Thoughts From My Life
Mar
22

Collecting Air Miles and their Value

Written by Neil Galloway
 

Why I think an airmile can be worth anywhere between 13 cents and 44 cents depending on what you use it for.

Air miles, Aeroplan points, HBC points, PetroPoints, etc, etc, all the way back to Club Z Points at Zellers. They seem like such a gimmick and just a way to influence your spending. The thing is, they are everywhere now and you can't really avoid it, so you might as well take advantage of it. I have calculated how much I think they are worth so read on.

I personally collect Air Miles and Aeroplan Points so I just talk about those. This posting is about Air Miles specifically, but the same techniques can be used to figure out Aeroplan. You can read these related articles...

Canadian Credit Cards

Basically, I value an airmile differently depending on the product. Here is my summary.

  • Entertainment gifts are about 40 cents/airmile.
  • Travel is around 20 cents/airmile.
  • Gift cards are around 10 cents/airmile.
So when you see those "double your airmiles when you buy this..." deals, you can add up how much you are going to spend and how many airmiles you will get and see if it will actually pay for yourself. Unless of course you actually need what you are buying, then it doesn't matter.

How to Collect Air Miles

Air Miles, first of all, is free and there are three different ways to collect.

  • You can apply for the blue Air Miles card and just keep it on you. If you shop at stores that are affiliated with them (Shell, SportChek, Turbo, Boston Pizza, Safeway, Rona, etc) then you just hand them your card and you collect some points.
  • If you have the blue Air Miles card then you can also earn points buy purchasing on-line through the retailer links at airmilesshops.ca using your collector number. Read more on it at Book Through AirMilesShops For More Air Miles.
  • You apply for a no fee BMO Mosaik Mastercard and link it to your Air Miles card you got above. They will give you 1 AirMile for every $40 you spend on their credit card. For a yearly fee you can increase the AirMiles you earn. You will get 1 for every $20 you spend for $35/year (the silver card), or you get 1 for every $15 you spend for $80/year (the gold card). The card upgrades can also give you some cheaper AirMile rates on flights.
  • You apply for a no fee American Express card and link it to your Air Miles card you got above. They will give you 1 AirMile for every $20 you spend on the card. This is way better than the Mosaik card above (there 1 for 20 card is $35/year), but you cannot upgrade this one any further. You don't get any special rates on flights either.
So you may get airmiles on any purchase if you use your Mastercard/Amex and at AirMile affiliates you can "double dip" by collecting airmiles using your blue card that they give you and paying for your actual purchase with your credit card and getting airmiles from BMO.

These points can later be used to buy flights, car rentals, gift cards, tickets, electronics, and a variety of other products. With flights and car rentals you will still have to pay the taxes, but the base fees are covered by the air miles.

So this is the basics of the system. Now I will discuss what they are actually worth.

What is the Best Value for My Airmiles? (How I Figure Out How Much They Are Worth)

This is an interesting question. This tells you what your airmiles are worth. I decided to investigate this. Basically, I looked at how many airmiles it took to purchase something and divided it into the cost of the item. This gave me the cents per airmile they were good for. There is a large difference depending on what you buy with them.

For example, I will compare 3 items for you right now. I'll list the value you save, the airmiles it takes, and the value of each airmile for that item. I priced out a round trip flight from Calgary to Victoria, a Starbucks gift card, and 2 for 1 movie coupon.

  1. A flight from Calgary to Victoria on Westjet. This is an approximate savings for the flight I found.
    • Money Saved: $181 (this can be higher)
    • Air Miles Used: 800 (A discount because I'm a gold card member)
    • Air Miles Value: 23 cents/air mile
  2. A $25 Starbucks Gift Card.
    • Money saved: $25
    • Air Miles Used: 200
    • Air Miles Value: 13 cents/air mile
  3. A 2 for 1 movie pass.
    • Money Saved: $11 (move ticket in my city)
    • Air Miles Used: 25
    • Air Miles Value: 44 cents/air mile

So you save the most money on movies, then the flight, then the starbucks card. Now don't run out and use your air miles for as many movie passes as you can buy. The problem here is, what do you want to buy with them? Not everyone wants to go to the theatre all the time. This is just to keep aware of what kind of value you are getting.

A couple years ago, my future wife was living in Victoria and I was in Calgary. Oil prices were still low and flights were really cheap. If we waited for seat sales to see each other on the weekends, I priced out my airmiles were only worth 8 cents each. So I just shelled out the money for my plane tickets and used my air miles for something else.

Basically, my advice is to check out how much money you "actually" save by using air miles to purchase something and how many airmiles it takes and plug it into this formula:
Air Miles Value = Money Saved / Air Miles Used

Should I Upgrade my Mosaik Mastercard?

Should you pay the annual fee to get more Air Miles? This depends on how much money you spend on your credit card and what you will use your miles for. The more you spend, the more likely an upgrade will be a good thing.

Update (March 22, 2007): American Express offers a no fees card that pays out 1 AirMile for every $20. This is better than the Basic and Silver card. The only question is whether you should go for the Amex or the Gold Mastercard. If you don't care whether you have an AMEX or Mastercard then read the section below called Should I Get a Gold Mosaik Card or an American Express. There is an update below regarding how to choose.

Now that we did our calculations above to see what an airmile is worth we can figure this out. Ask yourself what you want to use it for. For me, it is flights.

Upgrading Between the Mosaik Cards

If you do not want the American Express then here is the reasoning behind upgrading the Mosaik cards.

I will show you whether you should upgrade for each of the 3 examples I did above. To calculate this I made a formula that took into account the annual fee and what the value of an airmile is to figure out how much money you would need to spend to at least recover the annual fee in extra airmiles value. The formula for upgrading to the silver card is 1400 / Air Miles Value. The formula for the gold card is 1920 / Air Miles Value. If you want to see how I figured these out, send me an email and I'll send you the proofs.

For example, if I value an air mile at 20 cents, this is the formula:
1400 / 0.20 = $7000
1920 / 0.20 = $9600

This means that I would need to put $7000/year on my Mosaik card to make it worth the fee to upgrade to the Silver card and $9600/year to upgrade to the Gold card.

For the examples I list above here are the results:

Minimum Spending Amounts Based on Reward Types

ItemValue per Air MileSilver CardGold Card
Flight$0.23$6087$8348
Starbucks Card$0.13$10769$14769
2 for 1 Movie Pass$0.44$3182$4364

Should I Get a Gold Mosaik Card or an American Express?

Updated March 22, 2007

This is an update to this article since I have looked at the American Express. This card pays you 1 Airmile for every $20 and has no fees. So it is not even a comparison to the Basic and Silver Mosaik cards, the Amex beats them hands down. However, the Gold card will pay you more miles if you put enough money on it.

The formula is $MoneySpent = 4800 / AirmileValue

So depending on how you value an airmile, the amount of money you need to spend to make the Gold card worth your while is shown in the table below. Remember you have to make enough extra miles to cover the $80 yearly fee you have paid.

Minimum Spending Amounts Based on Reward Types for Amex to Gold Card

ItemValue per Air MileGold Card
Flight$0.23$20,870
Starbucks Card$0.13$36,923
2 for 1 Movie Pass$0.44$10,909

Wow, that is some serious coin you need to be putting down now. Unless you own a business and are putting your expenses on it, the Amex is probably the better bet.

Bottom line: The more value you get from your air miles, the less you have to put on your card to make it worthwhile for the upgrade. So if you are using all your airmiles on Starbucks gift cards, you will have to spend a lot on your credit card before you should think about upgrading.

If you are using the Amex, you can't upgrade anyways so it doesn't matter. UPDATE: There is a platinum Amex available now as well as Aeroplan earning cards. I will evaluate them at a later date. If you are not putting on at least the amounts I mention above to make the Gold card upgrade worth your while for the Mosaik card, you should just stick the American Express one. And based on the values, it looks the Amex is the best bet. The only question is how often you will be able to use it since it isn't as widely accepted.

If you enjoyed this post, then make sure you subscribe to my RSS feed or subscribe for email updates. Only one email a day and only if there was a new post.



Related Posts

Air Miles and Aeroplan Points to Montreal
American Express Air Miles Card
Book Through AirMilesShops For More Air Miles
Aeroplan Versus Air Miles - Comparing Them
Air Miles Cash Program

Email this article

Category: Finance

Original Post: Thursday, March 22nd, 2007


44 Comments

Anonymous Says:
2007-02-12 11:46:18
Great article! It's so hard to find information on the actual value of an airmile. This helped me out a lot.

Anonymous Says:
2007-03-19 10:51:16
Thanks for finally giving some concrete values for an airmile. It's almost impossible to find information like this.

AH Says:
2007-03-21 10:28:38
American Express offers a no fee AIRMILES credit card where you can earn 1 AIRMILE for every $20 spent per monthly balance. Better to use that at places where Amex is accepted and keep the Bronze No fee Mosaik BMO MasterCard for places Amex instead accep

Neil Says:
2007-03-21 14:45:09
Interesting. I didn't know about the Amex. Is it accepted in quite a few places. That is the best deal yet for no fees cards. I will crunch the numbers and post a review soon. Thanks AH.

Dan Says:
2007-04-09 13:21:49
Amex offers a Gold Air Miles card which gets you 1 Air Mile / $15 spent. Annual fee is $50.
Why bother with the Gold MasterCard?

Collect Airmiles Faster Says:
2007-05-04 16:23:52
Wow, I've never seen a collection of such great airmiles information! Great work! I found the site threw stumbleupon. Neat site!

anonymous Says:
2007-07-19 10:50:00
In your $25 Starbucks example, assuming I earn 1 Air MIle for every $20, it takes 200 points to get a $25 card, that means I had to spend $4000.00!!! thats only a 0.625% savings on $4000.00 converted into a $25 Starbucks gift card, you value at 13 cents per Air Mile, so if I take 200 Air Miles * .13 that equals $26, where does it end...

A 1% discount, simple one percent diso#!@%*# on my $4000.00 is almost double what I've gained in Air Miles, not to mention the time it takes to earn all those points, now...

Who pays for these points and how much?

Charlie Says:
2007-09-24 14:09:14
Good article, but it's not necessarily true that the Amex is better than the MasterCard.
The way to make the gold MC pay off nicely is to use it for westjet flights. For instance, a round trip flight from Toronto to LA is 4450 air miles, but the gold MC reduces it to 1400 air miles!! This is a savings of 3050 miles, which translates to hundreds of dollars. Using my AMEX I would need to spend $89,000 to earn one flight to LA. Using my Mastercard, I only need to spend $21,000. (plus the $90/yr fee). You do the math.

Sonja Says:
2008-01-08 02:35:23
Would you happen to know id there is any way to convert aeroplan miles to airmiles?

Thanks,
Sonja

Neil Says:
2008-01-08 09:06:57
I don't know of a way to swap between the two right now. There is a site called http://www.points.com that will let you swap between Aeroplan and a number of other travel rewards, but just not Air Miles. They end up taking a big cut anyways, so I would just try and use it one or the other for gift cards or something else.

Danny Says:
2008-03-08 13:43:32
Don't forget that you get a credit for BMO chequing account fees when you have a BMO gold mastercard. - It almost pays for itself.

Moe Says:
2008-03-19 08:06:24
I just wanted to add an adendum to your site. I am a BMO employee so I wish to remain anonymous. But as such I did want to let people reading this know that if they do get the Mosaik MC gold option, they get a $35 rebate on their banking plan. The general opinion here is that its only worthwhile if you bank at BMO. Otherwise, the Amex is probably the best bet, although their interest rate is higher than Mosaik's base at 18.5%. Just food for thought...

Tyler Says:
2008-05-30 12:21:53
One other thing to think about - AMEX now has a card available that gets you 1 Air Mile for every $10 you spend at Air Miles sponsors - on top of the miles you get for giving them your Air Miles card! This card option is available for $50 a year, and regular miles are paid out at 1/$15 - just like the BMO Gold card (which is $40/year more!). I've got both the Air Miles AMEX, and the Gold MC, and use them both for different things - the AMEX is great for sponsor shopping, since if you spend $160 at Safeway, you get 16 miles from AMEX and 8 miles from Safeway... I use my Gold MC for spending at places that either don't take AMEX, or non-sponsor locations. Check it out - I'm not renewing my Gold MC when it comes up - $90 a year for the added benefit of the MC's Westjet deals (which are being switched in June to only 20% off, instead of the awesome deals available (1600 miles to Fort Lauderdale from Calgary in the high season, vs 3040) now). I'd rather keep the MC on the base option, pay no fee, and earn awesome miles with my AMEX...

Harry Says:
2008-06-02 12:46:31
I have NEVER paid fees (or interest) on any card, and never will. I use my no-fee Amex card which gives me 1 Air Mile per $20. Aeroplan? I get points when I fly to India every few years, which is the only source of my Aeroplan miles.

I just checked out the price of a flight from Calgary to Boston, round trip. I need 40,000 Aeroplan miles and 38,000 Air Miles. However, I can also just pay $667 for a ticket, which I find might be the best, unless I have enough points of either, which I do not. Purchasing points is ridiculous, considering how much they charge you!

VictoriaPaddler Says:
2008-10-04 16:08:45
This is the "BEST" web site in terms of explaining earning points/airmiles. Thank you for posting the info. Neil!!!

My comments, in regards to Moe's interest rate comparing BMO and Amex: You can request Amex to review your credit standing and get a lower interest rate. I did it and I got 12.99% instead of the ridiculous 19% that they usu. offer to newbies. This may be worthwhile if you need a lower interest rate and have a good credit history with Amex. I've been there customer for over 7years.

For those of you that shop at Canadian Tire, you can earn 20% more on your Canadian tire Option Master Card IF you purchase their equipment, automobiles or even wanting to buy a fishing license. You'd be surprise at how quickly you earn Cdn Tire $$$...the best part is it's FREE!!!! So, instead of paying a fee for BMO Mosaik, you may like to consider Cdn tire, if you use their service.

Good luck to all those newbies!

Bianca Davies Says:
2008-10-29 18:26:54
I think your facts are wrong about not being able to upgrade from the basic Amex Airmiles card. Amex offers a platinum airmiles card as well. Thanks.

Neil Galloway Says:
2008-10-29 19:19:55
Good catch. I need to update this article with the platinum card information.

David Says:
2009-01-09 15:26:48
Another advantage for the Gold MasterCard is the free travel insurance coverage. I do not know if they still offer it but I get 30 day out of country medical coverage for my entire family at no extra cost. No calling them or signing up each time we want to go. Just leave & if any trouble they take care of it. It pays for the card fee & more. Plus you get to stay at the airport private club rooms for free as well. Very good information in this article. Great job. Thanks

Tal Says:
2009-02-24 10:22:01
Amex is not accepted in many places any longer as it costs to much to the retailer 2.5% But BMO MasterCard is terribly annoying. Constantly canceling and issuing new cards 3 times a year making it very hard to use for preauthorized purchases. Airmiles needs to get a VISA partner that is NOT BMO.
Tal

jay Says:
2009-03-22 03:55:21
Just stumbled upon this page & wanted to mention I have been using both Amex & MC Airmiles for years & love them. Pay off the balances regularly & you are basically getting free stuff. I love redeeming my Airmiles for gas certificates & car washes & flights!

jay Says:
2009-03-22 04:02:16
My (airmile every $40) MC has a (low) yearly fee. I noticed above you were saying it should be no fee. Is this currently the case? My Amexes are no fee & all these cards have very low interest rates (all under 13%) because I have am a longtime customer who uses credit wisely. BTW, I am in Canada.

john Says:
2009-03-31 19:15:31
good idea for a site. A new toolbar for explorer can earn upto 30 airmiles/month (you would have to do 300 searches on it in the month). I've made 85 airmiles from this so far. It's free!

Martin Says:
2009-05-26 20:26:59
Interesting thing for the flights. To fly from Fort St. John, BC to Vancouver it costs around 500$ but with air miles it only costs 680 with the bmo discount. It works out to 73 cents a mile

Ian Ma Says:
2009-07-22 10:26:26
I can not distinguish the air mail credit card and the the blue Air Miles card, I do not want any credit card because I have so many, but I can have a blue Air Miles Card to collect some miles when I shopping in some places. How to apply the Blue Air Miles Card?(not the credit card) Any body can give me a guid through e-mail (maguoyan1962@163.com.)

Scott Goodman Says:
2009-11-04 19:36:19
My question is why it takes so long to gather enough points to actually do anything at all with them. I have been collecting Air Miles for nearly 20 years and in all that time I have only accumulated about 2700 points, despite constantly adding to them. That is not enough to cover the cost of a taxi to the airport, never mind actually flying somewhere. I strongly suspect that not all of the points I get actually get credited to my account but I have no way of verifying this.

PeterPiper Says:
2009-11-06 16:04:02
Have you looked at the 'taxes' that Airmiles charges vs what a regular flight costs? I just booked through airmiles and was charged ~140 taxes and 40 insurance..booking through the airlines the same flight are 110 and 25...Are there profits/cost recovery in their program??

Don Says:
2009-11-13 04:08:50
Scott, just buy a bunch of $20 gift certificates for food at Metro, A&P, etc. Each costs 140 Air Miles so 2700 points buys 19 certificates with a few points left for a value of $380. That's a heck of a "taxi ride" and you can spend it on any food you want. Enjoy!

Chelsea Says:
2009-11-13 13:46:57
Does anyone know if you can limit your AMEX Air Miles card (the no-fee one)? I want to apply but am scared I'm going to get a new card with a ridiculous credit limit that I don't need or want. I tried applying online but there is no "credit limit" section. I'm just looking for a card for day to day purchases that would be paid off at the end of the month.

CAW Says:
2009-11-23 16:39:13
Fantastic article, and the most in-depth breakdown I've found on Google. Thanks!

Joanne Says:
2010-04-18 07:41:16
Regarding the different points cards - we've been using the Canadian Tire Options card for years, as well as the no-fee AMEX Air Miles card. People are always surprised when I tell them how fast we accumulate both money on our Canadian Tire card as well as airmiles. We've just booked our 4th flight to Vancouver using our air miles. Also used miles for car rentals in both Vancouver and Spain, all free to us. The Canadian Tire money has helped fund the building of our cottage - all the paints, floating platform, life jackets, and numerous other items. The trick is to put all expenses on your cards, provided you pay them off in full each month - no cost at all to us, but numerous benefits.

Gerri Page Says:
2010-04-20 16:56:30
If I buy a digital camera, how many points on my air miles would it take if the price of the camera is $300.00? How would I find that out?

Teo Zanetic Says:
2010-04-24 23:10:46
Good post. It would be interesting to see how the bonus offers factor into your calculations?

John Says:
2010-05-02 21:48:59
Who gives the Aeroplan points? Is there a list of places somewhere?
Thank you!

jonny Says:
2010-07-20 20:31:05
you know that amex has a platinum airmile credit card for 50$ that gives 1 mile every 15$ and 1 every 10$ at air mile participating stores

MC Says:
2010-09-15 15:29:25
You might find this interesting. In the Ontario Securities Commission Hearing (kinda like a trial) Re Istanbul, a witness from Bank of Montreal testified that AirMiles charge BMO 27 cents for every airmile awarded. (see paragraph 40 of the ruling)

http://www.osc.gov.on.ca/documents/en/Proceedings-RAD/rad_20080327_istanbulh.pdf

Stumptom Says:
2010-10-17 21:03:19
Well don't forget that BMO is offering a cool 1000 Bonus Airmiles with their Gold Card. Take the value you want for a single airmile (10 cents, 25 cents, 75 cents), it pays completely the 100$ annual costs for a couple of years. Add to that the 25% discount for flights, and this is a nice investment.

Anonymous Says:
2010-11-15 07:31:25
As far as flexibility in rewards is concerned, I find that no-fee cash-back credit cards are the simplest and easiest to deal with. Typically you get back 1/2% - 1% of your purchase. You can use the cash to buy anything you want, and there are no black-out dates (since you are paying cash). Maybe I don't get as good a deal on some promotions because I don't have an AirMiles card, but my life is made much simpler not having to always do mental math to decide if I should use a BMO or an AMEX or some other card. I just pay for everything with my one credit card and then my 1% cash-back adds up real quick.

peggyrice77@shaw.ca Says:
2010-11-16 16:42:23
I have lived allover vancouver iland,and for years I have never known how many points I have.years ago you use to send a letter ,but have not heard from you for years

Lpm@u.washington.edu Says:
2010-12-02 20:20:51
It is still a mess to know what to do. Am I hearing that Amex, no fee card is the best all around card in that you can use it for everything. For instance, a retail store cancelled our Visa and replaced it with an Amex card. I do not think it has an airmile option. Please comment.
Thanks Lawrence

Sue Says:
2011-01-26 21:27:11
I just got 5 free airmiles for a really quick quote. I put on the details on my blog http://findingfreethings.blogspot.com/2011/01/free-airmiles.html

ellen Says:
2011-05-01 17:09:45
hi everyone I'm new to this can you get other things than air travel though air miles

remi Says:
2011-07-06 04:43:16
Just go to www.airmiles.ca to see what you can redeem it for, lots of different options. I have found that it is not worth exchanging for electronics because of the very low value it gives your airmiles. I always exchange for sobeys gift cards. About 5 years ago you only needed 120 airmiles for $20, now its 140 airmiles for $20 and I believe that will change at the end of this month (July 30th 2011) and will probably be 175 airmiles for $20 so that will no longer be good value and that really sucks!! So right now for 140 miles it gives you a value of $0.14 cents per airmiles, nothing to go crazy about but ok. Once it goes to 175 then your airmiles will only be worth $0.116 so less then 12 cents per airmiles. Food chains keep increasing their prices and reward you less and less with their points system!

Matthew Bailey Says:
2011-10-06 17:01:58
Good post! Typically, miles are best used for flights especially with Aeroplan. It's practically the same amount of points for a round-trip flight to the U.S.A (just 25,000) as it is for an ipod.

I like that you found the movies cheaper.. that is a good deal. I find Safeway the quickest for earning points. I earned about 500 in 2 weeks buying groceries.

Amex is the best for aeroplan points. I usually earn enough for a round-trip flight to mexico every 6 months by only spending $3500 on what I use anyways.

I'll definately keep this in mind for my Canadian Free flyer club (teaching people how to earn points and redeem them)

Thanks!

Anon Says:
2012-06-21 03:36:57
The best place to get Air Miles is the Safeway Pharmacy with their 7x miles deal. I get about 20-30,000 every year. I've never had that many at once though. Heh.. I bought my PS3, Xbox360, Digital SLR, Laptop, iTunes cards.. It is the ownly perk of having so many meds.

Add a Comment

Note: Comments will be visible after they have been moderated.
Name:

Email: (Never made public)

Web Page:
(include http:// or https://)
Comment:


Enter Verification (image below):