Why Buying Starpoints To Convert To Avios May Not the Best Deal Right Now

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As I mentioned earlier today, Starwood is running a promotion through 14 July in which SPG members can purchase Starpoints with a 35% discount. Not only is that the best discount we’ve seen on Starpoints, but it also offers up the opportunity to generate airline miles at a very reasonable rate of 1.82 cents/mile.

In most cases 1.82 cents/mile wouldn’t be a bad rate at all but, if you’re looking to boost your Avios balance, using the current Starwood promotion may not be the cheapest way for you to do it.

British Airways is currently running a promotion where, through 30 June, you can purchase Avios with a 50% discount and, while the best cost per Avios you can get through this promotion is 1.85 cents (marginally more expensive than by converting Starpoints through Starwood’s promotion), there are two reasons why you may be better off purchasing Avios directly through British Airways.

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Reason 1 – Quantity

The Starwood promotion allows you to buy a maximum of 30,000 Starpoints which will convert to a maximum of 37,500 Avios (assuming you have at least 10,000 Starpoints already in your account to allow you to transfer the Starpoints across in multiples of 20,000 to make the most of the bonus).

The British Airways promotion allows you to purchase up to 100,000 Avios which, combined with the 50,000 Avios bonus, would give you a total of 150,000 Avios.

If you need Avios in any serious quantity the Starwood promotion is unlikely to be all that useful.

Reason 2 – Bonus Earnings

British Airways handles its own Avios sales so, if you have a credit card that earns a bonus for spending in the “travel category”, you can earn a fair number of bonus points buy buying Avios direct from the airline. Starwood uses Points.com to sell its Starpoints so there are no potential bonus category earnings from buying Starpoints.

The following credit cards would be among the best cards to use if buying Avios from British Airways:

  • The American Express Platinum Card – 5 Membership Rewards Points (MR) per dollar spent with airlines
  • Chase Sapphire Reserve – 3 Ultimate Rewards Points (UR) per dollar spent on travel
  • Citi Prestige – 3 Citi ThankYou Points (TYP) per dollar spent with airlines

Assumptions:

  1. The best card to use for unbonused spend returns 2%
  2. Amex Membership Rewards points are worth 1.3 cents each (my conservative valuation)
  3. Chase Ultimate Rewards points are worth 1.5 cents each (my conservative valuation)
  4. Citi ThankYou points are worth 1.5 cents each (my conservative valuation)

So, using those assumptions, the math can look like this:

Converting Starpoints To Avios

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When converting Starpoints to Avios the cheapest cost of Avios is 1.82 cents each (as I showed in the post earlier today) so, if you were to use a credit card that offered a 2% rebate/cash back, the net cost would come down to 1.78 cents/Avios.

Buying Avios Using The Amex Platinum Card

The best rate in the BA promotion is 1.85 cents/Avios and, if you were to buy the full allocation of 100,000 Avios, this is how that would look:

100,000 Avios + 50,000 Avios bonus = 150,000 Avios for $2,775.

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Here the Amex Platinum Card would earn 5 Membership Rewards points (MR) for every dollar spent and that comes to 13,875 points.

Using a valuation of 1.3 cents/MR the 13,875 points would earn an effective rebate of $180.37

That would make the total outlay for 150,000 Avios $2,594.63 ($2,775 – $180.37) or 1.73 cents/Avios

That beats the SPG conversion quite comfortably.

Buying Avios Using The Chase Sapphire Reserve Card or Citi Prestige Card

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Using the example of 150,000 Avios for $2,775, both the Chase Sapphire Reserve card and the Citi Prestige card will earn 3 points/$ or 8,325 points

Using a valuation of 1.5 cents/point the 8,325 points would earn an effective rebate of $124.87

That would make the total outlay for 150,000 Avios $2,650.13 ($2,775 – $124.87) or 1.77 cents/Avios

It’s marginal….but that’s still cheaper than converting Starpoints into Avios.

Bottom Line

This is one of those times where individual valuations of the various credit card currencies will come into play as will the number of Avios being purchased.

I know people who value ThankYou points and Ultimate Rewards points higher than I while there will probably be those who value them slightly lower – that’s why its important to do the math.

If you have a credit card that earns you bonus points on spend made direct with airlines you need to consider the effective rebate those points will be earning you if you were to buy Avios direct from British Airways. Once you’ve factored in that rebate you’ll have the effective cost/per Avios you’ll be paying and you can compare it to the cost of purchasing Starpoints and generating Avios that way.

Different people will come up with different answers but I suspect those with great credit cards will be better off buying Avios direct from British Airways.

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