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 Air Miles World Mastercard
To collect Air Miles rewards, I use two BMO Air Miles World Mastercards. 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 and the BMO Air Miles World Mastercard. 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?
Comments
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!
There’s something to be said about simplification. The downside is there is no opportunity to get more rewards which I like about Air Miles
Jim
The thing about true cash back is that when you spend the cash you can earn more points i.e. even more cash back. With other loyalty programs when you redeem points they aren’t treated as cash so you don’t EARN points when redeeming.
…and spending Cash is a lot less hassle than redeeming points (due to limited choice)
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.
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
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.
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.
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!
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
Jim, sorry, but still you can’t count the ‘double dipping’ as anything special: it’s just single dipping twice on the same program. If you use a cash-back card, you can “single dip” on the Air Miles points, then “single dip” up to 2% back on the cash back… or single dip AGAIN on Air Miles… or Aeroplan or PC Plus or Optimum or… the point is, unless using your Air Miles master card makes the points you are given for purchases like bonus miles on purchase of two boxes of cereal etc., then really, count it as “convenience” for just participating in a single points program… but a cash back program PLUS Air Miles is just as good and can be better than single dipping two times.
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.
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?
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!
Jim,
I do not have an Airmiles CC, but do collect on my ONYX, earned mostly from Safeway and Rexall bonus airmiles. If shopping on the first Tuesday of each month at Safeway, where one earns 20x the base miles, you’d still be earning a very minimum 160 miles for just having ANY free airmiles card for the $174 you spent (8 base miles X 20). Not sure how you calculated that you’d have to spend $4500 to get the same if using Safeways bonus day each month? This wouldn’t include the bonus miles either…
I usually wait each quarter to stock up on either toilet paper, frozen veggies, or toilet bowl cleaner to get bonus miles between 35-50 for just spending $10-12 – but always price check to make sure Safeway is on par with other stores re: pricing of products
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
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?
I have been using Airmiles religiously for about 10 years. Recently I have been searching for a credit card that has more real world redeemable rewards. I have been trying to book a flight to popular destinations and find it increasingly difficult…. actually impossible to get flights on or around the time id like to go booking 6 months in advance.
As the king of Airmiles… (nicknamed by friends and family) I know how to maximize airmiles in everything from Business, pleasure and personal expenses. From double dipping, personal balance transfers, paypal purchases and even memorizing the coupon codes to get maximum miles 24/7. Another thing I do is to get my friends and family to transfer their miles to me and book flights at a discounted rate my card provides and keep 10% of the savings Even that I have found that Its just not worth it… In some instances ive been able to manually book flights for close to the price of the taxes alone. The products offered are at highly inflated prices. Ex A 60″ sharp tv for 19500 airmiles+ $500. The same tv at the time was 1980 on sale. The cost per reward doesnt add up… To transfer my 21500 airmiles cash works out to $2350… At a conservative estimate of $10/mile is $215000. The card has a $99 annual fee. Considering the 2% cash back is constant and airmiles requires substantial research and effort to maximize the return on investment in an attempt to use them a cash back card is a no brainer.
Thats just my 2% lol ( I couldnt resist) but all information provided is accurate and current. For any tips how to get the most out of your miles email me and I’ll pass on my tips.
Jason
Your analysis of including the Safeway bonus airmiles in your credit card return is flawed.
You should only be including the AIrmiles you get from your credit card itself. The reason for this being that you could get the bonus Safeway Airmiles regardless of which credit card you used. (For example I get similar Safeway bonus Airmiles using my TD Aeroplan Infinite Visa.
You get 1 Airmile for every $15 you spend. That is all your credit card gives you. Even at the highest Airmiles value of 25 cents per mile, you only get 1.7% return on your card. At a more average Airmiles valuation of 15 cents per mile, you’re only getting a 1% return.
My Aeroplan Visa gets me a 2-3% return and I can still get all the same bonus Safeway Airmiles that you get. If I included those bonus Airmiles in my credit card calculation I would be near 10% return.
I have just finished up using almost all my Dream Airmiles and in future will use only a Cash back credit card. First of all, what you have to calculate is how many miles you used using your credit card, what those Airmiles are worth, minus the cost of the credit card if there was any. Then compare it to another type of Credit card, for example cash back.
As someone else pointed out, because you have cards that cost about $99 a year, you have to subtract $99 from the value of the Air Miles you earned with your credit card. I am using no-fee cards as my example because for most people, especially if you don’t have a business card, the number of extra Air Miles you earn with a fee credit card are not worth the extra money (I did the calculation one year).
So, my MBNA cash back gives me 1% on everything that is not groceries. So for $100 I get $1 back. That is the lowest rate. But on my no-fee Amex, for $100 I would get 5 Air miles if not Air Miles sponsors. Each Air Mile is worth about 10 cents; I just booked a flight to Europe; it cost 6270 Air Miles plus $593. Exactly the same Air Canada flights were $1,278 if I booked directly from Air Canada. So 6,270 Air Miles were worth about 10.9 Air Miles each. Even at 11 cents each, 5 Air Miles are worth $.55, about half of the cash back. Even at sponsors where I would get 1 Air Mile for every $15, it would still be worth only $.66.
And on some other flights an Air Mile is worth only about $.06.
If I used the Cash back card for groceries and gas, I get 2% cash back, which is $2 for every $100 I spend, more than double what the value of the $100 would get me from Air Miles even if buying with sponsors. For the first six months, I get 5% cash back at grocery stores and gasoline stations which is $5 for every $100 at grocery stores, which is almost 10 times what Air Miles are worth even with sponsors.
As other people have pointed out, you can’t count the bonus Air Miles from Safeway, Metro, etc. because you would get them anyway even without your Air Miles credit card. We don’t have Safeway in Toronto but I do understand it often has good Air Mile bonuses. But you can collect those bonuses anyway and credit them to your “Cash” account and use your cash back credit card to collect money.
When you do the kind of calculation I have done, you realize that for the average person, a good cash back credit card is much better. In addition, cash does not expire and you can use it on any airline for any flight for any time. Air Miles used to be a good deal when I started collecting 15 years ago. Now they add so many fees and surcharges, and have so few flights you can get at their base rate (my flight to Europe in theory should have been 5400 Air miles, not 6270), they are not worth it as a credit card.
I still use my Air Miles card at partners to collect Air Miles for cash. There are limits to what my cash back card will give per month so I will get another one as a back-up for those times when I would go over my limit (usually when I am travelling).
I agree with the posters who say you can’t include the bonus store Airmiles in your calculation. I don’t use an Airmiles credit card because I prefer my American Express Membership Rewards that earns 2 points per dollar spend at grocery, gas and drugstores (and travel). Or my Capital One or BMO 2% cash back on all purchases cards as a second choice.
Until a few months ago, I only collected Airmiles passively but now I’m interested. Over the last few months I’ve collected just under 2,000 Airmiles by paying attention to the bonus days:
150 bonus Airmiles for purchasing $100 Sobeys gift card
150 bonus Airmiles for purchasing $150 Sobeys gift card
100 bonus Airmiles for $100 grocery purchase at Metro
100 bonus Airmiles for $50 spend at Pharma Plus combined with 40 bonus for $40 spend on skincare
etc etc
At this rate I’m getting 1 to almost 3 Airmiles for each dollar spend. On top of my regular rewards credit card. Sometimes it may be as low as 1 Airmile per $1 if it’s not a big score day. Though I’m going to redeem those Sobeys gift cards on bonus days as well so it will balance out to the higher accumulation.
It takes a few minutes scanning the front pages of the flyers. And a bit of planning but IMO it’s worth the effort.
I just redeemed 2,275 Airmiles for a ten day car rental in the US. After the $11.30 Cdn ‘booking fee’ and $72.54 USD in taxes and fees that I still have to pay, I calculated 25 cents value per each Airmile. This is for the $575 Cdn savings I don’t have to pay out of pocket for the cheapest car rental package I could find without Airmiles.
That said, I’ll probably sign up for the Amex Airmiles card that has the 2,000 Airmiles sign up bonus and first year free. After doing the minimum spend required though, I won’t be using the card very often.
I’m convinced that the best value for all reward programs is for the reward they were originally intended. Hotel points for hotels, airline points for airline tickets etc etc.
Sure, it’s a bit tricky to redeem and I almost gave up on Airmiles. But with a bit of flexibility and some crazy desire to find a bargain, points can save a bundle. Even Airmiles.
Great insights Colleen. I have redeemed recently for a car rental at about 20 cents per mile and a few times at the Sheraton Gateway Toronto Airport at about 28 cents per mile.
It would be great if there was a forum for us all to share our high value redemptions.
stevevandie at gmail dot com
Agree with Colleen. Decided that we will use airmiles for groceries and stuff, car rental. They are charging a lot for travel now and am investigating cashback cards to use for travel.
Yeah. My family and I will no longer be using Air Miles.
Some of the reasons are:
– expiration of points
– easily devalues your points by inflating their rewards prices
– very limited rewards selection
– can find better deals elsewhere than what is offered in rewards
– cost per Air Mile is low
– fees to transfer points are high
– limited exchange with other rewards programs
… etc, etc, etc
I believe that Cash Back is the better and simple way to go these days giving you more freedom. And regarding rewards programs, probably a more focused rewards program that is company specific offers people better deals.
Good luck everyone!
I just signed up for American Express Platnum what I’m having trouble figuring out is how double dipping works? Do I get double base miles only? When there is a bonus going on do get that doubled aswell? And lastly if it’s a promo like 20xs base would that be doubled or is considered a bonus not a base, in new at this cannot seem to find a clear answer online.
Hi Melissa, the American Express AIR MILES Platinum gets you the one Air Mile for every $10 spent at sponsor locations, grocery stores, gas stations and drug stores. Plus one mile fore every $15 spent anywhere else. You don’t get the bonuses doubled up (and yes, the base multiplier is a bonus), but you’re still really cleaning up on Air Miles. If you’re in a Sobeys or Safeway, every $20 would get you 3 miles (2 from the Amex, 1 from the Air Miles card), plus the bonuses. The card goes a long way since it gets you miles from spending anywhere, but it’s still hard to beat the store bonuses like spend $100, get 100 Air Miles!
This is the first time in my life I have considered playing this dumb points game. I’ve never wanted to have all my purchases and habits tracked and studied for whatever creepy reasons those big companies have. But lately i am caving in, so I can get some help paying for those visits home by plane that have to happen every year.
I just want to say that, reading all these comments makes me ask, don’t you people have anything better to do than work out all the nuts and bolts and calculations of what points are worth? Wouldn’t you rather play outside? Do all of you live in the suburbs? I bet!
Blah! I might just keep paying cash for the most part so I can keep my dignity.
Finally someone said it.
I recently discovered that AirMiles now calculate the rewards on a flight for each way – so it’s now doubling the amount of miles required.
Agreeing with Steve and Jason, Airmiles just doesn’t seem to be worth the efort anymore.
Hi Jim,
I’m wondering what you think about airmiles vs. Westjet dollars? With the hassle of booking flights through Airmiles recently, I’m wondering if I would be better off switching to the West Jet World Elite Mastercard.
What means “……….Effective January 15, 2018, the 25% redemption discount on AIR MILES flights in North America will be discontinued” announced in BMO’s November 15, 2017 letter