Pro tip: Did Uber turn off "Gifts" in your account? Ask them to turn it back on!

Back in November I wrote about a trick I like to use now that the Barclaycard Arrival+ card allows Arrival+ miles to be redeemed against taxi purchases: buying Uber credit in "redeemable" $25 chunks, so that Arrival+ miles can be redeemed against Uber rides even when a single ride doesn't exceed $25 (which is fairly common in my experience).

A few weeks ago I noticed that the "Gifts" link had disappeared from the top-left corner of my Uber homepage. I remembered that back when American Express was offering $10 off any Uber purchase of $25 or more, many folks didn't have the option of buying gift cards, but that they were able to e-mail Uber to turn the feature on.

While I'd never heard of anyone losing the option to buy gift credit, I passed along that information to a curious reader, who reported back that Uber was able to re-enable the "Gifts" option in his account.

So yesterday I sent an e-mail to support@uber.com from the e-mail address linked to my account, writing:

"I used to have the option of buying electronic gift cards in my Uber account, but the option seems to have disappeared in the last week or so. Can that option be re-enabled?"

About 10 minutes later, I received the following reply:

"Thanks for writing in! I'm happy to set you up with gift card access so you can give the gift of Uber to someone special.

"If you log into your account on our website you will see a link at the top that says Gifts. From there you can purchase Uber credits in increments of of $25, $50, $100, and $250. You'll be able to purchase gift cards in USD that can be redeemed and used in the US. Please be careful to only hit the Place Orderbutton once."

So there you have it: if you're interested in buying Uber credit in "redeemable" chunks, but the option has disappeared from your account, just drop a line to support@uber.com and they seem more than willing to re-enable it.

Should you use super-premium cards to pay for airfare through manufactured spend?

A few months back I wrote a breakdown of three cards which earn bonused flexible points currencies at gas stations: the Chase Ink Plus (and Bold), Citi ThankYou Premier (as of April 19, 2015), and American Express Amex EveryDay Preferred.

While flexible points are terrific for short-haul Avios redemptions and long-haul premium cabin redemptions, I also like to remind readers that sometimes it makes sense to fly on revenue tickets. With the announcement of a new, 30% rebate on "Pay with Points" tickets purchased through the American Express Business Platinum card (via Twitter user @LoyalUA1K), I thought I'd revisit the subject with gas station manufactured spend squarely in mind.

Four ways to buy cheap plane tickets at gas stations

There are four methods I want to consider for buying revenue airline tickets using points earned at gas stations (four methods, and not four cards, for reasons that are about to become clear):

  • Chase Ink Plus/Bold. Earns 2 Ultimate Rewards points per dollar spent at gas stations, on up to $50,000 in annual gas station purchases. Points can be redeemed for paid airfare at 1.25 cents each. $95 annual fee.
  • US Bank Flexperks Travel Rewards. Earns 2 Flexpoints per dollar spent at gas stations, if you spend more at gas stations than at grocery stores or on airline tickets during that statement cycle. $49 annual fee, which can be waived if you spend $24,000 during the cardmember year.
  • Citi ThankYou Premier and Prestige. Earn 3 ThankYou points per dollar spent with the ThankYou Premier, and redeem them through the ThankYou Prestige for 1.6 cents each for tickets issued by American Airlines and US Airways or 1.3 cents each for tickets issued by other carriers. $95 annual fee for ThankYou Premier and $450 annual fee for Prestige (a $350 annual fee version may be available in-branch, although getting it sounds stressful).
  • American Express Amex EveryDay Preferred and Business Platinum. Earn 3 Membership Rewards points per dollar spent with the EveryDay Preferred (as long as you make 30 purchases per month), and redeem them through American Express Travel using the Business Platinum card for roughly 1.43 cents each on the same airline you designate for your $200 annual fee reimbursement. $95 annual fee for EveryDay Preferred and $450 annual fee for Business Platinum.

Now I know what you're thinking: "Free-quent Flyer, can't you show the same information in a simple chart?"

As a matter of fact, I can:

How much paid airfare makes premium card annual fees worth paying?

Anyone who's followed my blog for long knows what I think about annual airline fee credits: they're a way for affiliate bloggers to downplay preposterously high annual fees and move more product.

Since I'm not an affiliate blogger and don't have a dog in that hunt, I treat credit card annual fees the same way I suggest my readers do: as upfront expenses that have to be justified by the concrete value delivered by a card.

By concrete value, in this case I mean the actual surplus delivered by a premium card compared to a workhorse like the Flexperks Travel Rewards card.

As the chart above shows, the minimum value of a dollar of gas station manufactured spend with the Citi ThankYou Premier and Prestige combination is almost as much as the maximum value of a dollar manufactured with the Flexperks Travel Rewards card, and assuming you're loyal to American Airlines and US Airways, you'll receive a minimum of 0.8 cents more per dollar.

With the American Express Amex EveryDay Preferred and Business Platinum combination, you'll only want to redeem Membership Rewards points for airfare on your preferred carrier, since almost all other "Pay with Points" redemptions (except for sub-$300 airfares) will be worse values than a Flexpoint redemption.

On the other hand, those card combinations come with hefty annual fees, meaning that any surplus value earned on the redemption side compared to cheaper cards has to exceed the difference in upfront costs in the form of annual fees.

To arrive at that breakeven point, first we need to find a reasonable valuation for Flexpoints, which can be redeemed in bands at 10,000 Flexpoint intervals. While it's tempting to take a simple average of the top and bottom of each redemption band (i.e. 1.67 cents per Flexpoint), in my experience it's possible to consistently land closer to the top of that range. That being the case, let's use a point three quarters of the way from the bottom, or 1.83 cents per Flexpoint (e.g. a $367, 20,000 Flexpoint redemption).

Here's how much paid airfare you need to fly annually in order to justify $545 in annual fees, compared to the waivable $49 annual fee of the US Bank Flexperks Travel Rewards card:

  • Citi ThankYou Premier and Prestige. $2,294 at American Airlines and US Airways ($47,807 in annual gas station manufactured spend)
  • Citi ThankYou Premier and Prestige. $8,856 at other airlines ($227,083 in annual gas station manufactured spend).
  • American Express Amex EveryDay Preferred and Business Platinum. $3,711 with your designated airline ($86,508 in annual gas station manufactured spend).

Conclusion

I'm perfectly aware that these cards offer redemption options that can be more lucrative than redeeming points for airfare at privileged rates. In fact, I wrote a whole blog post comparing their transfer partners in each alliance.

I'm further aware that the super-premium $450-annual-fee cards offer benefits like lounge access, airline fee credits, and Global Entry fee reimbursement.

So any readers who are inclined to hash out the value of those benefits are welcome to do so in the comments.

But I am also certain that simply purchasing paid airline tickets is the single most common method of flying domestically for travel hackers and civilians alike, and an analysis of these cards along those lines was overdue.

Manufacturing Chase Freedom's second quarter bonus categories

A reader recently wrote to me asking if there were any super-secret hush-hush methods of manufacturing the $1,500 in 5% cash back offered by this quarter's Chase Freedom bonus categories. As a reminder, those bonus categories are "Restaurants, Bed Bath & Beyond, H&M, and overstock.com."

I sent along to that reader, but also wanted to share with any other readers who may have missed Tagging Miles' post that Bed Bath and Beyond sells $200, PIN-enabled Visa gift cards with an activation fee of $6.95.

As I explained in a guest post at Doctor of Credit's website back in December, earning 5 Ultimate Rewards points per dollar on $200 PIN-enabled Visa gift cards isn't a great deal in terms of outlay ($6.95) versus income ($10.35). Rather, it's a good deal precisely because they're $200 Visa gift cards, so you can cram a lot more of them into a Bluebird or Serve card's $5,000 monthly load limit, or into a bank or credit union's without worrying about a high-volume "fraud" tripwire.

My experience at Bed Bath & Beyond roughly mirrors Tagging Miles': not all stores carry Visa gift cards, not all stores carry $200 cards, and stores that do may be extremely reluctant to sell large volumes. Yesterday I had trouble buying just $600 in gift cards, requiring a manager to slowly walk the cashier through the process, since she was sure she would be fired for letting so many cards walk out the door!

In any case, while I know many of my readers won't have any trouble spending $1,500 at restaurants this quarter, I'm as a rule extremely reluctant to use cards for both manufactured spend and "real" purchases. So if you're like me, go ahead and take 3 trips per Chase Freedom card down to your local Bed Bath & Beyond and buy no more than $600 per visit. Then you can get back to putting your actual restaurant charges on a 2% or 2.22% cash back card.

Quick hits: American Express gift card denominations and Smart & Final

I'm enjoying lovely San Diego but wanted to share two quick hits that passed my desk yesterday.

TopCashBack tracks multiple $2,000 American Express gift cards in a single order

Back in February American Express added language to their cash back portal offers excluding gift card denominations above $2,000 from earning cash back. At that point I started ordering my American Express gift cards in separate orders of $2,000 each, both out of an overabundance of caution and because it makes orders easier for me to track.

Then I got bored doing that, and last month ordered multiple $2,000 gift cards in the same order. The cash back still tracked successfully, and went to "payable" status with TopCashBack yesterday afternoon.

So if you had been ordering $2,000 gift cards separately out of an abundance of caution, don't worry, you can order them in one order without risking your cash back (although my cards were still shipped individually).

Add the Smart & Final Amex Offer to all your eligible cards

I saw a Smart & Final "Offer for You" in my American Express account a few days ago, and added it to my two cards without giving it another thought.

Then I saw Doctor of Credit write that the offer also had a Twitter signup option, "#AmexSmartFinal", and added it to all the rest of my cards as well using Frequent Miler's Tweetdeck method.

You'll earn $25 back up to 3 times when spending $50 or more on each linked American Express card.

To the best of my knowledge, you can link the primary cardholder and all authorized user cards issued by American Express, and you can link Bluebird and Serve cards as well as Bluebird and Serve subaccounts, which come with their own cards. If a card is issued by another bank, like the US Bank Flexperks Travel Rewards American Express or the Fidelity Investment Rewards American Express (issued by FIA Card Services), only the primary cardholder is eligible (If any of that information has changed recently, let me know and I'll update this post).

Smart & Final sells PIN-enabled Visa gift cards, so this is a straightforward money-making opportunity, with points added on for fun on the side.

Iberia Plus requires a positive points balance to search oneworld award space

Iberia and British Airways, two of the airlines that use Avios as their rewards currency, have long had a number of differences in their award charts. British Airways charged each award segment separately, while Iberia averaged the cost of each first class, business, and economy leg over the length of the entire trip (see an illustration here).

For the last few weeks, I've run into a different problem: I have been totally unable to search and price oneworld award availability using my Iberia Plus account. Here's low-level availability between Dallas and Chicago on American Airlines on April 17, 2015:

Here's the same seat available for 7,500 British Airways Avios:

And here's the result that kept coming up when searching in my Iberia Plus account:

Iberia Plus won't show oneworld availability unless you have Avios in your account

After what seemed like hours of fiddling around with my Iberia Plus account, it finally occurred to me that I didn't have any Avios in the account. What if, like some other overseas loyalty programs, Iberia required a positive account balance to search for award space?

To test the proposition, I transferred 1,000 Avios from British Airways into my Iberia Plus account, and sure enough, the (somewhat overpriced) award space immediately appeared:

Conclusion

I've been planning to explore potentially valuable Iberia Plus awards for a few weeks, but have been stymied by this problem. So now you know: oneworld award space will only appear on Iberia Plus searches if you have a positive Iberia Plus Avios balance.

When are more points worth more than fewer points?

Back in January I posed the rhetorical question, "Should all manufactured spend go through American Express gift cards?" and outlined a number of practical problems with using American Express gifts cards to manufacture spend (cards are shipped to your door activated, orders are sometimes inexplicably denied, American Express cards aren't accepted everywhere), as well as the significant advantages of fusing 1.5% or higher cash back onto everyday manufactured spend.

I concluded with a more speculative argument that "within reason, more points are more valuable than fewer points."

I want to dig a little deeper into that premise.

Comparing bonused spend to cash back

All manufactured spend should be divided, not into cash back versus miles and points, but into bonused and unbonused spend.

Theoretically, all unbonused manufactured spend would be better pushed through American Express gift cards purchased through a sufficiently lucrative cash back portal than if made directly with the credit card.

But that theoretical statement is not nearly as strong as it appears: many forms of unbonused manufactured spend are, for one reason or another, not accessible when using American Express gift cards.

The real issue arises when deciding between bonused spend and unbonused spend, when that unbonused spend is fused with cash back earned through American Express gift cards.

For example:

  • A Hilton HHonors Surpass American Express card used at grocery stores earns 6 HHonors points per dollar. An American Express gift card bought at 1.5% cash back earns 3 HHonors points per dollar, plus 1.5% cash back.
  • A US Bank Flexperks Travel Rewards card used at gas stations earns 2 Flexpoints per dollar. An American Express gift card bought at 1.5% cash back earns 1 Flexpoint per dollar, plus 1.5% cash back.
  • A Chase Ink Plus card used at office supply stores earns 5 Ultimate Rewards points per dollar. An American Express gift card bought at 1.5% cash back earns 1 Ultimate Rewards point per dollar, plus 1.5% cash back.

The conceit here is obvious: 1.5% cash back ($15 per $1,000 in manufactured spend) is worth somewhat more than 3,000 HHonors points, roughly the same as 1,000 Flexpoints, and much less than 4,000 Ultimate Rewards points.

When are more points worth more than fewer points?

With all that being said, there's a reason I still manufacture HHonors points and Flexpoints at grocery stores and gas stations, and it's a function of my (extremely qualified) claim that, within reason, more miles and points are worth more than fewer miles and points.

The reason I stress the phrase "within reason" is that you should be redeeming your miles and points roughly as quickly as you earn them. When, and only when, you're doing so, there are advantages to having somewhat higher points balances rather than somewhat lower ones.

There a few reasons this is true:

  • 5th night free benefits. Hilton, Marriott, and Starwood offer the 5th night free on 5-night award redemptions (Hilton for elite members, Marriott for all members, Starwood only at Category 3-7 properties). While the Marriott Rewards and Starwood Preferred Guest co-branded credit cards don't have bonused spending categories where it's easy to manufacture spend, Hilton does. If you foresee 5-night stays in your future, bonused spend on the HHonors Surpass American Express earns the equivalent of 7.5 HHonors points per dollar, which may put it over the top of 1.5% American Express gift card cash back.
  • Tiered redemptions. The US Bank Flexperks Travel Rewards card has tiered redemptions, which means you can only redeem your Flexpoints starting at 10,000 Flexpoints (for up to $150 in hotel reservations) and 20,000 Flexpoints (for up to $400 in airfare) when they cover an entire travel purchase. If the perfect ticket you're looking at costs more than the maximum value your current Flexpoint balance can be redeemed for, you're (usually) out of luck.
  • Transfer partners. This is a corollary of the above, but is just as important: 4 Ultimate Rewards points are worth more than 1.5% cash back not just because they can be redeemed for 4% cash back, but because they can be transferred to partner hotels and airlines where they're worth even more than a cent each.

Conclusion

This post absolutely isn't is an unqualified endorsement of manufacturing bonused spend instead of cash back — I love cash back, and my overall impression of the travel hacking community is that folks are too committed to hotel points and airline miles, acquiring unredeemably high balances at the expense of always-useful cash back.

But if, and only if, you're diligently redeeming your miles and points roughly as quickly as you earn them, then there are reasons to favor spending directly with bonused merchants rather than unbonused spending pushed through American Express gift cards, precisely because that bonused spending might get your balance within reach of a redemption you'd otherwise fall short of.

Quick hit: Hotel Hustle Hot Rates

I'm fond of saying that what travel hacking needs is more facts and less data. Much of affiliate blogging is taken up with listing transfer partners and earning rates, without concern for the ways that people actually earn and redeem their miles and points, and how to do so as lucratively as possible.

If there is a good argument for data over facts, it's the website of Seth Miller, the Wandering Aramean. He has developed a number of tools, some more and some less useful, but one I've been spending a lot of time on lately is Hotel Hustle. Hotel Hustle allows you to search, by airport or city, for properties in eight major hotel loyalty programs. It has a number of bugs which require it to be used in conjunction with another tool like AwardMapper, but it's a great resource.

The other day I noticed that Seth introduced what had the potential to be a very fun addition to Hotel Hustle: Hot Rates.

When I saw him post about Hot Rates on Twitter, I thought it might be an interesting way to see which hotel loyalty points are really worth earning for "aspirational" properties. My thought was that since cash prices have no upward bound (a hotel can theoretically charge any amount for a night), but award prices do have an upward bound (the top of the award chart), outsized per-point values would be most likely to occur at the most expensive properties.

Oddly, that proves to be not at all the case. Since the Hot Rates are powered by users' searches on Hotel Hustle, it's impossible to tell how representative they are, but the vast majority of Hot Rate properties are either airport properties or random mid- and low-tier properties in cities that happen to host one or more huge events each year.

Here's the entirety of the Club Carlson Hot Rate list. Besides the Radisson Blu in Beijing, these are not properties folks are sprinting to redeem their last-night-free benefit:

Anyway, this post isn't meant to be an endorsement or an indictment, just a quick hit making my readers aware of this potentially useful resource.

Hopefully Seth will continue to introduce new features that will eventually make it truly valuable to the working travel hacker, and prove me wrong once and for all about the usefulness of data in this hobby!

If US Bank is trimming the fat, is Flexperks Travel Rewards next?

Plenty of digital ink has been spilled about the May 28/31 Club Carlson devaluation, including here, and there's not too much left to be said. However, one thing has been bugging me about the way Club Carlson has been talking about the change: they refer to it on Twitter as the "Visa announcement."

To explain why this has been nagging at me, it helps to think about how these co-branded credit card partnerships work. There are three independent corporate actors in any co-branded partnership. In the case of Club Carlson:

  • Visa processes transactions. Visa owns and operates a worldwide network of point-of-sale terminals, for the use of which it charges merchants every time a Visa credit or debit card is used as a form of payment. It rebates part of those fees to US Bank in exchange for Club Carlson cards being issued on the Visa payment network.
  • US Bank extends credit. US Bank timely pays merchants for the services rendered, and keeps track of customers' charges. If the customer fails to pay their balance in full and on time, they also get to charge the customer interest on those purchases.
  • Club Carlson sells Gold Points to US Bank, and operates a hotel loyalty program.

With respect to the last-night-free benefit, the question is, who was paying the cost of those bonus nights?

One possibility is that Club Carlson was paying for those nights. They could have been reimbursing their participating hotels the full negotiated rate for Gold Point redemptions, and simply been eating the cost of the last-night-free benefit, in exchange for selling more Gold Points to US Bank and their customers.

The other possibility is that US Bank was paying. They may have agreed to buy additional Gold Points at whatever fixed rate they negotiated with Club Carlson, such that Club Carlson was made whole for however many last-nights-free we redeemed.

The way that the changes have been communicated, and Club Carlson's framing of the change as a "Visa announcement" leads me to believe the latter option is more plausible. And that feels like bad news.

US Bank is terrible at predicting the costs of their rewards programs

There are two ways for a bank to predict how much a rewards program will cost before launch.

One method is to look at a static picture of how your current customers spend their money. A certain amount on gas, a certain amount on groceries, a certain amount on clothes, a certain amount on tuition. You can then design a rewards structure that will be competitive with your rivals, while turning a healthy profit for yourself.

Another option is to look at the dynamic effects of the rewards program itself. It may be that offering 5% cash back in a certain category will make your customers divert more of their spending to that category than they were before the rewards program was introduced. This is much more difficult, since every bank treats information about customer spending behavior as a closely guarded, proprietary secret.

To date, US Bank appears to have exclusively used the former method. When they first introduced the Cash+ card, it had no limits on 5% cash back earnings, and no limits on the $25 bonus for redeeming more than $100 in cash back. What were they thinking? Well, they were calculating their costs based on the existing spending pattern of their customers, without taking into account the dynamic effects of 6.25% cash back in super-exploitable categories like department stores, home improvement stores, and others.

This is the best explanation of the Club Carlson devaluation

It's become a cliche that the last-night-free benefit at Club Carlson properties was "too good to last." But to a travel hacker, it's obvious that it was too good to ever get started! And yet it did. Why? Because US Bank looked at a static picture of the distribution of the length of award stays and decided they could afford to pay for the last night, without considering how that distribution would shift once the last-night-free benefit was introduced.

Once they came to terms with the fact that the number of 2-night stays shot up ten or one hundred times, they had to make a decision, and the decision was to end the benefit.

This may spell trouble for Flexperks Travel Rewards cards

I write about the US Bank Flexperks Travel Rewards card a lot because I love it: 2 Flexpoints per dollar spent at gas stations or grocery stores each month and 3 Flexpoints per dollar spent on charity, each worth up to 2 cents for paid airfare.

The trouble is that, for redemptions on airfare, it is almost mathematically impossible for US Bank to be turning a profit on this product.

Technically the worst redemption in the program would be redeeming 20,000 Flexpoints for a $201 ticket (since for cheaper tickets a 1-cent-per-point cash back redemption would be better); that would generate a hair over 1 cent per point, or a hair over 2% cash back at gas stations or grocery stores.

At 2% cash back, it's possible for the Flexperks Travel Rewards card to be turning a profit.

But besides those marginal airfare redemptions of $201 to $266, the second-worst airfare redemption in the program would be redeeming 30,000 Flexpoints for a $401 ticket, which would yield 2.67 cents per dollar spent at gas stations or grocery stores, or 4.02 cents per dollar spent on charity. And remember: that's the second-worst airfare redemption in the program. Every other airfare redemption (of points earned in bonus categories) is costing US Bank more than that.

And, as unbelievable as it sounds, if you spend at least $24,000 on the card per cardmember year, you also don't have to pay an annual fee! You'll earn 3,500 bonus Flexpoints you can redeem against your annual fee. You can even make the redemption online.

Keep your expectations low and your balances lower

I do my best to redeem my miles and points as fast as I earn them, and that's as true for US Bank Flexpoints as it is for any other rewards currency. As long as a currency is in the hands of the bank, airline, or hotel, I have no control over its value. Once I've redeemed it and, even better, once I've traveled, it's not something that can be revoked or devalued.

Note on booking Delta flights with Alaska miles

One of the great things about Alaska Airlines' Mileage Plan program is the ability to both credit paid flights operated by American Airlines and Delta Airlines, and redeem Mileage Plan miles for flights on either carrier (when low-level space is available).

I wrote back in February about free award changes and redeposits being a great benefit of Alaska MVP Gold and MVP Gold 75K elite status, since it applies to award bookings on partner airlines as well. In March, when I went to use that benefit again, I encountered an unexpected snag, one it's vitally important to be aware of if you use Mileage Plan as your primary frequent flyer program, as I do.

Delta enforces stricter fare construction rules on Alaska awards than on their own members

In the pre-2015 days of award charts and the deeply broken Delta booking engine, to piece together an international award trip you had one option: search leg-by-leg for low-level award space, then plug each leg into Delta's multi-city search tool.

With the improvements to the SkyMiles booking engine, and loss of stopovers, that's not only unnecessary, it's counterproductive. While before you could book low-level awards by stringing together low-level segments, now Delta will sometimes show different award availability for non-stop flights than for connecting itineraries. Here's an example of a flight from Boston to Detroit with availability only at the 20,000 SkyMile level:

And here's a connecting itinerary with the same 10:30 am flight — but now it's available at the low level:

If you want to fly to Detroit, and aren't checking a bag, you could of course book the connecting flight and get off in Detroit, although there are some risks to hidden-city ticketing. If you don't actually want to fly to Detroit, then if you're booking with Delta SkyMiles this doesn't affect you; just search for and book the connecting flight.

Here's the problem: when I attempted to book the same itinerary using Alaska Airlines Mileage Plan miles, the Alaska website returned the following error:

When I spoke to an Alaska representative about the issue, she looked into it and explained that Alaska could only book Delta flights when there was low-level availability on each component flight of an itinerary — even if Alaska's website shows space on the composed itinerary, and even if Delta is willing to book the complete itinerary for their own members.

Conclusion

It's hard to say in the abstract how big a problem this is or will become. For now, on most flights, most of the time, Delta award space on each leg of an itinerary roughly corresponds to the award space for the entire itinerary, and this problem doesn't arise.

On some itineraries, some of the time, especially when connecting through one or more Delta hub, this will be a huge problem since it will completely prevent an award from being booked with Mileage Plan miles at any price.

In any case, it's an issue anyone using Alaska Airlines' Mileage Plan as their primary frequent flyer program should be aware of.

The May/June Club Carlson devaluation makes it just another middling hotel loyalty program

Before I get to the meat of my analysis of Club Carlson’s recently-announced devaluation, allow me to briefly mention my general approach when it comes to credit card rewards:

  • I prefer cash above all other rewards currencies. I can use cash to pay my expenses, save for the future, and of course pay for travel out of pocket;
  • There are times when earning rewards currencies besides cash can reduce the cost of a flight or hotel below the cost I would incur making a similar reservation with cash;
  • If those situations occur frequently enough in a specific credit card rewards program, I’ll consider prospectively earning those rewards instead of cash.

The point is that my default mode when earning rewards currencies through credit card spend is cash back, and other loyalty currencies need to offer consistent, out-sized value in order to earn my business. Since the least valuable point is always the one you don’t redeem, I also make sure to redeem my hotel, airline, and proprietary credit card rewards points approximately as quickly as I earn them.

Consider the US Bank Flexperks Travel Rewards credit card. By earning 2 Flexpoints per dollar spent at "grocery stores" or "gas stations” each statement cycle, and redeeming those points for up to 2 cents each towards paid airfare, you might think that a return of up to 4% is a no-brainer (and, indeed, I do earn and redeem a lot of Flexpoints).

But last month I took a $500 voluntary denied boarding voucher on an American Airlines-operated flight. The next time I make a paid American reservation, I’ll use that voucher instead of up to 30,000 Flexpoints. Suddenly I have 30,000 more Flexpoints than I would have otherwise!

Sure, I can redeem them for 1 cent each in cash back, but that’s still a $33 loss compared to putting the same $15,000 in gas station or grocery store spend on my Barclaycard Arrival+ card (or, given the categories, another even higher-earning credit card like my Chase Ink Plus).

The Club Carlson credit cards used to offer consistent, super-sized value

The tool I use to analyze the value of hotel co-branded credit cards is the "imputed redemption value” of award reservations made with the chain: that’s the value you’re implicitly putting on a hotel redemption when you earn enough points through manufactured spend to make an award stay instead of earning cash back with the same spend. The last-night free benefit of the Club Carlson credit cards produced extremely low (that’s good, remember) imputed redemption values for stays of at least 2 nights:

The only other hotel program which I have found to offer consistent value compared to cash back is Hilton HHonors, when you manufacture gas station and grocery store spend with the Surpass co-branded American Express card. While their 2014 devaluation dramatically raised the points cost of their properties, the exceptionally high earning rate of 6 HHonors points per dollar leaves relatively reasonable imputed redemption values, especially on stays of exactly 5 nights, when elites can take advantage of the 5th-night-free benefit:

As I wrote on Friday, Wyndham’s new rewards program, which will, starting May 11, 2015, offer free nights at all participating Wyndham properties for 15,000 Wyndham Rewards points, has a single imputed redemption value. Manufacturing a single night at their properties will cost $166.50 in foregone cash back:

 

Club Carlson’s program will be fine, if you really want to stay at Club Carlson properties

I have a commenter who always pokes fun at me when I talk about staying at dumps like the Radisson Blu es. Hotel, Rome or Radisson Martinique on Broadway just because the last-night-free benefit made them so cheap.

The fact is, I’m a poor person, so if I want to travel as much as I do, I need to do it cheaply. The Club Carlson credit card helped me do that. New York’s an expensive place to stay, and while I could always transfer Ultimate Rewards points to Hyatt and stay at one of their Manhattan properties, those points have an extremely high opportunity cost since they can also be redeemed for cash or paid airfare, or transferred to the right partner at the right moment. The Martinique made sense for me as an (admittedly run-down) alternative.

But beginning June 1, Club Carlson will not offer the outsized rewards that justified manufacturing thousands of dollars per month on their co-branded credit card. Here’s a side-by-side comparison of the imputed redemption values of Club Carlson stays and their competition, with the cheapest, second-cheapest, and most expensive stays highlighted in green, yellow, and red:

Note: For Hilton I used a synthetic "mid tier" value of 45,000 HHonors points, which does not actually exist on their award chart; they have an even number of hotel categories.

As the chart clearly illustrates, at bottom-, mid-, and top-tier properties, Club Carlson is consistently the cheapest or second-cheapest chain to manufacture stays of less than 5 nights (top-tier, 5-night Hilton stays do clock in cheaper at $281, as shown in the chart further above), even without the discontinued last-night-free benefit.

The problem is that in exchange for your Club Carlson points, you’ll have to stay at Club Carlson properties, and many Club Carlson properties are dumps. Unless you have a clutch of Club Carlson properties you visit regularly, or a specific property you have your heart set on visiting, it no longer makes sense to manufacture large numbers of Club Carlson Gold Points speculatively.

If you feel like it, buy 3 domestic nights each year for $326.40 (or $351.40)

The Club Carlson co-branded credit cards still offer a single, specific value proposition:

  • the US Bank Club Carlson Premier Rewards card has an annual fee of $85, while the Business Rewards card has an annual fee of $60;
  • each year you renew your membership with either card, you receive 40,000 Gold Points;
  • starting June 1, 2015, each year you spend $10,000 with the card you receive a free night at any Club Carlson property in the United States.

Since the earning rate of the card hasn’t changed, all this adds up to paying $222 in foregone cash back and a $60 or $85 annual fee, and receiving 90,000 Gold Points and a free night in the United States. Even if you have to manufacture an additional $2,000 in order to “top up” your Gold Points to 100,000 each year, you’ll end up paying $266.40 in foregone cash back, for which you’ll receive at least 3 nights at any US Club Carlson property (there are no domestic Category 7 hotels).

Since my partner and I visit Chicago at least a couple times per year, I’ll probably do exactly that, paying $108.80 per night for an annual 3-night stay at the Radisson Blu Aqua Hotel Chicago in downtown Chicago, which is a lovely hotel we’ve stayed at many times before (using the last-night-free benefit, of course).

By way of comparison, the imputed redemption value of the Hilton downtown Chicago properties (ranging from 40,000 to 60,000 HHonors points, depending on the season) is $118 to $178, while a reservation at the three Category 4 Hyatt properties in downtown Chicago would cost 15,000 transferred Ultimate Rewards points (worth $150 in cash).

Conclusion

The Club Carlson last-night-free benefit was so lucrative it justified a lot of otherwise-bizarre behavior. At the end of May, it’ll be gone, and Club Carlson will be just another middling hotel chain, packed with dilapidated, aging properties and struggling for relevance.

It sure was fun while it lasted, though!