Why Buying Miles Can Make Sense Even When Sold Above TPG Valuations
Buying miles & points is typically best when those points are sold below or close to "The Points Guy" (TPG) valuation of the points considered for purchase. That said, there are plenty of cases where you can get outsized value from the points where you might still consider a purchase, especially if purchasing within limited time promos at the historically lowest prices (or tying the lowest) that points have been for a year or more.
Points Examples to Be Tight With on Purchases
There are some points options that are important to be tighter with on purchases than others because the range of value is so low. For instance, the range of value on SouthWest & JetBlue miles is low.
Currently, you're able to buy JetBlue points for 1.74 cents per point, which matches the 70% threshold that One Mile at a Time reports is the max discount since April 2021. The author, "Lucky", states that "buying TrueBlue points almost never represents a good deal." That's because the least they are sold for is this amount, because the valuation of them is lower than that, and because you typically can't get outsized value for these points above 1.74 cents.
United Example (United Miles Are Never Sold within 170% of the TPG valuation) Saving 82% on Business Class Flights via Points Purchase & Even Cheaper Than if Paying for Economy Flights in $
The context of this post is a Ugandan looking to fly to Massachusetts to attend college and looking to make the booking on short notice where the cost of a points purchase for flights in business class is lower vs if purchasing an economy class ticket directly with cash.
According to One Mile at a Time, United Miles have had a max 100% bonus with their best promos between today (8/24/23) & December 2021.
Image Courtesy One Mile at a Time
At that 100% threshold, points are purchased for 1.88 cents each.
The TPG valuation of United miles at the moment is 1.1 cents each. That said, like most points currencies, United miles have a wide range of redemption values.
Here is the mileage option for redemption available with anyone's United miles account:
The points purchase option bonus available is different depending on the account. My dad's account and a number of other folks have a solid bonus available of 100% at the purchase threshold of 40k miles or more. Some other accounts have no bonus available (i.e. my grandma) & I only have a 90% bonus on my own account.
Images courtesy United Miles.
$1540+$103.53 = 1643.53. For business class travel from Uganda to the US on September 1st or 3rd for an itinerary under 19 hrs, that's fantastic. While originally slightly more expensive for this method vs booking in $ directly for economy on the cheapest flight available on the date of this publication, as of 8/24 at 7:26 AM EST, it's actually cheaper to use this method than it is to book in economy no matter how slow the itinerary is.
You actually save 16% by using miles and flying in business class than you would by paying directly for an economy class flight in $ in this example.
If you narrow down to itineraries 21 hrs or less, you only find the same flight sequence as the one in business class with United miles. Here it is in economy pricing for the Lufthansa leg (which is rated 21 overall in the top 100 airlines by Skytrax, with Delta, the top US based carrier, being ranked #20) and business class for the other 2 since no economy options are available in those EgyptAir flights.
If wanting to take that business class flight that you can get for $1643.53 by buying miles under the current promo if your account has the 100% bonus like my dad's does during the limited time promo, you'd be saving even more when compared to business class flights for that short itinerary costing almost $9k.
That's effectively 82% off business class pricing.
Delta: Points Example With Limited Niches on Purchases During Peak Promos
The range of value for Delta miles is typically relatively low, & TPG valuations for Delta miles are much lower than the lowest purchase rate during a promo (My Bank Tracker reported as low as 2 cents per mile) but there are some limited exceptions with nothing typical comparable with SouthWest & JetBlue in terms of value possible.
With Delta, it's hard to get much above 1.5 cents per point when flying within the US or to/from the US even if you are getting a 15% discount on points redemptions by holding one of their annual fee incurring Delta miles cards unless you factor into the equation something like a free upgrade using status or a global upgrade certificate. That said, if flying a partner on an itinerary that Delta doesn't operate at all, you might be able to snag some excellent pricing, as mentioned in One Mile at a Time's article on the subject. Upgrades points also has some viable options mentioned.
Amtrak: Viable Points Purchases During Peak Promos
Amtrak is an often neglected points currency, but sometimes their points have been sold for just slightly above the TPG valuation (2.51 vs 2.5 cents per point), with me believing that the TPG points valuation is low (& that it should be closer to 2.8 or 2.9). Also, while typically their points have a low range of value, there is a slight exception in the form of Single Visit Station Lounge Passes (1500 points) when redeemed at Moynihan Trail Hall & especially with One Class Uprade 12 hr Coupons (2500 points). Of note is that the latter of these can provide lounge access if you are upgrading from Acela Business Class to Acela 1st Class. Also these 2500 points upgrades can be worth hundreds of dollars in redemption value. See the "Details of Companion Coupon (potential to save >$400 per coupon)" section of my giveaway article.