When Does It Make Sense To Buy Miles & Points?

When Does It Make Sense To Buy Miles & Points?

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Airline & hotel loyalty programs will often sell miles & points directly to consumers. Some programs just sell points at a price that isn’t particularly lucrative, while other programs constantly have promotions, and generate tens of millions of dollars in revenue per year with this.

To many people this concept (understandably) seems strange — points are generally thought of as a reward for traveling or credit card spending, and not as something you buy directly. But the reality is that there’s so much potential with strategically buying points, especially if you like staying at five star hotels or flying first & business class.

Since I often write about promotions for buying points, I wanted to address this topic a bit more big picture. Under what circumstances can it make sense to buy points?

The value of buying points, in a nutshell

Let me start with a simple illustration of why buying points can be worth it, with one airline example and one hotel example.

On the hotel front, Hilton Honors often has promotions whereby points are sold for 0.5 cents each. When that promotion is around, you could buy 120,000 Hilton Honors points for $600. There are some nights where the Waldorf Astoria Maldives costs that many points, when the paid rate would be over $2,500 after factoring in all taxes and fees. By buying points, you can get over 75% off the cost of a hotel stay there.

Redeem Hilton Honors points at the Waldorf Astoria Maldives

On the airline front, Avianca LifeMiles often has promotions whereby points are sold for ~1.3 cents each. When that promotion is around, you could buy 87,000 LifeMiles for ~$1,130. Avianca is in the Star Alliance, and you could redeem that many miles for a Lufthansa first class ticket from Chicago to Frankfurt. If you were paying cash for that one-way ticket, it would cost over $13,000. That’s over 90% off.

Redeem Avianca LifeMiles for Lufthansa first class

Now, let me note that there’s some nuance to this, there are capacity controls, I don’t value these awards at the retail cost, etc. Rather this is just intended to be a quick illustration of what is possible if you buy points.

When it makes sense to buy points

More broadly, under what circumstances does it make sense to buy points? There are a few different scenarios where it can make sense, with the first scenario below being the reason most people (including me) buy points.

When it can save you money on a (luxury) travel purchase

I hinted at this above, but the general idea is that it makes sense to buy points when it can score you a significant discount over outright paying for your travel purchase, whether it’s a flight or hotel stay. In general you’ll find the most value when booking luxury travel, including first & business class flights, and five star hotels. Why? Because these experiences are generally disproportionately expensive if paying cash, while they might only be marginally more expensive when redeeming points.

When it comes to airlines:

  • A business class ticket may cost 10x as much as an economy ticket if paying cash, but may only cost 2-3x as much if redeeming points, which presents an awesome opportunity
  • The catch is that airlines have significant capacity controls and blackout dates, so you really need to know what you’re doing when it comes to finding award space
  • What’s awesome about airlines is how many partners they have, as typically it’s not just that you can redeem points on the airline you’re making the purchase with, but you can also redeem miles on several partner airlines; for example, you can redeem Air Canada Aeroplan points on everything from Lufthansa, to Vistara, to Azul

To give a further example, Alaska Mileage Plan often sells miles for under two cents each, and you could redeem 70,000 Mileage Plan miles for a one-way Cathay Pacific first class ticket from the United States to Asia with a stopover (okay, admittedly that’s not so easy right now with travel restrictions, but that’s just an example).

Redeem Alaska Mileage Plan miles for Cathay Pacific first class

When it comes to hotels:

  • Hotel loyalty programs often sell points at a surprisingly reasonable cost, and you can instantly save money by turning around and redeeming those points for the right stays
  • Unlike airlines, hotels generally don’t have blackout dates that are as restrictive when redeeming points, so the awards are easier to snag
  • Some hotel loyalty programs have the further benefit of often not having dynamic award pricing, so there are opportunities to get disproportionate value when redeeming during peak periods

To give a further example, Marriott Bonvoy often sells points for well under a cent each, and you could redeem 400,000 Bonvoy points for a five night stay at the Ritz-Carlton Maldives (that’s 80,000 points per night after factoring in a fifth night free). As a point of comparison, paid rates in peak season are often over $2,000 per night.

Redeem Marriott Bonvoy points at the Ritz-Carlton Maldives

To top off an account for an award redemption

Maybe you have an amazing hotel stay or premium flight in mind, but you don’t quite have enough points. In those situations, topping off your account by buying a small number of miles could be totally worth it. For example, in the above example of the Waldorf Astoria Maldives, if you had 100,000 points but needed 120,000 points for a redemption at the property, buying points could make a lot of sense.

Topping off an account could help you score a dream award

To prevent points from expiring

Loyalty programs have varying policies regarding the expiration of points. With many programs, points expire if you don’t have at least some activity every so often. With many programs, purchasing points resets the expiration of your account balance.

Now, in fairness, buying points won’t always be the most economical option for extending the expiration of points, but it will typically be among the fastest. So while this is hardly the primary reason you should consider buying points, it is a valid reason on occasion.

Sometimes buying points can prevent your balance from expiring

Some warnings before you buy do buy points

While there are plenty of circumstances where it makes sense to buy points, I think it’s also important to add a few warnings and caveats. Here are some things to consider:

  • I take an “earn and burn” strategy when it comes to buying points, so I’d only recommend buying points with an immediate and specific use in mind; ideally I redeem points right away, though if it’s an especially good deal I might buy points if I have plans to redeem them within a few months
  • Airline and hotel loyalty programs can be complicated, so do your search in advance — remember that there are often capacity controls on redemptions, that there may be restrictions associated with redemptions, etc., so I always recommend doing some “dummy” award searches before actually buying points
  • Be realistic about your valuations of travel experiences, and stay within your budget — in other words, just because a flight would cost $13,000+ if paying cash doesn’t mean you should spend $1,100+ to buy the miles for the ticket, assuming you don’t value the experience that much

I buy points all the time and I think there’s a lot of value to be had, but even so, I recommend only buying points if the math checks out immediately. You should think twice before trading hard earned money for a points currency that could be devalued at any time without notice.

See this post for my valuation of various points currencies. Note that this is intended to be a conservative valuation, and there’s way more value you can get out of these points if you play your cards right.

Redeem Alaska Mileage Plan miles for Japan Airlines business class

The best loyalty programs for buying points

What are the most lucrative programs for buying points? There are obviously lots of factors, including what you’re trying to redeem for, what kind of a promotion is being offered, and a lot more.

I’ll share my favorite airline programs and hotel programs to buy points from, account for the pricing, frequency of promotions, and overall redemption opportunities.

The best airline programs to buy points from

My favorite airline programs to buy points from include the following (and you can find links to the posts that discuss the opportunities in more detail):

  • Air Canada Aeroplan — the program doesn’t sell points as often as the other programs on this list, but award redemption rates are great, and you can add a stopover on a one-way award for just 5,000 points
  • Alaska Mileage Plan — the program frequently has promotions, has exceptional redemption values for first & business class on partner airlines (particularly oneworld airlines), and allows free stopovers on one-way awards
  • American AAdvantage — the program constantly has promotions, and is the best program for redeeming for business class on Etihad Airways and Qatar Airways
  • Avianca LifeMiles — the program frequently has promotions, and has very good redemption rates on Star Alliance airlines
Redeem American AAdvantage miles for Qatar Airways business class

The best hotel programs to buy points from

My favorite hotel programs to buy points from include the following (and you can find links to the posts that discuss the opportunities in more detail):

  • Hilton Honors — the program frequently has promotions, has great premium redemption values, and it’s also easy to earn status with Hilton Honors to maximize your stays
  • Marriott Bonvoy — the program sometimes has promotions, and while redemption rates aren’t good across the board, there are some properties where you’ll get huge value by buying points
  • World of Hyatt — the program occasionally has promotions, has some phenomenal hotels, and has great elite recognition on award stays
Redeem World of Hyatt points at Canaves Oia Epitome Santorini

Which credit cards should you buy points with?

You should always maximize your rewards with credit card spending, and that includes when buying points. The best credit card depends on whether the purchase is processed by points.com (in which case it doesn’t qualify as airfare or hotel spending, but rather as everyday spending), or whether it’s processed directly by the airline or hotel (in which case you could earn lots of bonus points).

See this post for the best credit cards for buying points.

How do the economics of selling points make sense?

You’re might be thinking to yourself “well why would an airline or hotel sell points so cheap that it makes sense to buy points rather than buying that travel experience outright?” This gets at the complicated economics of loyalty programs.

When it comes to buying airline points:

  • Airlines use all kinds of techniques to fill unsold seats, since the actual incremental cost of serving an additional passenger if that seat would otherwise be empty is very low
  • Airlines may prefer to make award seats available, rather than greatly discounting a cash ticket, since they hope that a last minute business traveler would still be willing to pay a higher fare
  • There are huge arbitrage opportunities with these programs, especially for airlines that belong to alliances; airlines reimburse one another at low rates for award redemptions, so Avianca LifeMiles (for example) can make money selling you miles at a discount when you’re really redeeming them on a partner airline
There are lots of arbitrage opportunities due to alliances

When it comes to buying hotel points:

  • Hotel loyalty programs are owned by the hotel group, while the hotel groups typically only have management contracts for hotels (and don’t own them)
  • The hotel loyalty programs typically only reimburse individual hotels very little for redemptions, unless the hotel is full, in which case the reimbursement rate is at close to the standard paid rate
  • Since most hotels aren’t 90-95%+ full, loyalty programs are mostly paying very little for award redemptions

As you can see, the concept of buying miles is a win-win for consumers and the programs, and it’s why this is a massive industry.

Hotel loyalty programs typically don’t pay retail rates for rooms

Bottom line

There’s huge value to be had in strategically buying points, especially for first & business class flights and luxury hotel stays. Even though I earn lots of points through credit card spending, flying, and staying at hotels, I still buy points all the time, as it’s a great way to fund premium travel at a fraction of the cost.

Hopefully the above is a useful summary of the circumstances under which it makes sense to buy points. If there’s anything I haven’t addressed, let me know.

What’s your approach to buying points? What’s the best redemption you’ve gotten with points you purchased?

Conversations (14)
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  1. MIchael R Karpiel Guest

    I find great value in IHG points since I use them at Kimpton, IC and Indigo and average around 1cent USD per point in redemption. When IHG points are on sale you can acquire them at .5cents a point.

    Again this ties in to your general statement that redemptions for higher end properties/services provides the best redemption value and thus might make sense to buy points.

  2. glenn t Diamond

    If you have miles and points scattered across a number of programs, as I do, it is unlikely you have status everywhere which confers the right to buy unlimited miles/points in a given calendar year Think Alaska LM, FlyingBlue et al).
    Therefore, this is the time of year I keep an eye out for great sales to boost up reserves before the year expires. Although, I would generally only apply this approach to programs...

    If you have miles and points scattered across a number of programs, as I do, it is unlikely you have status everywhere which confers the right to buy unlimited miles/points in a given calendar year Think Alaska LM, FlyingBlue et al).
    Therefore, this is the time of year I keep an eye out for great sales to boost up reserves before the year expires. Although, I would generally only apply this approach to programs I am reasonably certain to use in the next 6 months.
    I consider this managable risk in terms of devaluations and other nasties.
    Best value redemption(s) that comes to mind was SYD-HKG-LAX or JFK in F with CX using AAdvantage miles (multiple times), and SYD-DXB-LIS in F with Emirates, with QF points.

  3. Andrew Guest

    My personal rule is only imminently before a redemption, and only when it makes financial sense. Never prospectively.

    Reasoning: regardless of the global or local economic condition, loyalty currency is the absolute essence of depreciation. Hell, used cars are doing better in 2021 than any of these currrencies. I don't count a marginal redemption of LifeMiles a turn of the tide.

  4. Rafa Guest

    I find the best value using points when buying one way business class fare on one way or multi city tickets. One way cash price is often 90% round trip price.

    Bonvoy becomes a good value once you become Platinum or above and use suite nights upgrades in combination with Bonvoy cc. I scored some fantastic ocean front suites this way at reasonable price with free breakfast. Huge value.

  5. Hobbs Guest

    110k AA miles at a 35% discount for a Cathay first class award flight JFK>BKK.

  6. RayFlyer Guest

    Ben: 1) how can I do a trial search on LifeMiles if I don't have an account? If I need to set up a new acct, what's the best promo (sign up miles?) 2) could you publish your thoughts on points/miles value for all programs (airlines, hotels, etc). Thanks.

    1. Ben Schlappig OMAAT

      @ RayFlyer -- You do need to sign up for a LifeMiles account, and there's no cost to join, but there's also not a promo that offers miles just for signing up. You can find my valuation of miles & points currencies here:
      https://onemileatatime.com/value-miles-points/

  7. iamhere Guest

    The most important point you mentioned is about people having their strategy and having an immediate need for the points because they are devaluing rather quickly. You also need to wait for a good deal. 30% bonus is probably not high enough, for example.

  8. Tracy S Guest

    The only miles/points I buy speculatively are Choice hotels. In the past I've gotten very good value from them in Scandanavia at Nordic Choice hotels, and also in Japan. I'm considering LifeMiles as I plan to take my sister and her Significant Other to France in the spring.

    My best per-purchased-point value was several years ago when I topped up for the Radisson Blu in Longyearbyen. ~$140 to unlock two award nights which would have cost ~$500 cash.

  9. DCS Guest

    I purchase Hyatt points speculatively usually when the bonus one gets reaches 40% because I do not earn significant numbers of Hyatt points through revenue stays, but there are times when or places where redeeming points at Hyatt properties can get me better value than at Hilton properties (I once redeemed points at Grand Hyatt Singapore [even scored an suite upgrade as a lowly HGP Platinum!], when I would have gotten less than 0.4 cpp...

    I purchase Hyatt points speculatively usually when the bonus one gets reaches 40% because I do not earn significant numbers of Hyatt points through revenue stays, but there are times when or places where redeeming points at Hyatt properties can get me better value than at Hilton properties (I once redeemed points at Grand Hyatt Singapore [even scored an suite upgrade as a lowly HGP Platinum!], when I would have gotten less than 0.4 cpp at Hilton Singapore), or there maybe places overseas, like Siem Reap, Cambodia, that have Hyatt but not Hilton properties, that get me better value redeeming Hyatt points than paying cash.

  10. MilesAhead Guest

    Hi Ben, A very well written and useful article. I am curious about your thinking given your 'earn and burn approach to situations with transferable currencies like Citi now with American Airlines and expires tomorrow (Btw my "prediction" is Citi and AA will do periodic and repeated timeboxed transfer windows, rather than announce anything permanent...), would you transfer even without an "immediate use" And when transferrable currencies are giving a bonus, do you take advantage...

    Hi Ben, A very well written and useful article. I am curious about your thinking given your 'earn and burn approach to situations with transferable currencies like Citi now with American Airlines and expires tomorrow (Btw my "prediction" is Citi and AA will do periodic and repeated timeboxed transfer windows, rather than announce anything permanent...), would you transfer even without an "immediate use" And when transferrable currencies are giving a bonus, do you take advantage even without "an immediate use"? I am inclined to stock up in these situations without completely depleting my transferrable currency. Understand that there is no right or wrong answer here, but just curious.

    1. Fonzi Guest

      Spare your energy.He rarely ever reply.

    2. Ben Schlappig OMAAT

      @ MilesAhead -- Those are both excellent questions. I do sometimes make speculative points transfers when there are transfer bonuses, assuming we're talking about programs I naturally redeem through quite often. For example, when Amex had transfer bonuses in September, I transfered a sizable number of points to both Air Canada Aeroplan and Air France-KLM Flying Blue, even without an immediate redemption in mind. I knew how many points I transfered to these programs in...

      @ MilesAhead -- Those are both excellent questions. I do sometimes make speculative points transfers when there are transfer bonuses, assuming we're talking about programs I naturally redeem through quite often. For example, when Amex had transfer bonuses in September, I transfered a sizable number of points to both Air Canada Aeroplan and Air France-KLM Flying Blue, even without an immediate redemption in mind. I knew how many points I transfered to these programs in the previous year, so even if there were a devaluation, I'd still probably come out ahead by transferring with a bonus.

      The Citi ThankYou AAdvantage situation is an interesting one. Like you, I think we'll either see the transfer opportunity again, or I wouldn't be surprised to see it become permanent. I don't think partner awards on American will devalue in the next several months, so if it were me, I'd only transfer points if I thought I'd be able to get good value out of them within the next several months.

      That's my take, at least -- always interesting to see how different people approach this.

  11. Andrew Guest

    I've only bought points speculatively once and that was when Aeroplan sold points for 1 cent each. I was lucky to get through as soon as they went live.

Featured Comments Most helpful comments ( as chosen by the OMAAT community ).

The comments on this page have not been provided, reviewed, approved or otherwise endorsed by any advertiser, and it is not an advertiser's responsibility to ensure posts and/or questions are answered.

iamhere Guest

The most important point you mentioned is about people having their strategy and having an immediate need for the points because they are devaluing rather quickly. You also need to wait for a good deal. 30% bonus is probably not high enough, for example.

1
MIchael R Karpiel Guest

I find great value in IHG points since I use them at Kimpton, IC and Indigo and average around 1cent USD per point in redemption. When IHG points are on sale you can acquire them at .5cents a point. Again this ties in to your general statement that redemptions for higher end properties/services provides the best redemption value and thus might make sense to buy points.

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glenn t Diamond

If you have miles and points scattered across a number of programs, as I do, it is unlikely you have status everywhere which confers the right to buy unlimited miles/points in a given calendar year Think Alaska LM, FlyingBlue et al). Therefore, this is the time of year I keep an eye out for great sales to boost up reserves before the year expires. Although, I would generally only apply this approach to programs I am reasonably certain to use in the next 6 months. I consider this managable risk in terms of devaluations and other nasties. Best value redemption(s) that comes to mind was SYD-HKG-LAX or JFK in F with CX using AAdvantage miles (multiple times), and SYD-DXB-LIS in F with Emirates, with QF points.

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