Why would you book a stopover on a one-way trip?

On Wednesday I saw this post by The Miles Professor explaining how to book stopovers on one-way Alaska Airlines award tickets.

The thing is, it's not immediately obvious why you would ever do this.

As The Miles Professor writes:

"One of my favorite ways to use stopovers is to schedule a stopover in my actual home city and use the stopover to connect two completely different trips."

Of course Alaska Airlines has a zone-based, not distance-based, award chart, so there's no reason you would need to book two round-trip tickets from your home city as two one-way trips with stopovers in your home city. For example, a Seattle resident could book the following two one-way tickets:

• LAX-SEA (stopover)-BOS
• BOS-SEA (stopover)-LAX

Each of those tickets would cost 12,500 Alaska Mileage Plan miles, assuming there's low-level award availability. But remember, our hypothetical passenger is a resident of Seattle, so they'd need to find some way to get to LAX in the first place, and some way back from LAX at the end! Each of those one-ways would also cost 12,500, bringing the total cost for 2 roundtrips to 50,000, just as it's supposed to be.

Now, at this point you've probably seen the sleight of hand I'm pulling; in fact our passenger knows better than to spend 12,500 valuable Alaska miles on a short West Coast hop, and instead transfers 7,500 Chase Ultimate Rewards, Starwood Preferred Guest, or American Express Membership Rewards points to British Airways Avios, and ends up with reservations that look like this:

• SEA-LAX – 7,500 Avios
• LAX-SEA (stopover)-BOS – 12,500 Mileage Plan
• BOS-SEA (stopover)-LAX – 12,500 Mileage Plan

Here we've booked two-and-a-half round-trips for the price of one-and-a-half roundtrips. Not bad! Of course our passenger still has to find a way back from LAX if they decide to fly that leg, but even if they don't, they still end up a one-way flight ahead of the game, which isn't nothing.

If that's the obvious use for stopovers on one-way trips, I thought it'd be interesting to see which others I could come up with.

4 reasons to book stopovers on one-way award tickets

1. See more cities. As you can see in the comments to The Miles Professor's post, you can also book stopovers on one-way Alaska Airlines partner awards, so if you're booking an award ticket on a partner airline like KLM, you can stop over for a few days and enjoy Amsterdam on your way.
2. Cheap awards to Hawaii and Mexico. Since you can book award tickets from anywhere in the continental United States to Hawaii and Mexico for the same price, which is less than twice the cost of domestic awards, you can book future, onward travel to Hawaii for just 7,500 miles or Mexico for 5,000 miles, compared to the 20,000 and 17,500 Mileage Plan miles, respectively, you'd have to pay to book a separate itinerary.
3. Position for future flights. I showed one example of this technique above, but you can also use it to position for flights on other carriers. For example, United operates an international hub out of San Francisco, but you might have difficulty finding low-level award space between Seattle and San Francisco on United-operated flights. Instead, you can use your free one-way flight to position to San Francisco on an Alaska Airlines-operated flight.
4. Because you can. As long as you book your speculative onward connection at the end of your itinerary, you may as well tag an extra leg onto your reservation. Who knows, you might even end up using it! Just don't book a speculative connection at the beginning, since a missed first leg will typically cancel your entire itinerary.

Conclusion

Free one-ways are a fun and easy way to take advantage of airlines' generous award routing rules.

Which reasons to book a stopover on award tickets did I leave out?

Confirmed: multiple same-day Serve loads at Family Dollar

Back in July I mentioned my intention to load my Serve card at Family Dollar for the time being, using easily-acquired OneVanilla prepaid Visa debit cards, and just last month shared my local store manager's theory about the kinds of limits Family Dollar registers impose on Serve loads.

As I explained in that second post:

"However, using Family Dollar raises its own issues; in particular, you can generally only load a Serve card once per day, per store location. Since I only have one convenient Family Dollar location, that means loading $5,000 in OneVanilla cards over ten days, compared to the 2 days possible at Walmart registers ($2,500 per day)." (emphasis added)

While it's true that I have only one convenient Family Dollar location, it's not precisely true that I have only one local location.

Multiple same-day Serve loads are possible at different Family Dollar locations

A reader had privately e-mailed me to let me know he was able to load his Serve card multiple times on the same day at different Family Dollar locations, so this morning I set off to cruise around the suburbs and collect my own datapoints.

I ended up visiting 3 Family Dollar locations: my own local, convenient location, and two suburban locations:

• My $500 load went through as usual at my local store;
• the first suburban location's card readers and PIN pads were out of order;
• and the second suburban location allowed me to complete a second, $500 load.

My working hypothesis for now is that you can load up to $2,500 per day (Serve's daily cash load limit, per the Serve website), by visiting 5 different Family Dollar store locations.

Family Dollar loads have their drawbacks

Those with access to more store locations will benefit most from this fact, and not just because you need access to 5 stores in order to complete 5, $500 loads.

In addition to the one-load-per-store-per-day limitation, Family Dollar registers also have an overreactive fraud detection algorithm, such that you might be unable to load your Serve card at any given store even once, depending on that store location's previous daily load activity, as I described here.

And of course, as my experience today showed, Family Dollar stores are not necessarily reliable partners; both technical difficulties and undertrained personnel can make life more frustrating that you'd like.

Conclusion

I know there are metropolitan areas with dozens of Family Dollar locations, and for residents of those areas the possibility of multiple, same-day Serve loads using OneVanilla cards is yet another advantage of Serve over Bluebird.

As Serve becomes ever more useful than Bluebird, it seems to me that it must be a matter of time until Bluebird cards are discontinued and Serve remains as American Express's flagship prepaid card product.

Comparing distance- and revenue-based airline loyalty programs

In 2015, there will be two major distance-based airline loyalty programs based in the United States – American's AAdvantage and Alaska Airlines' Mileage Plan – and two major revenue-based loyalty programs – Delta Skymiles and United Mileage Plus. US Airways Dividend Miles will presumably disappear sometime in 2015, so I won't treat that program here.

A lot of digital ink has been spilled about whether individuals will earn more miles before or after the changes, but I think that's a relatively unimportant question – not just because I earn the overwhelming majority of my airline miles through manufactured spend, rather than flying, but also because it's irrelevant: the changes are coming, on January 1 in Delta's case and March 1 for United.

In other words, what's needed is a forward-looking analysis of earning under the revenue- and distance-based programs under a variety of circumstances.

Example: my 2014 travel projected into 2015

I noticed recently that Delta makes it easy to compute exactly how much better off you'd be crediting your paid miles flown on Delta tickets to Alaska, rather than Delta. I currently have 28,000 Medallion Qualifying Miles, which consist of a 10,000 Delta Platinum American Express bonus, 1,142 Rollover MQM, and 16,858 miles flown this year on paid tickets. Meanwhile, my Medallion Qualifying Dollar balance for the year is $1,150, which gives me a cost per flown mile of 6.8 cents.

Next year, as a Silver Medallion, I would earn 8,050 Skymiles over the course of the year if I credited the same amount of paid travel to Delta. Since I'll be requesting a status match to Alaska's MVP Gold status on October 1, I'd earn 33,716 Mileage Plan miles for the same amount of paid travel on Delta.

Of course, a more fair comparison is to my current Delta Platinum Medallion status, which would earn me 10,350 Skymiles – still roughly a third of the Mileage Plan miles I would earn.

Analysis: comparing apples to apples

You may have seen travel bloggers suggest a "breakeven" point of 20 cents per mile flown: those who spend more than 20 cents per mile will earn more miles under the new system, while everyone else will earn fewer.

This ignores the fact that there will still be distance-based loyalty programs that offer elite bonuses on miles flown. To give a more comprehensive view, I decided to compare the 2015 revenue- and distance-based loyalty programs taking into account both the cost per mile flown and elite status.

Here's the result:

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As you can see, the actual breakeven cost per mile flown varies tremendously – in both directions. If you're a 25,000-mile-flyer deciding between a United ticket and one operated by American, Delta, or Alaska, know that you need to be spending not 20 cents per mile, but 21.4 cents per mile, to earn as many miles as you would crediting a flight the same distance to Alaska.

A Delta flyer deciding between maintaining Delta Platinum Medallion or Alaska MVP Gold status would need to spend on average 22.22 cents per mile flown to earn as many Skymiles over the course of the year as she would Mileage Plan miles – that's over 3 times more than I actually spend per mile flown on revenue tickets.

Conclusion

This analysis isn't meant to be dispositive: you may value the perks of elite status with Delta or United, like waived award change and cancellation fees, more than the miles you're foregoing by not crediting your flights to Alaska (in the case of Delta) or another Star Alliance partner in the case of United.

But it is an easy way to determine just how many miles you're leaving on the table by doing so.

Back-of-the-envelope assessment of the Diners Club Card Elite

I saw today that Diners Club is now issuing consumer credit cards in the United States, and I mentioned on Twitter that the $300 annual fee might be worth paying if you value miles transferred from the program at more than 1.7 cents. That's an extortionate annual fee, and I won't be applying for the card myself, but in case you do value your airline miles that highly I want to show my work to explain how I arrived at that number.

The Diners Club Card Elite card gives 3 points per dollar spent at gas stations, grocery stores, and drug stores. The problem is that gas stations and grocery stores are already such heavily-bonused categories that neither, alone or together, could justify paying a $300 annual fee.

You can already earn 3 flexible Membership Rewards points per dollar spent at gas stations with the Amex Everyday Preferred card, and earn 2 US Bank Flexpoints per dollar spent at grocery stores (worth between 1.33 and 2 cents each when redeemed for airfare) while paying just under 50% the annual fee of the Diners Club Card Elite.

Drug stores, on the other hand, are not as frequently-bonused as they used to be, so the most relevant comparison is the "old" American Express Blue Cash card, which earns 5% cash back at drug stores after the first $6,500 in spend per membership year.

The Comparison

I consider the risk-minimal amount of spend at drug stores per month to be $13,000 for a single person, in most parts of the country (two PayPal accounts and a Serve account, if you have access to Family Dollar store locations). It's easy to spend more, but that provides a benchmark for monthly drug store spend.

Over the course of a year, that amount of spend would earn $7,540 with the "old" Blue Cash card (since the first $6,500 would earn just 1% cash back), or 468,000 transferrable Diners Club points (in which case you'd incur an annual fee of $300).

At that point it's easy to see that the surplus of $7,840 implies a value per transferred mile of 1.67 cents. If you value each one of your transferred miles at more than that, you might be better off with the Diners Club Card Elite.

Note the emphasis above: it's not worth earning the transferrable points if you occasionally redeem them for high-value awards – you need to value all the miles you earn, on average, at over 1.67 cents each.

While I used the "risk-minimal" amount of drug store spend in this comparison, in fact this is very close to the analytical limit: doubling annual drug store spend yields $15,340 in cash back and 936,000 transferrable points, or 1.63 cents per mile, because of the slowly diminishing importance of the $6,500 "penalty." In other words, having either or both cards doesn't affect the imputed mile valuation by much, regardless of your annual spend.

So, what are your miles worth?

From FlyerTalk, here are the transfer partners for the Diners Club rewards program (the catalog requires you to log in to view redemptions):

• OneWorld: British Airways
• SkyTeam: Delta Airlines, Korean Air.
• Star Alliance: Air Canada, Eva Airways, SAS, South African Airways, Thai Airways.
• Independent: Alaska Airlines, El Al Airlines, (1000:20), Frontier Airlines, Hawaiian Airlines, Iceland Air, Southwest Airlines (1500:1200), Virgin Atlantic.
• Hotels: Best Western (1250:3300), Choice (1250:2400), Hilton (1250:2000), Hyatt (1250:750), Intercontinental Hotel Group (1250:1500), Marriott (1250:1500), Starwood (1250:750).
• Rail: Amtrak.

What caught my eye here is the not-totally-unreasonable hotel transfer ratios, particularly the "mere" 40% penalty you incur transferring your points to Starwood Preferred Guest. At 0.6 Starpoints per Diners Club rewards point, you can earn 1.8 Starpoints per dollar spent at drug stores. While it doesn't convince me personally, there's certainly a lot of value that can be unlocked there — plus it's a good escape valve in case you decide to apply for the Diners Club card and end up unable to use the points for direct airline transfers.

Conclusion

In any case, that's how I glance at an earning ratio and decide what mile valuation is imputed – plus a quick review of the Diners Club Card Elite!

Redeeming Ultimate Rewards points for cash, miles, and both

I frequently redeem my Ultimate Rewards points for cash. Not statement credits, not mile-earning revenue airline tickets, but cash, deposited into a checking account.

There are a lot of reasons I do this. Here are a few:

• The least valuable mile or point is always the one you don't redeem. An Ultimate Rewards point sitting in my Chase online banking account is, by definition, not working for me in the way that a dollar deposited into a 6% APY savings account or a checking account linked to a rewards-earning debit card is. That's why I keep my rewards balances as low as possible; when I see my Ultimate Rewards balances creeping up towards 50,000 or more, I know I'm doing something wrong, and it's time for a redemption.
• I rarely value Ultimate Rewards transfers program currencies as highly I value the equivalent amount of cash. Flying United makes me feel like I'm watching a tragedy unfold around me in slow motion; Hyatt points are more valuable, but rarely coincide with my needs; Marriott points are worth fractions of a cent; IHG Rewards points still less; and so on.
• Chase ultimately controls my points as long as they remain in my Ultimate Rewards accounts. I don't have an overwrought fear of being "punished" for manufacturing spend the way some folks do, but Chase's ability to do whatever they want with my Ultimate Rewards balance is a fact, and it needs to be hedged against.

However, one of my goals here is to provide an objective accounting of travel hacking strategies, and I try not to let my own prejudices (like a preference for cash over miles and points) to influence my analysis. So I decided to figure out just what exchange rate is implicit in a variety of theoretical situations, just as I did with the imputed redemption value of hotel points.

Reminder: once you've earned points, speculative valuations are worse than useless

It's a point I've made before (see here for more), with which apparently no one agrees, but it's still true: you should value your point balances and point opportunities in a forward-looking way, based on the redemptions you actually intend to make and informed by the redemptions you have actually made.

The speculative valuations, right or wrong, used to justify acquiring points go out the window once the points have been earned, since the points are worth nothing until redeemed (and invariably lose value the longer they sit unused).

You may have acquired a million Ultimate Rewards points based on a speculative valuation of 2.2 cents each, but they're worth nothing until you redeem them, while the $10,000 you can redeem them for today is worth exactly $10,000. Not only that, but the option value of keeping them in your Ultimate Rewards account isn't free: you're paying $95 per year for that privilege.

If a high speculative valuation (or the obsession with aspirational redemptions some affiliate bloggers use as bait) is keeping you from redeeming your points, it's not helping you make objective decisions – it's blinkering you and playing right into the banking and loyalty industries' hands.

Imputed United redemption values

Starting March 1, 2015, United's Mileage Plus loyalty program is becoming "revenue-based:" the miles you earn for revenue flights are determined first by the dollar value of your ticket (less certain taxes and fees), adjusted for your elite status. As a reminder, here's United's earning chart, starting March 1:

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Since (flexible) Ultimate Rewards points are worth 1.25 cents each when used to book paid, mile-earning airline tickets, we can generate the following table (on the assumption that you do or can – at least occasionally – book revenue tickets out of your own pocket, rather than redeeming a more valuable rewards currency like Flexpoints):

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The first two values given are fixed, as is your cost per mile when transferring Ultimate Rewards points: no matter your Premier elite status, you're buying United miles for 1 cent each when you transfer Ultimate Rewards points to your Mileage Plus account instead of redeeming them for cash.

The last line reflects the fact that when you redeem Ultimate Rewards points for flights, you're getting more cash value from your redemption (1.25 cents per point) and earning fewer miles (the number depending on your elite status).

That imputed "cost per mile" is the amount of cash value you're foregoing per 100 Ultimate Rewards point when you transfer 100 Ultimate Rewards points into 100 Mileage Plus miles, rather than redeeming the points for a mileage-earning flight; in other words, the price you pay for the additional miles over those you'd earn on a paid ticket.

Starting March 1, a general member of Mileage Plus will be buying more miles (about 93) for her $1.25 in foregone value than a Premier 1K, who buys just 86 miles for the same $1.25 (since both members could redeem 100 Ultimate Rewards points for $1.25 in paid United tickets).

For that reason, it should be easier for a non-elite member to justify transferring miles to United than a Premier 1K, who's buying fewer miles (and foregoing precious Elite Qualifying Miles at the same time).

On the other hand, the Premier 1K may well value her United miles more highly, because of the added flexibility afforded by her status, such as waived close-in booking fees and free award changes and redeposits.

Imputed Delta redemption values

Of course, Ultimate Rewards points aren't directly transferable to Delta Skymiles. However, they are indirectly transferable in that you can book paid Delta flights using Ultimate Rewards points.

On January 1, Delta is adopting the same redeemable-mile-earning structure as United is in March:

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This conveniently makes the math the same as shown above, but rather than an equal exchange of $1.25 in foregone ticket value for the difference in miles received, you're paying $1.25 to exchange a smaller number of Skymiles for a larger number of Mileage Plus miles.

In other words, if a general member of Delta values a Skymile more highly than a Mileage Plus mile, they need to value Mileage Plus miles more than 1.33 cents each to justify transferring Ultimate Rewards point to United.

If they value Mileage Plus miles more highly than Skymiles, they can justify transferring points despite valuing Mileage Plus miles less than 1.33 cents each, and so on across the board.

Conclusion

This post was originally supposed to include another line of analysis as well, but it's late on a Friday afternoon and I haven't been able to gather my thoughts quite as cogently as I'd hoped to when I started writing. So that's something to look forward to this weekend!

Instead let me conclude like this: Ultimate Rewards transfers to partners can be the most valuable uses of those points, but they aren't unless you actually redeem them in ways that are valuable to you: never redeem Ultimate Rewards points for less than 1 cent each with a transfer partner (since you can pocket the difference in cash), and when making an airline partner transfer, be sure you're getting more than the imputed value of both your paid airline ticket and the miles (both redeemable and elite-qualifying) you'd earn flying it.

UFB Direct Airline Rewards Checking accounts (amazingly) still available

I get it. You didn't read this blog back when the Bank of America Alaska Airlines debit card was still available, so you missed out on hundreds of thousands of free or cheap airline miles. Then you ignored me when I told you the Suntrust Delta SkyMiles World Check Card was being retired, so you're not earning 1 SkyMile per dollar spent on PIN transactions today.

No hard feelings. Live and learn.

But I want to point out that a third account that earns miles on PIN transactions is still publicly available: the UFB Direct Airline Rewards Checking account. The name is slightly aspirational, since for as long as I've been around the only airline you can choose to earn miles with has been American Airlines. You'll earn 1 AAdvantage mile for every $2 spent with your debit card (confusingly called "Point of Sale (POS) debit transactions," presumably in contrast with ATM withdrawals).

There's no monthly fee or fee to open an account.

The card isn't, strictly speaking, as valuable as the Alaska Airlines debit card was (because those miles can be redeemed on both American and Delta flights), or the Delta debit card still is (since it earns miles twice as quickly), but AAdvantage miles are among the most valuable traditional airline rewards currencies, and you can redeem them for AAnytime awards on American Airlines-operated flights.

AAnytime awards aren't usually a great deal, but that's because you usually aren't earning AAdvantage miles hand-over-fist like you can with this debit card; cheap, plentiful miles make award redemptions even better, compared to spending cash.

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Bank of America wants to pay you to be a customer

[note: as regular readers know, I don't have any third-party credit card affiliate links anywhere on my site, and I don't receive any compensation from any bank for any content that I write.]

If you asked the average travel hacker what their first reaction is to the words "Bank of America," I'd be surprised if fewer than 9 out of 10 said "Alaska Airlines."

The Alaska Airlines credit card, after all, comes with a $99 economy companion ticket the first year and on every subsequent account anniversary, which can be redeemed for a mileage-earning, upgradeable (for Alaska's own elite members, in certain fare classes) ticket on any Alaska-operated flight.

The tenth might recall the occasionally astronomical Virgin Atlantic signup bonus, especially back when those miles could each be transferred to 2 Hilton HHonors points.

And a theoretical eleventh might mention the Bank of America Travel Rewards card which, in a certain high-net-worth fantasy world, can earn slightly higher rewards (in the form of travel redemptions) than a straight 2% cash back card.

But the most important thing about Bank of America is that, like Citibank and US Bank, they allow you to apply and be approved for as many of the same card as your credit report will support. That's why you get to read hilarious articles about redeeming 3 Alaska Airlines companion tickets in one year – if you live in a city served by Alaska Airlines, and have a travel companion, you may as well have more, rather than fewer, of those cards in your sock drawer.

Better Balance Rewards: passive income is good income

For the last few days I've been ruminating over an e-mail I received from one of my readers, and then today I read this intensely stupid post from Frugal Travel Guy founder Rick Ingersoll. Together, they inspired me to write this post.

The Bank of America Better Balance Rewards Visa card pays you $25 per calendar quarter in which you have a balance post to each monthly statement and pay more than the minimum payment due. If you have a Bank of America checking account (or a few other eligible accounts – check the terms and conditions), you earn $30 per calendar quarter instead.

According to the terms and conditions for the card, The $25 or $30 per calendar quarter are credited to your credit card statement, "unless you indicate otherwise," which leads me to believe they can be credited to your checking account, instead – although I don't have a card myself yet, so can't swear to that.

While I've known about this card for a long time, what always made me think twice was the requirement that "all of your monthly payments...are more than the minimum payment due," per the terms and conditions. Since, when credit cards have extremely low balances, the minimum payment due is the same as the statement balance, it wasn't clear to me how trivial it would be to meet that condition.

My correspondent shared that he's been able to meet the requirement by making extremely small purchases each month, which reassured me that paying an entire statement balance will qualify for the quarterly rewards.

Use automatic transactions and avoid dumb mistakes

If you're just managing one or two of these cards, it's not too much trouble to make sure a $0.50 Amazon charge posts to each statement. But once you have a fair number of these cards going at once, you may want to set up automatic purchases and payments each month.

Many charities will allow you to make automatic monthly contributions, although they may have minimum monthly contributions (to compensate for credit card transaction fees).

If you find the content on this blog worth supporting, you can also sign up for a weekly or monthly PayPal subscription. At $2 per month, you can pay just $24 per year and never have to worry about a month going by without generating a qualifying statement balance.

Credit Karma now shows full TransUnion credit reports

Credit Karma is one of several free services that let you view certain details of your credit report online and for free. Their biggest competitor that I know of is Credit Sesame – but since Credit Sesame couldn't verify some of my information while I was signing up, I've never actually used that site, and can't comment on it one way or the other.

Credit Karma, meanwhile, used to allow you to refresh your credit report every day, which made it somewhat useful for people trying to "bump" credit inquiries off their TransUnion credit report. A while ago they changed their policy to allow users to refresh their credit report just once every 7 days, which made it less useful for that purpose, and also more of a hassle to keep track of when you're "eligible" to refresh your report. Since then, I've basically stopped using the site.

Nonetheless, Credit Karma continued to be useful for a few specific purposes:

• Seeing when credit card balances are reported to the credit bureaux. For most cards, this is the statement closing date, for some it's the business day prior, and at least for US Bank it's the last business day of the calendar month (in my experience);
• Tracking hard versus soft inquiries. Unfortunately, many rental property managers make hard credit report inquiries of potential tenants; for us starving artists who move between rentals every year or two, this can potentially add up to a couple unnecessary hard inquiries at any given point in time. There's not much you can do about it, but it's good to know exactly where you stand on the inquiry front;
• Staying vaguely aware of potential identity theft (and other issues). Every once in a while a mysterious credit account will appear or disappear on my Credit Karma report card. So far it's invariably been my mom adding me or removing me as an authorized user on one of her cards, but presumably if my identity were stolen to open a new credit account, I'd see the same thing and be able to take action.

Full TransUnion credit report now available

When I logged onto Credit Karma on my PC yesterday, I noticed a new banner on the top of the page:

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As I said, I no longer check the site regularly, so it may have been there for a few weeks or months. But sure enough, clicking the banner now takes you to a new page that displays somewhat more information than the "digest" previously available on Credit Karma.

Having glanced through it a few times, here's the most interesting additional information now available:

1. Remarks on accounts. All of my accounts have the same remark: "Account closed by consumer." But presumably this is where other information would be found, for example if an account was reported settled or written off by the credit issuer. If you find that's been done in error, you need to dispute the remark as soon as possible;
2. Credit inquiry dates and estimated removal dates. This could potentially help you plan credit card applications in advance, if you currently have too many inquiries to feel comfortable applying for new credit;
3. Addresses and employers on your credit report. As I mentioned, I move all the time and it's interesting to see what addresses and employers appear on my TransUnion credit report and which don't. A work-study job from 3 years ago appears on there, but my last two years working and living in New England are like they never happened!

In any case, there's a lot of information there, and while none of it should be surprising, you may be surprised by what's there and what isn't, so if you have a Credit Karma account you've been neglecting, you may want to log in and give the new feature a whirl.

Credit cards that forgive small statement balances (microhacking)

A few months ago I noted on Twitter that Discover had "forgiven" an extremely small balance outstanding at the end of my billing cycle. Several people pointed me to a FatWallet Forum thread on the subject, but like many FatWallet threads, it's a bit sprawling and confusing unless you're willing to dig into it.

I recently ran another accidental experiment on the subject. Many credit card companies will close accounts that don't show any activity over a certain period, usually 6 or 12 months. In order to keep my accounts active (at least until I close them to avoid their annual fees), I went through and charged a $0.50 Amazon gift card to all these cards:

• Citi Dividend Platinum Select MasterCard
• Citi AAdvantage World MasterCard
• Chase Marriott Rewards Premier Visa
• Bank of America BankAmericard Cash Rewards Visa
• Barclaycard US Airways MasterCard

Chase and Barclaycard both forgave my $0.50 balances, while Citi and Bank of America posted the $0.50 charges to my statements.

Meanwhile my Discover it card statement coincidentally (I forgot the Diet Coke I threw in with my "gas station" purchases) closed with another, slightly larger balance of $1.89, which was also forgiven.

Significance?

This is pretty much the definition of an unscalable deal. After all, there are only 12 statements per year, and the maximum you can "earn" is less than $2 per statement, per card.

On the other hand, the money does seem to be free, and everyone can use $5 in Amazon gift cards per month, so if you have some unused Chase, Barclaycard, or Discover cards lying around it might still be worth considering (see the FatWallet Forum thread for datapoints on other card issuers).

I'm more interested in the fact that our financial system is packed full of these holes, which make sense individually (since it would be more expensive to keep track of small balances and process Automated Clearing House payments against them) but which, taken together, are big enough to drive a (small-ish) truck through.

In any case, I'm curious what my readers think: are $0.99 Amazon gift cards in your future?

Good enough for government work

I'm not shy about telling people that Americans today are blessed to have inherited government institutions designed by people who believed in the government's ability to function. I marvel, for example at the IRS's ability to fit a century of income tax regulations onto a one- or two-page form that works for almost all wage-earners – despite Congress's insistence on adding more amendments, exceptions, and exclusions each year.

While one political faction continues to sabotage the ability of those institutions to function on a daily basis, for the time being our inheritance hasn't yet run out. That's why I'm writing more in sadness than in anger at a ridiculous institutional failure I encountered today.

Since it has to do with US passport renewal, I think it's not completely out of place here. For all I know, this post may even help someone in the future who runs into the same absurd situation.

The Department of State has an online tool to complete applications for passport renewals

You can find it here.

Since passport renewals require you to submit a recent (within 6 months) passport-sized photo and your most recent passport (which the Department of State insists on calling a "passport book"), you can't actually submit the application online. However, you can use an online tool to prepopulate the fields of the relevant form, DS-82:

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Then you just have to print and sign the form, and submit it with the necessary materials.

The online tool is too smart for its own good

This took me several hours of trial and error to discover, but buried deep in this online tool is a seemingly innocuous question:

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As it happens, my place of birth WAS printed incorrectly on the passport I've been using for the last 9 and a half years. I was born in Arkansas, but my passport says I was born in Alaska (AR, AK, get it?).

If you report an error of any kind, however, your answers are prepopulated not to the correct DS-82 form, elegantly titled "U.S. PASSPORT RENEWAL APPLICATION FOR ELIGIBLE INDIVIDUALS", but to the DS-5504 form, used for "NAME CHANGE, DATA CORRECTION, AND LIMITED PASSPORT BOOK REPLACEMENT."

This error could cost you months of processing time

This shouldn't – necessarily – matter. After all, both the DS-82 and DS-5504 forms contain the same information (which is why they can be prepopulated from the same online tool). But the DS-5504 contains the following text:

"There is no fee associated with the use of this form unless expedited service is requested (see below)."

While the DS-82 reads:

"Please visit our website at travel.state.gov for detailed information regarding current fees."

In my case the renewal fee for my passport was $110. What would have happened if I had submitted my application without a check for $110? I have a hard time even venturing a guess. Would they have simply mailed my application back? Is there someone in the passport processing facility whose job it is to call hundreds or thousands of people every day to try and track down their missing payments?

A (kind of) explanation

As it turns out, there is an explanation for this diabolical situation: you can file form DS-5504 within a year of your passport's date of issue and have any errors on the document corrected at no charge. That seems like a fairly reasonable policy, allowing for human error on the part of both applicants and State Department employees.

What's unreasonable is that the online tool defaults to form DS-5504 even though another question on the same form asks for your most recent passport's date of issue. The online tool simply doesn't check first whether you're eligible for a fee-free replacement before defaulting to the fee-free form.

Now, if this were United Airlines, I'd have just submitted the fee-free form and crossed my fingers. But with the US government, I thought it was better to be safe than sorry, and submitted the DS-82 instead, with check firmly attached.

And if there are any errors on my new passport, I'll deal with them in another 9-and-a-half years!