Stop Guessing. How much should you pay for Krisflyer miles

I love accumulating miles.

My Krisflyer miles can get me business-class flights.

I did my calculation and cash-back cards are not worthwhile for me.

For those avoiding complicated criteria, Standard Chartered Cash Back Card gives unlimited cash back at 1.5%

If I spent $36,000 a year, I would have received $540 cash back for the year.

By spending $36,000 a year on a miles card (4 miles per dollar), I would have received 144,000 worth of miles.

This can allow me to redeem 3 one-way economy flights to London or 1.5 one-way business class air tickets to London.

Both are more worthwhile than $540 cash back for the year.

Should You Pay For Miles?

Companies charge annual fees and entice you to pay the fee and enjoy the bonus miles.

Companies charge fees so you can use your credit card to pay taxes, rent, utilities, and insurance to earn miles.

If you do not know how much your Krisflyer miles cost, how do you know if it is worthwhile?

How Much Are They Charging For Miles?

You can earn miles for free.

Banks also provide you with miles if you are willing to pay the annual fee.

Some examples

Voyage Card

Voyage card - $498 / 15,000 = $0.0332 per mile

Citibank

Citi Premier Miles - $196.20 / 10,0000 = $0.019 per mile

Cardup

Cardup - Based on a $3000 transaction.

$3,000 x 2.6% = $78

If your card up is linked to Citibank Premier Miles providing 1.2 miles per dollar spent.

**Miles are given according to the card you linked with the payment.

$3,000 x 1.2 = 3,600 miles

$78 / 3,600 miles = $0.0217 per mile

All Miles Are Made Different

As show, value of miles varies.

Voyage - $0.0332 / mile (most expensive)

Citipremier - $0.019 / mile (cheapest)

Cardup - $0.0217 / mile (the middle ground)

How Much Should I Pay For It?

Now that you know how companies are charging for their miles.

You have to know how much is a mile worth before deciding if it is worth it to pay for it.

Let us use 2 scenarios to do the calculation

Economy Class Tickets

I don't recommend redeeming Economy class tickets as it devalues your miles.

I will cover it later. But let's find out how much is a mile worth here.

It costs you $1,395.30 to travel from Singapore to London in an Economy flight (one way).

The same flight will cost you 42,000 miles for Saver

This means the value of the mile is

$1,395.30 / 42,000 = $0.0332 per mile.

Comparing it to the dollar per mile we calculated earlier in the table below.

1) Voyage - $0.332 / mile

2) Citipremier - $0.019 / mile

3) Cardup - $0.0217 / mile

In this scenario, scenarios 2 and 3 are worthwhile for you to spend the fees to purchase your miles.

Scenario 1 is subjective. Because if the dollar per mile of the ticket is the same as paying the annual fee to redeem voyage miles. You might as well purchase the air ticket straight.

Business Class Ticket

Business class tickets cost $5,704.20 for the same flight.

There is not saver ticket for the same flight I chose. But let's use the other flight as an example. The miles amount should be the same.

Business class redemption for saver will be 103,500 miles.

This means the value of the miles is $5,704.20 / 103,500 = $0.0551

This is what I meant in the earlier example I don't recommend you to redeem economy flights.

In the earlier example, economy flights value miles at $0.0332 each, while business class flights value them higher at $0.0551.

If we compare to how much miles are we paying as below

1) Voyage - $0.332 / mile

2) Citipremier - $0.019 / mile

3) Cardup - $0.0217 / mile

All 3 scenarios are worthwhile for you to pay the annual fee and charges for the miles if you want to.

Because they are all cheaper than $0.0551

Using Citibank Premier Miles As An Example

Let's do an example

Business class flight tickets to London cost $5,704.20

Citipremier Miles - Assuming you can pay $0.019 / mile to get exactly 103,500 miles.

You would have only paid $1,966.50 for the air ticket which is worth $5,704.20.

This is an example to show you the value of whether is it worthwhile to pay for your miles.

But the majority of your miles should be free by spending using the relevant miles credit card.

Takeaways

1. You know how to calculate how much companies are charging you for the miles.
2. You know how to much value is worth for a mile. As per calculation using the Singapore to London example - $0.0551 per mile.
3. As long as charges per mile are less than $0.0551, you can always consider if you would like to pay for it.
4. Redeem Business Class Flights because Economy Class Flights devalue your miles.
5. Cash Back vs. Miles: I prefer miles because they're more worthwhile and offer the experience of business class flights. How about you?

If you prefer video

https://www.youtube.com/watch?v=l6SAYJD0EDY&ab_channel=VincentTan

References:

https://www.moneysmart.sg/credit-cards/cash-back

https://www.uob.com.sg/personal/cards/cashback/one-card-cashback-calculator.page