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Are 10,000 Frequent Flyer Miles Worth $89?

US Airways

Last week, there was quite a bit of excitement over Barclays’ announcement that the US Airways Premier World MasterCard, which will be rebranded as an American Airlines card after the merger, would continue to pay out a 10,000 mile renewal bonus each year. It’s a bonus I personally haven’t thought much of and I know most others haven’t either, since the card has been fairly easy to churn. That’s changed somewhat, but the question remains: Are 10,000 Dividend/AAdvantage miles worth the $89 annual fee?

If you ask bloggers that subscribe to a point valuation system, the value of 10,000 miles will clock in at around $180. If you only use your miles for premium international travel, that value increases substantially. However, if you’re just using your Dividend or AAdvantage miles for domestic travel, 10,000 miles is barely enough for a one-way ticket. Not to mention, US Airways does not even allow one-way awards for half the cost of round-trips.

Let’s say you bank those 10,000 miles and then top it off with $2,500 in spend. Can you get $89 in redemption value per one-way award? On a coast-to-coast award, absolutely. One a flight from San Francisco to Los Angeles? Probably not, unless it’s a last minute flight on a peak travel date. By these calculations, yes the 10,000 bonus miles are worth the $89 annual credit card fee.

Let’s take it a step further and calculate how much it would normally cost to generate 10,000 miles. Use your credit card for direct loads on Amex Serve and you’re looking at $0 cost to manufacture 10,000 miles in ten months. If ten months is too long of a wait, another quick and cheap option is the Simon Mall gift card route. Buying $10,000 worth of Simon Mall gift cards in $500 increments will set you back $59 in gift card fees.

You’re probably wondering, “How can I earn that many miles if I’ve cancelled my US Airways Premier World MasterCard card?” The Starwood Preferred Guest American Express cards earn miles that can be transferred to American Airlines and US Airways at a 1:1 ratio. Double your balance to 20,000 miles and the 5,000 point transfer bonus gets you a total of 25,000 miles.

So whether 10,000 miles are worth the $89 annual fee depends entirely on how you normally earn and use your miles. On another note, if Barclays continues to impose the $89 annual fee after rebranding the current US Airways Premier World MasterCard as an American AAdvantage card, I would actually considering keeping it and canceling the Citi Platinum AAdvantage card. That card has a higher $95 annual fee and while it does offer a 10% rebate on award redemptions (up to 10,000 miles per year), the annual fee is higher – just by $6 but in my world that’s a latte with an extra shot of espresso to give me a jolt during early morning flights.

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Ariana Arghandewal

4 Comments

  1. You also have to take into account the reduced mileage awards that the citi card offers. I took a round trip from Houston to Knoxville for only 15,500 miles. That may help your decision

    • True. US Airways also offers a 5k discount and the annual fee is lower. It really just depends on how many miles you redeem each year.

  2. That is true as well. One thing I read is that it is easy to ge the annual fee on the citi card waived. I have both the US Airways card and the AAdvantage Platinum credit card. Ill keep both if i can get 10k miles for the annual fee on the Barclaycard and get the annual fee waived on the Citi card.

    • In my experience, Citi is getting stingy with waiving those fees. I asked for it on a card I was canceling and they did not bat an eyelash – a flat out no and “I can get this closed for you in just a few minutes.”

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