American Airlines is running a sale on the purchase of their miles through Thursday, April 30, 2015. You can buy up to 100,000 American Airlines miles during the sale and get up to 60,000 bonus miles.

Screen Shot 2015-04-01 at 2.22.03 PM

American Airlines miles cost 2.95 cents each plus a 7.5% excise tax, and every purchase has a $30 processing fee. The cheapest purchase on a per-mile basis is 160,000 miles (100,000 + 60,000 bonus) for $3,201.25 or 2.00 cents per mile.Screen Shot 2015-03-31 at 6.47.20 PM

Screen Shot 2015-03-31 at 6.47.24 PM

 

Math

The cheapest miles cost 2 cents each during this promotion, and that requires shelling out $3,200. I value American Airlines miles around 1.8 cents each, so there is no way I would buy these miles speculatively for 2 cents. The only way it could possibly make sense to buy miles at these prices is if you had an immediate high value use for them.

To figure out if you have a high value use, use this simple expression:

(A – B) / (C + D)

  • A: Value of the award. Important: this is the lesser of the cash price and your subjective value.
  • B: Taxes on the award
  • C: Miles used on the award
  • D: Miles you would earn if you purchased the award ticket with cash

This will spit out the dollar value you are getting for your miles. If that number is greater than 0.02, and you can book the dream award now, buy during this promotion. Otherwise, don’t buy.

Bottom Line

You can buy 160,000 American Airlines for $3,201 or 2.00 cents each. That’s way too high to buy speculatively. Hopefully cheaper sales come along.

The American Airlines miles sales are now processed by American Airlines itself, so you can get category bonuses on cards that bonus airline or travel purchases like my latest card, the Citi Prestige® Card which offers 3x on purchases from airlines, or you can use your Arrival Plus to get American Airlines miles for zero cash.

 

Chase Sapphire Preferred

Earn 80,000 Chase Ultimate Rewards Points after you spend $4,000 spend in 3 months

Just getting started in the world of points and miles? The Chase Sapphire Preferred is the best card for you to start with.

With a bonus of 80,000 points after $4,000 spend in the first 3 months and 2x points earned on dining and travel spend, this card truly cannot be beat for getting started!

Learn More

Editorial Disclaimer: The editorial content is not provided or commissioned by the credit card issuers. Opinions expressed here are the author’s alone, not those of the credit card issuers, and have not been reviewed, approved or otherwise endorsed by the credit card issuers.

The comments section below is not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved, or otherwise endorsed by the bank advertiser. It is not the bank advertiser’s responsibility to ensure all questions are answered.