In my last post on Air Miles, I went through a detailed analysis that showed every Air Mile I collect is worth 10 to 12 cents if I want to exchange it for merchandise like gift cards, coffee machines, cameras or audio equipment.
If I use the Air Miles for flights, I increase the value of the points to 16 cents to as high as 27 cents depending on whether I fly during low season or high season.
The real example I used was exchanging 14,850 Air Miles for 6 flights from Edmonton to Ottawa which would save me $2475.90.
To really answer the question “Is Air Miles rewards a good deal?” we have to look at how much money I spent to get that 14,850 miles in the first place.
BMO Air Miles World MasterCard
To collect Air Miles rewards, I use two BMO Air Miles World MasterCards. One for personal expenses and the other for business expenses. We use these credit cards to pay for everything and then pay them off at the end of the month. We get 1 Air Mile for every $15 spent on these credit cards.
Double dipping Air Miles
With Air Miles rewards, I can also collect points by double dipping. For example, I can buy my groceries at Safeway and collect all kinds of bonus points in addition to the points I get when I pay with my BMO Mastercard.
I can get bonus points by filling up at Shell, shopping at Rona, Staples and Expedia in addition to the Miles I get from my BMO Mastercard.
In fact, these bonus points really help to rack up the miles. In my last monthly statement, I collected 1179 Air Miles and 475 of those air miles came from double dipping. The rest came from my BMO Mastercard.
Doing the math on Air Miles rewards
When I look at my Mastercard statements over the past month, we spent $8423.53 to get 1179 Air Miles. That means I actually got 1 Air Mile for every $7 spent on the Mastercard over the past month.
If every Air Miles gets me 16.7 cents worth of travel, then my Air Miles rewards is the equivalent of at 2.3% cash back on what I spend. I’d say I’m doing pretty good given that most cash back cards are 2% at the highest rate and usually only on certain purchases for a limited period of time. More typically cashback cards are more often at a lower rate like 1% or 0.5%. I know that some credit cards will give you 3 to 5% cash back for the first 6 months but 2.3% is a pretty good deal on a more consistent basis.
If I use my points to buy merchandise my Air Miles rewards is still the equivalent of 1.56% cash back.
Looking at just one month can be deceiving so when I look at the last 5 months, I earned 4954 Air Miles and spent about $50,000 on my Mastercards over the same time period. That means I am getting about 1 Air Mile for every $10 spent.
My equivalent cashback is more like 1.67% over a longer time frame.
My five cents
Based on this analysis, I am pretty happy with the Air Miles reward program and the BMO Air Miles World MasterCard. Doing this analysis gives me a better foundation for analyzing whether it makes sense to switch to another reward card.
I’ve also realized how important it is to take advantage of bonus Air Miles Rewards and Double dipping. With a little more conscious effort and awareness, I wonder if we can get the reward up to a 2% cashback equivalent.
Although the Air Miles Reward program may be a little more complicated to calculate cost benefits, it also gives me a little more flexibility to enhance my rewards through purchases, bonuses and redemption of miles for merchandise or travel.
Does my analysis make sense? Did I miss anything? Are there any other rewards programs that produce better results than Air Miles?