 4,950 elite qualifying miles will “cost” me $247.50 in lost elite status qualification.

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Factor in lost upgrades.

On many U.S. carriers, elite status makes you eligible for complimentary upgrades—but not when you’re flying on an award ticket. (One exception: Delta allows award upgrades for flyers with Gold Medallion status or higher.) If your goal is to upgrade, you’re best off buying a ticket; just make sure it is in a fare class that is eligible. It is always best to call the airline to confirm before purchasing a ticket.

Think about the likelihood that your trip will change.

Oddly, airlines generally charge less in fees to change or cancel award tickets than paid tickets (which usually require a hefty fee and re-fare, which can be $200 plus any fare increases for domestic flights ). If you’re likely to need to change an itinerary, you might want to redeem miles.

OK, that’s a lot of math. If you want to skip it, use my rule of thumb. I almost always pay for domestic flights, as well as international flights on which I’ll be getting upgraded free from coach thanks to my AAdvantage Executive Platinum Status. But I always chart out my elite qualification to make sure I’m on track to get to Executive Platinum.

This article was previously published on Travel + Leisure.