October 2, 2013
Through October 15th, US Airways is offering a 100% bonus on shared miles. During the promo, when you transfer miles from your US Airways account to another person, US Airways will give the recipient twice as many miles (up to 50,000 bonus miles). And, it should be possible for the recipient to turn around and share miles back to you. As a result, this is a fantastic way to buy US Airways miles cheaply.
Miles are shared for $0.01 per mile plus a processing fee of $30 and a tax recovery charge of 7.5%.
Due to the fixed $30 processing fee, the lowest per mile cost is to transfer the maximum of 50,000 miles. The cost to do so would be: $500 + 7.5% + $30 = $567.50. The person receiving the miles then gets 100,000 miles so this is like buying 50,000 miles for $567.50. That’s a cost of 1.135 cents per mile.
If you’re planning an international trip and need the extra miles, this can be an amazing deal. For example, if you can find Star Alliance award space to North Asia in business class, you can get there and back for 90,000 miles. At 1.135 cents per mile, that’s like paying only $1,215 per person for this round trip business class award. Similarly, once could fly international first class round trip to Australia for 140,000 miles. At 1.135 cents per mile, that’s like paying only $1,890. In both cases, the cost for business or first class would be substantially less than a similar paid flight in coach.
A quick couple of notes about this promo:
- Accounts less than 12 days old are not permitted to Buy, Share or Gift miles, so if you need to create a new account for this, do it right away. You only have until Oct 15 to do the transfer.
- The charge for the transfer comes from Points.com, not from US Airways. So, you will not get bonus points from cards that offer them for travel or airline spend. Also, you won’t be able to get reimbursed for this with the Barclay Arrival card as a travel expense. Instead, use whatever card you have in which you need to meet minimum spend levels or the best card you have for non-bonus spend.
The case for cash back
When choosing rewards credit cards or online shopping portals, there is often a trade-off to be made: earn miles or cash back. Often cash back rates, as a percent, are higher than miles earned per dollar. For example, most mile earning credit cards default to 1 mile earned per dollar whereas there are some cash back credit cards that offer 2% cash back on everything. See “Best rewards for everyday spend” for examples.
I don’t see anything wrong with choosing miles over cash back as long as you understand the trade-off you’re making. I often choose miles over cash myself. For those that prefer miles, though, this US Airways promo shows that you could actually end up with more miles by choosing cash back!
Let’s compare one of the best cards for earning miles on everyday spend to a 2% cash back option. The Starwood SPG Amex card gives 1 point per dollar, but allows you to transfer points to miles at a favorable rate when you transfer 20,000 points at a time. For the sake of making math easy, let’s assume you spend $40,000 on either card:
- $40K spend becomes 40K SPG points.
- 40K SPG points becomes 50K airline miles (with many airline programs).
2% Cash Back card, 100% transfer promo
- $40K spend becomes $800
- With current US Airways promo, $567.50 becomes 50,000 miles
- With the 2% cash back card you have 50K miles and $232.50 left over (that’s 40% of the way towards purchasing another 50K US Airways miles!)
2% Cash Back card, 100% buy miles promo (when available)
- $40K spend becomes $800
- With double buy miles promo (which is run every other month or so), miles cost 1.88 cents each
- $800 becomes 42,500 miles
As you can see above, if you prefer miles over cash, the SPG card is better than a cash back card most of the time, but with the current US Airways transfer promo, you’re much better off having earned cash back (assuming you kept the cash and can use it to buy miles through this promo!). Of course, this assumes that you’re happy getting US Airways miles.
Maybe SPG is better after all?
In a way, the current promo may be the exception that proves the rule. We’ve seen this transfer miles promo before, but only about once per year. So, most of the time, the SPG card is a better option for earning miles on non-bonus spend. And, SPG has a huge number of transfer partners so you’re not limited to Star Alliance round-trip awards as you would be with US Airways.
What do you think? Points or cash? What do you prefer?