Managing A Frequent-Flier Portfolio Earning miles is easy. The trick is keeping count of them and getting your money's worth.
By Sarah Rose

(MONEY Magazine) – Chances are you don't need advice on how to earn frequent-flier miles. You already belong to half a dozen airline programs, rack up miles on at least one credit card and have long known that rewards are handed out for anything from renting a car to booking a hotel room. But a big stash of miles means nothing if you don't use them to get something you want. Randy Petersen, editor of the travel magazine InsideFlyer, estimates that 75 billion miles (enough for 1.9 million trips to Europe, mind you) expired last year.

To keep your perks from wasting away, you have to be as savvy about tracking and spending miles as you are about earning them. You have to know how many miles you have in each program, when they expire and what you can buy with them. To that end, we've compiled seven rules--some old, some new--for making your miles take you farther.

KNOW YOUR NET WORTH

The first step is good bookkeeping. Not only will you know when your miles expire, but you'll see how close you are to a ticket, which is handy if you're renting a car or checking into a hotel and can choose where to earn miles. Yet because most airlines mail statements only quarterly--and only if you've flown in that period--it's tough to recall what programs you're in, let alone what your balance is.

The traditional route for managing miles is to stash your statements and ticket stubs in a folder--a simple technique but not particularly efficient. So trade your paper file for a software program. Although you'll still need to input mileage updates, the software consolidates all of your accounts onto one page and lets you view your balances and a summary of recent activity at a glance. If you use a PC, you can download a free software program called AirEase from www.airease.net. Palm Pilot devotees can track miles on the road with AirMiles software, which is available for $29.95 at www.handshigh.com.

If you're not a diligent bookkeeper, a Web-based service called MaxMiles (www.maxmiles.com) will do the work. Once you enter your account numbers and, in some cases, personal identification numbers, this website will automatically track your frequent-flier and other travel-related programs for $29.95 a year. The site not only e-mails you updates as frequently as you want (weekly, monthly or quarterly), it also alerts you to bonus-miles opportunities.

You can get the same helpful service for half the price if you belong to American Express Membership Rewards ($40 a year; 800-297-3276). Rewards Manager (www. rewardsmanager.com) uses MaxMiles software to track your travels as well as your rewards points. The program is free for six months and then $15 or 3,000 points a year.

Keep in mind that automated programs track only the miles that show up in your account. "As many as 25% of eligible transactions are not properly tracked and credited," says Tim Winship, editor of the travel site FrequentFlier.com. So after every flight, check your statement.

VALUE YOUR MILES

To recognize a good deal when you see it, you need to figure out how much money you're getting for your miles. Here's how: Before you redeem miles, find out the going rate for the ticket or reward. Then use the worksheet on page 197 to calculate the value of each mile. As a rule, according to Rolfe Shellenberger, senior travel consultant at Runzheimer International, airlines price miles at a penny each. You should try to do that well, if not better. That means if you can buy a ticket worth $250 or more for 25,000 miles, you are getting good value. Remember, though, that accepting less than 1[cent] a mile is prudent if the miles are due to expire or if you fly so often that you can barely spend what you have.

STOP HOARDING

Who isn't tempted to stockpile miles for the ultimate getaway? One problem with this strategy is that you may not be able to get a seat to that ultimate destination. Airlines typically allot less than 10% of their seats to rewards tickets--and that's just the average. On a popular route or during high season, the number might be as low as 2%.

Another complication is that airlines can change their mileage requirements--for better or worse--anytime. Sure, US Airways has reduced the miles needed for an off-peak ticket from 25,000 to 20,000 as of September. But in February, American raised the requirement for a first-class upgrade from 20,000 to 30,000 miles. Although many airlines have eliminated expiration dates, American and United, among others, still put a time limit on miles.

Ask yourself: Are you flying often enough to reach 20,000 or 25,000 before time runs out? If not, spend what you've got. There's plenty you can do with a 5,000- or 15,000-mile stash. Several airlines, including American, Continental and TWA, let you cut the cost of last-minute discount fares with as few as 5,000 miles (for more on that strategy, see below). For 10,000 American, Continental, Delta, TWA or United miles, you can get a free night at most Hilton Hotels. If the room's $150 a night, that's 1.5[cents] a mile. If you have 5,000 AmEx Membership Rewards points, you can buy a $50 certificate good at Hertz. And at least one website is negotiating with airlines to let consumers buy merchandise with miles. If you have everything you need, let your miles help others by donating them to charity (see the box on page 201). Donated miles are not tax deductible, however.

SPLURGE ON UNRESTRICTED REWARDS

When it comes to free air fare, all major programs have two types of mileage rewards: restricted ones and anytime rewards, which aren't subject to blackout dates or frequent-flier seat limits but cost 35,000 to 50,000 miles. Why pay that much for a ticket? Why not, if you've amassed tens of thousands of miles and want to travel over the holidays or take a last-minute trip for which you'd otherwise pay an exorbitant full fare?

BOOK LATE...

Because airlines allot so few seats to frequent fliers, you're more likely to get one if you book early, right? Yes, but you're not necessarily grounded if you haven't planned ahead. Now that airlines have perfected the science of filling planes by constantly adjusting prices to meet demand, at the last minute you may get a second chance to book a rewards seat. Typically, says InsideFlyer's Petersen, if the plane isn't full 20 days before departure (right after the deadline for 21-day advance-purchase tickets), airlines begin allocating more seats to rewards ticket holders, and they'll continue to do so as the departure date grows closer. So if you can't get a free ticket well in advance, keep trying.

...AND EVEN LATER

When there's less than a week or two to go before a flight leaves, many airlines will even discount the number of miles needed for a ticket. You'll find those deals in the airlines' weekly last-minute super-saver-fare e-mails. (You can sign up for the e-mail at the airline websites listed on page 198.) With TWA, you can use 5,000 miles to get a $50 discount on a last-minute fare. You can pay for a round-trip ticket on American or Continental with as few as 6,000 or 7,500 miles, respectively, plus a $29 to $39 fee.

How good are the deals? They tend to get better the farther you fly. American recently offered a last-minute weekend round-trip ticket from Boston to New York City for $79, or 6,000 miles plus $39. That works out to less than half a cent per mile. The same weekend you could fly American between Phoenix and Dallas for $149, or 13,000 miles plus $39--twice as much value for your miles.

BUY MILES

Frequent fliers know all too well the sinking feeling of being a thousand miles short for a ticket. You can try the five novel ways to earn miles on the ground that are discussed in the box on page 198. Or you can write a check. Continental and Delta let frequent fliers buy miles for 2[cents] to 3[cents] each, with certain restrictions. Continental, for example, limits you to 20% of the total miles needed for the trip. This past July, AmEx began letting Membership Rewards members buy 1,000 points for $25 (2.5[cents] a mile); you can then transfer the points to any of 12 airlines, including TWA and US Airways. (American Express Rewards Plus Gold Card holders can borrow up to 10,000 points a year against future spending.)

Spending 2.5[cents] for a mile that's only worth 1[cents] when you redeem it seems foolish. And it would be foolish if you bought all 25,000 miles--but it's not if you're topping off your account. Say you need 2,000 more miles to earn a $500 ticket from Boston to San Francisco. If you pay $50 for those miles, all you've done is lowered the value of that ticket by $50. And $50 is a small price to pay for keeping 23,000 miles from going to waste.