CNet reports eBay has a new program which allows consumers to trade frequent flyer miles and other loyalty credit for dollars stored in a PayPal account. The Anything Points program looks really cool, right? Especially since people have stopped flying as much, what with the economy and the Iraqi war and SARS...
I was really excited when I first read about it, but a closer look reveals it isn't a great deal. The exchange rate for frequent flyer miles is 1.38 miles / point, and points are worth $.01, so this is $.0072 / mile. (10,000 miles are worth $72.) Frequent flyer miles are generally considered to have a value between $.02 and $.03 when used for flying, so this is a big discount. Furthermore, exchanging points requires that you join a program at points.com which has an annual fee of $20. I currently have about 60,000 miles at American Airlines; if I exchange them and pay the annual fee, I net $410. But if I fly to the East Coast and use these miles to upgrade from coach to business, they'll be worth $1,200. Not a good deal at all!
Note: I really, really hate it when people have a service and bury the fee. I had to get all the way through two different sign-ups (one for eBay, one for points.com) before the $20 fee was revealed, and even then it was obviously de-emphasized. This makes no sense to me, and is actually very un-eBay-like. People are going to find out, and when they do they're going to be upset. Why not just say it: this service costs $20/year? It is what it is.