If there is absolutely one thing that I cannot abide by in life, it’s the unnecessary waste of money. We are all guilty of doing it and I count myself in that regard. Still, I endeavor to stop such practices when I realize I am doing them. Even though the United States as country is universally portrayed as being quite obsessed with money and materialism, Americans are very prone to wasting money.
It is an issue of getting lost in logistics, processes, or best wishes concerning money that people don’t see they that they are wasting money. Take the lottery for example. Over billion dollars’ worth of lottery tickets were sold in 2016. Even if you win the lottery, a significant portion of any prize is reduced via taxes. Also, your chances of winning a grand prize lottery is less than 1 in 292,200,000.
People spend hundreds or thousands of dollars a year to buy lottery tickets in the mathematically slim hope of winning a lot of money. It’s a rather inefficient use of money, the art of tokenizing lottery tickets. The same thought process can be applied to people redeeming frequent flyer miles for anything other than airline tickets.
Domestic or International
The average airline mile is worth about 1.3 cents per mile. However, this is an estimate that varies from airline to airline. Some airline miles are more valuable than others. If you have accumulated hundreds of thousands or millions of air miles, then you can do the math to appreciate the potential value. Whenever possible, you may want to redeem air miles for international over domestic travel to maximize their value.
Don’t Redeem Airline Miles for Hotel Stays
Would you redeem 30,000 to 60,000 airline miles, or more, for free hotel stays offered by your airline? Why? You can probably use one out of hundreds of online hotel reservation services to find rock-bottom cheap deals. Also, most airlines will overcharge you for this privilege. Imagine being charged $0.02 per mile, or more, for this option.
The Transfer of Airline Miles Is a Waste
You can transfer airline miles as a gift. However, nothing is free. You and the intended recipient might be charged a few cents per airline mile to expedite the transfer. On top of that, you will be charged tens or scores of dollars in additional processing fees.
Watch Out For High Taxes & Fuel Charges
Some airway corridors are a lot more expensive to fly than others. Sometimes, the extra fuel charges and taxes might represent the majority of the cost for the airline ticket. Consider distances and extra charges if you redeem your airline miles for airline tickets. In some cases, you may have to spend hundreds of dollars in extra charges.
Resist the Resistible
The average cost of a domestic airline ticket is about $400, while an international ticket is about $1,000. Why not use air mile redemption to make air travel cheaper and easier? Airlines won’t make it easy with complicated rules and bureaucracy. It’s up to you to resist the allure of redemption for reward points, gifts and trinkets, and hotel stays and appreciate airline miles for the value they represent.
If airline miles weren’t valuable, then why are airlines so desperate for you to trade them for gifts you can get yourself? Refer to the redemption rules for your airline, or call customer service, to understand how to get the most of your airline miles. If you aren’t redeeming them efficiently and sensibly, then you are just treating air miles like lottery tickets.
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Allen Francis was an academic advisor, librarian, and college adjunct for many years with no money, no financial literacy, and no responsibility when he had money. To him, the phrase “personal finance,” contains the power that anyone has to grow their own wealth. Allen is an advocate of best personal financial practices including focusing on your needs instead of your wants, asking for help when you need it, saving and investing in your own small business.