Don't Use your Miles and Points for Merchandise

Gift cards, coffee machines and watches are a bad overall value.

Shopping online using tablet
Daniel Allan/Photographer's Choice/Getty Images

Edited by Joe Cortez; June 2018

The best use of points and miles is flying all across the globe. Trips that would otherwise cost tens of thousands of dollars are yours for the taking - as long as you're able to plan around using miles until it comes time to make a good redemption.

While points are great for frequent flyers, they are also very profitable for airlines and credit card issuers. They are even more profitable when you don't use them for flights. Such is why airlines often allow you use those hard-earned miles for merchandise. Personal electronics, golf clubs and kitchen appliances are some of the temptations loyalty programs use to try and separate you from your miles.

Is it really a good idea to use those points and miles for merchandise. Unless you have absolutely no other uses for them, you should restrict your points towards future trips.

Why is most merchandise a bad exchange for points and miles?

Once you start racking up lots of points, you'll probably receive emails from your credit card company, airline or hotel chain offering goods and services in exchange for points. More often than not, these redemptions are a very poor value, with prices calculated at or below one cent per point.

For example: the United Airlines MileagePlus Catalog currently sells a 256gb Apple iPhone 8 Plus for 126,600 miles. The same unlocked phone sells direct from Apple for $949.

If you use the miles to get a new iPhone, you would exchange them at a rate of 0.75 cents per mile. If you earn one MileagePlus mile per dollar you spend on a United credit card, you would get back less than a penny for each point, which is a terrible exchange rate.

For 120,000 MileagePlus miles (6,600 less than the iPhone), you could also book a round-trip United Polaris saver award flight between the United States and Europe. A flight from San Francisco International Airport to Frankfurt Airport in the United-exclusive premium cabin can cost over $7,000, depending on the season. If you used MileagePlus miles for that flight, you would exchange them at a value of six cents per mile.

Still not convinced? Consider another option: American Express Membership Rewards points. When linking your account with your American Express card, you can use Membership Rewards to pay for merchandise. But you will only get 0.7 cents each for each point. That means you would need 14,286 points for $100 on Amazon. Those same Membership Rewards points can be used through American Express Travel towards flights and hotels for one cent each. It's easy to see why merchandise is a bad value for all your points and miles.

When should I use points and miles for merchandise?

If you don't have anywhere close to the number of miles you need for a free trip before they expire, or you have no intention of flying with an airline ever again, you could still use those miles for some merchandise at a decent rate. It's all about where you get the most value.

A decent use of miles outside of free flights is magazine or newspaper subscriptions. Through Mags for Miles, flyers can exchange their orphaned frequent flyer miles for print subscriptions. Using United MileagePlus miles for example: a one-year subscription to Money Magazine costs 800 miles, valuing each point at 1.5 cents each. Getting a year of Bloomberg Businessweek would run you back $70, or 1,600 MileagePlus award miles - a value of 4.4 cents per mile.

A $264 United flight (before taxes and fees) can earn 1,320 MileagePlus award miles if you don't have status or use a United credit card. This would earn you at least one magazine subscription. Even if you don't plan on taking free flights, signing up for a frequent flyer progam can still yield some rewards.

Are auctions a good use of points and miles?

The only other time it could make sense to use miles for something other than travel is when an airline or hotel chain runs a compelling experience auction. These can occasionally be an excellent value and may get you once-in-a-lifetime access to the world's most exclusive brands.

Some brands also rent boxes at venues around the world. Marriott has a big presence at select stadiums in Chicago and New York, for example, and you can redeem points for suite seats that often include free food and drinks.

Generally, auctions are most popular with people who have far more points than they can use. Frequent business travelers who are on the road every week and want to spend their free time at home are often prime targets for these experiences These customers often drive up the prices of traditional points auctions, and since they value a program's virtual currency below what you'd get when using it for free travel, it's not unheard of to see event tickets going for hundreds of thousands of points or more.

In very select and specific cases, it may make sense to use your points for merchandise or experiences. But those cases are very few and far between. Before you decide to exchange points for a coffee maker, do the math to make sure you are getting the value you want. In nearly every situation, you are better off using points and miles to see the world at a discounted price.