I have a lot of bad ideas. I have a lot of good ideas, too! Basically, I have a lot of ideas. Being self-employed, I have a lot of time to sit and think (and, naturally, manufacture spend), all for the sake of my beloved readers.
Lying in bed late last night, I came up with what I believe may be my worst idea yet, although readers are of course free to chime in with their own candidates. Interested yet?
You can redeem Arrival+ miles against refunded purchases
Whenever I mention a creative way to maximize the value of Barclaycard Arrival+ miles, I always get pushback from readers who dismiss any actual travel redemption as a mug's game: after all (the logic goes), since you can redeem Arrival+ miles for as little as $25 against any travel purchase, even if that purchase is later refunded, no one should ever have a problem with "orphaned" Arrival+ miles.
I don't do this, for two reasons: first and foremost, I have plenty of authentic travel purchases (like this Monday's Orbitz deal) that Arrival+ miles are redeemable against, so I never have more than a few tens of thousands of Arrival+ miles in my account at one time anyway. But secondly, and this is where I meet a lot of resistance, since the Barclaycard Arrival+ card is one of the most lucrative cards for non-bonused spend I don't feel any compulsion to abuse that relationship by repeatedly making preposterously large purchases, redeeming miles against them, and then refunding them (it works in the opposite order, as well). That's easily tracked and easily flagged abuse, and it doesn't interest me.
Refunded purchases forfeit earned miles
When you make a purchase with your Arrival+ card, you earn 2 miles per dollar spent with the card. When you refund a purchase made with your Arrival+ card, you forfeit the same number of miles.
10% of miles redeemed for travel purchases are instantly redeposited
Whenever you redeem your Arrival+ miles against a travel purchase, 10% of the redeemed miles are instantly redeposited into your Arrival+ balance.
These miles are pure abstractions; they are not and could not be linked in any way to the "original" mile-earning purchase(s).
Consequently, while refunding a purchase causes the exact number of miles earned with that purchase to be "clawed back," any redeposited bonus miles remain in your account.
Rube Goldberg, eat your heart out
All of these facts were swirling around in my mind last night when I came up with the following. Consider the following stylized situation:
- On January 1, the cardholder makes 10 prepaid, refundable airfare or hotel reservations, each for $1,250, for September 1.
- On January 2, the cardholder makes 10 prepaid, refundable airfare or hotel reservations, each for $1,250, for September 2
- On January 3, when the January 1 reservations post and the Arrival+ miles are deposited into the cardholder's account, she redeems the 2,500 Arrival+ miles earned with each purchase against each purchase.
- The cardholder will receive $250 in statement credits and have 2,500 Arrival+ miles remaining in their account.
- Also on January 3, the cardholder makes 10 prepaid, refundable airfare or hotel reservations, each for $1,250, for September 3.
- On January 4, the cardholder makes 10 prepaid, refundable airfare or hotel reservations, each for $1,250, for September 4
- Also on January 4, when the January 2 purchases clear and Arrival+ miles are deposited into the cardholder's account, she redeems 5,000 Arrival+ miles against one January 2 reservation and 2,500 Arrival+ miles earned with each purchase against the other nine January 2 reservations.
- The cardholder will receive $275 in statement credits and have 2,750 Arrival+ miles remaining.
- The cardholder can then cancel a September 1 reservation, refunding $1,250 to her account and forfeiting 2,500 Arrival+ miles, leaving a balance of 250 miles.
- This continues forever.
It works, but only for a certain definition of "works"
As I said to begin with, this is certainly one of the worst ideas I've ever had. There are two key problems with it, which are already illustrated in the stylized example above:
- It takes roughly 10 days to earn enough miles to cancel all ten reservations made on Day 1. Each day you'll earn enough bonus miles to forfeit one reservation's worth of earned miles;
- It takes roughly 5 days to earn enough cash back to "pay" for each reservation. Remember that each day you're redeeming roughly $250 in cash back, while each reservation costs $1,250.
In other words, it's impossible to "catch up" to yourself: you'll eventually (around September 24, in the example above, by my back-of-the-envelope calculation) have outstanding reservations when the day of the reservation comes around, and have to cancel the reservation without a sufficient Arrival+ mile balance to cover the deficit.
Of course, this is all setting aside a much more profound problem: In order to avoid paying interest, you would have to pay off your Arrival+ card each month! Even though all your reservations would be eligible for redemption eventually, each statement would close with some outstanding reservations that would have to be paid off to avoid interest charges.
So what do you think? Where does this idea stand in the pantheon of my terrible ideas?