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I wasn’t going to write about this, but I’ve been getting email and comments about whether it is worth taking advantage of a 40% bonus when you convert gift cards into United miles.
United allows you to convert gift cards into United miles, but the regular exchange rate is terrible. For example, a $50 Kroger gift card converts to only 1,330 United miles.
This means that you’re buying United miles at 3.76 cents per mile (5,000 cents/1,330 United Miles) which is the same price which United sells miles for, and is not a great deal!
But with typical marketing chutzpah, United has sent out emails announcing: “Earn a 40% bonus when you turn gift cards into award miles.”
Except that this is still a bad deal.
Instead of getting 1,330 United miles for a $50 gift card, you now get a 40% bonus or 540 extra miles (which is actually a 40.6% bonus).
So your $50 gift card gets you 1,870 United miles (1,330 base miles + 540 bonus miles). But you’re still paying 2.67 cents per mile (5,000 cents per mile/1,870 United miles).
This is ~30% lower than the 3.76 cents per mile if you buy miles directly from United, but it isn’t a great deal.
For example, if you needed 25,000 miles for domestic US flight, you’d be paying $ 668 (25,000 miles X 2.67 cents per mile) for that flight!
I wouldn’t buy a gift card for $50 and convert it into United miles at 2.67 cents per mile unless I was short of miles for an award which I needed to book soon.
However, this is a good way to buy miles for ~30% less than what United sells them for. But that doesn’t make it a good deal.
I’m sure you can get some cash back by buying gift cards through a cash back site and reduce the cost of buying United miles even further, but I doubt it would make this a good deal unless you can get a gift card for 40% or more off its face value.