UPDATED: 15 October 2020
So, you read my blog about the two couples, you’re intrigued but you have no idea where to start. Don’t worry…I gotcha!
Miles and points are a form of currency. Similar to the stock market…the idea is to “buy” your miles for a low price and “sell” your miles for a high price. In other words, you want to generate the miles for as cheap as possible and then redeem them for an expensive ticket.
Sound complicated? I promise that if you continue reading, I’ll have you up to speed in no time.
THE OLD FASHIONED WAY
Back in the day, you would accrue frequent flyer miles by…as weird as it sounds…ACTUALLY FLYING. The airlines would give you 1 mile for every mile that you flew. For example, if you flew round-trip from Los Angeles (LAX) to New York (JFK), the airline that you flew on would award you with 4,950 frequent flyer miles.
I know most people do not enjoy math but the following example will be simple and will help you understand the concept.
Let’s assume you paid $400 for the LAX-JFK flight. You, essentially, “bought” 4,950 frequent flyer miles for 8 cents per mile ($400 / 4950miles = .08cpm).
We can dedicate an entire blog to the following statement, but trust me… airline miles are worth between 1 and 2 cents, so “buying” miles for 8 cents per mile is, obviously, bananas! <–Told you the math was going to be simple.
THE SECRET SAUCE
The easiest way to “buy” cheap miles is by signing up for credit cards. A fantastic “beginners card” is the Chase Sapphire Preferred Card.
Think of it this way…for a $95 annual fee (and meeting the minimum spend required), you can earn 60,000 Chase Ultimate Rewards points. You are, essentially, “buying” the points for .0015 cpm. That’s 50 times cheaper than flying round trip from LAX-JFK and even better…you didn’t actually to fly to get those miles!!
IT GETS BETTER
Now that we’ve “bought” the miles for cheap, the optimal plan is to “sell” them for a high value. Although, points are “worth” 1-2 cents each, there are opportunities to obtain mind blowing value from them.
REAL LIFE EXAMPLES
Example #1: You have 60,000 points (from the card above) and you’re interested in flying from the US to Europe in Business class. With a quick search, I found a flight from Detroit to Amersterdam in Delta One (Delta’s Business class) for 50,000 miles and $5.60.
Let’s take a look at how much Delta is charging for THE SAME BUSINESS CLASS SEAT on THAT SAME FLIGHT…
50,000 miles + $5.60 or ~$8000? I would say that’s pretty good value out of those points.
Perhaps you want to obtain more quantity from your miles…
Example #2: Obtaining the Southwest Airlines Companion Pass can be extremely lucrative because your selected companion can fly with you for “free”. Thus, the amount of points earned from obtaining the companion pass are doubled. For example, 80,000 points in your Southwest frequent flyer account, essentially, become 160,000 miles because two people are flying.
So how far does 80,000 Southwest Rapid Rewards miles get you?
Let’s do a simple search…Chicago (MDW) to Los Angeles (LAX)…
The values above are for a one-way, economy flight. Remember, if you have the companion pass, two people are flying for this amount. For simplicity, let’s say it costs 6,000 miles one-way (and 12,000 round-trip). From the 80,000 points, you AND A COMPANION can fly 6 roundtrip flights from Chicago to Los Angeles!!!
To be fair, prices change and the amount of points that airlines require change. It’s an ever-changing landscape, however, the concept does not change.
This hobby has a lot of nuances. Don’t get frustrated. Before you know it, you’ll be using acronyms and talking about the latest suite that you’ve flown in.
One word of caution…it will feel great when you look in your account and you see 100k…200k…or even a million points but I encourage you to NOT HOARD POINTS/MILES!
Often, you’ll hear the mantra “earn and burn.” This term comes from devaluations. For example, it cost 50,000 points for the Delta flight above. The airline could easily change the “standard price” tomorrow and require 75,000 points for that same flight thus your points are no longer worth the same value. If you’re continually building up your stash, you’re likely losing value also. This concept happens with, both, airlines and hotels.
Buy low, sell high…that’s the best advice you’ll ever receive.
Ready To Buy Low, Sell High? Let’s go to Step 1 —>>