There is is a deal going on right now that might be of interest to you, the USDM Shared Mile program is currently offering up to a 100% match bonus on miles that you transfer to someone, which is being used by people to buy miles at a very low cost (1.135 Cents each) this is a great way to boost up balances and there are a lot of sweets points on the US Airways award charts at this time…
Before you jump in, remember that US and AA are merging their programs, and both are due for a devaluation, so remember to earn and burn, don’t buy and hold these miles.
How it works:
So, if you were bouncing these between two people that you trust very well, you can buy points for cheap, but what happens when you don’t have that trusting relationship in place? It is worth noting that when everyone talks about the USDM shared program you can ‘buy miles for $567.50’ but really, to make this work you are actually not buying anything, other than the opportunity to be screwed over.
You see, you are sending over up to 50,000 miles and paying for the privilege, the receiver has zero risk, zero cost, and is about to be the recipient of 100,000 miles, that you have already established are valued at more than 1.135 each else you wouldn’t want them at that rate… you are exposed.
There is a platform for such trades, but whatever you do, you are at risk when trading with people that you don’t know ( you are at risk trading with people you DO know also, but hopefully you can track them down and beat them up before they fly out of state in Business Class using your money and miles) the only real way to offset this risk is Escrow, but it isn’t an ideal solution.
Escrow Accounts hold money in a mutually safe third party location, and when the deal is considered done, they will release the funds to you. When calculating the amount of your risk I would suggest the following: $567.50 (fees plus taxes) and 50,000x Z with Z being the value per point of the USDM to you now, it shouldn’t be less than 1.135 per mile logically.
So, lets assume 1.2 cents x 50,000 for $600 plus $567.50 for a total of $1167.50 as your base.
Prior to sending your miles off to Person B, you should have $1167.50 sent to Escrow from them, that way if they ‘forget’ to send them back to you then you have at least covered your basic costs. However, Escrow is not free, so you do need to add on a little amount to cover that too.
Escrow.com is a site that allows you to do just this, and their fees would come out as per below:
So, in order for the transaction to be safe, you want Person B to send you $1167.50 plus the $37.94 in fees…of course, they could still decide to renege on the deal here, let you keep your $1167.50 and not wire you back the points, so if you pick 1.2 cents each for $600 value on your existing 50,000 you have to be happy to sell them at that price in the event that you do get a bad transaction. It might be something to bake into the price to avoid incentivizing this.
Limitations
Type of transaction is not well accepted at Escrow.com
The unfortunate thing with Escrow.com is that they wouldn’t allow Person B to fund the Escrow account via Creditcard or Paypal, it would require a check, money order or wire-transfer, which are either slower or more expensive than loading onto your card (they accept cards/paypal for other transactions) it is possible that you could get around this by claiming that the transaction was something more vanilla, such as a website sale (an option from their dropdown) but that comes with risk of convolution to the deal and perhaps breaking terms and conditions.
Timing
The USDM share promotion ends on April 13th – meaning you would need the buyer to launch the check today, hope it cleared in time, then you wire the points/fees to them. If your goal was a round-trip transaction (Person B sends you back the 50,000 miles) the problem of the physical mailing of the check would mean that you run out of time. It is possible that you could both create Escrows in tandem, so there is a total of $2400 locked up over both accounts, but that could well be just as bad as having none.
What I would do
When I started out this post I was excited to share Escrow.com as a solution, but after calling them and discussing their process, compounded with the short duration of the transfer bonus promotion, I think it is limited as an option to be viable here. Instead, what I would do is simply shift the risk onto the person who wanted this the most. During the last promotion a couple of people approached me asking for me to send them miles in advance, I decided not to as I didn’t know them well – however, if you find someone does want to start the share process off by you sending them miles and they promising to send them back to you I would demand that you have your own insurance in that they send you via Amazon Payments or Paypal at least the cost of your miles, plus the fees, plus anything punitive that would encourage them not to renege on the deal.
If you want to find people who will share miles, feel free to discuss in the comments, or head on over to Coupon Connection on Flyertalk, but make sure you have a good CYA policy in place before ‘trusting’ anyone, even if they are known to you in person, nevermind online, or within a community online. How would you get around the trust issues here, or is it not something that bothers you?
I have done a couple deals at coupon connection and generally have a good experience with the folks there. I also have US Airways miles and would love to trade it for UA miles. Trust issue can be mitigated somewhat by doing business with long time members with several past trade.
I’ve personally not done any trades there, but would feel more comfortable if it was with someone I somewhat knew beyond that subforum area. The US for UA could be a good swap if you price the fees and bonus correctly
Would be happy to help any of the Saverocity gang, Matt, if need be, but I’m throwing my lot in with the camp that finds US & AA miles to be not nearly as useful as are UA miles. Personally not looking to buy at 1.1 cents. Trying to get to Iowa mid-summer, DC in the fall, or to Mexico in December, has produced bupkis at the lowest level.
Thanks Harvson, I’m personally good for now but hope some of the readers here can figure something out to benefit from the promo.
I am interested in doing a trade and can be vetted by Matt.
Yep, I can vouch for Nick here, he is someone I would trust.
Interesting article. My advice for anyone wishing to do this is to only trade with someone you know and trust… or at least someone you know ‘of’ and are aware of their ‘reputation’ (I don’t know how else to word that). I actually had someone send me a private message on FlyerTalk asking if I wanted to trade. Looking at this person’s profile, I saw that he/she had only just joined FT that day. Would I EVER do a trade with that person? An unequivocable NO! Now, I have actually traded with people that I have not met before, but we managed to work out a system that was fair and equitable… conducting the trade while we were both on the phone together and with a few other minor details in place. Bottom line… even with the Escrow thing, if you don’t know them or know ‘of’ them, I wouldn’t suggest sharing with that person.