Right now American is offering 15,000 bonus miles if you purchase 40,000 miles. At the normal purchase rate of 2.5 cents per mile, along with the $30 transaction fee, that means you can get 55,000 miles for $1,030. Certainly not a bad deal at under 1.9 cents per mile, though I'm betting hardly any of…
Continue reading: Why our behavior isn’t totally rational…. but kind of is
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The penalty for using a loyalty card is even higher with international transactions (1% to 3% depending on the card).
I keep a Capital One card solely for international travel as they're one of the few cards that doesn't charge any such fee.
[...] Why our behavior isn’t totally rational…. but kind of is – One Mile at a Time [...]
Remember that many purchases on "miles" cards earn bonus miles. You may get double or even triple miles which brings your cost per mile way down.
it's interesting how our brains work. i was flying home from NYC once and i met a guy who was trying to integrate game and competition concepts into residential power demand reduction -- the idea being that you'd use less power if there was a game where you could compete with your neighbors for who used less.
my friend Gabe Zichermann just wrote a book about it, called Game Based Marketing. his site is at gamebasedmarketing (dot) (com).
I don't know. Starwood points are worth about 2 points a mile, and that's my "backup" card, but as a not-big-spender (maybe $1000 a month on CC), I have no problem structuring it so that all my CC spending involves acquiring sign-up bonuses. I thought that was what everyone else did!
Not only that, but most cash back cards don't have an annual fee; the fee makes many mileage cards cash negative unless your spend gets high enough.
For example, the AA card has a $75 annual fee. Assuming a valuation of 2 cents a mile (generous), you aren't even in the black until you've done $3,500 in spend. To catch up to a 1% cash back card, you've got to spend over $7,500 on the card.
Now, assume that the cash back card gets 2% and you value miles at 1.5 cents each. The math of it is really bleak for the airline card. That's why I never keep an airline/hotel card for more than 9 months. Sign up, get the bonus miles, then toss after the point at which they won't take back the miles.
Similar to this, KLM is offering 'Buy Award Miles between 15 March and 30 April 2010 and receive a 30% bonus'
eg 40000 + 12000 bonus for 1000 euros.