Q – 11.1.25 – I have a high-level Chase Sapphire card and I earn miles which I use on American Airlines for free tickets to Europe and upgrades in the States. But no one ever really explains how the system works. Am I really earning something tangible? It seems as though I am.
A – It is a bit complicated, and it is constantly changing – so let’s simplify what is really happening. You are earning something tangible. Visa is purchasing miles from American to give you as a partial repayment of some of the profits they are earning based on your use of the card. the price has generally been between 1.8 to 2.5 cents per mile. Visa then takes the miles they have purchased and doles t hem out as rewards to customers. And here is the secret rarely discussed: In recent years, several major airlines have earned as much selling miles to credit card banks as they have selling airline tickets to consumers.
