Airline Miles Programs Sure Are Profitable. Are You the Loser?


Consider Delta’s gleeful filing. Under the heading “significant value creation,” Delta said American Express customers who used its co-branded cards made up 22 percent of the balances carried in 2019 by its holders of traditional credit cards.

Please: If you need to carry a balance on your credit card, don’t do it with mileage cards, which often charge dizzying interest rates that create value for card issuers. This is the very definition of letting the system beat you.

Now, to the math on what a mile might be worth. First, a standard disclaimer: It is always wise in this sort of exercise to read or reread “The Contrarian’s Guide to Frequent-Travel Plans,” a classic 2002 column by Joe Brancatelli, a veteran business travel writer. In it, he likened frequent-flier programs to “an unregulated lottery,” where your odds are uncertain and the rules can change at any moment.

And second, a benchmark of sorts: If you’re spending tens of thousands of dollars each year on credit cards, you can get 2 percent cash back with relative ease on Citi and Fidelity branded cards. That’s 2 pennies for every dollar you spend, which means that $50,000 in annual spending nets $1,000.

If, instead, you’re earning a mile for every dollar you spend on a credit card (and some cards can return a bit more), will those miles be worth more than 2 cents each when you exchange them for “free” plane tickets or upgrades that have an obvious cash value?

Airlines do not want you to do this math. Assume that $50,000 in spending yields 50,000 miles. Can you exchange them for an airline freebie that would otherwise cost more than $1,000?

Often, the answer is no, though a United spokeswoman was quick to email me January itineraries to Fargo, N.D., and Frankfurt where the answer was yes. Then again, the airlines don’t want you to know the odds of getting what you want at a reasonable value, nor do they want to allow many people to achieve a favorable exchange rate to lovely places at desirable times.



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