Yes, collecting SkyMiles still makes perfectly good sense, you dolt

Just my luck. The very weekend after I wrote that I was cancelling my Delta Platinum Business American Express because I'd given up on American Express's games awarding high spend bonuses on manufactured spend, Thought Leader From Behind Gary Leff posted another one of his moronic screeds against collecting SkyMiles.

Most people don't know what they're doing, and rightly so

The reason "I started this blog for friends and family" became an immediate cliche to describe affiliate bloggers is that it has a hint of truth in it: our friends and family have no clue what travel hacking is about, and don't have any interest in learning.

What it misses is that it is good and right that most people have not the slightest interest in travel hacking, not because it keeps the game alive, but because most people have better things to do.

Among the 95%+ of the population that doesn't — and shouldn't — care about travel hacking, there's nothing wrong with "collecting" SkyMiles because there's nothing wrong with virtually anything you could suggest.

Obviously at the extreme you could suggest a manifestly inappropriate credit card like a American Express Platinum card, or a Citi Prestige, or a non-rewards credit card like Chase Slate, but the difference between a civilian using a 2% cash back credit card, or an airline credit card, or a hotel credit card, is simply a rounding error to a normal travel budget, and if they prefer to fly on Delta, or prefer to stay at Marriotts, there's no harm in using a co-branded credit card because there's no benefit to using any other card.

Among people who know what they're doing, people will still make mistakes

That brings us to travel hackers, who presumably are Gary's target audience with his harangue, and there are only three logical categories a person can fall in:

  • they can overvalue SkyMiles;
  • they can properly value them;
  • or they can undervalue them.

In other words, when a person decides where a dollar in annual fees, or a dollar in credit card spend, or a dollar in shopping portal purchases, is going to be most lucrative, they can earn more SkyMiles than would be platonically "correct," the correct number of SkyMiles, or fewer SkyMiles than they really ought to.

Gary's whole rant is focused on the mere existence of the first group, those who overvalue SkyMiles. And the first group no doubt exists! I've probably fallen into this group for the last year or so, finding it harder and harder to redeem SkyMiles for the flights I want, while stubbornly sticking with my Delta American Express card to meet the Medallion Qualification Dollar waiver each year.

The problem for Gary's argument is that the second and third groups also exist, and there is no reason obvious to me that the first group is sufficiently larger than the other two groups to merit special attention.

Someone who puts $50,000 in qualifying spend on a Delta Platinum American Express earns 70,000 SkyMiles. To break even against a 2% cash back card they'd need to get an average of 1.43 cents per SkyMiles (weighted by redemption size). But remember, the floor on the value of SkyMiles is 1 cent each when redeemed against paid Delta fares, so the lefthand tail of the distribution of redemptions isn't at 0.0 cents each; it cuts off abruptly at 1.0 cents.

Meanwhile, it's easy to imagine that someone who is able to flexibly and strategically redeem SkyMiles for long-haul and premium cabin seats may not be earning enough SkyMiles. Just like in the case of the over-valuers, a travel hacker may be stuck in the rut of a single Delta Platinum card while they really should be earning many times more SkyMiles using a full suite of personal and business Platinum and Reserve cards, possibly even doubling up with a partner to gift themselves even more Reserve miles.

The existence of errors isn't informative unless you know the distribution of the errors

The reason I don't give advice is that I don't know your circumstances. I think Membership Rewards points, companion tickets, and annual free hotel nights are worth much less than face value, but whether they're worthwhile for you depends on your specific circumstances, about which I have no insight.

I believe many people make the mistake of collecting these instruments because they overvalue them, based on many interactions with my friends and readers.

But I also believe many people properly value them, and I believe many people undervalue them, and don't collect enough of them.

How is this miracle possible? How can I say in the same breath that some people overvalue companion tickets and other people undervalue them? Because they are worth different amounts to different people, and different people value them differently!

A currency is only overvalued if someone puts more value on that currency (sacrifices more value from alternatives) than it is worth to that person. And to know that, you need to know both what they are sacrificing (what their next best alternative is), which we can mostly approximate using widely-available 2%/2.5%/3% cashback credit cards, and how much the miles they earn are "really" worth, which depends on their particularized travel and booking patterns.


I'm the last person I expected to come to the defense of SkyMiles, and hopefully it's obvious I've more or less given up on the program for my own needs. But let's dispel with this fiction that Gary Leff has any insight into the value SkyMiles have in meeting your specific travel needs. If anybody tries to tell you the right program to meet your travel needs without knowing anything about you, it's a sure bet they're looking out for somebody besides you.