Back in June, Doctor of Credit (and many others), wrote about a great feature of the Discover IT card, at first for any card holder, then later for only new cardholders. That is the Discover Double Cash Back (receiving that second half of cashback 13 months later). This has been absolutely huge in my opinion, because it really changes the math, especially for resellers.
Cut to today, and I happen to see a FrequentMiler QuickDeal that United is offering 10x at Sears today. At first I’m looking at this and saying to myself “Wow, I could totally leverage this to get myself another Lufthansa First Class flight.” But then I start thinking to myself, if I were to do go ahead and go through the United MileagePlus Shopping Mall, what would I be giving up?
Let’s look at the math:
Since Sears lets you buy gift cards and get miles, you should do that, so we start out at 10x.
Lets assume you get giftcards for exactly the same amount as the product you’re going to buy, now you’re 10x.
If you do as FrequentMiler advises, and use your DiscoverIT (if you haven’t already burned through your $1,500 of 5x w/ another 5x in 13 months), that kicks yourself up more. Yeah, United has a Back to School bonus, but, for me that’s kind’ve in the weeds.
So, here I have it. I could have 20x United miles or I could have 40% cashback, with the second half of that cashback coming in 13 months. Let’s leave the whole Time/Value of Money consideration out of here, and ignore all risk of Discover somehow shutting down or not paying that second half. That roughly equates to valuing a United mile at 2 cents. United themselves value their miles when they sell them on special, like their flash sale earlier this week for 2.3 cents per mile.
Thinking all that through, I have to say, I’m sticking with Discover Cashback. I feel like its a no brainer for me. Maybe before United’s devaluation that nearly doubled most of the premium cabin awards, I would’ve felt differently, but having just burned 130k miles per person to fly Thai and Lufthansa First from Bali, I’m feeling like United has effectively cut the value of their miles by roughly half. For me, regardless of what the “market cost” of the award is, I feel like United miles are worth less than a penny. Not that I bother with outlining point valuations.