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The value of miles is highly subjective. For programs with revenue based redemptions there are generally agreed upon values (given that each point can be redeemed for X cents towards the cost of a ticket), but otherwise it gets trickier. That’s because the value of points really depends on what your redemption patterns are.
Nonetheless I’d like to think we’re all at least in a similar range. That’s to say that I think most of us value redeemable miles an average of anywhere between 1.0 and 2.5 cents each. That’s a big range, but at least most people will be somewhere in there.
What gets a bit trickier, in my opinion, is valuing elite qualifying miles. As a reminder, redeemable miles can be redeemed towards award tickets, while elite qualifying miles are those which count towards status, and they typically reset each calendar year.
So when credit cards offer elite qualifying miles for reaching certain spending thresholds, how do you value them? For example, I recently wrote about the Citi AAdvantage Executive World Elite Mastercard, which often offers an increased sign up bonus.
The card does have a $450 annual fee, but comes with several perks which help offset that, like an Admirals Club membership, a Global Entry fee credit, priority services when flying American, etc.
On the surface the Citi AAdvantage Executive World Elite Mastercard doesn’t seem very lucrative for everyday spend. It offers:
- 2x AAdvantage miles per dollar spent on American/US Airways ticket purchases
- 1x AAdvantage mile per dollar spent on everything else
There are other cards where you can achieve a better return than that. The American Express® Premier Rewards Gold Card, Citi Prestige® Card, and Citi Premier℠ Card all offer triple points on airfare, while the Starwood Preferred Guest® Credit Card from American Express offers one Starpoint per dollar spent, which can be transferred to American, and on top of that you get a 5,000 point bonus for every 20,000 points transferred (that means you’re essentially earning 1.25 AAdvantage miles per dollar spent).
But the Citi AAdvantage Executive World Elite Mastercard has one other spending bonus which is worth talking about. Specifically, it offers 10,000 bonus AAdvantage elite qualifying miles when you spend $40,000 on the card in a calendar year.
So what are American AAdvantage elite qualifying miles worth, and how do you decide whether to spend $40,000 on the card to earn those elite qualifying miles?
The value of EQMs is even more subjective than the value of RDMs. The only value you’ll get out of EQMs is if they help you achieve a higher status level.
For example, I’ve already requalified for Executive Platinum with American this year. An extra 10,000 elite qualifying miles would be worth exactly zero to me, since it wouldn’t get me anything I don’t already have.
On the other hand, if you would have otherwise ended the year with 90,000 elite qualifying miles, the 10,000 EQMs you would have earned through the Citi AAdvantage Executive World Elite Mastercard are the difference between earning Executive Platinum status and not.
If that were the case, how much would I value those 10,000 EQMs at?
As a general rule of thumb, I’d say you should expect to pay 4-5 cents per elite qualifying mile nowadays. Can you do better sometimes? Yes. But I’d say that’s a “fair” number. That’s to say that if you were to go for Executive Platinum from scratch, you should expect to pay $4,000-5,000. By that valuation, 10,000 EQMs would be worth $400-500.
That means that $40,000 of spend would earn you 40,000 AAdvantage redeemable miles (which I value at 1.8 cents each, or $720) and 10,000 AAdvantage elite qualifying miles (which I conservatively value at $400). That’s a return of ~$1,120, or ~2.8%. For everyday, non-bonused spend, that’s pretty good.
Ultimately there’s no way I can come up with an “objective” valuation of elite qualifying miles. Everyone has to crunch the numbers for themselves, and even then it can be really tough to do so.
That’s because you may pick up the Citi AAdvantage Executive World Elite Mastercard early in the year without knowing the full extent of your travel plans. If you knew with 100% certainty that you’d end the year 10,000 miles short of the threshold you’re aiming for, I’d say it’s totally worth putting $40,000 of spend on it. However, most people don’t iron out their travel schedule quite that well.
Regardless, I definitely think the card is worth picking up for the sign-up bonus. And I’d say it’s worth putting $40,000 of spend on the card if you’re fairly certain you’ll end the year just short of the next threshold without much time to take extra trips.
If that’s not the case, I’d probably focus most of my credit card spend on cards which offer lucrative category bonuses, like the Citi Premier℠ Card, Chase Sapphire Preferred® Card, Amex EveryDay® Preferred Credit Card, etc. Nowadays you should be earning more than a point per dollar on a vast majority of spend categories.
How do you value elite qualifying miles earned through credit card spend?