Is Borrowing Airline Miles Ever A Good Idea?

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Recently, American Express and Delta Air Lines teamed up to create a new offer with questionable motives. With the new “Fly Now, Earn Later” promotion, cardholders have the opportunity to spend airline miles they don’t have now and just pay them back at a later date.

As someone who abhors debt, this all seems pretty gross to me. But since borrowing money on credit is the business model of all airline credit cards in the first place, the promotion doesn’t surprise me, either.

How Fly Now, Earn Later Works

Unfortunately, like most amazing deals, the devil is in the details with this one. Here’s how the new program works:

  • Delta looks at your spending pattern to find a special formula for how many miles you can borrow.
  • Delta extends you these miles with the agreement you’ll pay them back via spending on your card over the next 6 months.
  • If you don’t spend enough on your card to earn enough miles to “repay your debt,” you’re charged 2.5 cents per miles for the miles you borrowed.

While borrowing some miles ahead doesn’t seem like a big deal, getting charged 2.5 cents for a Delta Sky mile is insane. These miles are typically worth only one cent each, meaning the proposed payback is a sour deal.

Why Borrowing Miles is a Bad Idea

While never really owning anything and going into debt for almost any purchase (including your smartphone ***cough***iPhoneX***cough) is practically the American way, there are plenty of problems that could arise from this setup.

One of those problems comes when you’re actually charged an outrageous amount for your unpaid miles. Imagine you borrowed ahead 20,000 miles to score a specific redemption, but for reasons outside your control, you could only spend enough on your co-branded Delta credit card to earn 10,000 miles over the next six months. Just like that, you would owe 2.5 cents per mile for 10,000 miles, or $250.

Second, what if you hated the idea of paying 2.5 cents per mile so much that you overspent on your card to avoid the penalty. Then what? I could easily see a situation where someone spends more than they could afford to repay their miles, only to wind up in credit card debt instead. At that point, any interest you’re paying is likely wiping out the value of those miles and then some.

Lastly, when will we ever stop borrowing? What makes us okay with always owing someone money or miles or favors? When will we decide to get by with what we have instead of continuously putting ourselves into the debt of someone else?

I guess I’m mostly against this offer because I hate debt so much. Debt makes you do crazy things, and it limits your life in ways most people never stop to think about. If you’re willing to get into debt over airline miles, then there’s no limit to what you will do.

The Bottom Line

Here’s my advice: Don’t borrow miles! Don’t borrow money, either. If you can’t avoid debt, stay the heck away from this hobby.

Earn your miles through regular spending or through signup bonuses like the rest of us, and you’ll be a lot better off.

Would you ever borrow airline miles? Why or why not?

Holly Johnson is a financial expert and award-winning writer whose obsession with frugality, budgeting, and travel plays a central role in her work. In addition to serving as Contributing Editor for The Simple Dollar, Holly writes for inspiring…
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Chase Sapphire Preferred® Card

  • Annual Fee: $95 fee waived for the first year
  • Foreign Fees: No
  • Card Type: Bank
FTG Review Reward Breakdown Points Breakdown
  • Earn 50,000 bonus points when you spend $4,000 on purchases in the first 3 months from account opening. That’s $625 toward travel when you redeem through Chase Ultimate Rewards®
  • Named Best Credit Card for Flexible Travel Redemption – Kiplinger’s Personal Finance, July 2016
  • 2X points on travel and dining at restaurants worldwide & 1 point per dollar spent on all other purchases.
  • Earn 5,000 bonus points after you add the first authorized user and make a purchase in the first 3 months from account opening
  • No foreign transaction fees
  • 1:1 point transfer to leading airline and hotel loyalty programs
  • Get 25% more value when you redeem for airfare, hotels, car rentals and cruises through Chase Ultimate Rewards. For example, 50,000 points are worth $625 toward travel
  • No blackout dates or travel restrictions – as long as there’s a seat on the flight, you can book it through Chase Ultimate Rewards

Breakdown

Earn (pt.)

Spend


First 3 months

50,000

$4,000


Travel Purchases

2.00

$1


Restaurants Purchases

2.00

$1


Coffee Shops Purchases

2.00

$1


Fast Food Purchases

2.00

$1


Alcohol & Bars Purchases

2.00

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