Can you book or change flights into a weather advisory?

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One of the blogs I've read most faithfully over the years is Delta Points. Like René, I'm more or less hopelessly in love with Delta as an airline, and have more or less hopelessly given up on Skymiles as a loyalty program (as opposed to a convenient way to travel the world for next to nothing).

One of the things I admire about René is his dedication to booking "low"-level Delta award tickets, and willingness to do anything and everything to get flights, dates and routings that work for his schedule.

And that's why I thought of him when contemplating today's question.

Delta's proactive approach to developing weather situations

Until René started blasting his Twitter and RSS feeds with every Delta weather advisory, I had never paid much attention to the little box on the bottom of Delta's homepage notifying visitors of strikes, unrest, and weather disruptions:

New York City and Philadelphia are affected by inclement weather

As it happens, I'm headed to New York City tomorrow for a long weekend visiting family and friends, and while my outbound ticket is nonstop, my inbound flight connects in Detroit. Yesterday afternoon, I called in to Delta to request my upgrade (my upgrades are sometimes not requested when I book through Delta.com), and thought I'd ask if the inclement weather would allow me to change from my current, indirect, flight to a direct one.

Unfortunately my return flight on the 15th falls outside of the window of affected dates, June 11-13, so the representative wasn't able to help me.

But then I got to thinking.

Can you book or change flights into a weather exception?

I got to thinking because I'm a Platinum Medallion with Delta, which I regularly claim is the best Medallion status because it gives you free award changes and cancellations. That makes it easy to lock in "low"-level availability when it's available, even if you can't find availability on every leg right away. Plus you can make backup reservations hoping that revenue ticket prices will go down before you actually need to fly.

As the storm advisory helpfully explains:

"Even if your flight is not canceled, you may make a one-time change to your ticket without fee if you are scheduled to travel to, from, or through the following destination(s) on Delta, Delta Connection®, or Delta-coded flights during the specified time periods listed below."

Since I'm a Platinum Medallion, I wondered if I could change my return flight to a low-level flight during the affected dates, then take advantage of the weather advisory to change my ticket back to the original date — but now on a nonstop flight.

Unfortunately, when this occurred to me I was already within the 3-day window when online changes are impossible, and I didn't really feel like trying to convince a phone representative to let me game their system.

Conclusion

I am still curious, however, so next time a weather advisory pops up more than 3 days out, I'll be giving this a shot.

Do any of my readers have experience either deliberately or accidentally taking advantage of a weather-advisory-related change to improve a reservation, without actually changing your plans?

The "other" 4% cash back portal

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[edit 6/9/14: As Milenomics quickly pointed out on Twitter, BeFrugal is currently offering 4% cash back as well.]

As I explained last week, for the time being I don't have access to American Express gift cards. That doesn't mean I don't know that they're one of the most lucrative tools currently available for driving down the cost of manufactured spend: by clicking through shopping portals to the American Express gift card site, you can earn cash back that more than offsets the purchase and shipping fees associated with the gift cards themselves.

The Barclaycard Arrival RewardsBoost mall gets a lot of attention, whether for its relatively high payouts, the 10% rebate earned when redeeming Arrival miles against travel purchases, or the commissions (other) bloggers earn on successful applications for the card.

Unfortunately, the RewardsBoost portal isn't perfect. First of all, American Express gift cards have disappeared from the portal, at least for the time being. Secondly, if you don't have an Arrival card already, you may not be ready to apply for new credit, or have trouble being approved by Barclaycard for a new account. Finally, as discussed in the comments to this post, if you primarily redeem miles and points for your travel needs, you may simply not have enough paid travel purchases to justify running up large Arrival balances; when redeemed for cash back, an Arrival mile is worth just half a cent.

USAA MemberShop

Meanwhile, if you have a USAA membership, you have access to the MemberShop, another shopping portal operated by the same folks who run RewardsBoost and many of the airline co-branded shopping portals. Unlike those portals, however, the USAA MemberShop offers cold hard cash, deposited directly into your USAA checking account.

It's a little tricky to find the MemberShop: from your USAA home screen, click on "Our Products," then "Retail & Discounts:"

From there, scroll down until you see MemberShop, and click "Shop Now."

Conclusion

The 3% cash back offered by TopCashBack ends in 6 days, and as always it's unclear if that means the rate will be going up, down, staying the same, or disappearing completely. If you have or are eligible for a USAA checking account, it's one more option to maximize your return on American Express gift cards.

Twitter feeds worth following

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Last week I mentioned that I've come to rely on Twitter more and more, while simultaneously cutting down my consumption of blog posts. In response, a reader asked me to suggest some Twitter handles that are worth following.

To be clear, these are not necessarily reviews or endorsements of the underlying blogs or bloggers behind these feeds; just Twitter feeds I happen to follow, and why.

To be clear, these aren't all the Twitter handles I follow, which you can find here. But they are the folks that I consider part of any well-rounded travel hacking diet, for the reasons explained above.

Are there any I'm missing? Let me know in the comments.

Initializing Iberia Plus Avios accounts

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Last month I mentioned that I was trying to figure out how to "initialize" my Iberia account. Now that I've succeeded, I can share my experience.

What are Avios?

For most hotels and airlines we use in the United States, a loyalty currency is almost indistinguishable from a loyalty program. It doesn't occur to anyone that there's a difference between the Delta Skymiles loyalty program and an individual Delta Skymile.

Avios work slightly differently: Avios are the rewards currency of three different loyalty programs: British Airways Executive Club, Iberia Plus, and the Avios travel rewards program.

So just like you can use Euros issued in France to buy bratwurst in Vienna, you can use your Avios for rewards through any of the three programs.

However, as the people of Greece recently discovered to their chagrin, just because countries use the same currency doesn't mean they can't impose border controls. That's exactly what Iberia has done, and smuggling Avios past those controls is the subject of this post.

Why Iberia?

While British Airways and Iberia charge the same number of Avios for flight redemptions through either program, Iberia charges much lower fuel surcharges for award redemptions on their own flights than those booked using Avios in British Airways Executive Club club accounts.

Here's British Airway's Avios calculation for a non-stop flight between Madrid and New York's JFK airport:

At the request of a very generous reader, this picture features a circle

Here's the same route priced out using Avios in an Iberia account:

At the request of a very generous reader, this picture features four arrows

What's the problem?

In a perfect world, that's all you'd need to know. By choosing "Combine my Avios" (find it under "Manage my account") on British Airways' website, you'd be able to save yourself hundreds of dollars on your Iberia award flights by booking using Iberia Plus instead.

Unfortunately, the world we live in isn't perfect yet, and you're not allowed to transfer Avios into your Iberia account until it's been open for 90 days and has at least one other (non-"Combine my Avios") transaction.

What's the solution?

In response to my original post a number of readers reached out with suggestions on how to "initialize" my Iberia account:

  • e-Rewards redemption. This is what I ultimately did: I redeemed $25 in e-Rewards credit for 750 Avios in my Iberia account. That transaction initialized my (over-90-day-old) account, and I was then able to successfully transfer Avios from British Airways to Iberia using Avios.com as the Points Guy describes here. This worked for me since I already had about $24 in e-Rewards credit, so I just had to flunk a few surveys in order to earn the additional $1 in credit. I initiated my transfer on May 29, and the Avios were credited to my Iberia Plus account on June 2;
  • Membership Rewards transfer. In the comments, Grant not-very-helpfully (I don't have Membership Rewards points) pointed to his post on transferring Membership Rewards points to Iberia Plus in order to initialize an account;
  • Melia Rewards transfer. Another reader reported being able to transfer the 2,000 point signup bonus with the MeliaRewards program to Iberia. I wasn't ultimately able to do this — as the reader pointed out, the 2,000 bonus points aren't supposed to be eligible for transfer. However, if you do ever stay with a Melia-affiliated property, or earn Melia points through some other activity, you will be able to transfer the points you earn to Iberia Plus.

Conclusion

Iberia has great award availability and relatively low fuel surcharges on their own flights; that can be a powerful combination when trying to decide how to fly to or from Europe using Avios, while Avios can be one of the easiest loyalty currencies to earn since British Airways Executive Club is a transfer partner of Chase's Ultimate Rewards points.

Update on life/career changes

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Back in April I announced that I was leaving my pretty casual employment in New England to move halfway across the country. I'd been in a long-distance relationship for way too long and it was time to cut down the distance. Rather than look for a new job, I decided to rededicate myself to my two favorite pastimes: blogging and taking money from banks.

My original announcement was titled "Everything (nothing) is changing," and I think I hit the nail squarely on the head. In case readers hadn't noticed my somewhat-more-frequent posts lately, I'm now settled into my new lifestyle, and I'm loving it. Three weeks into the move, here's where things stand.

What's changed

One (the only) good thing about my former position was that, besides giving me a flexible schedule and plenty of time to both travel and hack, it also gave me a regular paycheck. The money was enough to live on, which meant I could manufacture spend on miles- and points-earning credit cards "opportunistically," as Frequent Miler put it in the comments here. That is to say, I didn't mind foregoing cash back speculatively, since I knew I would be able to pay my rent no matter what happened to my American Airlines balance.

While manufactured spend gives me access to unlimited liquidity, given the constantly changing nature of the game I'm unwilling to use that liquidity to pay actual expenses. That means I've set myself the goal of earning enough cash back each month to meet my (honestly, pretty minimal) expenses. Fortunately, I'll still be receiving a nominal sum from my former employer for the next month or two, so I'm not leaping in completely without a parachute. It sure feels that way, though!

And in case you're wondering why I would have trouble manufacturing enough cash back to live on, I'm happy to share: my American Express gift card orders have been declined ever since the move, presumably because my new billing information hasn't populated to whatever database they use to validate orders. Unless those orders start being approved in the next few months, I'll be relying on brute force to earn enough to pay the rent.

What hasn't changed

My impression is that most people who quit their day jobs to write travel blogs full-time do so because they realize how much they're earning from credit card affiliate links, and decide it's enough to live in the manner they're accustomed to. Of course, the really big players earn enough to hire employees and merely phone in the occasional (16-part) post. 

I don't have any credit card affiliate links. This site is entirely reader-supported, by readers who buy or borrow my ebook from Amazon, use my signup links for travel-hacking-related services, and most importantly sign up for PayPal subscriptions using the subscription button on every page of the website.

Why do I say PayPal subscriptions are the most important, when a single Uber signup might offer $10 or $20 in referral credit? Simple: the trivial amounts you sign up to contribute each month (subscriptions start at $2 per month, and top out at $10 per month) add up, and give me a kind of base income I can more-or-less rely on each month. You probably won't notice PayPal deduct your $2 subscription each week or month, but if just 200 readers like you subscribe, that's $400 in rent I can worry a little less about manufacturing each month. In other words, it's a small thing to you that makes a big difference to me.

Plus it gives you access to my occasional subscribers-only newsletters and the recently-launched complete archive of past newsletters.

Other developments

As my readership has grown, a number of readers have reached out to me for one-off help consulting with them on how to develop or refine their own miles-and-points strategy. That's been a really exciting development and I've been able to help a few people out now, in addition to the help I'm always happy to provide readers here on the blog and through Twitter or e-mail.

Meanwhile I guess I've entered into the same summer funk I was in last year when I asked "Has affiliate blogging gotten worse?" because I've cut way back on my consumption of other travel hacking blogs. The simultaneous disappearance of both American Express affiliate links and articles about American Express cards is the kind of "coincidence" that helps you realize just how shameless many of those blogs can be. Of course there are exceptions (the crew over at Saverocity are still putting out great content), but I'd rather be hacking than reading most bloggers writing today.

Finally, one thing that's been fun about the renewed intensity of my manufactured spend is that it's put me on the front lines of recent changes that I've been able to share with my readers in real time. While the biggest news eventually makes its way to the blog, I've come to rely on Twitter for real-time reporting of developments, and there's really no substitute for a great Twitter feed.

I want to thank all my readers for reading, and for giving me the courage to take this pretty radical step with my life. See you in the comments!

New(est) changes to Walmart point-of-sale systems

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There are no two ways about it: it's been a frustrating week in the world of manufactured spend. Just a month after I wrote my award-winning (or at least widely retweeted) post on dealing with changes to Walmart point-of-sale systems, the geniuses in Bentonville struck again and implemented another set of obstacles to seamless Walmart financial transactions.

I've been experimenting extensively with the new(est) changes. This is my report.

Processing of prepaid debit cards

Historically, there's been a divide between the way (many) Visa and (many) MasterCard prepaid debit cards have been processed at Walmart registers. Visas, particularly the widely-available cards administered under the Vanilla brand, have (until the most recent changes) been processed by default as debit cards. That means immediately after swiping, a PIN pad would appear and allow you to input either a pre-set or extemporaneous PIN code, depending on the prepaid debit card product.

Many MasterCards, on the other hand, have required users to manually instruct the point-of-sale system to process the card as debit; otherwise, the system initially recognized them as credit cards and refused the cards for debit-only transactions.

As a result of that historical difference, I have never used a MasterCard prepaid debit card at Walmart.

The latest changes have resulted in (many) Visa prepaid debit cards being processed just like (many) MasterCard prepaid debit cards have been in the past: initially as credit cards, and only after explicit user intervention as debit cards.

Change payment – but fast!

Over the past few days I've visited many different Walmart store locations and processed all of the transactions popular among my readers. I'm pleased to say that there is no transaction that previously could be conducted with a prepaid Visa debit card that cannot, today, be conducted with a prepaid Visa debit card.

But that doesn't mean it's easy.

Upon each swipe of a prepaid debit card, you have exactly one chance to alert the point-of-sale system to process your transaction as debit, instead of credit. That chance comes immediately after swiping the debit card, while the customer-facing keypad appears to still be "thinking."

On the keypads at my Walmart registers, you'll first see a red button in the bottom right corner of the screen. Then, within less than a second, a yellow "Change Payment" button will appear in the bottom center of the screen. That, and only that, is your cue to push the yellow button on the right side of the keypad, embossed with a left-facing arrow.

If you miss that chance your transaction will be processed as credit, and fail.

As I mentioned, I've done these transactions at a variety of Walmarts and at a variety of registers, and I've started mentally classifying them into "fast" and "slow" locations.

At "slow" locations, you may have up to 1.5 or 2 seconds to press "Change Payment," either using the touchscreen button or pressing the yellow left-facing arrow button.

At "fast" locations, you will have less than half a second, and you will probably not be able to press the on-screen button. But you can still press the left-facing arrow button the moment you see the yellow on-screen button appear, and it will have an identical function (the screen even displays the "depressed button" animation).

Why are so many experienced people having so many problems?

If all that sounds vaguely familiar, it's because it's been widely reported for many months with respect to MasterCard prepaid debit cards. But this latest update has caused problems even among people who are well aware of the historical situation and the ongoing updates. Why?

My best guess is that they aren't taking into account the interaction of the new(er) changes with the new(est) changes.

As a reminder, under what we might call "first generation" Walmart point-of-sale software, for all split-tender transactions the cashier first typed in the amount of each swipe, before the customer interacted with the terminal.

Under the "second generation" [new(er)] software, the customer first completes their interaction with the terminal, all the way through to typing in a PIN code, before the cashier types in the amount of the split tender.

The problem is that under the new(est) software, the customer's interaction with the terminal takes much, much longer. And it's difficult to convince a cashier to not interact with her register during the entire 8-12 seconds it takes for the customer to complete their interaction with the customer-facing terminal.

Emerging differences between money orders and bill payments

In my earlier reporting on the "new(er)" point-of-sale software, I said or implied that the new "customer first" protocol applied to all split-tender transactions.

I frankly don't know whether that was an error on my part from the beginning or whether a change has subsequently been implemented.

Either way, since the new(est) software changes have been implemented, I've observed a recurring difference between split-tender transactions for money orders and for bill payments.

It's now my belief that at some Walmart store locations with the new(est) software, split-tender transactions for money orders can still be processed "cashier first." Bill payment transactions, on the other hand, can only be processed "customer first."

I know better than to suggest that's the rule at every one of the thousands of store locations in the United States. But if you're having ongoing problems with these prepaid debit transactions, that would be the place I would start diagnosing the problem: either buy money orders or, during bill payments, find a way to convince your Customer Service and Money Center employees to resist processing the split tender until you've completely finished interacting with your customer-facing terminal.

Conclusion

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Booking premium domestic products (on the cheap)

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Back in March I observed that Delta's premium transcontinental BusinessElite service was bookable using Alaska Airlines' Mileage Plan miles at the standard domestic First Class rate. That fluke has since been fixed, but it got me thinking about the best ways to book those premium transcontinental seats using partner miles. Here's what I found:

American Airlines

American Airlines operates a 3-cabin First Class product on transcontinental flights between JFK and LAX and between JFK and SFO. Booking these 3-cabin First Class seats through AAdvantage costs 32,500 miles each way at the SAAver level.

The popular workaround of using British Airways Avios on oneworld awards is actually counter-productive in this case, since for premium cabin redemptions British Airways charges 2 (Business) or 3 (First) times the cost of an economy award. Since LAX and SFO are in the 2000–3000 mile band, a First Class redemption will cost 37,500 Avios from JFK each way.

Instead, book your First Class ticket using US Airways Dividend Miles. You'll pay just 50,000 Dividend Miles, since US Airways doesn't have a spot on its domestic award chart for 3-cabin Business Class.

While researching this I naturally started wondering what would happen if you tried to price out a First Class award on a date when seats were available in Business but not First, since they don't have a separate price point for domestic Business. This is what I found:

Clever girl!

Delta Airlines

Delta operates their premium BusinessElite product between JFK and LAX, SEA, and SFO, and prices those seats out at 65,000 Skymiles roundtrip.

Many people would prefer to burn Skymiles instead of other, more valuable mileage currencies, but you can still book BusinessElite tickets with 65,000 Alaska Airlines Mileage Plan miles roundtrip, which you might consider doing in order to put together an itinerary that mixes and matches American's First Class and Delta's BusinessElite products, perhaps if you're some kind of travel blogger intent on reviewing these products (or if you just happen to be Mileage Plan rich).

If you're booking an award ticket for yourself or a (very) immediate family member, and are willing to persevere through their Byzantine booking procedure, you can transfer Ultimate Rewards points to Korean Airlines and book a roundtrip BusinessElite flight for 45,000 SkyPass miles.

United Airlines

United operates their "Premium Service" BusinessFirst product between JFK and LAX and JFK and SFO. Unfortunately my cursory glance showed essentially no award availability on the product. If you are able to find award space at the Saver level, it costs just 25,000 United miles each way, since it is a two-cabin product.

Star Alliance has a number of member airlines with interesting mileage programs, so you may find lucrative redemption options in your own favorite non-US program. Here are some that occurred off the top of my head:

  • Aegean Airlines. If you happened to have run up a balance of Aegean miles while qualifying for Star Alliance Gold status, you can redeem 21,000 of them for a one-way Business Class ticket within North America;
  • Lifemiles. As you may have noticed, Lifemiles are currently having a moment. If you've accumulated a stash of them, you can redeem 60,000 for a roundtrip Business Class flight within North America. Those miles may be cheaper than you think;
  • Lufthansa Miles & More. As is pointed out ad nauseam whenever a new affiliate link is released, Lufthansa allows you to redeem 35,000 miles for roundtrip domestic First Class (or in this case, BusinessFirst) awards within the US.

Do take a look at United BusinessFirst award availability, in case you think I'm exaggerating. You should probably not plan on redeeming any reasonable number of miles for that product, unless they open up vastly more award space in the future.

Observations on the banks and their quirks

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Despite the fact that here in America we have a more or less centralized banking system, each bank still interfaces with that backbone (the Automated Clearing House, Visa and MasterCard payment networks, etc.) using its own proprietary software. That leads to the various banks processing identical transactions on different timetables. Nothing in this post is scripture, but I thought it might be interesting to share my observations on the quirks of each bank, as I've observed them, and invite readers to share their own experiences in the comments.

These observations are based on obsessively logging into all my bank accounts multiple times each day, both on PC and smartphone. If you don't obsessively watch your accounts, you probably won't notice any of these differences, since they don't have any impact on the important stuff like statement balances or due dates.

American Express

American Express clears transactions the fastest among any of the banks whose cards I carry: they'll typically post the second business day after a purchase.

When making a payment, my "available credit" will typically increase on the day the payment is scheduled to be received, while my "outstanding balance" will decrease only the following day.

Rewards typically post to third party accounts about a day after statement closing, while my Blue Cash seems to take up to 2 days (based on a very small number of statements to date).

Barclaycard

Barclaycard clears transactions typically within 3-4 business days, I haven't observed them to be particularly fast or slow.

Payments post in the opposite manner of American Express: my outstanding balance will go down in the evening of the day a payment is scheduled to post, but my available credit won't go up until the following business day.

One of the many reasons I love the Barclaycard Arrival (now Arrival+) is that rewards post mid-cycle. Interestingly, in my experience they tend to post the evening before a charge actually clears on my online account. This can lead to some confusion about whether miles are the results of a charge posting or RewardsBoost shopping portal miles posting, because the pending charge disappears completely overnight, before reappearing as cleared the following day.

US Bank

US Bank is the opposite of American Express: charges take the absolute longest to post of any of my credit cards, at least 4 business days and sometimes up to 5.

However, I've been able to use this to my advantage, because of the other quirk of US Bank compared to my other credit card issuers: US Bank reports my balances to credit bureaux on the last day of the month, not on statement closing, while rewards are naturally based on all the charges during my statement cycle. That means I can drive down my balances before the end of the month with charges that will post before my statement closing date. I'm unable to truly maximize this quirk because my statement closing date happens to fall at the beginning of the month. If you have a mid-month closing date, however, you could easily avoid having any of your spend ever show up on your credit reports.

All of my US Bank credit cards are without a preset spending limit, so I'm not sure when credit becomes available again after a payment. However, payments usually show up online the day after a payment is scheduled to arrive, with the correct posting date.

Chase

Chase is absolutely vanilla compared to these other card issuers. Charges clear within 3-4 days, and payments post on schedule (although they don't show up in online banking until the following day). Ultimate Rewards points post towards the evening of the day my statements become available, while third-party rewards (Avios) can take 2-3 days to post.

I also use my Chase cards least aggressively of all my rewards-earning credit cards, so my experience may simply be a consequence of basing my conclusions on fewer datapoints.

Conclusion

Do these quirks jibe with your own experiences?

Have you observed similar quirks with other card issuers, like Comenity, GE Capital, or FIA Card Services?

Frequent Miler's wrongheaded approach to redemption values

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Frequent Miler's a smart dude, whom I respect for his dedication to the craft. Sometimes, though, I have the sense that he gets a little up in his head. In today's edition of "Frequent Miler overthinking things:" redemption values.

Background

In three recent posts, Frequent Miler has sought to find a rubric for understanding the "reasonable redemption value" of various loyalty currencies:

The underlying principle behind the series is that the value you should feel comfortable redeeming your points at is based on the typical price of the product you're redeeming them for.

But that's not right, and here's why.

Forget 5%

If you have a 5% cash back-earning credit card, then presumably you already know you need to be putting as much spend on it as you're comfortable with. You're going to get more value from each dollar spent at 5% cash back than you will with virtually any other credit card (unless you're going for a heroic signup bonus or high-spend threshold on your alternate card).

Forget "unlimited"

I have a commenter here on the blog who regularly chastises me whenever I write about opportunity costs, because of the possibility of "unlimited MS at negative cost." But even if you did have access to unlimited manufactured spend, you'd still want to spend your time (which, last time I checked, is not unlimited) manufacturing that spend on the most lucrative cards possible.

What do you actually redeem your miles and points for?

Here's where Frequent Miler goes so far afield. He argues,

"I think it is important to supplement Fair Trading Values with estimates of the redemption values of points and miles.  Such numbers could be used to help decide whether buying points or miles is a good idea.  And, they can be used as a target when booking awards to ensure that you get good value from those awards."

But he doesn't explain why. And that's because no sane person starts with redemption values, then decides whether a redemption is worth making. Sane people start with a trip they want to take, and then figure out how to pay for it.

How about an example?

In the latest edition, Frequent Miler suggests that a reasonable redemption value for Delta Skymiles might be 1.02 cents for domestic economy redemptions, on the following grounds:

  • the average domestic flight costs $381;
  • it's typically possible to fly for somewhat (10%) less than average;
  • Delta charges up to $10 in fees on domestic award redemptions;
  • and you'll typically end up paying 32,500 for a domestic award redemption.

The problem

All of this begs the question: if you're getting just 1.02 cents per Skymile for your redemptions, why do you have any Skymiles at all?

I ask because every dollar you put on an American Express Delta Platinum (earning 1.4 Skymiles per dollar at $50,000) or Delta Reserve (1.5 Skymiles per dollar at $60,000) card could be put on a 2% or 2.22% cash back card. 

Furthermore, all your paid flights on Delta could be credited to Alaska Airlines' much more lucrative Mileage Plan.

The answer, of course, is that you have Skymiles because you get more than 1.59 cents (Platinum) or 1.48 cents (Reserve) per Skymile on your redemptions.

In other words, if you're getting just 1.02 cents per Skymile on your redemptions, you need to redeem all your Skymiles and stop earning more as soon as possible.

So what's my alternative?

The alternative approach, which I've advocated in my own posts (Club Carlson, Hilton) is to instead start with the cost of acquisition and ask a far simpler question: "how much do I need to value this redemption to justify putting the needed spend on a co-branded credit card instead of a 2% or 2.22% cash back credit card?"

The best part is that this exercise allows an instant validation of whether a trip should be paid for with cash or points, based on actually existing prices for the product you're interested in.

A real person starts by saying, "I'd like to fly roundtrip on Delta between Madison and a New York airport (but not Newark) for a weekend in June."

Then they pull up an ITA Matrix search and find the lowest fares available:

As you can see, our little weekend romp will cost between $460 and $541.

Then a real person hops on delta.com (or, more likely, alaskaair.com) and checks award availability, immediately seeing whether they are getting more or less value than their points' acquisition cost:

Using this technique (again, the thing that people actually do when evaluating redemptions), we can calculate our redemption value for each weekend:

  • June 5/6 — 8: $540/25,000 Skymiles. 2.16 cents per Skymile;
  • June 12/13 — 15: $460/25,000 Skymiles. 1.84 cents per Skymile;
  • June 19/20 — 22: $460-$520/32,500 Skymiles. 1.41-1.6 cents per Skymile;
  • June 26/27 — 29: $475-$540/32,500 Skymiles. 1.46-1.66 cents per Skymile.

Here's the thing: these are all great redemptions, not because of the high value you're getting for each Skymile but because you already have 25,000-32,500 Skymiles, and if you don't redeem them they're just going to keep collecting dust.

After redeeming, decide whether to keep earning

Once you have a load of Skymiles it's too late to start considering redemption values. The time to make that calculation is before you earn them.

If in your market, for your travel needs, you're redeeming your Skymiles for less than the implicit cost of acquisition (putting the spend on a 2% or 2.22% cash back card), you shouldn't be putting spend on that card to begin with (unless you're doing so for other reasons, like Medallion Qualifying Miles or the Medallion Qualifying Dollars waiver).

That doesn't mean you shouldn't plan ahead

Over at Milenomics they're doing the Lord's work advocating for a rational approach to earning and burning miles, and one of the centerpieces of that effort is so-called "demand schedules," explicit plans for upcoming trips and the miles, points, and cash currencies the traveler plans to redeem for them.

Demand schedules can't anticipate everything, however. If you have an upcoming trip to Milan planned with American AAdvantage miles and you suddenly discover a $200 one-way flight, you shouldn't blindly book the ticket with your AAdvantage miles anyway. You should, however, be ready to spend those miles as soon as possible, even on a less expensive trip you might have been planning to pay for with cash.

Because once you've passed up the opportunity to earn cash back, and instead earned miles or points, it's too late to start calculating [edit: ideal] redemption values.

Manufacturing spend with low credit limits

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My impression is that most people get into travel hacking the same way I did: by accident. Either by accidentally triggering elite status, getting an operational upgrade to first or business class, or discovering a lucrative but unadvertised feature of a card they already carry. Then — if they have the right personality type — they get hooked.

A straightforward consequence of that fact is that most travel hackers are middle or upper class. It simply doesn't occur very often that the working poor fly 25,000 miles on the same airline during a single calendar year (and think to credit their flights to a frequent flyer account), or carry credit cards that can offer outsized rewards.

But as I never hesitate to remind people, I myself am a poor person, and that means low credit limits. Nonetheless, I have a miles and points strategy that's comprehensive enough for me. Here's how I do it.

Have perfect credit

When I was growing up, my mom always referred to herself as a person with "perfect credit." What she meant was that she paid off all her credit card bills on time each month, and had never missed a payment.

And when my mom was growing up, that may have been what "perfect credit" meant. Nowadays, of course, we could critique her credit history for not having students loans, car loans, or home mortgages: she was fortunate enough to be educated when student loans were in their infancy, and to never have to take out a loan for a car or house.

Nonetheless, the single most important thing you can do to develop your miles and points strategy is avoid scrutiny by banks, and that means at least having a spotless credit profile, if not a perfect one: pay your bills on time.

Miles-earning debit cards

For years, Bank of America would issue Alaska Airlines debit cards to anyone with a checking account — they didn't ask your annual income and they didn't check your credit history.

Sure, that card's no longer being offered, but rather than pine for lost opportunities, why not go sign up for a Suntrust Delta Skymiles World Check Card?

Diversity is strength

I don't have a credit limit over $10,000 on any of my 2% cash back credit cards.

But I have three of them:

  • Fidelity Investment Rewards American Express;
  • US Bank Cash+;
  • and Barclaycard Arrival+ MasterCard.

Between the 3, I have over $20,000 in credit limits, which I can deploy to earn over $200 in cash back each month without spending over my credit limit on any one of the cards.

Take risks

I would never give this advice to someone who makes a lot of money and enjoys high limits on all their credit card accounts. But this post isn't for them, it's for the rest of us.

As I shared back in January, my "old" Blue Cash card was approved with a credit limit of just $1,000. If I limited my spend on that card to my credit limit each month, I'd be earning just $340 per year, minus my costs. And that would be a total waste.

So I cycle my credit limit many, many times each month.

Is that a good idea? Of course not. But you probably have higher credit limits than I do.

Conclusion

What I'm trying to say is that you don't need to think about manufacturing $50,000 per month as requiring a single card with a $50,000 credit limit, or even multiple cards with credit limits that add up to $50,000. $25,000 in money orders deposited into a checking account with a linked miles-earning debit card can double your value at a trivial additional cost, and aggressively paying off your credit cards mid-cycle can free up additional credit limits as well.