For quite a few years now, I’ve been manufacturing Delta Diamond elite status through credit card spend. That has required a huge amount of spend ($250,000 per year), but the rewards have been huge too. Each year prior to the pandemic, for example, I’ve bought cheap international economy tickets and used the Global Upgrade certificates available to Diamond elites to upgrade to lie-flat Delta One. This year, though, Delta has made those certs less valuable (for details, see: Delta Downgrades Upgrades) and so I’m rethinking my elite status plans…
Earlier this week I updated my estimates regarding Delta Elite status. If elite status could be bought, how much would one reasonably pay? The result was $500 less for Delta’s top tier Diamond status than before. My new estimate came to $2,500 (vs. the old $3,000). But that’s the estimated amount worth paying to move from no status all the way to Diamond status. I’m in a situation now where Platinum status is practically automatic (more on that in a bit) and so the meaningful estimate for me is the value of moving from Platinum to Diamond. In my earlier post, I estimated that it is worth paying $1,500 to move from Platinum to Diamond. This gives me a metric by which I can compare the cost of manufacturing $250K spend (which is the amount required for Diamond status). Is the net cost to me less than $1,500? If so, I probably should keep manufacturing Diamond status. If the cost is more, I should stop.
Throughout the pandemic, Delta has rolled over elite status and Medallion Qualifying Miles (MQMs) each year. But I kept manufacturing Diamond status anyway and so I have a huge number of rolled-over MQMs: over 300,000. This means that if I spend $25K on a Delta Platinum or Delta Reserve card in order to earn a Medallion Qualifying Dollar (MQD) waiver, Delta will take 75,000 of those MQMs and give me Platinum status. I could do that for four years without earning any more MQMs. In reality though, I will earn MQMs (both from the credit card spend and from flying) and so I could realistically get Platinum status each year with hardly any fuss for many years. With 300K+ banked MQMs, I don’t have much need to earn more MQMs. So while in the past I’ve highly valued earning MQMs, I don’t highly value earning more today.
In addition to having lots of MQMs rolling over, I also have lots of redeemable miles at my disposal. I have about half a million in my account, and my wife has 1.3 million. I’m mentioning that here not to brag, but to explain another reason to question whether it makes sense to manufacture Diamond elite status through spend. One of the results of spending $250,000 on Delta credit cards each year is that I earn a huge number of redeemable miles in the process. In the past I’ve valued those miles at least at 1 cent each and sometimes as high as 1.3 cents each. But with so many miles in reserve, I don’t value earning more miles as highly. Would I pay 1 cent per mile to get 250,000 more miles? No, I wouldn’t. I don’t know if we’ll ever use up the miles we already have let alone need more. So, how cheap would miles need to be for me to want more? I’d say .8 cents per mile. If you consider that miles can be used for a penny each towards airfare, then buying those miles at .8 cents each is like locking in a 20% discount (or better for times when you find good award deals).
OK, with the above rambling out of the way, we can get into the math. Let’s assume that I can very easily manufacture spend (i.e. put spend on credit cards and get the money back) at a 2% cost. With that assumption, it’s easy to calculate my net cost of earning Diamond status:
- Need $250K spend – $30K = $220K spend. Assume that I’ll put $30,000 spend on a Delta Reserve card each year just to keep Platinum status. In that case, the incremental cost to earn Diamond status is the extra spend needed to get to $250,000
- $220,000 spend at 2% cost = $4,400. This is the incremental cost of spending my way to Diamond status.
- $250K spend on the Delta Reserve Business card = 300,000 redeemable miles. The Delta Reserve Business card has this feature: After you spend $150K in a calendar year, you will earn 1.5X miles per dollar on eligible purchases for the rest of the year. So the first $150K spend will earn 150K miles and the remaining $100K spend will earn another 150K miles. There are other arguably better ways to play this that would result in more MQMs, such as spending $120K on the Delta Reserve and then downgrading to the Delta Platinum to do another $130K spend (ideally with purchases of $5K or more in order to earn 1.5x for most of that); or by spending across multiple cards (personal and business) in order to earn even more MQMs; but let’s keep this simple and assume just one card without any upgrade/downgrade shenanigans.
- I’d pay $2,400 for 300,000 redeemable miles. As discussed earlier in this post, even though Delta miles are worth at least 1 cent each, I don’t need more and so I’d have to get a good discount to want to buy them. At the purchase price of .8 cents per mile, 300K miles would cost $2,400.
- $250K spend on the Delta Reserve Business card = 60K MQMs. One could do even better by putting spend across two Delta Reserve cards or by maxing out the MQMs on the Delta Reserve, then downgrading to Platinum and maxing out the MQMs that can be earned there. But, as discussed earlier, I have tons of rolled over MQMs and so I’m not going to assign a value here toward earning more.
- My net cost for Diamond status = $2,000 ($4,400 – $2,400).
- $2,000 net cost > $1,500: Don’t do it. At the beginning of this post I wrote that I’d be willing to pay up to $1,500 for the incremental benefit of Diamond status over Platinum status. But, as you can see here, my estimated net cost is $2,000.
The numbers tell me not to do it. And so, this year, I won’t do it — at least, not for myself. My wife is already about half way through the needed spend to re-up her Diamond status and so we’ll go ahead and finish that spend for her this year. Then, next year, we’ll see how things go. The good news is that we’ll still have her Global Upgrade certificates to use. Plus, when we fly together domestically, we’ll be upgraded based on her status.
One thing I’ll be watching closely is what happens after January 31 2023. Delta probably won’t roll over everyone’s elite status again. And so, I predict that there will be far fewer top tier elites competing for complementary upgrades. Plus, if Delta lets old upgrade certificates finally expire on January 31st, there should be less competition to use those certificates. If this all turns out to be true, then the subjective value of Delta Diamond status should increase. If we find that my wife’s Diamond elite status gets us more upgrades than before, we might then reevaluate my approach. Conversely, if we find that her Diamond benefits don’t prove to be significantly more valuable than my Platinum benefits, we’ll decide whether she too should stop manufacturing Diamond status.
- Manufacturing Delta elite status in 2020 and beyond
- What is Delta elite status worth (now that Global Upgrade certs are worth less)?
- Delta Downgrades Upgrades (but there’s good news too)