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Author: BeavisNbutthead One star, 50 posts Add to my Favorite Fools Ignore this person (you won't see their posts anymore) Number: of 308695  
Subject: FF miles vs Cash back? Date: 12/31/1997 11:44 PM
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First off, let me admit that I am a FF junkie. I do everything to get more FF miles - renting cars from the right people, staying in the right hotels, ordering flowers, switching long-distance carriers, well, you get the picture.

Recently, while sitting in terminals with 3-hour layovers waiting for connections, I started to rethink the vaue of the whole FF thing. As a new carrier of the Amex/Delta FF card (see earlier post), I decided that at least for the next year to make the majority of my purchases using this card, rather than the Discover I had been using. Industry analysts say that airlines value each 100 FF miles as $1 (take my word on this one - or not, it's your decision but I couldn't find the cite to back me up), or basically 1 FF mile as 1 cent. On the cards which give 1 FF mile for each $ charged, this is essentially a 1% rebate. This would be similar to the cash back offered by Discover, with a few exceptions:

1) Discover has no annual fee - airline cards seem to run around $60 (Delta SkyMiles gold = $75).

2) Discover's rebate is paid in cash, while airline rebates are paid in *airline currency*. While I can do anything I want with cash - including buying airline tickets - it would be difficult to go to Kroger's and try to buy milk and bread with FF miles. In that way the airlines have you trapped.

3) FF miles are getting harder to spend all the time. Load factors have steadily increased, reducing the number of FF seats available per flight. I have heard that some airlines on some flights provide as few as *2* seats per flight for FF awards. Blackout periods and other inconveniences also make it tough to even spend the currency the airlines give you.

Digression - I just love (large amounts of sarcasm) the airline programs that allow you to donate your miles to charity - such as the AA commercial that flies the girl to Boston for cancer tests with donated FF miles (no tax deduction here either). The airlines don't need someone to donate FF miles to put a child on a plane - just sit the kid in an empty seat and the incremental cost is maybe $10 worth of fuel, luggage handling, and peanuts and a soda. In the meantime the airline looks like this great charitable entity - what a bunch of crap.

So, in the end with all other things held constant (interest rates and/or paid off each month, convenience, etc.), does a FF-bearing card really make more sense than a cash-back card? I hope this starts a lovely discussion.

Huh huh huh,
BnB
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