It's long been an open secret in the travel hacking community that US Bank credit cards which have "charity" as a bonus category also bonus loans make through the micro-lending site Kiva.org. This is one of the first hacks that I took advantage of, since if you're using a US Bank Flexperks Travel Rewards credit card you can earn 3% cash back or 6% back in paid airfare by making Kiva loans. Many of those loans have repayment periods between 4 and 6 months, so if you have cash that you're willing to tie up in these loans, you can earn a decent annualized return, even if you're just redeeming your Flexpoints for cash back, instead of airline tickets.
While I mention this trick in my ebook, The Free-quent Flyer's Manifesto, it's never been entirely clear whether this was an oversight on US Bank's part, a side-effect of their payments being processed by PayPal, or was in fact an intentional policy decision.
I've discovered that rather than an oversight, bonused Kiva loans are an advertised benefit of at least one US Bank credit card program.
As I mentioned last month in my post on product changes, I recently changed one of my two US Bank Flexperks Travel Rewards cards into a US Bank Cash+ card (apply in-branch only, or ask for a product change), which has no annual fee and offers 5% cash back on up to $2,000 in spending per quarter in two categories of your choosing (and 2% cash back in your choice of gas stations, grocery stores, or drug stores).
My US Bank online rewards center has now updated with the Cash+ rewards program, so I decided to check out what the 5% categories were this quarter. "Charity" was among them, as it has been since the card first became available. Unlike with the Flexperks Travel Rewards card, however, the Cash+ rewards center provides a lengthy list of organizations where spending is eligible for 5% cash back. And sure enough, there in the second column is Kiva:
Of course, the fact that US Bank advertises Kiva as one eligible merchant that's eligible for the "Charity" category bonus right now doesn't mean they will do so forever, or even that "Charity" will return as a bonus category next quarter, since these categories are regularly changed and reshuffled. However, at this point I think this is the low-hanging fruit of the travel hacking game, and I do strongly recommend at least thinking about getting in on the Charity category bonus with one of those two cards.
Things to keep in mind
Of course, this isn't a risk-free play and it isn't for everybody. Here are some things to keep in mind:
- Kiva loans are not risk-free. I've never had a default among the approximately $10,000 I've loaned through Kiva, but it certainly happens. The average default rate appears to be about 0.98%.
- You can minimize, but not eliminate, the risk of default by selecting loans that are offered by partners with a 0% delinquency and default rate, and that have a risk rating of 5 out of 5 stars. This will reduce the number of loans you can consider, however.
- Kiva deposits and withdrawals are processed by PayPal . That means you need an open PayPal account in order to make Kiva loans. This may not be an option if you've have your accounts closed or if you've been blacklisted by PayPal (more on this coming soon).
- Deposits to Kiva are instantaneous, withdrawals take 1-2 weeks. This has actually improved considerably: formerly withdrawals could take up to a month to process.
- US Bank credit cards can be difficult to be approved for. I've always received immediate online approval, but that's not the case for everybody, especially those with lots of recent credit inquiries. One of my most popular blog posts was my step-by-step instructions for one trick you can use to increase your chances of approval for US Bank cards.
Let me know in the comments if you have any more questions on making Kiva loans with US Bank credit cards.