Using frequent flyer miles to buy merchandise: deal or no deal?

I love using my frequent flyer miles. They can take me places I’ve long wanted to go, and if I plan carefully, they can take me in the style to which I’d like to become accustomed. But in today’s economy, they can also get me hard goods … IF I’m willing to pay the price.

What started this was a catalog I got in yesterday’s mail – not from L.L. Bean, REI or even The Gap – but from United Airlines (NYSE:UAL). The catalog was offering me ways to redeem my frequent flyer miles for something other than travel.

The catalog offered a wide range of products that I could buy with my accumulated miles, from a Nostalgia Electric Lazy Susan S’mores maker for 6,100 miles to a Sony 55 inch Master Series 4K TV for 424,300 miles. The offerings in between ran the gamut, from Maui Jim sunglasses (29,900 miles) to a Kate Spade satchel (28,300 miles) to Bose Quiet Comfort headphones (40,900 miles).

I understand the airline’s position. Unredeemed frequent flyer miles are a liability on the carrier’s balance sheet. Better for them to be used and reduce their drain on the bottom line. After all, what would the stockholders say?

But here’s the rub: the things they’re offering are incredibly overpriced and therefore, as my wife noted, probably appeal most to those people who have a ton of miles accumulated and either can’t or won’t be using them to travel.

Do the math

It is generally conceded that the value of a frequent flyer mile – United’s or any other carrier – is about three cents, give or take. United’s MileagePlus miles break down this way. If one purchased 4,000 miles, it would cost $140 before taxes, or 3.5 cents per mile. United, however, offers bonus miles for those who buy in larger quantities. As of this writing, a MileagePlus member can buy a total of 30,000 miles for $700, which works out to 2.3 cents per mile.

Now, apply that figure to the proffered merchandise and you’ll see the ride you’re about to be taken on.

At the lowest per-mile figure, that Kate Spade bag will cost you about $651. On, it's $298.  The Bose Quiet Comfort headphones work out to $941. On, they're $349.95.

Photo provided by Bose

Costa del Mar sunglasses, which I love and have been wearing since 2004? 24,800 miles or $570. MSRP? $249. That Sony TV (do we actually still call them “televisions”?): Nearly $9,800. At $2,799.

My take

What it comes down to is a personal cost-benefit analysis.

If you’re someone who has lots of accrued miles, then this could just be the gravy you’ve been looking for. Still, you’d do well to ask where those 425,000 miles would take you and that special someone.

A Business Class flight from Seattle-Tacoma International (SEA) to Paris’ Charles de Gaulle airport (CDG) could be had for 310,000 miles worth $7,130. Buying that ticket for cash would cost about $7,450, so miles and dollars are roughly on par.

Not so with products, as we’ve seen.

However, your decision could be influenced by the way you acquired your miles. Do you run your household expenses through your card and snag the miles as a bonus? Does your company pay for your travel and you get to keep the perks?

In either of those cases, maybe the actual dollar value doesn’t matter to you. If that’s the case, go ahead and indulge. Just do the math to be sure you’re getting a fair return on your investment, whatever it is that you’ve invested.

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Photo by Carl Dombek unless otherwise noted
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