When is it beneficial to purchase points and miles?

Did you know that numerous loyalty programs offer their points or miles for sale without any hidden conditions?

You can easily log into your account online and purchase points or miles using a credit card in just a few clicks. These programs often allow for substantial purchases, enabling you to boost your balance significantly within minutes.

What’s the downside? Primarily, the cost. The price per point or mile is typically higher than TPG's valuations.

On the bright side, many programs frequently hold promotions for buying points and miles. During these sales, you can often acquire points and miles for about half their usual price, and sometimes even below our valuation, allowing you to redeem them for greater value than what you spent to buy them.

Nonetheless, there may be times when purchasing points and miles isn't advisable, even if they're discounted. In this guide, I will outline when it is worthwhile to buy points and miles.

When is the right time to buy points and miles?

It’s advantageous to buy points and miles when their redemption value exceeds the cost of purchasing them.

For example, if you’re considering a flight priced at $500 in cash or 20,000 miles plus $50 in fees and taxes. If you can purchase those 20,000 miles for 1 cent each during a promotional period, the total cost for that flight using your purchased miles would only be $250 (20,000 times $0.01 plus the $50 in taxes and fees), compared to the $500 cash fare.

That would indeed be an excellent deal.

For this reason, I actively seek out promotions where you can earn bonus miles for minimum purchases or where prices are reduced. A good guideline is that when the cost per mile falls below TPG's valuation of that mileage currency, it’s likely you can redeem them for more value than you spent to buy them.

For instance, Air Canada's Aeroplan program is my top choice among Star Alliance loyalty programs and possibly my favorite airline loyalty program globally. Aeroplan points are straightforward to earn and redeem with competitive partner redemption rates and an extensive network of 50 airline partners, including Lufthansa, All Nippon Airways, Emirates, Singapore Airlines, and Cathay Pacific.

According to our July 2024 valuations, TPG assigns a value of 1.5 cents to Aeroplan points, and I know I can readily redeem them for at least that amount, whether for business-class flights to Europe with Air Canada or to Africa with Ethiopian Airlines.

You can acquire Aeroplan points for Canadian cents each, which is about 2.6 U.S. cents. At this rate, it's nearly a cent above our valuation, so despite my fondness for Aeroplan points, I refrain from purchasing them.

Nonetheless, the program sometimes provides bonus offers when purchasing points, typically ranging from 80% to 100%. A 100% bonus means that if I buy 50,000 points at 2.6 cents each, I would receive an additional 50,000 points for free. This effectively reduces my purchase cost to 1.3 cents per point, which is a compelling deal.

Aeroplan recently had a promotion with a 125% bonus on the purchase of Aeroplan points, lowering the cost to about 1.14 cents each (this promotion has now ended, but you can check the current offers page for buying points and miles, which we update regularly).

This level of bonus is usually only offered once a year, so I seized the chance to buy a significant number of Aeroplan points, but only because I was certain I would redeem them eventually. If you don't have a specific redemption plan or aren't a regular user of a particular program, TPG generally advises against buying points or miles, as frequent devaluations can make hoarding a single currency a poor long-term strategy.

Since I frequently book flights through Aeroplan, I'm confident that I can redeem my purchased points for at least TPG's valuation, if not much higher.

For instance, I know I can fly from Western Europe to the eastern United States for just 60,000 Aeroplan points in business class with partner airlines like Lufthansa and Swiss. By acquiring points at 1.14 cents each, I can cross the Atlantic in business class for less than $700 worth of points, plus minimal taxes and fees. That's an exceptional deal.

However, there are some caveats.

The calculation above is based on the assumption that you can redeem the miles for the airfare you desire at the initial quoted redemption rate. The first issue with this assumption is that availability for redemptions is constantly changing. The seat that might have been available today when you considered purchasing the points and miles may not be accessible tomorrow.

For programs that utilize dynamic pricing, the costs for the same flight can fluctuate frequently.

The second concern is that the number of points or miles required may increase. Most programs periodically raise their requirements—this is referred to as a devaluation—leading to a decline in the value of your loyalty currency. While some programs may alert members ahead of time before changes take effect, others have devalued without any notice overnight.

If you're sure you can use the points or miles for the intended purpose at a price that satisfies you, purchasing them can be worthwhile, but it's unwise to hoard this currency for uncertain future use.

It can also be advantageous when you're just a few thousand points or miles shy of a significant redemption, like first-class tickets for your honeymoon. Even if the points or miles aren’t discounted, adding just enough to complete your dream redemption could be a smart move.

When is it unwise to purchase points or miles?

If it's not cost-effective, then you should refrain from buying points or miles.

Keep in mind that purchasing points or miles comes with their own costs, plus any associated taxes and fees for booking award flights. For instance, during the standard (off-peak) season, you only need 20,000 points for a round-trip from New York to London with Virgin Atlantic Flying Club. However, before you get too excited about what seems like a cheap one-way ticket to London, be sure to review the associated fees.

Initially, you'll incur a transaction fee for acquiring the points. Additionally, Virgin adds significant surcharges, taxes, and fees when you go to book your ticket. In some instances, these taxes and fees can surpass the price of the points themselves. It might be more economical to purchase a regular fare instead.

Typically, buying points or miles is not advisable if you don't intend to redeem them right away — this is referred to as 'speculative' purchasing. The uncertainty of their future value, due to potential devaluations and changes in loyalty programs, makes this a risky choice.

Which credit card is the best option for purchasing points and miles?

Most promotions are handled through Points.com rather than directly by the airline or hotel, meaning you typically won’t earn bonus rewards with most travel rewards cards. It’s advisable to use an everyday spending card that provides good returns on regular purchases.

A notable exception is American Airlines, which is said to categorize mileage purchases as airfare. Therefore, using a credit card that offers bonus miles on airfare could yield the best rewards when buying AAdvantage miles.

If you’re aiming to meet a minimum spending requirement to qualify for a welcome bonus on a new credit card, it’s often beneficial to use that card for your purchases.

Be aware that some cards may charge foreign transaction fees when buying points or miles from international programs. Consider using one of the following cards instead:

• Capital One Venture Rewards Credit Card: Earn 2 miles for every dollar spent on all purchases, plus no foreign transaction fees (refer to rates and fees).
• Capital One Venture X Rewards Credit Card: Earn 2 miles per dollar on every purchase with no foreign transaction fees (check rates and fees).

In summary

Under the right conditions, purchasing points and miles can yield incredible value. Over the last ten years, I’ve acquired over a million points and miles across various programs because I had immediate plans for them at the time.

If you're thinking about buying points or miles, be aware that their value is unlikely to increase; in fact, it often declines due to frequent devaluations. Therefore, if you're buying with no immediate plans, your newly acquired points and miles could lose value before you get to use them.