Liquidating tiny-denomination prepaid debit cards

If you read yesterday's post and rushed out to buy up a slew of 5% Back Visa Simon Giftcards, and then triggered 5% cash back on each of them, you are probably feeling pretty good about yourself.

You're also probably realizing that you've got a drawer full of $25 Visa debit cards, and may need some suggestions for liquidating them. I'm here to help.

Buy gift credit

If there's a particular world-swallowing online merchant you do a lot of shopping with, you can simply use your $25 debit cards to reload your gift card balance.

This goes for any merchant where you have a consolidated or well-organized method of keeping track of gift credit — Uber and Starbucks spring to mind, with their beloved smartphone apps.

If you are buying gift credit at a merchant where you already reliably spend money, this is a good way to convert prepaid debit cards into cash savings, as long as your swollen gift card balance doesn't make you spend more money than you otherwise would have.

Pay bills

I don't personally have very many bills, but I'm assured by experts that most people have a great many bills. They might be:

  • Phone;
  • Internet;
  • Cable;
  • Walker (dog, cat);
  • Insurance (homeowner's, renter's, car, health, dental, long-term care, yacht, RV, flood, drought);
  • Utilities (electric, gas, hot water, cold water, lukewarm water, elevator, heating oil, cooling oil).

Some of them may accept debit card payments at face value. Even if you usually make these payments quarterly or annually, you may be able to prepay them and have the balance roll over from one billing cycle to another.

This is a basically excellent idea, but like buying gift credit, you will quickly run into problems when you're producing more $25 Visa debit cards than you need to cover even your most speculative bill payments.

Liquidate as usual

Of course, these are PIN-enabled Visa prepaid debit cards, so it's also perfectly possible to liquidate their (small) balances as usual: by buying money orders or making bill payments at any merchant that allows those services to be paid for with PIN-enabled debit cards.

The problem with this approach is that while it's likely to be the cheapest in out-of-pocket cost, it's likely to be the most expensive in opportunity cost, because the same trips could be used to liquidate higher-denomination (and more profitable) PIN-enabled debit cards instead. This is the issue I've referred to in the past as "liquidation bandwidth."

If your local merchants don't throttle payments, that may not be an issue for you: you can liquidate these tiny-denomination cards side-by-side with higher-denomination cards. But if you're limited to 4 debit card swipes, or a single swipe, then you'll likely be better off swiping a higher-denomination, rather than lower-denomination, card.

Pay up

It's not nearly as sexy as loading up a Starbucks card or settling a decade's worth of car insurance payments, but there are also ways to simply pay to liquidate small-denomination debit cards. You can pay many kinds of bills online using Plastiq at a cost of 2.5% (61 cents on a $24.39 payment).

If you enroll using my personal referral link you also earn "Fee-free dollars" which allow you to make eligible bill payments without paying any fees at all — I get 400 fee-free dollars (16 $25 cards!) and you get 200 fee-free dollars (8 $25 cards!).

Plastiq has one key advantage over other bill payment services for liquidating these tiny-denomination cards: it doesn't have a minimum fee. When liquidating high-denomination cards the objective is to have a low, flat fee. That's one reason online quarterly tax payments are popular — at least among self-employed bloggers who have to make online quarterly tax payments anyway!

On the other hand, when liquidating low- or tiny-denomination cards, it's much preferable to have a fixed percentage fee no matter how high it is.


The good news is that 5% Back gift cards are capable of producing almost pure profit, no matter how much you have to pay to liquidate their residual balances.

The bad news is that once you have a stack of cards with residual balances, you really should put in a little bit of time to figure out the cheapest, most efficient way of liquidating those balances back to cold hard cash.

My experience with free 5% Back Visa Simon Giftcards

A number of bloggers have mentioned some current promotions going on related to 5% Back Visa gift cards. One potential money-making approach is to buy $500 cards through GiftCardMall for $480.95 each. That is unfortunately limited by GiftCardMall's frequent and inexplicable flagging of large gift card orders.

Another current opportunity is purchasing 5% Back Visa Simon Giftcards in-person at Simon Malls locations. The cards are currently being sold with no activation fees at many, if not most, Simon Malls in the United States.

My local mall finally restocked today, so I headed down to find out whatever I could.

5% Back Visa Simon Giftcards really are free this week

You never know when this kind of promotion comes around what kind of limits or restrictions will be placed on purchases. At my Simon Mall, the guest services manager was happy to ring up my order exactly as usual, while waiving the activation fee. Most Simon Malls limit gift card purchases to a total order amount of $10,000, including activation fees. Since activation fees are waived I assume that means you would be able to purchase twenty 5% Back Visa Simon Giftcards for a total of $10,000.

The promotion runs through Sunday, December 11, 2016.

5% Back Visa Simon Giftcards are PIN-enabled as usual

The Visa gift cards sold at Simon Malls are issued by Metabank, with a default PIN of the last four digits of the card number. 5% Back Visa Simon Giftcards are no exception, and are fully functional Metabank PIN-enabled debit cards. My firm expectation is that merchants which don't accept Metabank PIN-enabled debit cards will not accept these either.

Debit purchases at CVS don't require the last four digits of the card number

There are a lot of CVS store locations in the United States. While the CVS point-of-sale terminals do not instruct cashiers to compare customers' identification with the name on their credit card, there are no doubt particular cashiers who, out of an abundance of caution, will try to compare the name on your card with the name on your identification documents.

However, when making a PIN-based purchase at CVS, the system does not prompt cashiers to enter the last four digits of the debit card's number, so there's no occasion for them to notice that your debit card doesn't have any name embossed on it, let alone your name.


I'm sure most of my readers with convenient access to Simon Mall locations have already begun experimenting with these cards, so won't find anything too groundbreaking here. On the other hand if you've been waiting to dive in until you were more confident that 5% Back Visa Simon Giftcards were as easy to liquidate as whichever products you're currently using, I hope this post is reassuring.

Even if you don't take advantage of the 5% Back feature of these cards (which can be cumbersome), this deal is just about as close to free as manufactured spend gets these days, and I have every intention of making the most of it.

"The Black Swan" is not a very good book

This is a review of "The Black Swan" by Nassim Nicholas Taleb. You can find all my previous book reviews here. If you're interested in buying a copy, I hope you'll consider using my Amazon Associates referral link.

"The Black Swan" captured the imagination of the reading, writing, and investing public the moment it was published in 2007, and sprang to even greater prominence as the global financial crisis ran its course over the following years. While I'd been looking forward to reading the book for some time, last month I finally found the time to plow through it.

I was disappointed.

"The Black Swan" is a book about one interesting and true observation

Taleb has one main point, which he approaches from a variety of angles: the impulse to apply Gaussian (bell curve) statistical distribution models to real-world phenomena is based on the ease of applying them, and not on their accuracy in describing those phenomena.

I took introductory statistics in college, and in my experience this is precisely correct: introductory statistics professors teach statistics as if the goal of the science is to acquire a large enough sample to discover the correct Gaussian distribution. If your sample doesn't follow a bell curve distribution, then you need to collect more samples until you discover the true, underlying bell curve.

Taleb argues convincingly that there is no reason to believe "social" phenomena have bell curve distributions. Wealth and income are not physical phenomena which become increasingly rare the further you move from the average; on the contrary, an arbitrarily large amount of income or wealth can be concentrated among an arbitrarily small number of people.

Nassim Taleb is not entirely hinged

Once you realize that Gaussian distributions are not entirely, or even not particularly, applicable to the real world, then it's natural to draw unusual conclusions.

If stock market performance is random but not Gaussian then "unusually" large stock market moves will occur far more often than would be predicted by models based on the bell curve (see: 2000 and 2008).

If success in business is random but not Gaussian then risky bets will produce extreme wins and losses more often than a bell curve would predict, so exposing yourself to those extreme wins while protecting yourself from extreme losses (Taleb's so-called "barbell" approach) will produce higher returns than a consistently mediocre portfolio.

Unfortunately, Nassim Taleb does not confine himself to his area of obvious expertise: trying to profit from large advantageous market moves while protecting himself from large, irrecoverable losses.

Taleb thinks black swans are everywhere

Taleb accidentally makes an interesting point about the difference between predicting the behavior of individual subatomic particles (completely impossible) and predicting the behavior of large grouping of subatomic particles, i.e., physical objects. He asks why, if his coffee mug is composed of subatomic particles moving in unpredictable ways, his mug doesn't leap off the desk into the air. The answer, of course, is that subatomic particles in large groups behave according to extremely predictable rules. Mugs don't jump off desks.

What Taleb gets wrong is that more human institutions are like coffee mugs than like subatomic particles.

For example, in chapter 11 Taleb advances his idea of "academic libertarianism:"

"[T]he problem with organized knowledge is that there is an occasional divergence of interests between academic guilds and knowledge itself. So I cannot for the life of me understand why today's libertarians do not go after tenured faculty (except perhaps because many libertarians are academics). We saw that companies can go bust, while governments remain. But while governments remain, civil servants can be demoted and congressmen and senators can be eventually voted out of office. In academia a tenured faculty is permanent — the business of knowledge has permanent 'owners.' Simply, the charlatan is more the product of control than the result of freedom and lack of structure."

Academia, of course, is an educational system much more like a coffee mug than a subatomic particle: the objective of higher education is to educate at a level as consistently high as possible. When people don't have control over the quality of education they receive, making it as consistent as possible is a perfectly reasonable goal.

Taleb has nothing to say about the large, functional systems we depend on

The subtitle of Taleb's book is "the impact of the highly improbable." The tendency since the book's release is to refer to any unforeseen event as a "black swan." This tendency is largely Taleb's fault, because while he has since become extremely protective of the term, in the actual text of the book it's barely defined at all. Taleb says a black swan must be "rare, impactful, and predictable in retrospect but not prospectively."

What event does that not apply to?

The fact is that vast majority of the systems actual people rely on are extremely resilient against "black swans," and virtually impossible to "hedge" against the failure of.

  • Social Security is a system virtually all American workers pay into and which pays out checks to the retired and disabled.
  • Medicare is a system virtually all American workers pay into and which pays out checks to doctors, hospitals, and pharmacies.
  • The Department of Education's Direct Loan Program collects information on students and disburses funds to their institutions of higher education.

We can break these systems by electing politicians dedicated to destroying them. But that is not a "black swan," that's the unfortunate outcome of a process of collective decision making.


The solution to Gaussian, bell curve fantasies is not this sprawling 400-page tome of artistic criticism and intellectual wankery. It's reality.

Don't take out an interest-only mortgage with a teaser rate and balloon payment — the domestic housing market isn't Gaussian.

Don't invest money you can't afford to lose in a single car company, bank, or oil company — disasters are unpredictable.

And don't ask more out of your investments than they're capable of giving you. Buying a low-cost total stock market mutual fund from Vanguard will give you exposure to the total stock market. Buying a bond fund will give you a stream of income. Buying a bunch of Beanie Babies will give you exposure to the 90's hobbyist market.

But there's no added value to thinking of a collapse in the US stock market, a rise in interest rates, and people realizing Beanie Babies aren't worth anything as "black swans," outside "the normal distribution." They're all guaranteed to happen eventually.

Trying to develop resilience against these events is worthwhile, but doesn't require any additional intellectual framework beyond:

  1. Don't risk more than you can afford to lose;
  2. Don't take risks you don't understand;
  3. Diversify what you can afford to lose among risks you understand.

Gut-checking the latest and greatest opportunities

Starting today, it should in principle be possible to sign up for the Popular Credit Service Avianca LifeMiles credit cards. Signup bonuses are constantly fluctuating up and down, but it's not every day that we get a brand new credit card to evaluate. With that in mind I thought I'd share my simple framework for looking at new offers like this when they come around.

What do I already know, and what do I need to know?

A quick glance at my airline alliances page shows that Avianca is a Star Alliance member. I already know that I hate flying United, so Avianca won't be useful for domestic itineraries, but it might be useful for international itineraries.

On Star Alliance partner airlines, there are no obvious sweet spots. Economy awards to Europe, for example on Lufthansa or Turkish Airways, cost 60,000 LifeMiles roundtrip, the same as United MileagePlus miles. In Business class on a Star Alliance partner you'll pay 126,000 LifeMiles roundtrip, somewhat better than the 140,000 MileagePlus miles United would charge.

To North Asia, LifeMiles will charge the same 70,000 miles roundtrip as United, but 10,000 miles fewer (150,000 LifeMiles versus 160,000 MileagePlus miles) for Business class. So in terms of redemption value, LifeMiles are certainly competitive with MileagePlus miles for travel on Star Alliance partners.

This is the sort of simple calculation you can glance at to anchor the valuation of a new currency compared to ones you're already familiar with. LifeMiles seem to be a pretty good Star Alliance rewards currency, at least competitive with MileagePlus miles.

Do I have a redemption plan?

Some readers seem to think that I'm some kind of maniac who insists there's no point in earning a mile you don't already have budgeted for a specific trip, on a specific flight, on a specific day, with a specific co-pilot leaving from a specific gate.

That's baloney! All I've ever said is that the least valuable point is the one you don't redeem, and that the point of travel hacking is to pay as little as possible for the trips you want to take.

If the trip you want to take is "Lufthansa First class to Europe," then having a slew of reasonably-priced Star Alliance miles lying around is a natural solution — a perfect solution! On the other hand, if the trip you want to take is "summer in Europe" then you may well have been better off waiting for a fare sale like the ones we saw last week where roundtrip economy fares were in the low 3-figures.

Knowing the kinds of trips you're likely to take, whether you're likely to pay for them with cash or with miles and points, and knowing which miles and points are well-suited for the job is a simple way of calibrating whether a brand new deal is spectacular or a dud.

Is it scalable?

There are two kinds of offers: one-of-a-kind opportunities like a 100,000-point signup bonus from a bank with good risk controls, and opportunities with potentially unlimited upside. Into the second category fall things like churnable credit cards, unappreciated reselling opportunities, or gift card liquidation mechanisms no one else has thought of.

A scalable opportunity is worth more than a one-off opportunity because once the background research has been done each iteration produces close to pure profit for as long as the deal lasts.

For example, while the US Bank Club Carlson credit cards offered the last night free on award stays, there was no limit to the number of 2-night stays you could book at half price. Along with a partner you could book any integer multiple of 2 nights at a top-tier 70,000-point property for 35,000 points per night, or $7,000 in otherwise-unbonused credit card spend per night.

In the case of the Avianca Vuela credit card, which is supposed to offer 2 LifeMiles per dollar spent at gas stations and grocery stores, the question is whether you'll be willing to earn 2 LifeMiles per dollar at the expense of other rewards currencies. There's no obvious answer to that question — it'll depend on your own circumstances. At grocery stores, 2 LifeMiles per dollar spent may be worth more than 6 HHonors points, or more than 2 Flexpoints, or more than 2 Membership Rewards points, or it may not.

In short: a lucrative bonus category can turn a so-so credit card, or a decent signup bonus, into a scalable opportunity — but whether it does or not will depend on your own circumstances.

What will I do with the remaining points?

After signing up for a Avianca Vuela card, and meeting the spending requirement, you'll be the proud owner of 60,000 LifeMiles. Say you jump on a 50,000-LifeMile First class award from North America to Hawaii. Now you're the proud owner of 10,000 LifeMiles.

You can either accept that you got a 50,000-mile signup bonus, instead of a 60,000-mile one, or you can start conniving and contriving to redeem your remaining 10,000 LifeMiles, or start doing your utmost to earn more until you get to another redemption threshold.

I don't give advice, and don't care which response you have.

But knowing which response you're likely to have before you get there is a key to long-term mental health and regret-minimization in this game.


Let me stress again that there's no reason that "maximizing" the cash value you get from each travel hacking technique should be the only goal of your practice. But it does provide a general framework that at least lets you calculate, within general parameters, what the tradeoff is between fixed-value and flexible rewards points, between hotel points and airline miles, and between manufactured spend and signup bonuses.

Shutdowns, devaluations, and resiliency

One travel hacking blogger who never disappoints is Vinh at Miles per Day (his Twitter account is a must-follow as well). Vinh attracts shutdowns like an office supply store promotion attracts Ink Plus cards. He's been shutdown by PayPal, eBay, Best Buy (huh?), Chase, and that's just in the last two months.

On the other hand, Vinh is incredibly resilient, judging by the fact that he seems to buy a new car every 6 months or so.

That got me thinking about different ways to approach shutdowns and devaluations. In other words, how to become as resilient as Vinh.

Shutdowns are another kind of devaluation

If, like me, you think the point of travel hacking is to pay as little as possible for the trips you want to take, then there's no conceptual difference between a shutdown and a devaluation.

When American Express Membership Rewards points changed their transfer ratio to British Airways Avios from 1000:1000 to 1000:800 in October, 2015, that was a 20% devaluation. If you have both a flexible Chase Ultimate Rewards account and a Membership Rewards account, losing the Ultimate Rewards account with its 1000:1000 transfer ratio is also a 20% devaluation, since you'll have to pay 25% more Membership Rewards points than you previously paid in Ultimate Rewards points.

You can adjust the numbers depending on how you value Ultimate Rewards points relative to Membership Rewards points, but the point is that an account closure makes trips more expensive, just like a change to an award chart or the elimination of a credit card bonus category does.

I don't think there's any one right answer to how to think about shutdowns and devaluations, but here are three different approaches, each of which suggests a different way to build a travel hacking practice.

Approach #1: Pretend you're safe

This is by far the most popular approach advocated on mainstream blogs and in fact practiced by many travel hackers. When someone tells you to buy American AAdvantage miles at their lowest price ever, they're not just telling you the price you can buy them at, they're also telling you to pretend they'll maintain their value until you redeem them, or at least to factor in only a small risk of a short-term devaluation.

Likewise when someone tells you to earn Ultimate Rewards points "because they're so valuable," they're also implicitly telling you "and ignore the risk of your Chase accounts being shutdown and you being forced to liquidate your points on 30 days' notice."

There's nothing inherently wrong with this approach, as long as you know that's what you're doing. Acting as if you're safe from devaluations and shutdowns would lend itself towards running up big balances in just a few programs where you get the most value. Someone pretending they're safe might use just two or three credit cards issued by a single bank.

A combination of a Chase Freedom Unlimited, Chase Ink Plus, and Chase Sapphire Reserve would give you easy access to bonused spend with the Ink Plus, unbonused spend with the Freedom Unlimited, and high-value redemptions with the Sapphire Reserve, all without setting foot outside of Chase's ecosystem.

After those cards are closed and your Ultimate Rewards points have been liquidated, you could switch to an American Express Business Platinum card combined with an Amex EveryDay Preferred and/or Preferred Rewards Gold card.

The point is that pretending you're safe creates a permission structure to focus as heavily as possible on the very most valuable rewards currencies. Ironically, this approach of ignoring the risks of shutdown and devaluations is best suited for someone who is convinced that travel hacking is dying as a hobby!

The reason is obvious: the more certain you are that travel hacking will no longer be possible in the near future, the less you have to lose by risking shutdown, and therefore the more value you can extract from the most valuable programs by ignoring the risk of shutdown and devaluation.

Approach #2: Equal-weight the value of your rewards

Another approach might be to admit that there is an unknown risk of shutdown and devaluation across all your rewards currencies. If the risk were known, you would be able to weight your earning rates by value and risk: if Delta SkyMiles were twice as valuable as United Mileage Plus miles today, but were certain to be worth half as much a year from today, you could earn and burn them in the precise ratio such that your remaining, post-devaluation balances have the same value in one year.

Since the risk of shutdown and devaluation is unknown, you can't make that precise calculation. Instead, you can assume that more valuable currencies are more likely to devalue than less valuable ones, and more lucrative credit cards are more likely to shutdown heavy hitters than less lucrative ones.

This approach lends itself to the counterintuitive practice of earning fewer of more valuable rewards and more of less valuable rewards. If one card earns 5% cash back and another earns 2% cash back, you could earn 2.5 times more rewards on the second, less-lucrative card. This would theoretically raise the risk of shutdown on the less-lucrative card (which would hurt less to lose) and lower the risk of shutdown on the more-lucrative card (which would hurt more to lose).

While it sounds slightly bizarre when I frame it this way, a version of this approach is actually practiced by those of my readers who leave comments on my posts about manufacturing spend with a Chase Ink Plus card. They'll frequently say, "I value my relationship with Chase too much to manufacture spend aggressively on my Ink cards." In other words, the more valuable they find a rewards program, the less risk of a shutdown they're willing to run.

Approach #3: Set earning and burning goals, and change course as necessary

If you asked a representative sample of travel hackers, I suspect a slight plurality would say this is their general approach to the game: combine a broad awareness of as many opportunities as possible with a realistic view of your own travel goals and time constraints, and do your best to earn and burn the "right" miles and points.

When framed this way, the approach has a lot to recommend it: by earning the miles and points you need for the trips you want to take, you can keep your balances low enough that you're unlikely to be devastated by a single shutdown or devaluation. There's no way to "protect" yourself from an overnight devaluation like the one inflicted on Emirates awards booked with Alaska Airlines Mileage Plan miles back in March, 2016, but under most circumstances if you restrict yourself to planning 6-12 months in advance, you're likely to be able to redeem your miles under roughly the same terms as you earned them.

While this is certainly the approach I take, it's also far more difficult to implement successfully than the previous two approaches. We call rewards currencies "loyalty programs" because they are designed to cloud precisely the judgment needed to make good decisions about them. While devaluations reduce the value of your rewards currencies for future redemptions, months or years in the future, they don't affect the value of rewards you've already redeemed — and you're more likely to judge a program based on your past success using it than prospectively based on its current and future earning and redemption structure.

The annual free night certificates offered by hotel credit cards are a great example of this. The Marriott Rewards Premier credit card currently has an 80,000-point signup bonus. Even in Marriott's miserly program, that's enough for 2 nights at a Category 8 property. After the first year, you receive a free night certificate good at a Category 1-5 property. During that second year you may find a Category 5 property that fits your needs, and still feel like you're getting a good value for your $85 annual fee. Now your third year rolls around and your annual fee is due: you're likely to look at your past success redeeming your free night certificate than look at your future plans when deciding whether to pay the annual fee or not. And as more and more properties migrate up and out of Category 5, you'll find it harder and harder to use that free night certificate each year.

The point here is simple: it's not enough to draw up a strategy to earn and burn the points you need for the trips you want to take. To use this approach successfully you also have to periodically revisit your plans and programs to decide whether the techniques you're using still offer the straightest path towards your goals, or whether it's time to add a new program, cut out an old program, or change your strategy entirely.


Every travel hacking practice is ultimately a hybrid of calculation, opportunism, and habit. My own relentless focus is on those currencies I'm most likely to redeem as soon as possible. I start with cash back, then build on that with fixed value currencies like US Bank Flexpoints and Ultimate Rewards points, then add Delta and Hilton points thanks to their combination of accelerated earning and ease of redemptions — Delta SkyMiles and Hilton HHonors points are both relatively easy to redeem as long as you are willing to redeem them at "break even" rates instead of swinging for the fences with each redemption.

For example, an upcoming Hilton redemption over the holidays yielded 0.5 cents per point — nothing out of this world, but the equivalent of 3% cash back on my grocery store manufactured spend, and 57% off retail, after accounting for fees.

But my strategy only works for me because I'm willing to keep my rewards balances as low as possible. If you're the kind of person who likes seeing 7 or 8 digits in their loyalty accounts, you may want to consider figuring out whether you actually have a travel hacking strategy at all.

Why I'm gunning for Globalist

After I wrote last month that Hyatt's new loyalty program "made the decision easy" to requalify as a Hyatt Gold Passport Diamond in 2016, Joe Cheung at As the Joe Flies suggested it might be useful to explain my thinking in more detail.

The fact is, I take a pretty brute force approach to travel hacking, so the calculus for me is equally straightforward: I calculate my projected benefits, subtract my projected costs, and figure out whether I'll come out ahead or not. I'm happy to spell that calculus out in more detail.

The cash value of 2017 Diamond status

There are exactly three benefits of the World of Hyatt program which have any concrete value to me:

  • A free night at any Category 1-7 property worldwide. This is worth up to $300, the cash value of 30,000 Ultimate Rewards points transferred to Hyatt Gold Passport or World of Hyatt.
  • Breakfast and club access. This is worth perhaps $20-30 per night stayed at Hyatt properties between March 1, 2017, and February 28, 2018.
  • 4 confirmed suite upgrades, subject to availability. This is worth perhaps $100 total — suites are nice, while being subject to availability sucks.

In other words, given a minimum of 4 Hyatt stays in the 2017 membership year, Hyatt Gold Passport Diamond status requalification can be assigned a starting value of $480: $300 in transferred Ultimate Rewards points, $80 in breakfast, and another $100 in suite upgrades.

The cash cost of 2017 Diamond status

After meeting the $40,000 spend threshold on my Chase Hyatt credit card, and earning a total of 5 elite-qualifying stay credits, I'll be 5 stays away from requalifying for Diamond status in 2016. Earning those 5 elite-qualifying stay credits only needs to cost me $96 per stay to "break even" with my projected value of Globalist elite status

I'm always anxious to remind people that "breaking even" isn't the point of travel hacking: we're supposed to come out so far ahead that all the crazy antics we commit ourselves to end up paying for themselves! If spending $480 in cash only got me $480 in value, there'd be no point in using Hyatt Gold Passport as an intermediary — I'd just pay $480 for things I valued at $480.

I can, in fact, achieve my remaining 5 elite-qualifying stays for a total price of $455. Putting those charges, at Hyatt Regency properties, on my Chase Hyatt credit card will reduce the price by another $50. One of these "mattress runs" will trigger another 10,000 Hyatt Gold Passport-point payout from the current "More Points. More Play." promotion, and all 5 will trigger 500-point payouts from the current mobile-booking promotion. Earning 6.5 points per dollar adds up to another 2,600 points on the room charges, plus up to 5,000 more points if I choose the points amenity on all 5 stays.

Valuing those earned points at their cash opportunity cost to me — one cent each — means I can pay $204 for $480 in value. That puts me squarely in the range of savings that travel hackers should take seriously.

This calculation requires no fantasies

If you're paying attention, the value I place on Hyatt Gold Passport Diamond status and World of Hyatt Globalist status requires just four stays of one night each in the 2017 membership year.

If I stay four separate nights, and apply four suite upgrade awards, and a single one of my nights is at a Category 7 property, I'm certain to get $480 in value.

I plan to get much, much more value from Globalist status in 2017. The key point is that the more realistic your assessment of the value of elite status, the easier it is to calculate the return on your travel hacking investment.

My Borgata Black Label trade up experience

For quite a while now My Borgata Rewards has been running a status match program called "Trade up to Black Label." New My Borgata Rewards members who show elite status with "Caesars Entertainment, MGM, Tropicana Atlantic City, or Trump Casinos" will instantly receive My Borgata Rewards Black Label status and:

  • "$100 BONUS SLOT DOLLARS or Match Play
  • "Complimentary Stay in a Classic Room
  • "Access to VIP Lounge"

During a weekend trip to Philadelphia I popped over to Atlantic City to see how the status match works in practice. Here's my report.

Getting the status match

When I arrived at the Borgata, which is not on the Boardwalk but rather stuffed into a little corner of Atlantic City along with the Golden Nugget and Harrah's, I went straight to the My Borgata center and got in line for a new account. I mentioned the promotion (it's prominently advertised on-site as well) and showed a screenshot on my phone of my M life Platinum status (showing 0 tier credits, points, etc.). In other words, I didn't need a physical M life Platinum card in order to take advantage of the status match.

The My Borgata agent was happy to get me set up with a new Red Label account and immediately upgrade me to Black Label.

Although she kept apologizing for her "system being down," it seemed to me to work perfectly so I'm not sure what she was talking about.

Using $100 Bonus Slot Dollars

I chose the $100 Bonus Slot Dollars option, which can be redeemed for credit on any of the casino's slot machines. The $100 in match play option can be used on table games, but requires a real dollar to be matched to each bonus dollar.

The only two things you need to know about Bonus Slot Dollars are that once added to a machine, they can't be withdrawn and added back to your account, and that only your winnings can be cashed out, not the Bonus Slot Dollars you add to a machine. To simplify things, I just added $10 at a time to the machines I played, then after betting $10 withdrew however much I had won.

I ultimately won about $280 on my $100 in free Bonus Slot Dollars. If you go to Atlantic City, you should definitely try to do that.

Hitting the Amphora Lounge

After "gambling" up an appetite, my partner and I decided to head to the Amphora Lounge for dinner. Both the Amphora Lounge and the buffet cost $10 for Black Label members (and $10 for up to one guest), and the My Borgata staff member had added $20 in comp dollars to my account when I signed up. My impression is that the Amphora Lounge has a more limited food selection than the buffet, but drinks are included (and as Matt suggested on Twitter, they are happy to make drinks to carry out).

(Not) redeeming my complimentary stay in a Classic Room

Once back in Philadelphia, I activated my online My Borgata Rewards account and logged in to see how the free night benefit works. The stay has to be booked within one month for a stay no later than 3 months in the future.

Long story short, there are no complimentary rooms available in the next 3 months, or at least none available online. I assume this varies with demand and with the season, so maybe if you status match at some other time of year there would be more complimentary rooms available. But there aren't any right now, so don't count on this benefit when deciding whether to make the trip.

Is it worth it?

On the one hand, I came out pretty far ahead on my day trip to Atlantic City: after backing out the $46 in train tickets, plus cabs and tips, I made about $200 and got material for this blog post.

On the other hand, if you go to Atlantic City and status match to My Borgata Rewards Black Label, you might not win $280 on the slot machines. After paying for gas and parking, or train tickets and cab fare, plus the obligatory salt water taffy, the trip might turn out to be a pretty expensive "free" dinner with cocktails in the Amphora Lounge.

What is a nation?

I am an American. My parents were born in Oklahoma City and San Francisco. I was born in Arkansas. I was raised in Montana. I may be just slightly less American than apple pie, but only because I prefer strawberry rhubarb.

I'm not an Irish-American, I'm not a German-American, I'm not an Italian-American, I'm not even an Anglo-American. My whole life, I've only ever been an American.

Until I went to Russia. In Russia, "America" is a state (государство), but not a nationality (нация). In Russia, if you don't know what nationality you are, you're generously assumed to be a lying Jew (spoiler: my family enjoys prominent noses).

In my youth, I could simply never understand what was a "country," what was a "nation," and what was a "state." That's because in my mind America was all three: a country (purple mountains majesty, sea to shining sea, etc.), a state (government, Constitution), and a nation (all of us Americans).

Donald Trump, along with his supporters and enablers, have one vision of the American nation, which they'll have the opportunity to implement in the coming presidential term. But it is not the vision of the American nation expressed by actual Americans on November 8, 2016, a majority of whom voted for Hillary Clinton, one of the finest, most dedicated public servants in the history of the Republic.

I am an American, and my identity has nothing to do with the peculiarities of the Electoral College. I believe this is a nation, country, and state filled with people with a keen sense of justice. I'm full of pride for how the majority of the American people voted, against all the bigotries represented by Donald Trump.

I'm also a Christian. Religion is not an excuse to check out from the world we live in and focus on the world to come. Christ certainly didn't. The example Jesus set wasn't just of dying: it was also of absurd generosity to the most needy. That's the model of generosity we should all aspire to.

The next four years will be frightening in a lot of ways. The devastation about to be inflicted on the welfare state will send millions of people into unspeakable poverty. The return of "pre-existing conditions" to the American lexicon. The abandonment of any effort to fight climate change before hope is completely lost for the survival of low-lying communities and nations.

But I am an American. I love my country, my nation, and my state. The next four years aren't an experience I'm looking forward to, but for good or for ill we don't get to pick the obstacles we face in our lives. We just have to face them one at a time.

My taxonomy of travel hackers

Last weekend I took a quick trip down to Dallas to meet up with blog subscribers, and also managed to fit in a Friday happy hour with folks in town for the latest Family Travel for Real Life gathering.

Getting together with likeminded folks, or at least folks likeminded enough to travel from all across the country to swap tips, tricks, and stories, is always fun, and there are now lots of options. The Ann Arbor Art Fair DO is a longstanding annual gathering, Trevor at Tagging Miles has started running daylong get-togethers focused on reselling, and there are the aforementioned Family Travel for Real Life conferences focused on family travel, including (very) large families.

In my experience at these events, I've noticed a few basic attitudes towards travel hacking that differentiate how people — even people using the same credit cards, loyalty programs, and techniques — think about what they're doing.

The Hobbyist

No one I have ever met in this game calls travel hacking "The Hobby." But in a bizarre piece of stunt journalism, Rolling Stone used that term in its profile of rich weirdo Ben Schlappig, and we've been joking about it ever since.

I'm reclaiming it here to use it without criticism or calumny. Trevor at Tagging Miles is also what I would call a Hobbyist: he takes 1- or 2-day trips all around the world, flying in international first class and business class cabins to spend a little bit of time in Sydney, Taiwan, or Bangkok.

A Hobbyist really is the kind of person who would benefit from what Frequent Miler once called "opportunistic hoarding." If you want to hop on a plane at the last minute to take a short trip to the other side of the world, then having as broad and deep a portfolio of loyalty currencies is essential. Every route you want to fly requires a different calculus: distance-based or region-based; with or without fuel surcharges; stopovers allowed or prohibited.

Hobbyists are the kind of travel hacker willing to buy points or miles "when they're cheap" and who pursue every new signup bonus as a "painless" way to diversify their portfolio.

The Family Traveler

Another "type" I meet all the time is the Family Traveler. This is the guy or gal who wants her children to see the world, but quickly realizes how expensive seeing the world (or even the country) is if you have to pay for it out of pocket.

Here you typically see a keen focus on the bottom line: mom and dad will both earn Southwest Companion Passes, each select a different child, and then exclusively fly to destinations served by Southwest.

A family traveler has both constraints and opportunities that other travelers don't. Opportunities include companion tickets like those offered by the American Express Delta Platinum and Reserve personal and business credit cards, which become more valuable than they would be to a solo traveler, since they partially obviate the need to find award space when booking multiple tickets. Constraints include the near-impossibility of regularly finding 3 or 4 award seats on the same flight.

The Budget Traveler

As I have joked in the past, before I learned about travel hacking I still traveled all the time — I took busses, I flew Spirit, and I stayed in hostels. I don't travel more since I became a travel hacker, but I pay less and I get more. That slots me into the category of Budget Traveler.

From a Budget Traveler point of view, locking in higher-than-average rewards at lower-than-average prices is the point of travel hacking. That makes rewards currencies like US Bank Flexpoints and Hilton HHonors points into priorities, since they offer outsized rewards on easily manufactured spend. You'd be crazy to fly to the Maldives with Flexpoints, but they offer a big discount off retail for a range of domestic and international economy flights, and thanks to price compression are also an easy way to get seated up front on domestic flights and accelerate your progress towards elite status.

The Sucker

Of course, no taxonomy of travel hackers would be complete without mentioning the Sucker. The Sucker mostly reads affiliate blogs, follows affiliate authors on Twitter, and gets excited each time a signup bonus spikes from 40,000 to 41,000, as long as it's the highest offer ever. They jump on every deal, store up points in every program, and writhe in agony at the announcement of each devaluation of the points they've earned and will never, ever redeem.

The Sucker has 105,000 Membership Rewards points, because they met the minimum spend requirement but have no idea what to do with their signup bonus. The Sucker has hundreds of thousands of Club Carlson points, Wyndham points, and Choice points, even though there's no earthly reason for a single person to have points in all three tertiary programs.

I don't care if you're a Hobbyist, a Family Traveler, or a Budget Traveler. But please, don't be a Sucker.

Grocery store spend and the possibilities of loyalty-agnostic travel

I'm a big proponent of the US Bank Flexperks Travel Rewards card, since I think it provides the straightest path for most people to pay as little as possible for their airline tickets. With the recent return of PIN-enabled prepaid debit cards to many grocery stores, that view has been confirmed and even strengthened.

But it's also true that another favorite card of mine, the American Express Hilton HHonors Surpass card, also earns bonus points at grocery stores. And of course unbonused spend can earn between 2% and 2.625% cash back, and at lower cost than grocery store manufactured spend.

So I thought it would be useful to revisit some break-even points, or what I call imputed redemption values, for spend on a variety of cards, to help readers think through the best way to book their flights and hotel stays.

Three opportunities, three costs

The simplest way of approaching the tradeoffs between bonused grocery store spend and unbonused spend is to look at the cost per point. Using only the most widely available methods of manufacturing spend, you'd arrive at these simple calculations:

  • US Bank Flexperks Travel Rewards, 2 Flexpoints per dollar spent at grocery stores: 0.62 cents per Flexpoint;
  • Hilton HHonors Surpass American Express, 6 HHonors points per dollar spent at grocery stores: 0.21 cents per HHonors point;
  • 2% cash back credit card at unbonused merchants: 0.43 cents per cent in cash back.

That final line allows us to have an anchor for the kind of value we should expect to get from Flexpoints and HHonors points that would make them competitive with unbonused cash back. For example, if you redeem Flexpoints for cash back you'll never come out ahead compared to a 2% cash back card, since you're paying 44% more for each Flexpoint, which are, like pennies, worth just a penny each.

The flip side of that calculus is that all Flexpoint airfare redemptions above 1.44 cents each are cheaper than paying cash for the same trip. For example, a $288 plane ticket would cost 20,000 Flexpoints, and $124 in out-of-pocket grocery store fees, while the same $288 plane ticket paid for with cash earned on unbonused spend with a 2% cash back credit card would cost $123 in fees. That means for all airline tickets between $289 and $399 (or any other price point that falls between a multiple of 10,000, 0.0144, and 0.2), the Flexpoint redemption is cheaper than the cash ticket.

Now let's do the same math with Hilton HHonors points earned at grocery stores with a Surpass card. Due to the difference in total price per point, compared to a 2% cash back card, Hilton HHonors points have to be redeemed not at 0.33 cents each, but rather at 0.49 cents each. For example, a 5,000 HHonors-point stay would cost $10.50 in fees, while $10.50 in fees would earn $24.42 in cash back — 0.49 cents per point. This is a purely mechanical calculation: a 95,000-point HHonors redemption would cost $199.50 in fees, while $199.50 in fees would earn $463.95 in cash back — 0.49 cents per point. That produces the simple maxim that stays which offer more than 0.49 cents per HHonors point are cheaper if paid for with HHonors points than with cash.

Flexpoints can also be used for hotel stays

There's one additional wrinkle worth mentioning here: Flexpoints can provide value on hotel stays that are too cheap for HHonors redemptions. I'll be the first to admit that this doesn't happen very often, but it's something to keep an eye out for: when Flexperks redemptions fall in the 1.44 to 1.5 cent per point band on hotel redemptions, they still entail a lower out-of-pocket cost than manufacturing the needed cash with unbonused spend on a 2% cash back card.

For example, a $144 stay (including taxes) would cost 10,000 Flexpoints ($62 in fees), and paying in cash earned with a 2% cash back card would require $62 in fees. Of course, it might be cheaper yet depending on the HHonors point rate available, if any.

This makes Flexpoints one of my favorite currencies to earn speculatively: if good flight opportunities present themselves, they can be redeemed for valuable flights; if middling hotel opportunities present themselves, they can be redeemed for middling hotels; and if no opportunities present themselves, they can be redeemed for cash.

While it's easy to posit a general principle that Flexpoints should be spent where they're most valuable — on paid airline redemptions — it's also true that they're more valuable redeemed for hotel stays than for cash, so if you find yourself in the situation of having to choose between spending precious cash or spending down a constantly growing balance of Flexpoints, you'll probably thank yourself later if you save the cash today.