Interest on Your Miles Balance: In My Dreams!

Imagine checking your British Airways Club account and seeing not just your usual static Avios balance, but a little notification: "You've earned 427 bonus Avios this month in interest." Sounds absurd, doesn't it? But when you think about it, loyalty programmes are very similar to bank accounts.

You deposit value through spending, you maintain a balance, and you withdraw when you need something. There's just one thing missing: whilst your savings account pays interest, your miles balance sits there doing absolutely nothing but slowly depreciating through inflation and devaluation. What if airlines actually paid interest on the miles we've loyally accumulated?

Why Interest on Miles Would Be Brilliant

First, it would reward loyalty in a meaningful way. Members who maintain large balances (often the most dedicated customers) would see their commitment recognised with compounding returns. A 2% annual interest rate on 100,000 Avios would yield 2,000 bonus points per year. Not life-changing, but certainly appreciated.

More importantly, interest would offset the very real problem of devaluation. Airlines regularly increase the number of miles required for redemptions, effectively eroding the value of your saved points. British Airways has recently devalued their award chart, what cost 100,000 Avios only a couple of weeks ago might now cost 110,000. Interest wouldn't eliminate this problem, but it would soften the blow, giving savers a fighting chance to keep pace with points inflation.

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From a psychological perspective, interest would encourage engagement with loyalty programmes. Members would have a reason to check their accounts regularly, to understand their earning rates, and to feel like their miles are actually working for them rather than sitting dormant. This increased engagement typically translates to increased spending with programme partners, creating a virtuous cycle.

Finally, it would bring loyalty programmes more in line with modern consumer expectations. We earn interest on cash, returns on investments, and even cashback on credit cards. Why should airline miles be any different? The points represent real value. British Airways holds billions worth of unredeemed Avios. Paying even modest interest seems only fair.

Why It Will Never Happen

Unfortunately, the dream of earning interest on miles runs headlong into the harsh realities of airline economics. The fundamental problem is that miles represent a liability on airline balance sheets. Every Avios or Virgin Point issued is a future obligation, in this case its a seat the airline must provide without receiving full cash payment. The last thing airlines want is for these liabilities to grow automatically through interest payments.

Consider the numbers: British Airways has millions of Club members holding billions of Avios. Even a modest 1% annual interest rate would create tens of millions of additional Avios that the airline would need to honour. That's tens of millions in additional liability with absolutely no corresponding revenue. For businesses operating on notoriously thin profit margins, this is simply a non-starter.

There's also the uncomfortable truth that airlines actively benefit from miles sitting unused. "Breakage" is the term for points that expire or go unredeemed. As you may guess, this is a significant revenue source. Some estimates suggest 10-20% of issued miles never get redeemed. If members had interest as an incentive to maintain and grow their balances, they'd likely be more engaged and more likely to redeem, reducing this profitable breakage.

Interest = Happiness

Airlines also rely on miles devaluation as a pressure valve. When redemption costs for airlines become unsustainable, they simply increase award pricing. Interest would make this harder to justify and would create member expectations that their miles should maintain value, and expectation that airlines have no interest in meeting.

Finally, there's no competitive pressure to offer interest. No major airline does it, so no airline loses customers by not doing it. It would take a bold disruptor to introduce such a feature.

Conclusion

Interest on miles balances would be a genuine game-changer for loyalty programme members, transforming our points from slowly depreciating assets into something that actually grows over time. It would reward savers, offset devaluation, and bring airline loyalty into line with other financial products. But wanting something and getting it are two very different things. Airlines have every incentive to keep miles as static liabilities that depreciate through inaction and devaluation, not growing assets that compound in our favour. So whilst we can dream of logging in to see our Avios balance ticking upward month by month, the reality is that our miles will continue doing what they've always done: sitting there, until we finally decide to spend them.

Use them whilst they still have value, because interest on your balance? That's staying firmly in the realm of fantasy.

Sam

Points Well Made is a passion project of Sam and Helena with a loyal following. If you like what we do, and wish to help us continue to create the content you love, please consider buying us a Kofi, or subscribing monthly. Your help is greatly appreciated. Thank you.