When it comes to credit card rewards, the industry standard for value is one cent per dollar spent. Whether your card gives you one point, one mile, or one percent cash back for every dollar you spend, you can usually assume the lowest value on redemption will shake out to a penny per dollar.
But travel hackers and bargain hunters are always on the lookout for ways to make their credit card rewards pack a little more punch—and a new study gives the lowdown on how travelers can squeeze more than five cents out of each reward mile in their frequent flyer account.
IdeaWorksCompany recently conducted a study to find out which travel rewards offer consumers the best value. Using the MileagePlus program from United Airlines, researchers looked at over 170 itineraries to determine the value of fares when booked with reward miles.
When they compared economy class, business class, and first class flights both within the continental United States and outside of it, they found that the best deals were first and business class flights to Hawaii, Europe and Asia.
Reward value and redemption
In the United MileagePlus experiment, mileage rewards were found to have a value range between one cent and 5.4 cents per mile. United offers “domestic saver” reward travel for 25,000 miles, and these fares were readily available and easy to book. Value for the domestic saver redemptions was 1.4 cents per mile.
However, the slightly harder-to-find “first class saver” seats, which can be redeemed for 40,000 miles, offered greater value. A first-class round-trip ticket to Hawaii made those 40,000 miles worth four cents each. Going even higher up the ladder, first class saver reward fares to Europe and Japan cost 135,000 miles each – but made those miles worth over five cents each.
Elite programs and co-branded credit cards
Many frequent flyer programs also have elite membership upgrades, such as United’s MileagePlus Premier program. Those offer extra value, giving members benefits like car rental discounts and preferred booking and seating options. Average discounts with the premier program ranged from 29% to 36%.
Another way to maximize frequent flyer rewards is by using a co-branded credit card offered by the airline, such as the United MileagePlus Explorer card from Chase, which lets members earn miles with every purchase. The study found that travel rewards credit cards not associated with any particular airline, such as the Capital One Venture card, offered better value for economy class reward travel, while co-branded cards offered better premium rewards.