Update: 12/17/21 3:34 p.m. Central: American Airlines says the deal is being honored

Update: 12/14/21 4:48 p.m. Central: Now the site says this about the promotion,

The 5X AAdvantage promotion offer has reached its cap and has ended.
We hope you continue enjoying earning miles with participating merchants in SimplyMiles.

Update: 12/14/21 1:53 p.m. Central: The message about the 5x promotion being honored ‘only through 12am Eastern on the 13th’ is no longer on the SimplyMiles website. American Airlines tells me,

The SimplyMiles 5X promotion has reached its cap due to an overwhelming customer response. We are in discussions with Mastercard to ensure our customers receive all the promotional miles offered.

Looks like we’ll have to hold our breath a bit here but they understand the issue.

Update: 12/14/21 1:37 p.m. Central: American has a banner up saying the offer is over. The meaning of the banner is not 100% clear to me, whether they mean to say all Monday transactions will be honored for the bonus and that Tuesday transactions will not be… or whether they’re saying that Monday transactions will not be. I have asked another person who should be in office to clarify.

Regardless they do seem to be saying that ‘while supplies last’ means that they were advertising a bonus after they stopped honoring it (and indeed, depending on the meaning of the language here, that they may not honor some transactions that occurred even before they confirmed how the promotion would work).

Update: 12/14/21 12:34 p.m. Central: The SimplyMiles website was down for a little while earlier today. Now it’s back and the 5x offer no longer appears. While I’d guess that transactions today might still be honored for the 5x bonus, with the offer gone from the page I wouldn’t count on it and assume it is over. (The person at American who has been confirming elements of this promotion for me is out of office today.)

Update 12/13/21 7:43 p.m.: Frequent Miler notes that many more accounts have had offers added to them, and a lot more now have the 40 miles per dollar Conservation International offer. If you couldn’t do this before, you might want to consider it now.

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I wrote last night about what’s probably the deal of the year, an opportunity to buy American AAdvantage miles at just over $0.004 apiece. A lot of readers are nervous about whether the deal will be honored because it seems too good.

SimplyMiles is like an online shopping portal – earn miles for taking advantage of offers – but instead of going through a link that tracks your purchase, you spend money with a Mastercard credit card that you’ve registered with SimplyMiles.

• There’s an offer of sextuple miles (regular miles plus a bonus of 5 times the usual miles) that runs through December 27, but could be pulled earlier.

• There are offers that earn as much as 40 miles per dollar. The most lucrative (not targeted to everyone) is donating to an environmental charity through Mastercard.

• 40 miles per dollar plus 5x the usual miles means earning 240 miles per dollar or buying miles at $0.004167 cents apiece.

• Since it’s a charitable gift there’s a whole separate discussion on whether you’re entitled to a tax deduction (whether or to what extent the miles received count as a quid pro quo that would reduce your deductibility). So some will argue their cost basis is even lower here, as I’ll discuss below.

Is This Offer Real? Will It Be Honored?

I reached out to American Airlines and asked to confirm that the offer isn’t “going to be considered a mistake of some sort, will the offer be honored as-advertised – that members completing transactions will receive 6 times the advertised miles?”

For avoidance of doubt I even made clear this meant “a charitable donation under an offer of 40 miles per dollar should earn 240 miles per dollar, or a return of 1 mile per $0.0042 spent.”

According to American Airlines, “the offer is as described.” It is not a mistake. I’m told “This is an offer from Mastercard and it will run until Dec. 27 subject to availability.” They’re checking for me “how will they inform members if the promotion ends before Dec. 27.”

I was afraid maybe the offer was real, the 40 miles per dollar donation could be a typo? They confirm “no, it’s not a typo.”

Is This Offer Really For A Bonus Of 5 Times The Usual Miles?

The offer seems really clear to me, but several readers have asked about it.

• A similar offer was made two years ago, and that’s how it worked. Members got six times the usual miles.

• They offered a ‘5x’ bonus not a bonus of 5 extra miles per dollar

• A bonus of 5 extra bonus miles per dollar wouldn’t even have made sense, since many offers are for a fixed number of miles – e.g. earn 1500 miles if you spend a certain amount of money. The offer wouldn’t be ‘earn 1505 miles under this promotion’ in that case.

• American actually described the offer pretty clearly, in a promotional email:

  As a special holiday bonus, through December 27 or while supplies last, earn an additional 5x American Airlines AAdvantage bonus miles on every offer site-wide. For example, if you earn 100 miles on a purchase of $30 or more, then you will actually earn 100 miles + 500 bonus miles for a total of 600 miles.

Nonetheless the concern about the number of miles you’d receive is why I was explicit about the math in my question to American, asking whether this would be honored. And American says, “MC will fund the original 40 miles per dollar and then it would be part of the 5X offer, which would be an additional 200 miles per dollar donated.”

How Can You Really Max This Out?

You can earn miles through SimplyMiles when paying for an offer using a Mastercard linked to your profile. I’m not telling anyone to spend their full credit limit on this offer! Goodness knows American AAdvantage miles aren’t worth what US Airways miles were worth in 2009 when I really maxed out on their holiday shopping promotion (TrackItBack) at a net cost of a little over 4/10ths of a cent per mile.

But look at it this way,

• Qatar Airways QSuites to the Maldives currently costs 70,000 miles one way – that’s $291.67 with this offer (+ taxes)
  
• Japan Airlines first class between the U.S. and Tokyo costs 80,000 miles one way – that’s $333.33 with this offer (+ taxes)
  
• Air Tahiti Nui business class between the U.S. and Tahiti costs 80,000 miles one way – that’s $333.33 with this offer (+ taxes)
  
• Cathay Pacific first class between the U.S. and Southeast Asia costs 110,000 miles on way – that’s $458.33 with this offer (+ taxes)

Let’s assume award prices go up. A lot. How much deep deep discount travel can you prepay?

In fact, let’s say you wanted to fly to Australia and American was charging an outrageous 195,000 miles one way for business class… that’s still just $812.50.

Do You Get A Tax Deduction Also?

There are some amazing value offers at SimplyMiles with this promotion right now. I rarely paid SimplyMiles enough attention. This changes that. There are some good deals for instance at Wine.com, as well as for magazines. But the one that is getting the most attention is the Conservation International donation.

There are readers that have donated $20,000. There’s real money on the table here. Here’s what Mastercard says about taking a deduction for your gift,

The receipt of miles may reduce the tax deductibility of your contribution, please seek a financial advisor for tax related questions.

When you receive something of value in exchange for your gift that’s called a quid pro quo contribution. You’re really giving the charity some money for goods and services, and some money for a gift.

In one IRS example, “if a donor gives a charity $100 and receives a concert ticket valued at $40, the donor has made a quid pro quo contribution” and gets to deduct $60 of their gift. The ‘value’ of something in this example is its market value, what a willing buyer and seller would pay for it.

Are miles being given to you in exchange for your gift something of value? You don’t really own the miles, American AAdvantage does, but probably yes. How much are the miles worth?

Bask Bank reports miles earned from their savings account to the IRS at a value of 0.42 cents per mile. Valued that way, it pretty much wipes any possibility of a deduction.

• $10,000 donated would yield 2.4 million miles
  
• Bask Bank’s valuation says you receive $10,080 in value back in exchange for your gift
  
• Therefore nothing is deductible

You’d have to take the position that the miles didn’t qualify as quid pro quo value under IRS definitions to take a charitable deduction and reduce your cost basis on the miles even further.

Are There Any Cautions?

The deal can be pulled at any time, so make sure it is live and still being advertised when you use it. Take screen shots. We don’t know when it will be pulled and we don’t yet know how they intend to notify that it’s being pulled.

Also don’t spend money prepurchasing travel that you cannot afford to spend on travel, no matter how good a deal this is. Even if you envision living in first class cabins this way, you’re still going to want to be able to make rent.

If This Offer Ever Comes Back It’ll Be Even Better

Starting in January miles earned with SimplyMiles will count as Loyalty Points, which is how AAdvantage elite status is earned. This excludes bonuses (the 5x bonus wouldn’t count). But earning 40 miles per dollar with a donation would.

A $5000 donation would earn Executive Platinum status. An $18,750 donation would earn ‘750,000 point status’ for level 5 Choice Rewards (like confirmed international upgrades) provided you reach 30 flight segments to qualify for Choice Rewards.

And Loyalty Points are going to become the tie-breaker for how upgrades are given. You’d earn Executive Platinum and be at the time of pretty much every upgrade list for a year.

Sadly there’s no such thing as Loyalty Points that you can earn yet, and this offer won’t make it into 2022. But they’ve done lucrative bonuses with SimplyMiles before, and those bonuses will be even better in the future.

And if you’re using an American AAdvantage co-brand MAstercard for this, and your statement close date isn’t until January, you should ultimately earn Loyalty Points for the purchase price (at 1 point per dollar). So there’s that. I wouldn’t hold on on transactions in order to get into the next month’s statement, however, since the deal could be gone.