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I just received an offer on my credit card (Barclays Aviator, if needed to verify). The offer (Flight Cents) is as follows:

  1. I can choose a limit every month ($1 to $500)
  2. Every transaction during a billing cycle will earn points (American Airlines miles) as usual
  3. In addition the cents will be rounded up to the nearest whole dollar (For ex, on a $3.20 purchase, 80 cents will be rounded
  4. At the end of each cycle, the total cents rounded up thus will earn 0.5 American Airlines miles per cent up to a max limit set in #1
  5. I'll be charged the rounded cents as a purchase

So let us say I set the limit as $500 and I bought one cup of coffee in the whole month, costing $3.20, I'll earn 3 miles (since it is not an American Airlines purchase I'll earn 1X) and for the 80 cents that are rounded I'll earn 40 miles. So the total AA miles I'll earn = 43

My bill for the month will be $3.20 + $0.80 = $4. This is an amazing conversion (~10 miles per dollar) rate but I am skeptical. What's the catch? How is the airline/card benefiting from this?

I am thinking if I use this card for every small transaction generating a lot of cents that will be rounded up that will be the best way to extract value from this. If I end up rounding even $20 I'll end up with 1000 miles and so roughly $10 to $12 in AA value. Likewise $100 will mean 5000 miles. This will be on top of X miles for $X.

perennial_noob
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7 Answers7

82

The catch is that you are paying the extra cents for nothing but miles. If you want to "boast" that you earned 10 miles per dollar, you have to also note that you paid $4.00 for $3.20 worth of coffee.

While 1-2 miles per dollar is a decent rate for a kickback when you are spending money on other things, if you are outright buying miles you should expect to get ~50 miles per dollar (which is what you're getting on the round-up amount). Most airline miles are worth ~1.5 cents each in typical redemption value, and they can often be purchased in bulk from the airlines for 2 cents or a little less, using promotions (or you'll pay about 3 cents "retail" with no promotion). Effectively, your card allows you to buy miles in small amounts at a not-terrible price of 2 cents. But it's no screaming deal.

See also my comments here.

nanoman
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Imagine that you pay cash for everything and every day you come home and put your change in a jar. Say you have a month's spending:

3.40, 2.60, 7.10, 8.90

Now you have 22 dollars spent (gone forever) and 2 dollars of loose change sitting in your jar.

What will you do with that two dollars: (a) spend it to buy 100 airline miles, or (b) literally anything else that you can do with two dollars?

If your answer is always (a) for purchases on this card, then this is a reasonable (but not astonishing) deal. If your answer is ever (b), then this is not a good deal because it locks you in to (a).

stannius
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user3067860
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If I end up rounding even $20 I'll end up with 1000 miles and so roughly $10 to $12 in AA value.

So you'll be spending $20 to get $10 to $12 worth of miles?

You seem to be confusing earning mile as a bonus versus outright buying miles. If you spend 80 cents to get something that costs 80 cents, and you also get 40 miles, that's 40 bonus miles. If you spend 80 cents and get nothing but miles in return, that's buying miles. 10 miles per dollars is a great rate for bonus miles, but a terrible rate for buying miles.

Acccumulation
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You're getting miles for 2 cents per mile on the round-up portion (80 cents -> 40 miles). The travel blog I most often read for miles hobbying estimates American's value at 1.4 cents per mile, based on redemption value and availability/ease of getting an award. If you are otherwise close to a reward limit or status, then this could be a great deal for you, but within the grand scheme of travel miles, this is OK but doesn't seem like I'd call it "too good to be true".

user662852
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I don't think any of the other replies mentioned it, but the value of an 'airline mile' is also being intentionally obfuscated by many carriers today in what is a rather obvious way to devalue them. This radio show covered it just 2 days ago: https://www.marketplace.org/shows/marketplace-morning-report/05282019-markets-edition/

In short, several airlines have already eliminated their miles chart (i.e. a publication that stated how many miles it would take to get from point A to point B in their network) and several more will before the end of the year. After those charts go away, to redeem miles, you will be subject to surge pricing and basically the whims of the airlines as to what they charge.

This needs to be taken into account in attempting to evaluate the worth of this perk.

R. Hamilton
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Other answers have corrected your misconceptions about the offer. Here is a blog post considering the offer under its actual merits:

https://onemileatatime.com/barclaycard-aviator-card-flight-cents/

In addition to considering whether paying 2 cents per mile is worth it, you also should consider whether it is worth the opportunity cost of earning the base 1 mile per dollar on the actual purchase. You could instead use a credit card that offers 1.5% or 2% cash back, which is worth more than one AA mile.

I received the same offer and made the same choice as the blog author: I didn't bother opting in.

stannius
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3

Short answer:

The extra 80¢ you spend on coffee doesn't pay for the 40 miles you earn.
In the US, the average mile price is 1.4¢, but you paid 2¢.

Pedro Lobito
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