Why is it so hard to tell how much airline miles are worth?

At times it can be very difficult to ascertain the value of frequent flyer miles because often there is a lack of commonality on how the miles are earned or how they can be redeemed. Here is what I mean, originally when frequent flyer miles were introduced, a traveler who is a member of an airline's loyalty program would earn one frequent flyer mile for every mile flown. Many airlines have changed their flyer loyalty programs in recent years to award miles based upon the purchase price of the airline ticket and not based upon the number of miles that would be flown by the traveler. Think one miles for each dollar spent instead if each mile flown. Hence, the more a traveler spends on an airline ticket the greater the number of miles that will be rewarded to the traveler for completing that segment of their trip. Additionally, most airlines also reward bonus miles to a loyalty program member based upon their status within that program. Hence, platinum, gold, and silver classification members (also known as Elite Status Members) will earn increased miles. Also, a traveler can earn a significant bonus in miles based upon the classification of their ticket; for example, a first-class or premium passenger may earn five times as many miles as a coach class passenger would for the same trip. Also, loyalty program members who hold an airline's branded credit card may earn a premium bonus of miles as well or receive additional perks such as free checked luggage or early boarding privileges onto the plane. Clearly, trying to easily understand the value of frequent flyer miles when a passenger is earning them can be very confusing.

As a general rule of thumb for most airlines in the United States, frequent flyer miles are valued by the airlines at one cent per mile. However, many airlines will allow a loyalty program member to purchase additional miles typically at the rate of two cents a mile. If a passenger wishes to purchase additional frequent flyer miles they typically must be bought in increments of 10,000 miles. Also, many frequent flyer programs have a cap on the number of miles that may be purchased in a year. While the one cent and two cent rules of thumb are pretty uniform with most airline's frequent flyer programs, one thing that most passengers don't realize is that an airline may discontinue their frequent-flier program at any point in time that the airline chooses to do so by merely notifying it's frequent flyer program members. If an airline were to do this all the accumulated miles that are being held by the members would become worthless and those frequent flyer program members would have no recourse. This notification can be found in the fine print of each airline' frequent flyer loyalty program agreement that a user accepts when they join the program. By recent estimates, there are over 1 trillion unused miles that are sitting in members' accounts with a value of over several billions of dollars.

How often does someone need to fly to justify getting an airline miles credit card?

In order to justify whether a person should apply for an airline's frequent flyer credit card, it is not about how often they will fly as opposed to how much money a person really spends using their credit card to pay for purchases. A person who pays for nearly all of their personal expenses utilizing an airline's credit card can amass a significant number of frequent flyer miles. If a person can pay for their mortgage payment, auto loan, utility expenses, grocery expenses, dining expenses, gasoline, or any other type of personal or household expenses, this can translate into a significant number of miles earned. But consumers should be forewarned, because not all airline credit cards earn miles at the same rate. Some credit cards may award bonus miles when used to purchase flight travel and pay for baggage expense only with that particular branded airline and only pay one mile for every $1 or $2 in non-airlines purchases. Hence, it is critical to read and fully understand the credit card user agreement before signing up.

Finally, no airline that I am aware of offers a loyalty program credit card without charging an annual fee. These annual fees can be as much as $250 per year, though most are about $100. Also, most airlines credit cards do not offer low interest rates for unpaid balances. So while a card holder can rack up the frequent flyer miles merely by using the credit card to pay for purchases and expenses, the card holder must consider the annual fee and also the often higher interest rate incurred for balances that are carried on the credit card. Also, most applicants for airline credit card programs must have good or excellent credit ratings to be approved. Individuals with poor or merely average credit worthiness are often rejected for approval.

What should a frequent traveler look for in an airline credit card?

When deciding which airline credit card program to enroll in, a person should ascertain and consider several things:

Can I qualify for this credit card? And if I apply, how will it impact my current credit score and credit rating? Opening new credit card accounts usually lower an individual's credit scores for up to two years.
What are the annual fee and the interest rate on unpaid balances? Almost certainly a person can find an alternate credit card that offers lower interest rates and lower or no annual fees, albeit without the perks of accumulating frequent flyer miles.
How easy is to redeem the frequent flyer miles for free travel? By the way, it really is not free travel because the card holder will still have to pay the government imposed travel security fee, Passenger Facility Charge (PFC), and often a nominal transaction fee imposed by airlines to redeem miles for travel.
How many miles are required to redeem for a free one way or round trip ticket with that airline? Not all airlines charge the same amount of miles for a free ticket. It depends on each airline's program as well as imposed blackout dates, travel restrictions, seats available for frequent flyer redemption, and more. Most airlines will only allot one to two percent of their seat inventory to be used for frequent flyer travel redemption. After that point, miles cannot be used on that flight except under extenuating circumstances.
Does this airline fly to where I might want to travel to? It makes no sense to enroll in a credit card frequent flyer program if you can't use the miles to get to where you think you want to fly. Not all airlines fly to the same destinations. Many airlines have codeshare agreements with their strategic alliances (sister airlines) to offer seamless travel connections, but...can you use your frequent flyer miles to redeem travel on a partner airline of your credit card brand? If you are prevented by the user agreement from using your (say) Delta frequent flyer miles on any flights operated by Delta's strategic partner airlines, then this could significantly limit your ability to travel to specific international locations.

What are the biggest mistakes people make with airline miles credit cards?

I think that the biggest mistake in using frequent flyer miles is not realizing the value of the miles. For example, if a traveler redeems their hard earned miles for a flight that they could have purchased relatively cheaply, this may not be the best use of those miles. If however you want to travel to a location where the airfares are rarely discounted, then this would be a wise use of miles.

One final thought, I always hold at least 100,000 miles in reserve just in case of a tragedy or a family emergency. Last minute travel is always expensive because airlines close out lower fare categories as a travel date draws closer. If you had to fly across the country on incredibly short notice to attend a funeral or visit a sick or dying friend or relative, this could cost in excess of a thousand dollars. Even though many airlines offer "bereavement fares" which discount the last minute rate by up to 50percent, this could still translate into an expensive airfare. But almost every airline will allow you to use your accumulated frequent flyer miles for documentable bereavement travel. But you cannot use what you do not have, so I always hold enough miles for two people to travel on a moment's notice for family emergencies....just in case.