The old hair dryer you’ve had since college has finally given up the ghost. Your options are to:
- go to work with a sopping wet head of hair, and pass it off as the latest avant-garde style from Paris, or
- simply buy a new hair dryer.
Naturally, like all well-adjusted, normal-thinking people, your first thought is: how can I get the most miles as possible out of this? Like all good miles harvesters, you live by the maxim: get miles for things you were going to buy anyway.
After some quick shopping portal research, you realize that WorldOfHairdryers.com is having a fantastic promotion this month through the Oceanic Airlines shopping website – 10 miles per dollar! That’s fantastic – you’ve been trying to build up your balance on Oceanic for that dream island vacation to the South Pacific! You log into your Oceanic account, click through to the online store, and decide on the new HairMaster 2000 for $49.95. Now, to choose a credit card…
Wait – something catches your eye on the TV. It’s an advertisement for a big weekend sale at Humungo-Mart. And they’re selling the HairMaster 2000 hair dryer… for just $42.95.
Now what do you do?
While online shopping portals are a fantastic way to collect a bounty of miles, you always need to stop and ask an important question: are the miles actually worth it? Obviously, if the price of the item you’re purchasing is the same on the website as it is in a physical store (or if it’s even lower, as is common for online shopping), then the answer is easy: go ahead, buy it through the online shopping portal, collect your miles, and do a little happy dance. A question arises, however, when the online price is actually higher. You’re paying more money, but you’re also getting something additional in return – frequent flyer miles. What we need to do is determine just how much those miles are worth.
That actually winds up being a fairly complicated process, to which other bloggers have devoted an impressive amount of work. I’ll probably try my own miles valuation effort in the near future. For now, it’s sufficient to realize that different kinds of miles have different relative values, just like one Dollar, one Euro, and one Yen have different values. For the sake of simplicity, let’s say that Oceanic Airlines miles are worth two cents apiece.
Now – brace yourself – math. The question you need to answer is, do you want to spend an additional seven dollars (the online price of the hair dryer is $49.95 – $42.95 = $7.00) to collect 500 Oceanic miles ($49.95, getting your ten miles per dollar through the portal and rounding up)? Knowing that the miles are worth two cents apiece, you can now figure out that your bonus reward is worth 500 x 2 = 1,000 cents, or $10.00. In this case, the bonus reward is worth more than the extra money you’re paying, so yes, it’s worth it to go ahead and buy the hair dryer online.
In practice, of course, it’s more complicated than this. Depending on which state you live in, or which online store you’re shopping at, you may or may not pay sales tax. And you may have to pay extra for shipping. These things all have to be factored into the equation. But essentially, you’re still doing the exact same thing as you did before: you’re trying to figure out how much extra money you’re shelling out, and then see whether or not the miles you’re getting as a bonus are worth at least that much, or preferably, much more.
Another version of this choice frequently comes into play with coupons. It’s very common for online stores to offer promotional coupons, in the form of banners you can click on, or codes you can enter into the website during checkout. However, you usually have to choose: coupon or miles, one or the other. For example, let’s assume that WorldOfHairdryers.com is offering a 25% promotional coupon. Now, do you use the coupon, or go for the miles? We already know that buying the hair dryer will get us $10.00 worth of miles. If we decide to use the coupon, that will take 25% off the price of the hair dryer – that’s $12.50. In this case, the smart choice is the coupon. This blog is called the Frugal Travel Guy, after all.
A big part of your shopping and mileage strategy should be to collect miles for things you were going to buy anyway. However, never forget to ask the important question – am I paying more for the miles than they’re actually worth?
Citi ThankYou® Premier Card
- Annual Fee: $95 fee waived for the first year
- Foreign Fees: No
- Card Type: Bank
- Earn 50,000 bonus ThankYou Points after $3,000 in purchases within the first 3 months of account opening - redeemable for $500 in gift cards, $625 for airfare, or other great rewards.
- Earn 3X ThankYou Points on Travel including Gas, 2X ThankYou Points on Dining Out and Entertainment, and 1X ThankYou Points on Other Purchases
- ThankYou® Points are worth 25% more when redeemed for travel through thankyou.com, as compared to gift cards
- No foreign transaction fees on purchases
- Points do not expire and earn unlimited ThankYou Points
- Annual Fee: $95 (fee waived for the first 12 months)