Buying 300k Avios!? A business case ….?

[PB2]

I’ve always generally been averse to buying Avios as that kind of goes against the “reward” nature of later spending them, let alone the price is not particularly good value at all. At the moment I have a couple of 100k Avios remaining across BA and Iberia.

BUT…it’s come to a point where essentially without buying 300k for £3215 (during the 50% bonus window) I won’t hit the £10k on my BAPP Amex this year, to trigger my first ever new-style 241 voucher.

With this voucher I’ll likely fly out in First and back in Club Suites somewhere for around (68k + 50k) 118k Avios, being flexible on dates, off-peak, and with a companion. So triggering the voucher and using it will “save” me 118k avios doing this. Aside from a “big” 241 trip I usually spend Avios on last minute European flights when economy/business cash prices are very high – or on Qatar reward flights ex-EU, plus an annual Barclays upgrade voucher departing LHR.

Using the general principle of 1 Avios = 1p, even with the 50% “bonus” I would be paying £215 extra (above the £3000 for 300k Avios) for the privilege of buying 300k Avios, but bringing the triggering of my 241 into the equation, making such a purchase begins to have some logic does it not? Interesting to hear some takes on this.

I appreciate Avios could be devalued at a moments notice but I wouldn’t imagine this to be too dramatic over night, plus with low fee redemptions across Iberia and now Qatar, the options to spend the remaining points remain strong. Of course taxes and charges are rising every few months ex-LHR but starting a trip in Europe no issue so less of a factor.

Thanks for any thoughts and ideas while I ponder making my first ever purchase of Avios!

• This topic was modified 54 years, 4 months ago by .

[NorthernLass]

If you’re going to use them for very expensive cash tickets I don’t see any problem with this. Remember to factor in the avios/TPs you’d earn on a cash booking as well. But it’s accepted as perfectly fine to do for outsize hotel redemptions so I can’t see that buying avios is any different.
A word of caution – although you clearly aren’t a newcomer to avios, remember that flexibility is always to key to award flights and don’t be like the famous chap who bought enough avios to fly to Tokyo then found there was never any availability when he wanted to travel!

[PGW]

Rob posted an article on the merits of purchasing avios last year which you can access through the search function. I’ve copied his conclusion below:

“As a rule of thumb, it’s better to avoid purchasing Avios as much as possible, and certainly in bulk. You may be able to justify small quantities – if you only need a few more to top up your balance before redeeming, and if you intend to redeem immediately – but unless you are sure that you can spend them for more than you bought them for it’s generally best to stick with alternative methods to accruing Avios”.

Your call of course but that might help your decision.

• This reply was modified 54 years, 4 months ago by .

[Mouse]

You can’t really count the 2-4-1 as a benefit of buying the avios. You could just as well trigger it by buying vouchers for a retailer that you would eventually use them in, which is effectively a zero-cost alternative.

[PB2]

Thanks for the thoughts. The vast majority of my card expenses are in Euros (on Euro credit cards) so I was looking at the Avios purchase as a way of increasing my GBP spend but into Avios that can be spent anywhere (rather than say GBP vouchers that would need to be spent in the U.K.).

[Mouse]

PB2 wrote:

Thanks for the thoughts. The vast majority of my card expenses are in Euros (on Euro credit cards) so I was looking at the Avios purchase as a way of increasing my GBP spend but into Avios that can be spent anywhere (rather than say GBP vouchers that would need to be spent in the U.K.).

I guess you could in theory buy vouchers in Euros for places you would spend them, so you could count as a benefit in your calculation the £100 or so of FX fees you avoid by being able to spend that money in pounds. But the fundamental calculation stil has to be do you get more than 1.07p per avios in value when you use your avios (including the benefit of 2-4-1s) and if so then it makes sense to buy if you know you will use them soonish. I have done so in the past and been happy about it so I’m not trying to put you off.

[tazzy]

I don’t think you can access first with the new 2-4-1.

[The real Swiss Tony]

My take – insanity. Cigarette pack calculations…

For £2k you can get J r/t to the US. Probably an extra £500 to go one way in F

So £5k in cash and earn 20k miles, worth another £200. £4800 net spend.

Or otherwise spend £3200 on miles, a further £1200 on TFCs, you need to factor in the £295 for the voucher and then play a game of hunt the award availability. £4695 net spend.

The surplus miles then have to be offset against the lack of flexibility and what product BA will serve up on the day. Granted that could be a coin toss with any airline right now, but BA are hardly covering themselves in glory.

[TGLoyalty]

Unless you actually have a use for them right now which is better value than the cash alternative this sounds like a crazy idea

Spend the £3k on fully refundable hotels via Expedia or something then cancel as soon as the voucher is in your account.

[Hbommie]

I believe that your math is a little off, it wouldn’t cost’ the full 300,000 for one return flight to the US with a 241.

[aq.1988]

I can’t say I have done this before, but could you not send someone you know and trust the £3k for ‘goods and services’ on PayPal, and they then send you the money back after the voucher has posted? But they send it back ‘friends and family’. You’d obviously have to swallow the £100 or so fees for doing so.

The reason I’m not saying to send the money F&F in the first instance, is in case Amex categorise it as a cash advance? Maybe someone else can confirm how Amex treat PayPal payments in F&F.

That way you don’t tie up £3k plus buying Avios you dont have an immediate use for, as it seems you would have enough to make your trip without these additional avios?

[memesweeper]

If you are building a business case for buying Avios for triggering a companion voucher I’d work on a valuation of 0.8p, as this is a realistic exit value. Many people, myself included, are struggling to get anything more than that in flight redemptions, even with long haul and club/first in mind. When speculatively buying I’d definitely low-ball the valuation. Then the maths is:

Cost of BAPP + (cost of Avios – value of Avios) = cost of companion voucher

Depending on your anticipated use of the companion voucher, you can then make a decision. If it’s a close call, but you value flexibility in bookings, favour the buying and booking with Avios route, if you value TPs then favour booking for cash.

[yonasl]

tazzy wrote:

I don’t think you can access first with the new 2-4-1.

You are getting confused with the Barclays voucher.

[Angelamc11]

Regards PayPal, I send £400 per month to my childminder through F&F and it’s always earned avios, and not seen as a cash payment.

[John]

aq.1988 wrote:

I can’t say I have done this before, but could you not send someone you know and trust the £3k for ‘goods and services’ on PayPal, and they then send you the money back after the voucher has posted? But they send it back ‘friends and family’. You’d obviously have to swallow the £100 or so fees for doing so.

The reason I’m not saying to send the money F&F in the first instance, is in case Amex categorise it as a cash advance? Maybe someone else can confirm how Amex treat PayPal payments in F&F.

That way you don’t tie up £3k plus buying Avios you dont have an immediate use for, as it seems you would have enough to make your trip without these additional avios?

Do you trust PayPal to give you back your £3000 easily? If it was so easy why wouldn’t anyone just spend £350 on Paypal fees to buy a 241

[AJA]

How many Avios do you currently have? Im slightly confused with this sentence:
“BUT…it’s come to a point where essentially without buying 300k for £3215 (during the 50% bonus window) I won’t hit the £10k on my BAPP”

Are you saying you are going to buy exactly 300k Avios for £3215? If so how do you work out that they have a value of 1p each? They will end up costing you 1.07p but in reality are only worth 1p at best and have a floor value of 0.8p when converted into Nectar points. So you’ll immediately be losing between 0.07p and 0.27p and still have to find availability in First and more likely Club World where you will spend 118k of your stash plus at least another £1,200 in BA charges.

So in fact you will end up spending near enough £4,415 to buy your 2 tickets using Avios which is not terrible value at £2,2k each.

I also concede you’ll be getting a 2-4-1 voucher so will “save” 118k of Avios on the companion ticket and you will still be left with 182k Avios which while nice to have will only be useful if you actually will spend them.

Wouldn’t it make more sense to compare your cost of purchasing the Avios versus the cost of the equivalent cash flights you intend to take?

Could you buy your desired tickets for less than or more than £4,415 as calculated above? Bearing in mind you’d also earn a fair few Avios and get TPs on the guaranteed cash flights and would trigger the voucher anyway.

Given cash prices of tickets spending £3,215 on 300k might actually be the way to go but I wouldn’t be buying unless I was certain I could get the flights using Avios.

On the other hand I would consider buying a few CE flights that I’d actually use costing £3,215 to trigger the 2-4-1.

At the end of the day it’s your decision. It’s not totally ridiculous but not something I’d do.

[Rob]

PayPal friends and family is not a cash advance. However, PayPal is shit hot at locking accounts and freezing funds if there is the slightest whiff of money laundering and you don’t want to go down that wormhole.

Most people just booked a fully flex BA flight and cancel it 48 hours later for a £15 fee to trigger a 241 ……

[trader363]

I would recommend booking a £3,000 hotel on hotels.com (fully refundable) for say, 6 months time.
It gives you 6 months to spend 3k on your card. When you do have hit 13k, then you cancel your reservation and you’re still at 10k

[PB2]

Thanks for all the replies, really helpful.

One thing I never considered was spending the money, earning a voucher and then refunding the purchase. Having heard stories of people having Amex welcome bonuses rescinded if they later get a refund on the qualifying spend, taking them back below the minimum spend level, I always assumed something similar would happen with the 241 – but obviously not by the sounds of it. Food for thought!

When referring to 1p value per Avios, that would always be my calculation when making a decision eg. choosing what combination of cash/Avios to select for a reward booking. At the moment I have about 200k Avios, with a fair few expected from trips later in the year, from which I expect to hit Gold (so TP from extra trips not so important for the rest of the year). I’m very flexible on dates over winter so not too worried about finding availability either.

I fully accept that paying 1.07p per Avios is slightly worse than the standard valuation, but essentially my logic is:

Spend £3215 for the 300k Avios. Trigger 241 with no issues about refunds etc. Spend 118k Avios and £1600 TFC on a First out, C Suite return, for 2 people. Spending £10k on non-BA spend with the BAPP card earns £150 worth of Avios – so ignoring the fact that much of the spend is BA (but not the point purchase for example), let’s call the cost of the card £295-£150 = £145. So the return so far, for 2, costs £3215 + £1600 + £145 = £4960, £2480 each for a flexible return ticket. I doubt you would find a (less-flexible) cash fare for much less even taking into consideration the value of Avios earnt on a cash ticket (direct on BA departing LHR). Assuming we can make it work with a long enough stop over to enjoy the Concorde Room on the outbound, it would actually help to start the journey ex-MAD too, so further reducing the TFC.

After this, from the 300k Avios, I would still have 182k Avios remaining to spend going forward. Whether it be on last minute European flights or rewards on other airlines. Using the 1p value, that’s £1820 worth of Avios still in my pocket, from the £2480 each spent on the return tickets. And subject to devaluation risk, I’d have no problem making £1820 or greater use of those points.

Thanks again for your ideas!

[aq.1988]

John wrote:

aq.1988 wrote:

I can’t say I have done this before, but could you not send someone you know and trust the £3k for ‘goods and services’ on PayPal, and they then send you the money back after the voucher has posted? But they send it back ‘friends and family’. You’d obviously have to swallow the £100 or so fees for doing so.

The reason I’m not saying to send the money F&F in the first instance, is in case Amex categorise it as a cash advance? Maybe someone else can confirm how Amex treat PayPal payments in F&F.

That way you don’t tie up £3k plus buying Avios you dont have an immediate use for, as it seems you would have enough to make your trip without these additional avios?

Do you trust PayPal to give you back your £3000 easily? If it was so easy why wouldn’t anyone just spend £350 on Paypal fees to buy a 241

I mean, it wouldn’t be PayPal that would be giving him his money back, it would be his friend (via PayPal), but would obviously have to be someone he trusted with that large amount. Not sure why PP would stop his friend paying the money back, unless there was a hold or limit on the account (which I guess could be true), but as a one off, I’d be surprised. And then he could withdraw to a bank account.

But, I’m sure doing this regularly could raise eyebrows at Amex, and would be considered manufactured spend. But as one of the comments mentioned, they send their childminder £400pm using PayPal F&F (so without any fee), and receive points for it.