Travel Hacking

Adam Ruins Frequent Flyer Miles: Are Airline Miles Costing You Money?

I saw this coming….#adamruins frequent flyer miles. I’m a huge fan of the Adam Ruins Everything series, though admittedly some of the conclusions are a little absurd (i.e. “Herpes is not a big deal!”). Yesterday a new episode came out: Adam Ruins Frequent Flyer miles. CollegeHumor posted a clip, titled “How frequent flyer miles are actually costing you money.” I expected it to be mostly nonsense, because “frequent flyer miles are a rip-off” gets tossed around a lot by people who don’t know what they’re talking about. I was actually surprised at how much the segment got right. Let’s go over some of what I did and didn’t agree with:

“Frequent flyer miles are a big ‘ol rip-off…”

This is something Christopher Elliott is fond of saying and over the years, I dismissed it as nonsense. But there is some truth to it. Frequent flyer programs are a rip-off in the sense that they’re not made to be user-friendly or “easy” to navigate. In order to get the most out of them, you really need to educate yourself on the rules, and not rely on the assumption that the airlines will make it easy for you.

“It’s ‘funny money’ because the airlines control how you can use them”

Frequent flyer programs routinely restrict award availability, making it very difficult to redeem miles on a whim. But at the same time, you can technically redeem miles for almost any flight by opting for a standard award. Not that you should, but it is possible.

“They can rewrite the rules to change the value of your miles at any time”

Again, true. We’ve seen dozens of devaluations of frequent flyer programs like United, Delta, American, and even Alaska. This line made me laugh: “In 2017 United Airlines devalued all of its customers’ miles with just a few months notice.” We’re lucky if we get a few months’ notice. Remember when Delta increased award redemption rates multiple times, without any notice? 

“Airlines will revoke [miles] if you don’t have ‘qualifying activity’ or if you do anything else to violate their specific sneaky terms.”

“Qualifying activity” is not the mystery it’s made out to be. Keep earning or redeeming miles and airlines won’t revoke them. Also, don’t try to sell miles or defraud airlines and chances are you’ll be one of the 99% of people who won’t get their miles revoked. 

“Surveys show that 59% of Americans have no idea how frequent flyer programs work”

“73% of people enrolled in these programs don’t even know how many miles they have”

I find it odd that Adam cites a 2013 Points Guy “survey” for these stats. While I’m sure The Points Guy has a huge readership, they can come up with a more credible place for stats on frequent flyer knowledge. One that covers a wider base. And a more recent statistic. Also, I find it hard to believe that 59% of TPG readers don’t know how frequent flyer programs work and that 73% don’t know how many miles they have. Where did these numbers come from?!?!?

“There are currently 20 trillion unredeemed miles in circulation”

The weirdest thing about this Adam Ruins Everything segment on frequent flyer miles is the outdated information he keeps citing. Like a 2013 International Travel News article claiming that there are 20 trillion unredeemed miles in circulation. Five years ago. It does nothing to prove (or disprove) how bad frequent flyer programs are. If that number corresponded with the number of miles that expired that year, it would make a compelling case against frequent flyer programs. But all we know is that five years ago, there were a lot of miles out there, the majority of which could very well have been redeemed before expiration.

“Half of credit cardholders carry debt. And the massive interest rates completely wipes out any points or miles you’ve earned.”

This is a very important lesson for newbies. In fact, it was one of the first principles that was really emphasized when I was learning the ropes. There is no point in getting a rewards credit card if you’re not going to pay it off on time every month. The interest rate on these cards is often higher than on non-rewards cards, and that is by design.

When people are earning rewards, they feel incentivized to spend more money. When they spend more than they can pay off, they end up with huge interest fees that negate the value of any miles they’ve earned. Keep this in mind before you start churning credit cards or get into manufacturing spending.

“Credit card reviewers make money every time someone signs up for a credit card from their site”

A lot of the big rewards and finance blogs have affiliate relationships with the banks. So when they write a review of a credit card, it could well be influenced by that relationship. Convince your readership that the Sapphire Reserve is The Second Coming and you get a nice little payout from Chase. But not all “credit card reviewers” earn affiliate payouts, so it’s unfair to make that blanket statement. Statements like this also place too much of the responsibility on bloggers. 

We’re all being sold to constantly these days – I can’t tell you how many “life-changing” weekend bags I come across on Instagram every day. Or how many 19-year-old beauty school dropouts on Youtube make it seem totally normal to own 35 mascaras. But it’s up to us to drown out the noise and determine what’s best for us rather than what bloggers tell us we should do. Think critically about your decisions (purchasing and otherwise) and make decisions accordingly.

“Even if you pay cash, you’re still paying for everyone else’s credit card rewards”

There’s some convoluted logic at play here about how credit card transaction fees drive up merchant costs. So you’re paying more for products regardless of whether you’re paying with cash or credit. That’s inaccurate, since not all credit cards pay rewards. This was yet another point where a statistic is backed up by old information, this time from 2011.

“If you really want to game the system, forget the points and miles and just buy a ticket from whatever airline is the cheapest”

I think this is great advice to live by…if you’re earning your points via travel. Being “loyal” to a single rewards program that could devalue at any moment is not the best idea. Especially, if you’re paying for travel out of pocket. In that case, you absolutely should opt for the cheapest flight or hotel instead of paying more to earn points.

This is why 2% cash back cards are becoming a bigger part of my manufactured spending strategy. With cards like the Barclay Arrival Plus, you can earn rewards that are higher than the typical 1.6 cents of value that is assigned to most airline miles. You can book whatever cheap fare you come across without having to pay out of pocket.

Final Thoughts

Overall, I thought this episode of Adam Ruins Everything was fairly accurate and entertaining, as usual. Several of his complaints could be attributed to user error rather than the evil nature of frequent flyer programs. Most of the negative qualities can easily be overcome with a little education. But that goes for everything these days. We should all learn a lesson from all the drama surrounding tech companies these days: Read the fine print and don’t rely on any corporate entity to respect your rights as a consumer and not take advantage of you. 

I think the video is informative for newbies and a great refresher for those who have been at this for a while.

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