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When - and When Not - to Use Your Frequent Flier Miles

When - and When Not - to Use Your Frequent Flier Miles

By Tim Winship, | USAToday


There’s a movement, small but growing, to pass along the costs of miles to those who earn them. You may decide those mileage surcharges are fair and reasonable, and elect to pay them. But you should be aware of the extra costs, and consider them in light of any available alternatives.

Some examples follow.

Car rentals: Beginning on October 1, 2002, Hertz instituted a 50-cent-per-day fee, up to $2, for rentals which generate miles in most U.S. airline programs. That may not seem like much, but with an earning rate of 50 miles per rental day, it amounts to paying 1 cent per mile on rentals of four or fewer days.

Today, most car rental companies have followed Hertz’s lead and now charge a Frequent flier Tax Recoupment Surcharge of 50 cents per day if travelers elect to earn airline miles for their rentals. There is one notable exception to this rule, however. Customers who choose to earn miles in American’s AAdvantage program earn one mile for every dollar spent but are only charged about 6 cents per day.

So when it comes to renting a car, travelers have multiple options. They can earn miles and pay the fees. They can opt to avoid extra fees by choosing not to earn miles when renting from Hertz and other car rental companies which charge for them. Or they can choose to earn miles in American’s program, incurring a lesser surcharge.

Credit card miles: Also in 2002, Diners Club began charging Club Rewards members .95 cents for every point exchanged for airline miles. The charge can either be added to the member’s next card statement, or paid off in Club Rewards points (95 points deducted for every 95 cents in fees).

The alternative? For one, Diners Club’s principal rival, American Express, charges .5 cents for every Membership Rewards point exchanged for airline miles—$12.50 to exchange 25,000 points, versus the $23.75 to exchange the same number of Diners Club points. Even better from a cost standpoint, the airline co-branded cards do not charge any exchange or redemption fee. And there’s always the option of using a credit card that awards a cash rebate instead of miles or points.

Caveat emptor

Miles for mortgages, miles for mutual funds, miles for meals … the mileage offers are everywhere.

It only takes a bit of basic arithmetic to tell when an offer is the real deal, and when consumers should just say, “Thanks, but no deal.” features expert travel advice and unbiased coverage of travel deals.

Courtesy of © 2008 YellowBrix, Inc.

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