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Best ways to spend airline miles

Do some calculations before you use your miles for anything other than travel

Last reviewed: April 2011

Collecting frequent-flyer miles is easy, since many credit cards offer air miles as rewards for all types of purchases. But spending those accumulated miles on travel is more difficult. Because airlines have a limited number of seats allocated to rewards use, it's not easy to book a dream vacation paid for by points.

Instead, frequent-flyer programs are trying to get you to spend your miles on other things, such as merchandise, gift cards for a variety of retailers, and even tickets to sports and cultural events. Late last year, American Airlines added the option for miles holders to redeem their miles, or a combination of miles and cash, for hotel stays and car rentals. Delta and United/Continental frequent flyers already had that option. Both Delta and Continental even have websites where you can use your miles in an auction to bid for tickets to concerts at Carnegie Hall, footballs signed by NFL players, and rodeos.

Running the numbers

But is it worth using your precious miles for anything other than airfare? "In general, redeeming points for nonflight awards is a pretty lousy deal," says Tim Winship, publisher of "And using them for merchandise is the worst deal." He says you generally get the best value when you redeem miles for airfare, followed by hotels and then car rentals.

Here's how to compare options to see if you're getting the best deal:

Frequent-flyer programs typically offer a restricted round-trip domestic economy ticket for 25,000 miles or points. If that ticket is worth $350, which is about the average cost, then your miles are valued at about 1.4 cents each. Now let's factor in the complications of blackout dates and availability restrictions, which might boost your cost for that ticket to anywhere from 35,000 to 50,000 miles, according to Winship. Now the value of your miles is closer to 1 to 1.2 cents each.

Compare that with the value of miles spent on merchandise. For example, Delta SkyMiles recently offered a $50 gift card at 1-800 Flowers or Macy's for 18,000 miles. That equates to about 0.28 cents a mile—not a very good deal. Also on Delta's SkyMiles was a pair of Bose noise-cancelling headphones for 68,100 miles. You can buy those same headphones on for $300. That comes out to about 0.44 cents per mile.

American Airlines allows you to redeem miles for retailer gift cards through a partner service called To get that same $50 gift card from Macy's using this service, you'd have to spend 12,295 American Airlines miles, which comes to 0.41 cents per mile. That's a better deal than Delta's though still not on a par with the value of miles used for air travel.

Hotels and rental cars

You'll do better spending your miles on hotels and car rentals, though the value of your points will depend on the program you're in. One night at the Hilton in Los Angeles near the airport over a weekend in late May cost 22,832 miles with Delta, 13,795 miles with Continental, and 8,900 miles with American. We used the travel search engine to find a price for the same room of $128 a night including taxes. American's deal works out to 1.4 cents a mile, Continental's is 0.9 cents per mile, and Delta's is 0.56 cents per mile.

American also offered the best deal in rental cars, followed by Continental and Delta. For example, we compared the cost of renting an economy Chevrolet Aveo for that same Los Angeles trip through Alamo. On Alamo's website the rental would cost $60.77 per day. Using reward miles, it would cost 2,800 miles on American (2.2 cents a mile), 5,575 miles with Continental (1.1 cents), and 8,506 miles with Delta (0.71 cents).

We found one merchandise category that qualifies as a good deal: using your miles for magazine and newspaper subscriptions. For example, a one-year subscription to Entertainment Weekly, which is $20 on, costs 1,300 miles with American and Continental. That works out to about 1.5 cents a mile. That might be a good way to spend leftover miles instead of waiting to accumulate enough for a ticket or upgrade. Another option is to use to aggregate miles or points from multiple frequent-flyer programs or trade them with other members.

Cash-back cards offer flexibility

Credit cards pay rewards in several ways: airline miles, points, and cash back are most common. You'll probably get the highest rate of return on your rewards and more redemption flexibility with a cash-back card.

For one thing, getting your rewards in cash allows you to spend that money on the best travel deal you can find without worrying about choice of airline, blackout dates, or capacity controls. A good cash-back card will also let you buy merchandise at the best price. And many come without an annual fee, which is not common with airline cards.

This article appeared in Consumer Reports Money Adviser.

Posted: May 2011 — Consumer Reports Money Adviser issue: April 2011