BIG BONUS TO BUY AMERICAN MILES

Expiration Date – August 31, 2016

To celebrate the last full month of summer, American Airlines is offering up to a 57% bonus to buy or gift miles by August 31, 2016. But even with a bonus this big, buying miles doesn’t usually make sense and we’ll show you why...

American AAdvantage bonuses and discounts are typically offered on tiered purchase levels and this sale is no different. The more you buy, the larger the bonus. Miles are available in increments of 1,000 all the way up to 150,000 miles (the maximum you can buy annually) and the bonus miles are offered if you purchase at least 15,000 miles.

Without a bonus, to buy or gift American AAdvantage miles cost 2.95 cents for each mile, plus a 7.5% tax, which increases your cost to 3.17 cents. In addition you will pay a $30 processing fee per transaction.

With this bonus offer the purchase price will range from 2.04 cents per mile for 150,000 miles + 15,000 miles and 35% off to a whopping 6.17 cents per mile at the lowest purchase level of 1,000 miles (due mostly to the $30 transaction fee).

As you know from prior trvlvip Perks and Tips, we believe the value of an American AAdvantage mile is 2 cents per mile, which is the value we would be willing to pay for AAdvantage miles if we could buy them for cash. It is also the minimum value we feel you should expect before redeeming your miles.

So if you buy or gift 150,000 miles, you pay slightly more than what we believe AAdvantage miles are worth (2 cents per mile)

In order for the miles purchase to make good economic sense, you will need to use your miles to book an award ticket or upgrade where the value of each mile is more than what you paid for it.

The Choice:

Does it ever make good financial sense to buy or gift AAdvantage miles? Maybe – but typically only in one or more of these scenarios:

• You plan to purchase miles in order to secure a specific award flight during a discounted award promotion

• MileSAAver award space is available

• You plan to secure a Business or First Class award ticket

Here is a quick calculation you can use to determine deal value:

1. Find an award ticket.

2. Determine the full price of that ticket if you were to pay cash, including all taxes and fees.

3. Add to that amount any taxes and fees you will be required to pay on the award ticket.

4. Divide that amount by the number of miles required.

5. If the value per mile exceeds the amount you have to pay to buy the miles then you’ve found a good deal and if not, we don’t suggest you buy the miles.

Want to look a bit deeper into the option to purchase, gift or share miles with or without a bonus offer? See our great tip: American - Pros & Cons of Buying and Gifting Miles.

Click here if you’d like to review award availability and to book award travel.

Remember, purchased miles will not count toward AAdvantage elite qualification.

The Wrap-Up:

It rarely makes sense to buy or gift miles speculatively as it is an expensive way to acquire miles even with a discount. Once you’ve picked a location and your dates and have taken the steps to ensure award availability, make the small effort to crunch the numbers to make sure the mile purchase makes good economic sense - you will be very happy you did!

And rather than purchasing miles to gift to another person, book them an award ticket using your miles instead. That is a much more economical choice.

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