Last week I wrote an analysis of the Delta Reserve credit card.  In that post I pointed out that the Reserve card has an excellent rate of return for daily spend (over 3.4 cents per dollar) if you are a very big spender and can hit the $30K or $60K bonus levels.  That card also has a very steep annual fee ($450) which is offset by various perks.

If you don’t want to go all out with a $450 annual fee, another option is the Platinum Delta SkyMiles credit card which has a $150 annual fee.

What you get for the annual fee (just the highlights):

MQMs and bonus miles:

The first year you have the card, you will be given 5,000 MQMs (Delta Medallion Qualifying Miles) and 20,000 redeemable miles after your first purchase.  Since I’ve argued that the fair trading price for MQMs is about 3 cents each (see How much should you pay for elite qualifying miles), and the fair trading price of redeemable miles is about 1.29 cents, this signup bonus is worth approximately $408.  Since the annual fee is not waved the first year, this amounts to a $258 signup bonus.  Not a great signup bonus if you’re into credit card churning, but its not bad if your purpose is to get the card for its ongoing benefits.  Note that if you do not expect to reach at least bottom level elite status (25,000 MQMs) even with the 5K MQM bonus, then that bonus will not have any value to you, and the total signup bonus value will reduce to $258 (or $108 once you subtract out the annual fee).

Companion Certificate:

After the first year, when you renew the card, you will receive a a free companion certificate.  This will allow you to essentially buy two tickets to and from anywhere in the continental US for the price of one.  These can be used for either coach or first class tickets.  Note two big downsides: the companion does not earn miles or MQMs and you and your companion will not be eligible for upgrades.  I like to use these certificates on regional jets that don’t have first class anyway.  Personally, I value this benefit at about $250.  This benefit alone makes the card worth holding onto even if you have no plans to spend any money with the card.

Priority Boarding and Free Checked Bag

If you have elite status with Delta, these benefits won’t matter to you.  Otherwise, this is a pretty good perk.  Priority boarding will allow you to get on the plane and find overhead bin space for your carry-ons before the bins fill up.  The value of a free checked bag should be obvious.  If you don’t have elite status, I would estimate the value of this perk to be about $75 per year.

Total cost each year (including year 1): $150

Total benefits first year:

• $408 for elites
• $483 for non-elites who will reach elite status
• $333 for non-elites who will not reach elite status
  

Total benefits ongoing years:

• $250 for elites
• $325 for non-elites

So, as you can see, the card pretty much pays for itself with its benefits.  If you value the particular benefits listed above, you might want to seriously consider this card.  Let me stress again, though, if your purpose is to signup for credit cards for their sign-up bonuses, you can do much better.  This card is one to keep for its ongoing benefits.

Benefits from Daily Spend

If you don’t spend a lot on this card, the return rate for using this card is not very good.  You will earn one Delta SkyMile per dollar on most purchases, and two Delta SkyMiles per dollar on Delta purchases.  Compared to several other cards, this is pretty lame.  Where the card shines, though, is if you manage to put exactly $25K or $50K of spend on the card in a year:

Big Spend Benefits

Once you reach $25K in spend in a calendar year, you will be awarded with 10,000 bonus miles and 10,000 Medallion Qualifying Miles (MQMs) which will help you get to the next level of elite status at Delta.  The same benefits kick in again at $50K of spend.  So, if you manage to put exactly $25K or $50K of spending on your card each year, you will earn 1.4 SkyMiles and .4 MQMs per dollar spent.  According to my Fair Trading Prices chart, SkyMiles trade at 1.29 cents each whereas MQMs trade at 3 cents each.  This means that you would earn 1.29 * 1.4 + 3 * .4 = 3 cents of value per dollar spent on the card!  This is a very good rate of return for non-category spend (some cards offer better rates of return for spend within categories such as gas stations, grocery stores, etc.).  Theoretically, you could spend $25K on Amex Gift cards by going through Big Crumbs to earn 1.6% cash back and increase your overall rate of return to about 4.6 cents per dollar!  The more highly you value elite qualifying miles (MQMs), the more attractive this option is likely to be to you.

Conclusion

If you are a frequent Delta flyer and you value annual companion passes, this card is a good one to keep in your wallet or in a drawer.  If you are also a big spender, this card is a strong contender!  The rate of return for big spend is not as good as the Delta Reserve, but it is close.  Personally, I hold both the Delta Reserve card and this Platinum Delta SkyMiles card (the business version).  I concentrate my spend on the Reserve card and keep the Platinum card for the companion pass.  If I manage to max out the Reserve card to $60K of spend, then I’ll consider putting additional spend on the Platinum card, but only if I’m sure that I’ll get to $25K of spend.

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Delta is currently running a special promotion in which they’ll double miles transferred to another person. Is it worth it?

Until December16th, Delta is running a promotion where they will double miles transferred from one person’s account to another. You will be charged 1 cent per mile to transfer those miles plus a $30 transaction fee. You can transfer up to 30,000 miles to a person in each transaction. Since it is possible to transfer miles back and forth between people, you can essentially buy Delta miles for 1.1 cents each with this technique. It is possible to reduce this amount very slightly by bundling transfers to multiple people in a single transaction, but to make this easy to think about, let’s just assume that the cost to buy miles is exactly 1.1 cents.

Is it a good idea to buy Delta miles? The answer depends on your situation. If you’re unlikely to use the miles, then the answer is no. If you would want to redeem the miles for gift cards, hotel stays, etc., then the answer is still no (since the value of such redemptions will typically be 1 cent per mile or less). So, when is it a good idea? Here are my top 5 reasons to buy miles before the promotion ends:

Reason #1: International Travel

If you are planning international travel, but don’t have enough frequent flyer miles for the trip, this could be a great opportunity. Suppose, for example, you are planning a trip from the US to Europe. With Delta, if you’re able to find low-level award availability, you would need 60,000 miles for coach travel or 100,000 miles for business class. To buy the miles would cost $660 or $1100, respectively. Often, the price for a flight to Europe, in coach, is more than the $1100 to buy miles for a business class ticket. In that case, and If you can find low-award availability on Delta for the times you would like to travel, buy the miles and either save a bunch of money by going in coach or live the good life in business class.

Even if you’re not planning an international trip right away, but you know that you will go on a number of such trips in the future, it is probably worth it to buy miles speculatively in the hopes that it will work out. This is a bit risky, though, since you might find no low level award availability on the dates you want to travel.

Reason #2: Holiday Travel

Suppose you failed to plan ahead and you are just now looking for flights to visit family and friends for the holidays. You are likely to see astronomical fares for the flights you want. I took a look recently at some sample fares and the corresponding Delta award availability for the same flights. While you won’t be able to get your round trip tickets for 25,000 miles (low level award), there are plenty of medium and high level awards available that can still save you hundreds of dollars per ticket. For example, suppose you have 30,000 miles to work with and all you can find are high level awards (60,000 miles within the continental US). Transfer all 30,000 miles to a friend for $330 and have them book the ticket for you. Since many such flights are running $800 or more, this can be a pretty good value for you.

Reason #3: Gift Miles

Want to give someone an incredible gift? How about transferring your miles to their account with a card saying something like “Use these miles for the trip to Paris you’ve been dreaming of”. Of course, like a gift card, they would be able to use the miles for any trips they want.

Reason #4: Last Minute Travel

Every now and then something may come up in which you need to travel right away. Two interesting things happen when you are within a day or two of travel: flight prices skyrocket and award availability opens up wide. That means that you might have the option to pay something like $1,200 for a last minute flight or use 25,000 miles for that same flight. Since 25,000 miles would only cost you $275 with this promotion, I’d highly recommend banking some miles now for that just in case situation in the future.

Reason #5: Combine Miles

Many families face the situation of having small amounts of miles in multiple accounts. Separate, the miles are fairly useless since you need a minimum of 25,000 miles to book award travel. Use this promotion to move miles all to one account and not only will your total family miles double, but you’ll also have them together where they are now usable! If anyone in the family has elite status with Delta, then make sure to have the miles end up in that person’s account because they will have better award redemption options than people without status.

I took advantage of this promotion when it ran previously in September and I’m thinking of buying a few more miles again in preparation for future travel to Australia or Asia. How about you, are you going to go for this promotion? Let us know why or why not.

This deal is dead.

A resurfaced SkyMall promotion provides amazing opportunities.

In one of my earliest posts as Frequent Miler, I wrote: “Buy Samsung Tablet, Get 25,000 Delta Miles Free!” The SkyMall was running a promotion at the time in which they would give 25000 Delta miles for purchasing $500 or more in the SkyMall. I had spent many hours scouring SkyMall to find the best opportunity, and I came up with that one. I didn’t take advantage of it though. I was a happy iPad owner and so I let the deal go. Fellow BoardingArea blogger Delta Points (also known as DeltaGOLDflyer), though, didn’t pass up this opportunity. Instead, by coincidentally buying the same tablet I wrote about, he found a way to use this deal to buy 250,000 Delta Miles for only $700! That’s enough for a round trip award ticket (at “medium” award pricing) from the US to Australia in international business class! If you can find low-level award availability, you can get two tickets for just a bit more (300,000 miles). So, just out of curiosity, I priced a few business class flights from Detroit to Australia and they came up at about $10,000 each. It’s amazing to think that DeltaGOLDflyer can get one or two of these tickets for a net cost to him of $700!

Opportunity Resurfaces

Now, for a short time, the SkyMall promotion is back! Use this link to get there: http://www.skymall.com/25000. This time, though, the deal is only available for the first 1000 purchases so you’ll have to act fast.

DeltaGOLDflyer’s trick is to make multiple just-over-$500 purchases from the SkyMall and then resell them on EBay. Even with a loss on the resale, the overall value you can get from the miles can be far higher than the money you “lose” in the deal. The hard part of all of this is to find products with high resale value. In September, the Samsung Tablet was a sure bet. Now, however, I’m skeptical about the resale value of $500 tablets since Amazon has come out with the $200 Kindle Fire tablet. It’s true that Amazon’s tablet is a far cry from Samsung’s, but I do think it will significantly change the market. Also, if a lot of people simply mimic DeltaGOLDflyer’s technique, there will be a glut of tablets on EBay which will significantly drive down the resale price. So, if you’re interested in this opportunity, I’d recommend that you scour the SkyMall yourself for things that you think will have a high resale value. Keep in mind that shipping costs can be significant so you’re better off with a small item than a big screen TV!

For an in-depth analysis of the opportunities here (including a pretty well thought out PPM), please also see The Man of a Thousand Places.

More about Australia

A trip to Australia is just one of the many ways to use Delta SkyMiles. I pointed it out because, seriously, who doesn’t want to visit Australia? But, also, some of my favorite bloggers have written that award travel to Australia is one of the best redemption options for Delta. For examples, see ThePointsGuy, View from the Wing, and Ben at TravelSort. All of those guys have written about how to get low level award availability through a Delta partner, V Australia. If you can get that to work, you can go business class for 150,000 miles round trip. Otherwise, you’ll most likely have to book the tickets at the “medium” level which will cost you 240,000 miles round trip.

Add It Up

If you don’t have plans to fly internationally, this deal is probably not for you. If you do like the idea, though, of flying internationally in style (e.g. business class), it’s worth taking a look. Let’s break down some of the numbers:

Let’s assume you want two business class round trip tickets to Australia and that you’re willing to pay up to $3000 each for the tickets (still a huge savings over paying directly). Let’s also assume, worst case, that you will be redeeming your SkyMiles at the “medium” level. In other words, it will cost you 240,000 SkyMiles for each ticket.

Now, let’s assume that you can find some items on SkyMall that individually or together add up to just over $500. Let’s say the total before taxes and shipping is $525. Now let’s assume that taxes and shipping bring the total all the way to $600 (this is hopefully worst case). Since you want two tickets at 240,000 SkyMiles each, you will need to make 20 purchases of $600 each. So, your total expense before trying to sell anything will be $12,000. In other words, before selling anything, you will have enough SkyMiles to “buy” medium level US to Australia business class awards for $6000 per ticket. This is already a substantial savings off of the rack rate, but it is probably much more than you want to spend.

So, next step is to sell your items. Remember that the retail value of your items was $525 per order. You will need to sell the items at a discount via CraigsList, EBay, or whatever. Let’s assume you go with EBay and discount the items by 25%. Let’s also assume that you pass along shipping charges to the buyer. In that case, you will sell the items for $393.75 and EBay will take about $46 of that in fees. So you will be left with about $347. Since you will sell 20 of these, you will get a total of $6,940. Remember that your initial out of pocket expenses came to $12000. Subtract the $6,940 and you find that you have paid a total of $5060. This comes to just over $2500 per ticket! Keep in mind that many of these assumptions are close to “worst case” so you could do even better by either selling your items for more or by redeeming your miles at a lower rate.

Analysis

If you want to fly internationally in business class and you’re willing to do some work selling and shipping, this is clearly a great opportunity. There are risks, though. You might find that your items don’t sell or you might even get swindled by a buyer. And, it might be difficult to redeem your miles for the exact dates and times you want (although “medium” awards are very easy to come by). This is not the first time this promotion has run, so the safe thing to do is to spend just the amount you are comfortable with and, if it works out, wait until they (hopefully) run the promotion again in the future. Also note that Delta occasionally runs promotions in which you can effectively buy SkyMiles for 1.1 cents each. This, of course, would be a much simpler way to get 500,000 miles for just a bit more money ($5,500) than the worst case scenario presented above.

Until the end of September, Delta is offering to double SkyMiles that are transferred from one person to another.  This is the perfect time to make use of little pockets of miles in different family members’ accounts by consolidating all in one place, and doubling miles as you do so.  Unfortunately, transferring miles isn’t free: Delta charges a penny per mile plus a $30 transaction fee (up to 30K miles per person per transaction).  However, the result is that by shuffling miles around from one person to another you can effectively buy SkyMiles for just over a penny each. 

Is this a good deal?  It definitely can be if you know you’ll use the extra miles.  Recently, when I looked into a few potential personal trips (to Europe and to Central America), I found that if I used this trick to buy my way into First/Business class, I would pay about the same as the best coach ticket I could find with a similar itinerary.  Or, I could use half the miles to travel in coach and pay far less than I would have by buying tickets outright.  Note that if you use SkyMiles awards to book your travel you won’t earn miles or status from the flight so you need to factor that in to your situation to determine if it’s really a good deal.