Would you redeem airline miles for direct cash?

Airlines have offered frequent-flier credits for at least three decades — yet close to a third of those points go unclaimed each year as customers put off or forget to redeem airline miles before they expire.

Seeing a list of points is one thing, however. Seeing a stack of twenties is another.

Which might be why a number of people in the travel industry are taking close note of a building trend: programs that let customers turn miles or loyalty points directly into cash.

A recent Fox Business report examined the idea, tracing its roots back to eight years ago, when American Express Rewards introduced Pay With Points. The program, which let cardholders spend their points like cash at Amazon.com, never really took off, though.

Maybe it’s just the timing, but for whatever reason, Fox’s report says, similar programs are sprouting all over the place now. Emerging offerings include direct payments via PayPal to loading cash credits onto debit cards.

Not all airlines are buying in, of course — nor are all frequent fliers. Some complain that the cash rewards are too paltry to be worthwhile. Instead of getting a cheeseburger’s worth of change, they’d rather roll their rewards into their next trip.

Still, Randy Petersen of FlyerTalk.com thinks the new currency systems could prove popular with many travelers — especially those who don’t normally fly business class. “The silent majority or middle class don’t really measure value like frequent fliers,” Petersen tells Fox. “My guess is, as these currency systems come to fruition, the frequent fliers will reject it because they’re only getting seven-tenths of a penny for their mile at Home Depot, but the majority of people may go for utility.”

 

I'm not onboard with the idea until 135,000 Mileage Plus miles equate to a check for $8,000-10,000. (135k = 1 first class R/T to Europe)

 

That won't ever happen unfortunately I believe.

 

I'm OK with that actually!! Just let me keep redeeming miles for C and F and I'm a happy camper...er flyer.

 

I would jump on this in a heartbeat. I have 1M+ miles sitting in various accounts, and being able to cash those out to put a dent in my mortgage would be a life saver. But, like 744, I would only go so far. I'd settle for $7,500 per 100,000 in most programs though.

 

This just got me thinking about something else, If this were to happen; wouldn't signup bonuses, spend bonus, etc be reduced significantly? Most people would just signup, cash out and be done with it. With miles/points the way to redeem them for their best value is to use via travel incentives, but that does require time and knowledge.

 

I'd be in favor of this for "orphaned" miles in various accounts in which I have too few to use and little incentive to reach a redeemable level (Frontier, HA). Unfortunately, I'm not a large liability to those airlines and the piddling balances give me some tiny incentive to buy their products, so this may not be workable.

See Fatwallet's Finance forum. People do this already.

 

+1

 

If i had large balances, I wouldn't mind 2cpm (a more realistic valuation).

 

I would be surprised if the airlines would buy back the miles at any decent price. As long as they just sit there in peoples accounts, there is a very good chance that many will never be used. Expired, forgotten or lost to death of customer. That is why gift cards and rebates are so profitable. They also lose value just sitting there as the mile charts are inflated.

 

It seems that unless someone is flying frequently, an individual's share of orphaned miles is likely pretty small. Unless one is accumulating miles from credit card spend and other non-flying. In which case, doesn't it make more sense to just use a cash back card like the FIA-issued Fidelity-branded 2%-back AmEx?

 

I'll bet on 1/2 cent a mile as a cash offer. I would be shocked if it's much higher than that. Also seems they would be happier letting miles expire with no liability than giving actual cash. Just one man's opinion.

 

I think the challenge is that for orphan miles, the balances would likely be too small for a traveller to see significant cash. Though this might add up though if a traveller has a number of orphan accounts.

 

Agree with this view.

 

I used points.com to cash out of US Airways -- in general, it's a bad redemption, but if it's the best offer you have, might as well.

 

Well some of us are aware of the following example of a ff cash for mile scheme, posted at the end of last year:

Echangez vos Miles-Prime contre un bon d'achat en euros à valoir sur un vol
pour vous ou pour la personne de votre choix sur les compagnies AIR FRANCE, KLM,
Air Europa, Kenya Airways, TAROM ou Air Calin.
For 20.000 miles, you will receive an e-voucher of 100€. You have one year to use it on AF, KLM, Tarom, Kenya Airways
The value seems to confirm the level indicated by other posters estimates. It is also worth pointing out that this wasn't exactly cash, it was a voucher redeemed with the airline.
It is hard to see how this represents good value. There are many better opportunities available for cash swaps out of the different schemes, but they are not obvious to the gen pop.

 

Sometimes buying things with the miles is better than cashing out. I do not know about US Air, but Delta will let you buy a 39 week subscription to The Wall Street Journel for 2417 miles. First time at new address only. A very good value. Some of the magazine offers were not too bad either.

 

There's one fundamental reason why the scheme operators won't permit this to happen. In the event that a more structured price transparent market opened up, it becomes harder and harder to defend the argument that miles accumulated during work trips are not a benefit derived from the factor of employment, and therefore become a taxable liability.

That would open not the smallest of cans of worms.

 

This assumes you want a WSJ subscription, which I do not. I also subscribe to zero magazines (except for Nat'l Geographic via my iPad). Cash can be used anywhere.