Back in 2018 I wrote a post ranking seven levels of credit card usage, and somewhere in the middle I said I prefer airline miles. I was very proud of the pun that followed (your miles may vary). What that post did not have was a single number to explain why.
So this is the number. More precisely, it is the argument that the number everybody quotes, what are airline miles worth in cents per mile, is the wrong one to look at. A mile is worth what you would actually have paid for the thing you used it on, minus what you still paid, compared against what the same spending would have earned in plain cash. That’s less exciting than a points-valuation chart, and it gives a smaller answer most of the time.
The fare that counts is the one you would have bought
Most miles math divides the cash price of a ticket by the miles it cost. A business-class seat that sells for $6,000, booked for 120,000 miles, comes out at 5 cents a mile, and that’s the screenshot that gets posted.
The problem is the $6,000. Unless you were going to pay $6,000 for that seat, you didn’t save $6,000. If the trip was happening anyway and you would have bought economy for $1,100, the honest value of those 120,000 miles is closer to $1,100 plus whatever you decide the flat bed is worth to you personally (be honest, and put an actual dollar amount on it). If you wouldn’t have taken the trip at all, the value is what you’d have been willing to pay for it, which might be a lot less than either number.
In optimization terms, the retail fare is a list price and the fare you’d actually buy is the real cost of the alternative. Decisions get made against the alternative. List prices are for brochures.
Subtract what you still paid
Award tickets aren’t free. You still pay taxes and fees, and depending on the program and the route, sometimes a carrier surcharge that can be a meaningful chunk of the cash fare. Those come off the top before you divide by anything.
An illustration with round numbers: a round trip you would really have bought for $900, booked instead for 60,000 miles plus $120 in taxes and fees. The miles bought you $780, not $900. That’s 1.3 cents a mile.
Flying between Wichita and Argentina has taught me to look at this line first. Nothing leaves Wichita for Buenos Aires without at least one connection, so “the flight” is always two or three flights on a single ticket, and the award price and the fees can move a lot depending on the routing. The miles number in big type is the least informative figure on the page.
The benchmark is the cash-back card in your wallet
Here’s the part almost nobody does. Those 60,000 miles didn’t come from nowhere. They came from spending money on a card that earned miles instead of something else. Several issuers sell flat 2% cash-back cards, so the fair question is not “is 1.3 cents a mile good?” but “did the miles beat the cash I gave up to earn them?”
That comparison is one division. If your card earns e miles per dollar and the alternative pays c percent in cash, a mile has to be worth at least c ÷ e cents just to tie. On a card earning 1 mile per dollar against a 2% card, every mile needs to be worth 2 cents. At 2 miles per dollar the bar drops to 1 cent. At 3x (usually a bonus category, like dining or travel) it’s 0.67 cents.
Go back to the illustration. At 1.3 cents a mile, those miles lost to a 2% card if they were earned at 1x, and won comfortably if they were earned at 2x or better. Same trip, same redemption, opposite verdict, and the only thing that changed is how the miles got into the account. That’s why a single cents-per-mile valuation, however carefully a blog computes it, can’t tell you whether miles were worth it for you.
Transferable points (the kind Chase and Capital One run) change the picture a little, because you can decide which airline to send them to after you see the prices. That flexibility is worth something. It isn’t worth an unlimited amount, and it still has to clear the same line.
Miles are a terrible place to keep money
A mile balance is inventory. It earns no interest, and the price of what it buys is set by the other side whenever it likes. The CFPB said so in fairly plain language in its 2024 report on credit card rewards: issuers and their partners “reduce the value of rewards already earned by increasing the number of points or miles needed for a redemption.”
Any inventory model has a holding cost, and for miles it’s the chance that the award you’re saving for costs more next year. Sitting on a big balance for a “someday” trip is making an interest-free loan to an airline that reserves the right to pay you back in smaller units. The OR answer is the boring one: keep the balance roughly proportional to trips you actually have planned, and redeem on a schedule instead of hoarding for the perfect sweet spot.
How I’d decide on a redemption
Put together, the whole thing fits in four questions, in this order:
- What would I really have paid in cash for this trip, in the cabin I’d really have bought?
- What do I still pay in taxes, fees and surcharges on the award?
- Divide the difference by the miles. That’s the value per mile.
- Is that above cash-back rate ÷ miles-per-dollar for the card these miles came from?
If yes, book it and stop thinking about it. If no, the miles still have to go somewhere (they aren’t getting more valuable in the account), so the useful takeaway is about the spending, not the trip: the card you’ve been putting that spending on is probably the wrong card for you.
None of this means miles are a bad deal. Big sign-up bonuses are a different calculation, because that’s value you get on top of normal spending rather than instead of cash back, and they are where most of the real wins live. And if you hold a premium card mainly for the travel perks, the math is about the annual fee rather than the miles (I wrote about the perks side in Chase Sapphire Reserve authorized user benefits). It just means the miles you earn on everyday spending have to clear a bar, and most people have never looked at where the bar is.
I still prefer miles, by the way. I just know what I’m paying for the preference now.
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