How to Get the Best Value from Air Miles Rewards

How to Get the Best Value from Air Miles Rewards

In my last post on Air Miles, I went through a detailed analysis that showed every Air Mile I collect is worth 10 to 12 cents if I want to exchange it for merchandise like gift cards, coffee machines, cameras or audio equipment.

If I use the Air Miles for flights, I increase the value of the points to 16 cents to as high as 27 cents depending on whether I fly during low season or high season.

The real example I used was exchanging 14,850 Air Miles for 6 flights from Edmonton to Ottawa which would save me $2475.90.

To really answer the question “Is Air Miles rewards a good deal?” we have to look at how much money I spent to get that 14,850 miles in the first place.

BMO Gold Air Miles Master Card

To collect Air Miles rewards, I use 2 BMO Gold Air Miles Master Cards.  One for personal expenses and the other for business expenses.  We use these credit cards to pay for everything and then pay them off at the end of the month.  We get 1 Air Mile for every $15 spent on these credit cards.

Double dipping Air Miles

With Air Miles rewards, I can also collect points by double dipping.  For example, I can buy my groceries at Safeway and collect all kinds of bonus points in addition to the points I get when I pay with my BMO Mastercard.

I can get bonus points by filling up at Shell, shopping at Rona, Staples and Expedia in addition to the Miles I get from my BMO Mastercard.

In fact, these bonus points really help to rack up the miles.  In my last monthly statement, I collected 1179 Air Miles and 475 of those air miles came from double dipping.  The rest came from my BMO Mastercard.

Doing the math on Air Miles rewards

When I look at my Mastercard statements over the past month, we spent $8423.53 to get 1179 Air Miles.  That means I actually got 1 Air Mile for every $7 spent on the Mastercard over the past month.

If every Air Miles gets me 16.7 cents worth of travel, then my Air Miles rewards is the equivalent of at 2.3% cash back on what I spend.  I’d say I’m doing pretty good given that most cash back cards are 2% at the highest rate and usually only on certain purchases for a limited period of time.  More typically cashback cards are more often at a lower rate like  1% or 0.5%.  I know that some credit cards will give you 3 to 5% cash back for the first 6 months but 2.3% is a pretty good deal on a more consistent basis.

If I use my points to buy merchandise my Air Miles rewards is still the equivalent of 1.56% cash back.

Looking at just one month can be deceiving so when I look at the last 5 months, I earned 4954 Air Miles and spent about $50,000 on my Mastercards over the same time period.  That means I am getting about 1 Air Mile for every $10 spent.

My equivalent cashback is more like 1.67% over a longer time frame.

My five cents

Based on this analysis, I am pretty happy with the Air Miles reward program.  Doing this analysis gives me a better foundation for analyzing whether it makes sense to switch to another reward card.

I’ve also realized how important it is to take advantage of bonus Air Miles Rewards and Double dipping.  With a little more conscious effort and awareness, I wonder if we can get the reward up to a 2% cashback equivalent.

Although the Air Miles Reward program may be a little more complicated to calculate cost benefits, it also gives me a little more flexibility to enhance my rewards through purchases, bonuses and redemption of miles for merchandise or travel.

Does my analysis make sense?  Did I miss anything?  Are there any other rewards programs that produce better results than Air Miles?

Written by Jim Yih

Jim Yih is a financial expert, columnist, best selling author and award winning blogger. He is also a Group Pension Consultant for Clearpoint Benefit Solutions.To learn more about Jim, visit www.RetireHappy.ca and JimYih.com.

13 Responses to How to Get the Best Value from Air Miles Rewards

  1. The tough part about AIr Miles is the variables. I like my current rewards card, which gives me 1.5% cash back, deposited into my account each month.

    No muss, no fuss. Very simple and easy to keep track of!

  2. One questions about the credit cards and double dipping: is there a fee for your cards? We recently cancelled our rewards card because on closer analysis, after paying the annual fee we decided it wasn’t worth it.

    • Jim Yih says:

      There is a fee for my cards but I use the travel insurance and car rental insurance all the time so I would pay a fee no matter what.

      Other’s should factor in the annual fee for sure.

      Thanks for popping by

  3. Frugal Guy with Balance says:

    Hi Jim

    1. To make air miles pay you have to be disciplined to pay all credit card balances on the due date.

    2. You can’t be buying items just because they have double air miles attached to them.

    2. Not sure but al lot of credit cards including Air miles cards have annual fees.

    3. Air mile rewards cost money how do the companies pay for them. Do they increase the cost
    we all pay for the products.

    4. Most folks do not spend 8k month using there Visa cards I hope. A lot of folks don’t make that much
    Per month.

    5. My opinion is if someone has there financial house in order that means no outstanding consumer debt air miles would be ok.

    6. Jim I think you are poor example to use for an air miles pay back because you unlike the majority of air miles collectors has a very good handle on your finances.

    • Jim Yih says:

      Great points!

      Any example is never perfect. The point is really to show people the methodology to analyze their own situation. Whether you spend $8K or $800 per month, the calculation can still be worked back to compare to a cashback option. I might argue that the less you spend on the CC, the higher the cashback option will look if you can still get all the bonus air miles from double dipping.

  4. Matt says:

    Hi Jim,

    It’s a very good analysis, and certainly helpful for those evaluating their own credit card reward programs.

    My only point would be that when you are comparing your results to a cash back credit card, you should only look at the Air Miles earned by using your BMO card and not for “double dipping”, as you can get Air Miles for those purchase no matter what card you are using.

    A quick calculation means this could change your figures about 40%… so maybe your results aren’t as good as you thought.

    Hope that is helpful!

    • Jim Yih says:

      Thanks Matt, This issue did cross my mind. I decided to include it because it’s part of the benefit of the program. A straight cashback gives you no opportunity to ‘double dip’ and earn more points. That to me is one of the key benefits of the Air Miles program so for me it should be factored in.

      Others doing their analysis can do it any way they want.

      Cheers!
      Jim

  5. Jim Yih says:

    I just went to Safeway on the first Tuesday of the month and collected 300 Air Miles from $174 of groceries. Lot’s of good deals because the bill before sales and discounts was $242. This has turned into a fun game for us.

    One of the benefits of the Air Miles reward program is the ability to double dip and collect extra miles.

  6. Gerard says:

    Jim, I get the appeal of double dipping, but as Matt suggests, wouldn’t two single dips be just as appealing? What if you got those extra air miles at Safeway, but added them to the money back from a cash back card? Wouldn’t you come out ahead? Or is the issue that without an air miles CC, we earn miles so slowly that we have too few to redeem for high-value items like trips?

    • Jim Yih says:

      Hey Gerard! Thanks for the comment.

      Let me use my recent comment as an example. If I went to Safeway and used my BMO Mastercard to pay for $174 of groceries, I would have gotten a whopping 11 Air Miles (1 Air Mile for every $15 spent). The other 289 Air Miles came from Safeway bonuses and coupons). I would have to spend $4500 in groceries (Single Dips) to get 300 Air Miles.

      One of the reasons I like Air Miles Rewards is the ability to get more points/miles through double dipping!

  7. Michelle says:

    The BMO Mastercard also costs $99 a year for the privelege to carry it. So is there another card that is free that gets the same Air miles credit?
    I dont pay a fee for my AMEX but I only get 1 reward mile for every $15 at Airmiles sponsors and 1 reward for every $20 everywhere else

  8. Nice methodology to compare the rewards versus cash back. My question is comparing the 2 for 1 arrangement from places like Capital One versus the normal airline credit cards. Which is better? If I understand the Capital One arrangement you get 2 miles for every $1 purchased. Then your total miles are divided by 100 and that amount can be offset against any travel expenses. Is this better than the standard airway cards?

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