How much is a mile worth? A penny (says The Wall Street Journal)

From the Wall Street Journal article (subscription required) Follow the Money, Frequent Fliers: It’s Time to Start Collecting Cash, Not Just Miles

Reporter Ron Leiber runs the numbers:

Most people redeem miles for domestic plane tickets in coach class. So, if you used 25,000 miles to book a ticket priced at $250 on the open market, you’d be getting only a penny per mile of value for that trip.

Only if you use your miles for free international seats in first or business class do you start to see more than a 5% return on your rewards. A first-class trip to Sydney on United requires 120,000 miles. A round-trip in January could cost over $16,000, valuing the miles above 13 cents each.

Similar logic applies to the Membership Rewards points from an American Express card. Turn those points into miles, and the same math applies. Trade them for merchandise and you rarely get more than a penny of value per point.

A good case is made that for many the better deal is a cash back card that offers up to 5 times the reward(!)

The Citi Dividend Platinum Select MasterCard and the new Chase Cash Plus Rewards Visa both give 5% cash back at gas stations, grocery and drug stores, and 1% everywhere else. Others deliver 3% back on restaurant purchases or 2% on all purchases as long as the refund goes into a college savings account.

Many travelers might want to consider ditching their frequent flyer charge cards for the ultimate point system that’s always redeemable for airplane tickets: Cash. No blackout dates either…