Statement credits are worth (much) less than cash

I've written several times in the last few weeks about hacking Marriott elite status using the Chase Marriott Rewards Premier Visa card, and received a number of e-mails and comments suggesting the Ritz Carlton Visa card might be a better option, allowing cardholders to earn Platinum, rather than Gold, status after $75,000 in annual spend.

In response to those comments and e-mails I tend to say the same thing: I don't pay $395 annual fees, and I don't recommend that my readers do either.

When affiliate bloggers promote cards like the Chase Ritz Carlton Visa and American Express Platinum cards, they usually repeat the tired canard that the hefty annual fees ($395 and $450, respectively) are discounted by the annual airline statement credits the cards offer. The usual approach is to point out that since airline gift cards are reimbursed at face value, you're "actually" paying $200 (American Express Platinum) or $300 (Chase Ritz Carlton) less per calendar year than the annual fee would suggest.

The problem with that argument is that a $50 American Airlines gift card (the usual example) is worth much less than $50.

Travel hacking means never paying retail

Using only the most trivial examples, redeeming US Bank Flexpoints, Chase Ultimate Rewards points, or Barclaycard Arrival+ miles for paid tickets allows you to purchase redeemable- and elite-qualifying-mile-earning revenue tickets at a fraction of face value.

Indeed, if you fund Kiva loans with a US Bank Flexperks Travel Rewards card, all you have to pay for your revenue tickets is the time value of your money and the risk of your Kiva loans defaulting (which can be substantially mitigated against by carefully choosing your loans and diversifying your loans across borrowers and countries).

Don't let annual fees lock you into paying retail

Using $50 American Airlines gift cards to purchase your revenue tickets means foregoing the opportunity to redeem alternative, cheaply-acquired rewards currencies for them. In other words, it means paying the full face value of your airline tickets.

When you pay a $395 annual fee for the Chase Ritz Carlton Visa card, and receive back a $50 American Airlines gift card, you shouldn't mentally deduct the full $50 from your annual fee as a rebate. Rather, you should deduct only the amount you would have paid for $50 in American Airlines air travel:

• if you redeem free Flexpoints for your travel, that amount is $0;
• if you redeem Arrival+ miles acquired at 0.29 cents each, that amount is $14.50;
• if you redeem Ultimate Rewards points acquired at 0.47 cents each, that amount is $18.80;
• and so on.

In no case is that amount $50, so you can't justify deducting a full $50 from your annual fee in your mental accounting.

Conclusion

Credit card annual fees have to be paid with cold hard cash, while the supposedly dollar-denominated annual benefits they provide can only be redeemed in restricted and restrictive ways. While annual benefits like companion tickets can sometimes justify paying annual fees, there are vanishingly few scenarios where paying annual fees over $100 is justified.

If I can make as controversial a claim as is supported by the evidence, even the American Express Delta Platinum credit card, with its $195 annual fee and companion ticket awarded on each account anniversary, only makes sense (compared to redeeming Arrival+ miles) if you can consistently redeem the companion ticket for flights costing more than $672 – the value of the Arrival+ miles you could manufacture with the same $195 in disposable income – or if you can use the Medallion Qualifying Miles earned with the card to achieve Platinum or Diamond Medallion status.

Do this now: double points with Hilton HHonors

Registration is now open for Hilton's winter "Double Up" promotion, whereby you can earn double points between November 1, 2014 and January 31, 2015, starting with your second stay.

I love staying with Hilton, but naturally make almost all my reservations using HHonors points. I have one "Points and Money" and one award reservation during the promotional period, so it doesn't look like I'll be earning any double points during this promotion.

Whether you plan to take advantage of the promotion or not, be sure to register now, before you forget, and find the list of non-participating properties here.

US Bank Visa Buxx address changes

Obviously, I change addresses somewhat more frequently than your average worker bee. Back in May I moved to the Upper Midwest from New England, then in August my partner and I finally moved into our own place together. That's a lot of address changes to keep track of, but I do my best.

One thing common to all Visa Buxx cards is that the profile address on file with your Buxx card must match the billing address of any credit card used to fund the card. With the Nationwide and TD Go Buxx cards this doesn't pose much of a problem: when your credit card's billing address changes, you can easily sign into your Buxx account and update your profile address to match it.

The first time you attempt this with a US Bank Visa Buxx card, you'll find it equally easy. But if you change your billing address again shortly afterward, you'll see that the option to edit your profile address has been disabled, as indeed I discovered when I moved for the second time and became unable to fund my Buxx card.

I've been logging into my US Bank Visa Buxx account a few times a week for the past few months, and finally today discovered that the option to edit my profile address had reappeared. I checked my records and found that the last time I'd edited the address was 3 months ago, almost to the day.

Conclusion

Your Visa Buxx profile address must match the billing address of any card you use as a funding source. While Nationwide and (formerly) TD Go both allowed you free reign to edit your profile address, my experience indicates that US Bank allows additional profile address changes only after a 3-month period has elapsed.

I'm setting off this afternoon for a long Halloween weekend, so anticipate delayed response times until Monday. Hopefully a few days off will allow me to take a more nuanced view of all the changes currently taking place when I return on Monday.

Deciding between low fees and bonus categories

Several months ago, around the time I moved West and decided to try my hand at blogging and travel hacking for a living, I made a sort of philosophical decision that I would only manufacture spend in bonus categories, except for the few very, very cheap options still available, where I would continue to manufacture non-bonused (but hopefully valuable!) spend.

For example, while US Bank and Nationwide Visa Buxx loads cost $2.50 and $2.00, respectively, for loads up to $500, I'm willing to earn a mere 2% or 2.22% cash back on that spend, but for gas station, drug store, and grocery store spend I decided to direct that spend exclusively towards cards that featured above-average earning rates.

That's a perfectly reasonable decision but, being me, I've long wanted to expose it to a bit more thorough analysis and make sure it's rational as well. This is that analysis.

Bonus categories

There are quite a few bonus categories which typically generate the most interest among travel hackers, including gas stations, drug stores, grocery stores, and office supply stores. Each of these might feature a variety of price points: $3.95, $4.95, or $5.95, and a variety of associated discounts, like the Visa Savings Edge 1% discount at Staples.

Non-bonused spend

In addition to bonus categories, there are a number of manufactured spend techniques that don't generate bonus category rewards, but cost somewhat less than spend in those bonus categories. For example, I've been flogging AAA Visa gift cards and the assortment of Visa Buxx cards for as long as I can remember. The fees for what we might call "generic" techniques tend to fall between $2 and $3 per $500 in manufactured spend.

Points-only earning

For spend on cards which generate only points, this analysis is relatively easy (although not as easy as it looks – more on that below). If your bonus category earns a higher multiple than the ratio of bonused category costs to non-bonused costs, you'd naturally be better off manufacturing the spend in a bonus category.

To provide a trivial example of this, the US Bank Flexperks Travel Rewards Visa card earns 2 Flexpoints per dollar spent at gas stations (or grocery stores – wherever you spend the most each statement cycle), and 1 Flexpoint per dollar spent everywhere else. If you're manufacturing spend exclusively for the value of the Flexpoints (redeemable for up to 2 cents per point on mileage-earning airline tickets), you're (almost) always better off earning 1,008 or 1,010 Flexpoints for $3.95 or $4.95 (plus liquidation costs) rather than earning 503 points for $3 (ditto), since you're paying just 33-66% more for 100% more Flexpoints per dollar.

High-spend bonuses

Next, there are cards where you're interested in manufacturing a certain amount of calendar or membership year spend, but which don't feature bonus categories or which have points that aren't worth manufacturing for their own sake.

This category is defined by products like the American Express Delta Platinum and Reserve cards, which offer bonus Medallion Qualifying Miles and redeemable Skymiles at the $25,000/$50,000 and $30,000/$60,000 spend levels, respectively, in addition to the Medallion Qualifying Dollars waiver offered to all American Express Delta co-branded credit card holders who spend $25,000 or more per calendar year across all their Delta co-branded credit cards.

Since these cards don't have any bonus categories, if you just want to meet those high-spend thresholds there's no reason not to meet them as cheaply as possible.

As another example, I've recently written about using Chase Marriott Rewards Premier cards to achieve Marriott Rewards Gold elite status. Since Marriott Rewards points are worth less than one cent each under most circumstances, you'd be crazy to cannibalize any of your valuable bonus category spend meeting that spending requirement, but might consider moving some of your cheaper spend towards the Premier card, as I in fact have.

As I've documented extensively, $3,000 spent on the Marriott Rewards Premier credit card would cost not just the $18 spent on PIN-enabled Visa gift cards, but also the $60 or $66 in foregone cash back you'd earn by putting the same spend on a 2% or 2.22% cash back card. It's fairly insane to buy 3,000 Marriott Rewards points for $60, but it becomes more understandable if you intend to use the elite-qualifying night to achieve Marriott Gold elite status – after all, even $66 is a pretty cheap mattress run for elite status.

Mixed-purpose cards

And now we've come to the crux of the issue: how do we treat cards that have both bonus categories and spend thresholds?

Here another example comes in handy: how much does it cost to achieve Hilton HHonors Diamond elite status using the American Express Hilton HHonors Surpass card?

Well, the card awards Diamond elite status after $40,000 in calendar year spend, so:

• At $3 per $503, Diamond elite status costs $238;
• At $4 per $504, Diamond elite status costs $317;
• At $5 per $505, Diamond elite status costs $396;
• At $6 per $506, Diamond elite status costs $474.

This straightforward accounting fails, however, because the first entry is in a non-bonused category, earning just 3 HHonors points per dollar, or 120,000 points total, while the other three entries earn 6 HHonors points per dollar (gas, gas, and grocery, respectively), or 240,000 points over the course of $40,000 in manufactured spend.

At each of our bonused price points, the marginal 120,000 HHonors points each cost:

• $4: 0.07 cents;
• $5: 0.13 cents;
• $6: 0.2 cents.

Hilton HHonors points get a bad rap from a lot of folks in the community, but it's ludicrously easy to get 2-5 times more value than that from even the most typical Hilton redemption.

Liquidity has value

Finally, there's one point that's not exactly fashionable to mention: liquidity. Liquidity, in the sense I mean it, is the ability to turn available credit limits into cash, that can be used (preferably through a mileage-earning debit card) to pay off existing credit card balances, while also earning credit card rewards on the initial transaction. That has value. And, most importantly, it has value independent of the value of the miles generated by the initial transaction.

Consider a travel hacker with just two credit cards and $10,000 in credit card debt: the Hilton HHonors Surpass American Express card ($0 balance, $11,000 credit limit) and the US Bank Flexperks Travel Rewards Visa ($10,000 balance, $10,000 credit limit).

A straightforward analysis of the type I gave above would suggest that the user would be better off manufacturing $10,000 on the HHonors Surpass card exclusively in bonus categories, earning 60,000 HHonors points. The problem is that for many users in many parts of the country, manufacturing that much spend in bonus categories is hard. Grocery stores and gas stations often have restrictive policies preventing large purchases, while non-bonused-category merchants can be more accommodating.

In this case, using the HHonors Surpass card at a non-bonused merchant can, while generating fewer miles per dollar, produce the liquidity necessary to pay off the Flexperks Travel Rewards card in time to avoid interest charges and liberate the card's credit limit for spend in that card's own bonus categories.

Most travel hackers will tell you you're crazy to play the game while carrying credit card balances, which eat up any rewards you could possibly earn from your activities. I'll tell you that's only true if you're paying interest on your credit card balances. Liquidity is what makes it possible to not just carry credit card balance, but profit from them, and it's worth considering in any analysis.

Update: Marriott bonus nights and application timing

Two weeks ago I wrote up a technique for achieving Marriott Gold elite status through manufactured spending that's slightly more convoluted but much cheaper than the straightforward method described by Frequent Miler. That post drew a lot of terrific comments from readers, and since I know many readers get my posts by e-mail or in RSS readers and may not have checked out that follow-up conversation, I want to provide a quick update.

Three moving parts for Marriott elite status

The hack I described takes advantage of three facts:

• Elite status, once earned during a calendar year, is good for the remainder of that year and the entire following calendar year;
• Elite-qualifying nights earned in excess of your earned status are rolled over and count towards the following calendar year's elite-qualifying night total;
• The Chase Marriott Rewards Premier credit card gives 15 elite-qualifying nights per year.

By noting all three of these facts, I realized that it's possible to spend your way to Gold (not Platinum) elite status every two years, instead of attempting to requalify for Gold status by earning 50 elite-qualifying nights each calendar year.

The (not so) fatal flaw

Unfortunately, my commenters noted a potentially devastating problem with this plan, based on a nuance of the Premier credit card's bonus nights: the 15 elite-qualifying nights are not credited at the beginning of the calendar year, but rather together with the card's anniversary statement each year! Since my hack depended on using the bonus nights to qualify every other year, in the "requalification year" cardholders have to make do with Silver elite status until their anniversary month arrives.

Timing Marriott Rewards Premier credit card applications

In other words, if you are interested in this trick, the absolute worst day for your anniversary statement to close is December 31: you get just one year of Gold elite status every two years.

On the other hand, the best possible day for your anniversary statement to close is January 1: in this case, the trick would work exactly as I originally described.

Personally, my anniversary statement is in April, so I'm closer to the winning end of that spectrum. Some readers complained that their anniversaries are in October, which strips a lot of the value from the technique.

If you already have the Premier card, but have a bum anniversary month, I don't see any easy way to get on board with this technique. Canceling the card and reapplying (without a signup bonus) would be a tough credit pull to justify.

But if you don't already have the Premier card and are interested in getting it someday, make that day early in January!

US Airways anniversary miles (and affiliate bloggers acting shamelessly)

I've long said that the only question that mattered - and the one that was being studiously ignored by affiliate bloggers - about the Barclaycard US Airways MasterCard is what will happen to the card's anniversary miles.

Applications for the card before the US Airways-American Airlines merger was completed offered 10,000 Dividend Miles that post on each account anniversary. Affiliate links released since the merger, that is to say, the applications you see on sites like Boarding Area and The Points Guy, have not included those anniversary miles.

Meanwhile, "zombie" applications continued to be available which did offer the 10,000 anniversary miles, and which were studiously ignored by bloggers who were paid for those referrals.

The difference matters because, while the newer applications tend to have higher up-front signup bonuses, those anniversary miles can make the card worth keeping after the first year, especially since Barclaycard is notoriously generous about giving annual fee waivers upon a quick phone call.

It has now been confirmed by Barclaycard that those of us who applied under what I call the "and every anniversary thereafter" version of the offer will continue, for now, to receive our anniversary miles.

Affiliate bloggers have no shame

I get things wrong sometimes. That's not something I relish, but it's something I've come to terms with, and when I do, I admit my mistakes, accept criticism, and try to mend my ways.

When affiliate bloggers get things wrong, they write gleeful posts ignoring their humiliating mistakes, which has never been demonstrated as clearly as their reactions today to the news that they have been screwing their readers for months by linking to inferior, non-anniversary US Airways offers.

Remember I shared a working link to an "and every anniversary thereafter" offer on April 30, 2014.

Here's a Mommy Points post on April 30, 2014 linking only to the non-anniversary version of the offer. And here was her priceless reaction to today's Barclaycard announcement:

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Note the word "My" in her tweet: her card will award her 10,000 bonus miles because when it comes to her own cards, she looks out for her best interests. Of course, when it comes to her readers she also looks out for her own best interests.

Likewise on April 30, 2014, The Points Guy wrote up the same offer, again without linking to the "and every anniversary thereafter" offer (an oversight we proceeded to debate on Twitter).

After the announcement today, he wrote blandly that "current cardholders will continue to receive the annual 10,000 Dividend Miles." This is, of course, not strictly true, since anyone who followed his advice and signed up using a non-anniversary application will not receive the anniversary miles.

Finally, again on April 30, 2014, the same day I conveniently provided a link to the "and every anniversary thereafter" offer, Gary Leff wrote up his affiliate link without mentioning the existence of the other application.

And – prepare yourself – his post today celebrates the anniversary miles he'll continue to receive, without acknowledging that he deliberately kept his readers in the dark for months about how to earn them.

Conclusion

I don't think a person who needed a quick influx of US Airways miles would necessarily have been wrong to privilege a 40,000-mile offer that charged the $89 annual fee up front over a 30,000-mile, waived-annual-fee offer that offers anniversary miles.

But the shameless promotion of money-making links, the shameless concealing of other, potentially better offers, and then the inevitable denial that that's exactly what took place, does drive me nuts. It shouldn't, but it does. And today's examples were among the most egregious I've seen in some time.

Post-script

Incidentally, it would be interesting to know whether those who applied under the no-anniversary-miles version of the card application received the same e-mail confirming the continuation of anniversary miles. It doesn't seem likely, since Barclaycard has relatively good IT in my experience, but I think there's a non-zero possibility Barclaycard incorrectly classified at least some of those applications. So if you recently applied for that offer, leave a comment and let me know if you've heard from Barclaycard regarding anniversary miles.

Reflections on PayPal and My Cash warnings

PayPal's compliance department is sending warning e-mails

It's no secret that I'm a huge fan of PayPal My Cash cards as a tool for manufacturing spend in two of my favorite bonus categories: drug stores and gas stations. Unlike some more aggressive users, I've never withdrawn My Cash funds directly to a bank account, preferring to use the money to fund Bluebird, buy money orders, and make bill payments.

On October 9, the first report I'm aware of appeared, describing a warning e-mail sent from PayPal's compliance department about withdrawing My Cash funds directly to a bank account. On October 17 a reader forwarded me the e-mail he received, and on the 18th I received an identical e-mail for each of my PayPal accounts.

In other words, this is not a warning e-mail narrowly targeted at those who deposit and immediately withdraw PayPal My Cash funds. Rather, the compliance department seems to have adopted a relatively broad filter to identify users who may or may not have have exhibited the behavior described in the compliance e-mail.

Does this require action?

The compliance e-mail concludes with the following:

"If you think we've made an error, here's how to contact us.

1. Log in to your PayPal account.
2. Click Contact Us at the bottom of the page.
3. Click Send us under Email Us.
4. Follow the instructions to complete the steps.

We value your business and appreciate your attention to this matter."

This raises the question of whether those of us who have used My Cash funds immaculately should e-mail PayPal and protest our innocence, in the hopes of receiving another month, year, or decade of impunity.

That's a judgment that is going to depend on the individual. Personally, I've already maxed out my PayPal My Cash loads for the calendar month, so any changes in monitoring and compliance won't affect me until next month in any case. Consequently, I'm going to sit tight and wait for more datapoints to come in, as they inevitably will.

It seems likely to me at this point that many who received the warning e-mail, myself included, don't in fact have anything to worry about since we've used the cards more or less as intended. If, on the other hand, in the coming weeks we start to see people report accounts closures, I'll know I need to consider scaling down my My Cash usage.

No, PayPal still can't be "trusted"

I've ranted before that "trust" is the wrong framework to think about your relationship with your bank, your loyalty program, or your landlord. Save "trust" for your partner, your friends, and your kids (well, maybe not your teenagers).

When I write about PayPal, I always include the caveat that while they have been very, very good to me, many folks have well-founded grievances against their arbitrary account closures and long hold times for the withdrawal of frozen funds.

That warning still applies.

But since it's one of the easiest ways to manufacture bonused spend on cards like the US Bank Flexperks Travel Rewards and American Express Hilton HHonors Surpass cards, it's remained a tool in my arsenal, and I hope it continues to for a long time to come.

Use rollover nights to earn Marriott Gold elite status

Continued experiments with posting schedule

As long as I've been writing this blog, I've posted on an extremely irregular schedule: my own. Typically, I get home from manufacturing spend, plop down at the desk and write about whatever I've been thinking about. When I'm done writing, I push "publish."

During Subscription Week, I started scheduling the "classic" posts from my archive on a specific schedule; I'd write up a post the night before and schedule it to post at 6 am (wherever Squarespace is based – in another hilarious shortcoming they don't tell you the timezone you're scheduled to post in).

I think there are advantages to both methods: I write in order to be read, so it makes sense to publish posts as soon as they're ready so folks can start reading them. On the other hand, I notice that when I publish posts late at night or very early in the morning there's more of an immediate response in the comments, since a lot of readers check my site first thing in the morning. If I publish in the afternoon, it might be 16-20 hours before readers finally get around to my posts.

At any rate, I'm going to keep the experiment going and schedule non-time-sensitive posts like today's to publish at 6 am. Meanwhile, I'll continue to publish urgent and time-sensitive posts as soon at they're ready. As always, I'd love to hear feedback one way or the other in the comments.

If you're going to manufacture Marriott Gold elite status, do it right

I mooted this idea on Twitter a few weeks back, and was reminded of it by Frequent Miler's recent post on manufacturing Marriott elite status.

Most folks know the headline benefits of the Chase Marriott Rewards Premier Visa Signature: an annual free night certificate good at Category 1-5 Marriot properties; 15 "bonus" nights annually towards elite status; and an additional "bonus" night for every $3,000 spent on the card each calendar year.

Frequent Miler did a little math and came up with the figure of $105,000 in spend each year to earn Gold elite status: 35 elite nights at $3,000 each.

But in focusing on those headline benefits, he missed the forest for the trees. The key to manufacturing Marriott Gold elite status with the Premier card is rollover elite qualifying nights.

Marriott has a generous rollover night benefit: every night in excess of those needed for your current elite status are rolled over to the next elite qualifying year. But since Silver elite status requires just 10 nights, and the Premier Visa Signature gives 15 bonus nights towards elite status, Silver elite cardholders receive an automatic 5-night rollover "bump" towards Gold status at the beginning of each elite qualification year.

Keep Gold elite status for 2 full calendar years – then do it again

Since elite status, once earned, is good for the remainder of the year it's earned and the entire following year, you don't want to manufacture spend all the way to Gold elite status: you want to end the year with between 45 and 49 elite qualifying nights. In January, you'll rollover 35-39 of those nights (the amount in excess of Silver's 10-night requirement), and your 15 bonus nights will make you an instant Gold elite – for 2 full calendar years.

To keep your Gold elite status, you need to end the second calendar year of elite status again with exactly 45 elite qualifying nights – in other words, earn 30 elite qualifying nights over the course of 2 years. That's just $45,000 per calendar year, rather than the $105,000 Frequent Miler suggested – or less than $4,000 per month in Premier credit card spend, even if you don't have a single paid night.

Unfortunately, this technique can't be used as easily to earn Platinum elite status, for the simple reason that Platinum status requires just 25 more elite qualifying nights than Gold, so the most nights you could roll over to the next year and remain a Gold elite is 24. You'd then still have to manufacture your way all the way from 39 to 75 nights, spending $108,000 as early in the year as possible.

Conclusion

While I've noticed my bonus nights roll over in the past, this is the first year I'm attempting to achieve Gold elite status with this technique, so there may well be something I'm missing. Naturally, I'll post an update in January after my rollover and bonus nights are credited. In the meantime, I'd love to hear from readers who have succeeded (or failed!) in earning elite status this way.

Thrilling follow-up to subscription week!

Last Sunday I introduced Subscription Week, 5 posts (one, two, three, four, five) selected from my archives which, while wide-ranging, I felt represented a selection of the best work I do here for my readers and which I hoped would encourage some casual readers or fence-sitters to sign up for PayPal subscriptions to help ensure the continued viability of this site.

Those who subscribed by last Friday should already have received an e-mail with information about accessing the newsletter archive; if you didn't receive an e-mail (after checking your spam folders), drop me a note and I'll get it to you ASAP.

The subscription scoreboard

I gave all sorts of figures in my Sunday post, but since last week was Subscription Week, let's stick to PayPal subscriptions. Here were my subscription figures last Sunday:

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I'm not sure what I was expecting, but I am an eternal optimist. I have a lot of readers, a lot of Twitter followers, and a lot of e-mail correspondents, but just 120 PayPal subscribers. I sort of figured if I could get up to 200 active subscribers that would be a nice round number that might justify me continuing on at this for another year.

Well, we didn't quite get there. Here are my current subscription figures:

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Conclusion

When I first wrote about my move to self-employment a lot of folks suggested going to a subscription-only model. In a way that would be easier for me, since it would both let me talk openly about stuff I'm discrete about here on the blog and give me more time to work on my other writing projects (or "get a damn job!" as other commenters have suggested).

On the other hand, I love writing for a larger audience and helping people in the comments, by e-mail, and on Twitter. If I went subscription-only it seems like that kind of presence would naturally disappear.

So I don't know. It may even turn out that the little Google Adsense box in my sidebar will start spinning off gobs of cash and render the whole discussion moot.

I have until the beginning of February to renew my hosting agreement, and I have to make some kind of a decision by then (and no, credit card affiliate links are not on the table). Stay tuned!

Survival bias and the "ease" of travel hacking

There's been a lot of great writing lately in the travel hacking blogosphere about the traps being laid by affiliate bloggers and others who suggest that travel hacking is so easy that "anyone can do it."

My favorite post on the subject was "Airheads in the Rewards Credit Cards Bubble," by Ric Garrido at Loyalty Traveler, who was reacting to Mommy Points' claim that:

"In my 3.5 years of writing about this type of stuff, I only personally know one person who has gotten a rewards credit card primarily for the travel rewards, and then maxed it out on unneeded items. I know hundreds, even thousands, who have used rewards cards successfully to maximize the purchases they were going to make anyway."

Like Ric, I find this claim utterly preposterous.

Survival bias is why your intuition is wrong

There's a concept in economic history called "survival bias" which helps explain Mommy Points' intuition that it's easy for most folks to manage multiple credit card signup bonuses and juggle things like bonus categories, all without spending beyond their means.

Survival bias is the observation that statistics compiled based on currently-existing companies (for example, the Dow Jones Industrial Average or S&P 500) will show inflated returns over long periods of time because they don't take into account the $0 value of companies that fail and are no longer included in the relevant index.

In other words, if you bought a weighted average of the S&P 500 in 1957, you wouldn't actually accrue the entire gains suggested by the increase in the value of the index since then, since the index today contains different companies than when it launched – some of the original companies have become worthless (Delta Airlines is a component of the S&P 500 today, for example, but its pre-2007 shareholders were wiped out in bankruptcy).

In the same way, by definition an overwhelming majority of currently-active travel hackers are successful travel hackers, since out of the many people who start exploring the game each year, those who are unsuccessful will also usually no longer be active in the community, and won't be sharing their experience with bloggers like Mommy Points. What you end up with is a group of folks who think travel hacking is easy because it was easy for them — after all, they were and are successful at it.

The game is not easy and it is not for everyone

There are serious cognitive and organizational demands to being successful at travel hacking:

• Keeping track of credit card application dates and minimum spend requirements. If you can't or don't want to do this, you shouldn't be playing this game, as The Miles Professor's friend discovered;
• Keeping track of anniversary dates and annual fees. If you can't or don't want to do this, you'll end up paying annual fees that cut directly into the value you're earning from your credit cards;
• If you manufacture spend, keeping track of the value remaining on every single one of your prepaid and reload cards. A single card lost under a car seat or couch cushion, or a money order left in the bottom of a drawer can wipe out a month's profit, or more.

For a lot of folks, it's not fun, interesting, or easy to meet those challenges. They should find something else to do with their time.

None of this is meant to discourage new people from joining us. If you're a good fit, then travel hacking is a fun and lucrative way to achieve your goals, whether it's to travel more, travel cheaper, or just to pocket some extra cash every month.

But if the game isn't for you, then the sooner you recognize that fact – the better. You can still read trip reports about sucking down champagne in Lufthansa first class, and when you get to the inevitable call to action to apply for another credit card you don't need, you can just close the tab and get on with your life.