Most frequent flier programs are hopelessly opaque: You may have 40,000 miles on your account, but their value seems to change every day. So how do you make an informed decision of when to use your rewards miles?
Consider these tips to get a firm grasp of your program's rewards structure, and make calculated decisions on when to cash in your miles:
What to do for holiday travel. During the holidays, it's hard to find good deals with American Airlines AAdvantage miles or British Airways Avios, but not all miles are created equal.
If you use a fixed-rate mile, you'll get a fixed return from redemption (the same value for each booking). Such fixed-rate miles aren't really miles in the traditional sense because:
--They're not airline-branded, but typically redeemable for a number of airlines.
--Their value is static (usually at 1 cent per point), no matter the time or booking.
--Their utility extends beyond takeoff and landing, meaning on some credit cards like the Capital One Venture Rewards card, you can use your miles to redeem flights as well as car rentals, hotels and other travel expenses.
What to do about international travel and expensive airfare. When traveling abroad or booking an expensive flight, book with your traditional mile rather than the fixed-rate mile. By going the traditional mile route, you can get up to 3 to 4 cents per mile. If you redeem miles for anything less than 1 cent each, it's not worth it.
To find out where you stand, simply divide the cost of the potential ticket in dollars by the number of miles you're redeeming. For example, when an airline asks for 60,000 miles for a $500 flight, you're getting $0.83 per mile; not quite worth redeeming. In that case, you would want to go the fixed-rate mile route.
In short, it makes sense to have two travel cards - one that offers redemption using fixed-rate miles and one that offers redemption using traditional miles.
What to do about pesky expiration dates. Many airlines state upfront their frequent flier miles never expire, but that wording may be a technicality. With some airlines, your miles may not expire, but your account is penalized for inactivity.
As such, read the fine print with the following questions in mind:
--Do my miles have a set expiration date?
--Can I prolong the life of my miles and avoid expiration? (e.g., if I redeem miles every six months)
--If I can prolong the expiration date on my miles by being an active customer, what exactly constitutes activity? Do I have to redeem miles every given number of weeks or months, or can I do simple transactions like transfer points in or out of my account?
The bottom line. Once you know the best ways to redeem your frequent flier miles, you're ready to book your summer travel plans - just make sure to lather on some sunscreen before you hit the beach.
Mike Anderson is an analyst for NerdWallet.com, a personal finance website dedicated to helping individual consumers make informed decisions with their money.
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