Watch Out for Fake Credit Card Miles

fake

Lately, I’ve seen a growing trend in what I refer to as “fake credit card miles.”

I call them fake because the use of the word “miles” is a bit of a misnomer. You see, many of these so-called miles aren’t actually miles at all, they’re just standard credit card points that tend to be worth a penny each.

Put another way, there’s nothing all that special about them, nor any good reason to refer to them as miles.

If anything, this practice probably just confuses cardholders who think they’re earning frequent flyer miles when in fact they are not.

Are These Miles or Points?

For example, let’s take a look at the new Discover it Miles card, which offers miles in exchange for credit card spending.

What’s strange about it is the fact that the miles don’t actually differ from straight cash back. They even say you don’t need to spend money on travel or redeem the miles for travel.

Each mile is worth a penny, so if you accrue 10,000 miles, you’ve earned $100 in cash back.

So basically it’s the same exact thing as earning cash back via their Discover it card, though you do earn 1.5 miles per dollar spent and double miles during year one, which is a better deal.

A similar example comes courtesy of the Barclaycard Arrival Plus, which allows you to earn two miles per dollar when redeemed for travel.

Yes, travel is involved here, which gives the miles terminology some credence, but only to the extent that you can use the miles to erase travel-related purchases you’ve already made.

The miles can’t actually be transferred to a frequent flyer program, and if they are used for any purpose other than travel, the redemption rate is cut in half.

So if you redeem for cash back or gift cards, your miles are once again worth a single penny each.

The same goes for the Capital One Venture Miles Reward Card. You earn two miles per dollar spent, and can use those miles for existing travel purchases via their Purchase Eraser feature or use miles for an upcoming trip via their Rewards Center.

This is why they (with the help of Jennifer Garner) claim to not have blackout dates and things like that – because it’s not really an award booking, but a cash back redemption credit card tied to travel.

All you’re really doing is paying for your trip with credit card points, not using miles via a frequent flyer program.

And if you happen to redeem your miles for cash, their value again drops to a penny per mile.

I classify the Amex Blue Sky credit card as another one of these fake miles cards because you can only get statement credits for travel purchases.

Real Miles Can Be Much More Valuable

Now let’s talk about real credit card miles, those which can be transferred to airline partners, or those which are directly tied to frequent flyer programs.

There are a number of credit cards that earn points (ironically) that can be used as airline miles via a 1:1 transfer.

Examples include Amex EveryDay, Amex Green/Gold, Amex Platinum, Chase Ink, Chase Sapphire, Citi ThankYou Premier, and Citi Prestige, to name a few.

For each point you earn, you get a mile in a corresponding frequent flyer program, assuming that’s how you want to use them.

The same goes for straight up airline rewards credit cards where you earn a mile for each dollar spent on a particular airline.

To give you an idea of the value, I recently redeemed 115,000 Ultimate Rewards points for a roundtrip business class flight to Europe during the high season via United.

If I had used those points for a cash redemption, I would have only received $1,150 in value towards my flight. In reality, that flight would cost somewhere in the teens, and by teens, I mean ~$15,000 or more.

How many fake miles would I need for $15,000 in value? Just 1.5 million…

The takeaway here should be clear.

Author: Colin Robertson

Colin created this blog after spending several years in a job that required him to scour credit reports on a daily basis. His goal is to help individuals better understand their credit and get the most out of credit cards.