Cash or Points To Book A Flight?

[ukinny2000]

Ok, so I have to book a r/t flight for later this year from NYC to California for three people, myself being one of them. We will be flying coach, and to get to our destination we need at least one connecting flight.

My options to pay for this flight are as follows (all prices/points are per person):

$557 on AA
40,000 miles on AA (Economy Anytime, there are no mileSAAvers)
47,246 Crystal (CNB) points
44,696 TY points

Which would you choose, and why?

Now, let's say I can MS AA miles & TYP at roughly $150 / 25000 AA. Would that change your answer, and if so, why?

 

[HariOm]

For me it's always points before cash. Cash is the very last option. Especially given your cost of harvesting AA miles. (Interested in how you achieve that conversion ratio, if you care to share.)

 

[AnyNameYouWish]

For me it would matter how much of each you'd have to MS to get the total amount needed. Do you have any accounts that have enough already? If not, what would the cost be to MS enough needed for each? And then, do you have other plans for any of your points?

 

[Matt]

Cash is best based on the math in my head, and the assumption that you would be starting from zero.

 

[Matt]

Here's the math in my head:

$150 earns you 25,000 AA. AA we know is a 1x, therefore
$150 earns you 25,000 TYP
$150 earns you 50,000 BA+ (plus a rebate) or $500 DC.

• $500 seems close to $557, the cash price (11% ish short)
• 25K AA seems pretty far away from the 40K required comparatively to above
• 25K TYP is further away still as it requires a higher target of 44.6K rather than 40K for AA
• Those crystal points I don't earn.. but if they are 1x then harder still

The question here brings up several classics:

• 2x opportunity cost (you must earn more than 2x to make AA/TYP earning smarter than BA+/DC)
• 'Mileage Run Bum' in seat rebate (everything other than using AA earns AA, not a lot, but worth noting)
• Leverage points on the burn side - your redemption rate for the AA at 40K is poor, especially when we consider using them for 50K international J (for today) or 62.5K F.
• Imbalance in earning - you might find that AA is cheap enough to squander as your balance is high, however, it might be wiser to hold onto those and pivot earning to the 2x card. Alternatively it might be worth looking into different spend options, such as AA hotels per @KennyBSAT or buying a toaster.

And lastly, this brings up the value of time and the limits we all face. If you can earn 25K base points (that could be doubled at a 2x card or higher leveraged with something like an AS card) for $150 there is obvious arbitrage. The only limits that would be faced would be card issuer imposed, time available, and MS channel limits, such as how many giftcards/money orders they will sell you.

With all that said, $500 is smarter because it eats the smallest amount of:

• Time to earn (11% short, a fast turnaround to fully pay)
• Pipeline of points generation (11% short, allowing you to pivot into another earning channel, eg 50% Cash 50% AS/TYP)

And it allows you to redeem the AA, TYP, and Crystal at higher leverage value than the amount you are seeing now.

 

[knick1959]

For me it's always points before cash. Cash is the very last option. Especially given your cost of harvesting AA miles. (Interested in how you achieve that conversion ratio, if you care to share.)

I was just browsing around and found THIS, which seems to work out to this ratio. See post #476 on this page ... Ooops. Level 2. giftcards.com thread.

 

[KennyBSAT]

Is there a better use for your Crystal Bank points? If not, I'd use them now.

And how much is Southwest? If you can get WN under $400, you may be able to work out something for 20K Flexperks points. Or a combination of FP and a little cash if the cost is a little over $400.

 

[ukinny2000]

Is there a better use for your Crystal Bank points? If not, I'd use them now.

And how much is Southwest? If you can get WN under $400, you may be able to work out something for 20K Flexperks points. Or a combination of FP and a little cash if the cost is a little over $400.

WN doesn't fly to my destination, only AA and UA (and I loathe EWR)

 

[janetdoe]

Ok, so I have to book a r/t flight for later this year from NYC to California for three people, myself being one of them. We will be flying coach, and to get to our destination we need at least one connecting flight.

My options to pay for this flight are as follows (all prices/points are per person):

$557 on AA
40,000 miles on AA (Economy Anytime, there are no mileSAAvers)
47,246 Crystal (CNB) points
44,696 TY points

Which would you choose, and why?

Now, let's say I can MS AA miles & TYP at roughly $150 / 25000 AA. Would that change your answer, and if so, why?

1. The transcons, if purchased with anything other than AA miles, should earn about 5k AA miles for the round trip. So it basically makes the AA miles option cost an extra 5k AA miles. If you're looking at several close options, that could make a difference.

2. The best solution is one that uses up points that you already have, especially if you have no other use slated for them. That may mean using one ticket using CNB, one using TYP, and one using AA miles. Since I know nothing about CNB points, I would tend to use whatever I had of those first. Since the rates are so high, I'm assuming this is either close in or a high-demand season, so you may need to act quickly to lock in the rates you found.

3. Why can't you use the TYP to book at 1.6 cpp on AA? $557 on AA should cost 34.8k TYP. At the very least, even if you don't have a 1.6x Citi card, you can transfer the points to a friend and have them book for you at 1.6 (or 1.5 if they're not a really good friend. )

4. I'm really curious about the route and dates, if you can share those. There may be a travel hacking solution you are missing, like perhaps splitting the trip into a cheap transcon and a short-haul.

5. If you are searching for 3 people on AA.com, you should double check and see if Saver awards are available for just one or two people. That could cut the cost significantly. Similarly, if there are only one or two seats in a lower fare bucket, booking engines will quote a more expensive fare for all three people. So searching for just one person can make a difference there, too.

 

[ukinny2000]

@janetdoe 1.6cpp is if you have a prestige card, which I don't have maybe I can convince one of my friends to apply for one

 

[janetdoe]

If you can manufacture TYP at ~0.6 cpp (I'm assuming the ATT 3X card?) then it makes sense to have a 1.6 redemption card somewhere in your circle of F&F.

 

[MickiSue]

My (very rough) rule of thumb for redeeming miles/points is that I don't do it if I can't get $.02/mile. In your case, that would mean spending no more than roughly 28000 miles or points.

Which, based on what you've written, you cannot do. If YOU were paying for all three tickets, I might suggest a combination of paid and mileage tickets, because $1650 for a domestic RT is a lot.

But if you are only paying for your own ticket, then I'd save the miles/points. It could be argued that it would be excessively generous for you to spend your hard earned miles/points at a discounted rate for your friends.

 

[ukinny2000]

I am paying for all three (other two pax are my parents, and no way on Gd's good earth would I ever let them pay for anything!!!)

 

[MickiSue]

Good to know, because that obviously changes the dynamic, and the advice.

In that case, assuming that you know that the dates are pretty much set in stone, I'd book at least one ticket with what I have in miles/points, and check to see if it looks like the cost of a paid ticket will come down, at one of several sites that track that sort of thing.

Obviously, book the award ticket for your mom, so she has a seat for certain, right now! If you end up having just one revenue ticket, you want it to be yours, so it earns miles in and of itself.

 

[ukinny2000]

Loving the advice and analysis - cheers everybody