Low Value Sign

Once upon a time, there was an "up for anything" AutoSlash team member named Michael, who was searching for a cheap rental in the French Caribbean. He looked high and low but the rates were persistently more than he wanted to spend. One day while logged into his American Airlines AAdvantage account, he discovered that he could book a car at Avis using miles at a pretty aggressive rate, valuing his frequent flyer miles at 2.5 cents each. Sounds like a good deal? Well, there were a number of catches that made this less of a happy fairy tale (there weren't many) and more like a story by the Brothers Grimm.

The Backdrop

I won airfare to a vacation destination in a contest, so I was clearly taking advantage of the offer. My search for a three-day car rental repeatedly showed the equivalent of $170, a rate that stayed persistently high. I logged into my American Airlines account and was offered the same rental at Avis for 6,500 AA Miles due to the Executive Platinum status I held at the time, an approximate value of 2.5 cents each. I took American Airlines up on the offer under the guise of "research", booked my reservation with Avis, and imagined repelling down waterfalls without a care in a few days. 

The Reality

Redeeming frequent flyer miles for rental cars is almost always a horrible deal that the AutoSlash team cannot recommend. With American Airlines, the number of miles required for a rental car redemption decreases as one's status level increases, so the deal seemed to make sense from a mathematical perspective. However, there's one massive restriction:

Car Rental Redemptions from frequent flyer accounts are almost always immutable. Non-refundable, non-cancellable, and the miles are never coming back. We talk about prepaid rentals separately -- the decreased cost often comes with less (and oftentimes no) flexibility. A family emergency or a canceled flight? My 6,500 miles were already gone. And the Terms and Conditions also include the vague statement that "car rental rates may not include some taxes, service charges, deposits or other additional fees".


The Terms and Conditions do not inspire confidence.

But I needed a vacation (even if just three days), so I took a calculated risk with the 6,500 miles. Again, my rental was 6,500 miles only because I held status with the airline; before I logged in, the number of miles required was far greater.


Like many programs, American gives better redemption rates to elite members who log in.

My willingness to try the process was based on a firm knowledge of the insurance provisions of my credit card issuer and how the rental paid with miles would be handled. Does your credit card's damage waiver cover a rental when paid for with rental car company points or frequent flyer miles? Are you certain? If not, you will want to read those policy documents from the credit card company very carefully before booking a rental with frequent flyer miles.  

Arrival at the Rental Car Counter

I cleared customs and walked to the rental car counters. There were approximately 8 companies, one with a massive line and seven with no line at all. Foreshadowing is not required -- Avis was the company with the massive line. Avis Preferred service might have helped if this were an Avis Preferred location. I stood in the queue, which moved at a decent clip until one of the two staff members decided to go home.  

Some of the folks in front of me in line decided to get other companies to match the rates confirmed by Avis. My reservation was non-refundable and non-cancelable, paid with miles. Going with another provider would require spending cash on top of the miles irretrievably spent. 

An hour and a half later, I reached the front of the line, handed over my prepaid voucher, and the counter agent took my 3,000 euro deposit. Due to my Avis Preferred status, I did get a larger, brand-new car, though -- a four-door hatchback instead of the two-door hatchback reserved. And the larger car assignment was fortuitous in another way. Once someone opened the secured Avis lot, I was able to hop in my Suzuki Swift; the same Suzuki Swift that spawned our Sleeping in Rental Cars article. Aside from waiting in line, the lost time, and the massive deposit, it was an uneventful rental by AutoSlash team-member standards.

Rental Return

At return, there was one more surprise, which I had suspected was coming all along. The local government imposes a $30 or 25 euro airport surcharge on all rentals at the airport. Remember the disclosure from American Airlines that "car rental rates may not include some taxes, service charges, deposits or other additional fees"? Well, the airport surcharge wasn't covered by the voucher, so I had to break out the credit card at the time of return to pay the airport's tax. That payment decreased the value of the miles I had redeemed -- still over 2 cents per mile. Did I get a good deal? That's questionable, and I would have really appreciated flexibility while standing in that interminable line.

Our Take

We truly only care that our fellow travelers get the best possible rates on their rentals. A frequent traveler might find a situation where redeeming frequent flyer miles may seem like a good idea. If the redemption passes muster, there are just four major questions to ask oneself:

  • Flexibility -- Is there any flexibility in the reservation made with frequent flyer miles? 
  • Other Travel Needs -- Frequent flyer miles might be redeemable for rental cars, but is there a better use of those frequent flyer miles?
  • Insurance Considerations -- Does your personal insurance policy or credit card damage waiver cover you when paying with frequent flyer miles?
  • Unstated Taxes and Fees -- While the rules may warn you of extra taxes and fees, would you be happy to learn about those fees at a rental counter?

Without the discount American Airlines provided based upon my elite status tier, there's no way I would have made the decision to redeem miles for my rental. Even with the massive discount based upon my frequent flyer status, I might never make this decision again -- the utter lack of flexibility doesn't work for what National terms a "Control Enthusiast".

 

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