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:

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):

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:

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.

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:

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?

If manufactured spend disappeared tomorrow

/

Introduction

For many people, in many parts of the country, this is a golden age for manufactured spend.

OneVanilla prepaid debit cards are back (sort of). 5% cash back is back. Debit card miles are still around (for those who listen). Flexperks gives 75-100% discounts on paid airfares while Hilton and Club Carlson are working to make your hotel stays as cheap as possible. The list goes on.

But as great as it is to be doing what we do at this moment in history, I've been thinking a lot lately about developing an exit strategy – albeit one I'll hopefully never have to use!

So I thought I'd share with readers my action plan for the day when manufactured spend disappears for good.

Immediately consolidate my debt in a low-interest loan...

One of the underrated benefits of manufacturing spend is the unlimited liquidity it gives. The ability to spin off huge amounts of cash on a monthly basis transforms high-interest credit card debt into free, unsecured loans. Unlike some personal finance gurus, I have no principled objections to debt or even any particular interest in paying off my credit card debt, as long as the banks keep letting me turn it over at 0% APR.

I don't go out of my way to avoid debt, but I do go out of my way to avoid interest, so if manufactured spend disappeared tomorrow, I'd first need to consolidate as much of my credit card debt as possible into one or two low-interest loans. Assuming I didn't have enough notice to use the technique described here, I'd start with a Chase Slate card, the only 0% balance transfer card I know of that doesn't charge a balance transfer fee (for the first 2 months), and maybe take up Discover on one of their regular offers of low-interest personal loans.

...then focus on paying it off!

Of course, whether it's an interest-free balance transfer or a low-interest personal loan, the goal would be to pay it off as quickly as possible in order to minimize the interest paid on the loan.

Cancel or change most of my annual-fee cards

I cancel most of my cards that charge annual fees before their first anniversary anyway, so I pay either nothing or only once for each card (depending on whether the first year's fee is waived). However, there are a few cards that charge annual fees that I only keep around because of the opportunity to manufacture spend on them.

So I'd request to change my Hilton HHonors Surpass American Express back into the no-annual-fee version of the card, downgrade my Barclaycard Arrival+ to the no-annual-fee Arrival, change my Chase Ink Plus into an Ink Cash, and convert my US Bank Flexperks Travel Rewards card into another Cash+ or Perks+ card. Of course each bank has different policies on product changes, so not all of them might allow me to do so; in those cases I'd cancel the cards.

There are a few cards that charge annual fees I'd keep: my US Bank Club Carlson Business Rewards Visa, which gives 40,000 Gold Points annually (and the last night free on award redemptions), and my Delta Skymiles Platinum Business American Express, since that card's $195 annual fee is more than covered by the companion ticket earned on each anniversary. While it's tough to rationalize paying cash for a Delta ticket (and getting a second ticket free) while Skymiles are so easy to earn, remember that this is a world without manufactured spend: in that world, there's no doubt I'd have a chance to use the companion ticket each and every year.

The card I'd struggle the most to justify keeping is the Chase Marriott Rewards Premier Visa, which charges $85 annually for a Category 5 free night certificate. As I explained earlier this year, Marriott's latest category realignment has gutted downtown Category 5 options, making these certificates much less valuable for the properties I like to stay at. On the other hand, for airport, rural, and some overseas properties, it's still easy to get more than $85 in value from the certificates — as long as you're willing to commit in advance to staying in such a property at least once each year!

Use 2% cash back cards for everything

Once all those affairs were in order, I'd take my own advice and do what I've always recommended readers who weren't interested in manufacturing spend do: put all my domestic spend on my Fidelity Investment Rewards American Express card, and my overseas spend on a card that didn't charge foreign transaction fees, probably the Discover it card, which still earns 1% cash back on such purchases. For cash transactions, I'd make ATM withdrawals overseas from my Bluebird account, which doesn't charge foreign transaction or ATM fees.

The fact is, I only have trivial amounts of real spend each month, so I might not get more than one or two redemptions per year out of those cards. But I'd know I was getting the best return possible on what little spend I have, and not speculatively earning hotel points or airline miles I may never use.

Get back to travel hacking basics

And finally, I'd reinvest in the techniques I started travel hacking with: watching for cheap fares; taking travel vouchers when flights are overbooked; using Priceline to get the cheapest hotel stays possible; keeping track of future travel plans and be sure to book free one-ways on award tickets; and so on. It may not be particularly glamorous, but it is how to stretch the same small travel budget into more travel.

The Free-quent Flyer's 2014 mid-year financial report

/

As long as I've been running this website, I've said that it's a partnership between my readers and I. I go out every day to manufacture spend, book award travel, and exploit mistake fares, and you write in with questions and suggestions, support the site, and subscribe through PayPal or Amazon Payments.

Since I treat this project as partnership, I want to share the internal financials of the site so you know not just what you're getting out of it (my original reporting and help) but also what I'm getting out of it.

PayPal subscribers are my heroes

Since January of this year, readers have had the opportunity to support the site directly by making monthly or weekly contributions through PayPal. There are 5 contribution levels, which you can see by clicking on the pull-down menu on any page of the site.

What I've been most amazed by are readers who initially sign up for a $2 per month subscription and then after a few weeks or months decide to increase their commitment to $5 or $10 per month. That's real, direct feedback from my readers that I'm doing something right here.

With all that being said, I currently have 109 active PayPal subscribers, plus 6 subscribers who have contributed through Amazon Payments or other means. The overwhelming number of those subscriptions are at the $2 per month level, and my subscription revenue (after PayPal transaction fees) is currently between $200 and $300 per month ($275.40 in June).

Besides the knowledge that they're essential to the continuation of this project, my subscribers also receive my occasional subscribers-only newsletters.

Amazon Associates links are a new revenue stream

Since I moved from a state where Amazon Associates was not allowed, readers are now able to support the site by clicking through to Amazon using my Amazon Associates link. That's an easy and free way to support the site, and many readers have taken advantage of it. Here's my current Amazon Associates balance:

Still no affiliate revenue

I have still never received a dollar from any credit card affiliate program, and I will never receive a dollar from any credit card affiliate program as long as this site exists (see here for my previous experience trying the affiliate game and here for the inevitable denouement).

I do carry a large number of credit cards, and occasionally those credit cards offer referral credit to me just as they do to any cardholder. I won't promote that on the blog, but you can see the current cards I can refer readers to on my "Support the Site!" page (currently only the US Bank Flexperks Travel Rewards Visa Signature card).

Books sales are no longer a significant revenue stream

Longtime readers know this site started as a companion to my path-breaking book, The Free-quent Flyer's Manifesto. It's sorely out of date and it's largely been replaced by the content on this site, but there's a lot of great content there and I'm glad to see folks occasionally buy or borrow it (I make the same, roughly $2, either way). I now make $5 to $10 per month on book sales and rentals.

Meanwhile, I'm working on putting together a new book proposal which my PayPal subscribers will be the first to hear about. It has a slightly different subject matter, but one that I think is of more importance than ever in our current, hyper-financialized economy.

Costs are high and steady

Here are some of the costs that reader support covers:

Conclusion

I know from the tremendous feedback I get from my readers that they're grateful this site exists. Unfortunately, it's not yet self-sufficient, and my goal for the rest of this year is to convince more readers that it's worth contributing $2, $5, or $10 per month to the ongoing existence of this project. Naturally, I'll report on my success meeting that goal at the end of the year in my next shareholder report, when I'll have to make a decision about whether to continue or not.

"Pound Foolish" is a pretty good book

/

I recently finished "Pound Foolish: Exposing the Dark Side of the Personal Finance Industry" by Helaine Olen, and thought I'd share some of my initial reactions to the book, since it's a topic that's related to travel hacking in odd ways.

Personal Finance is a fantastically lucrative industry

As someone who has never had the good fortune to pick up one of Suze Orman's exhortations to "stand in my truth" or "own the power to control my destiny," I had no idea this industry really existed at all.

I thought "personal" finance was just meant as a juxtaposition to corporate finance or government finance. It turns out it's something of a term of art for "charismatic salesmen telling you how to live – with an emphasis on buying more personal finance products."

While there are certainly people who need help organizing their finances, the only personal finance advice I've ever followed is pretty simple:

  1. Don't pay interest if you're earning less interest on your investments than you're paying on your debt;
  2. Max out your IRA contributions;
  3. and invest in Vanguard target retirement date funds.

If really hard-pressed, I might add something like "spread your IRA contributions throughout the year to account for natural fluctuations in prices."

That would add up to a medium-length article, but it would make for a pretty short book. Nonetheless, these hucksters write countless books, host popular TV shows, and exhort their followers to engage in unbelievably convoluted schemes, the riskiest of which involve buying real estate speculatively and engaging in options trading with borrowed money (what my brother refers to as "unlimited downside" trading).

No one shares easy ways to get rich on the stock market

The "efficient markets hypothesis" gets a pretty bad rap, but at its core contains a basic truth: opportunities to take advantage of differences between public information and asset prices are vanishingly short-lived.

If a person really knew a sure-fire way to pick stocks or design stock-picking algorithms that invariably resulted in profitable trades, that person would receive a huge salary and even bigger annual bonus implementing that strategy for any one of thousands of investment banks, hedge funds, or sovereign wealth funds – not writing a monthly newsletter or hosting a TV show on a fourth-rate cable channel.

Of course, the real problem is that even if the schemes of personal finance "experts" worked for some or even most people, there's no way to know in advance if you're one of those people.

Olen is right about the little things and wrong about the big things

Olen is absolutely right about all this, as far as it goes. There is, however, an odd current running through the book, of hopelessness in the face of the massed forces of banks, publishing houses, cable news channels, and in-person appeals.

In fact, she more or less endorses a fanciful scheme by Teresa Ghilarducci to replace individual retirement savings with a universal forced savings program. Here's a rundown of the program in Olen's words:

  • "create a pension plan for all of us by having workers and their employers contribute a minimum of 5 percent of pay into a guaranteed account via mandatory automatic deduction;"
  • "all this money would be placed in United States bonds which would promise an annual minimum return of 3 percent above the rate of inflation, so participants would be protected from market downturns;"
  • "And who would manage all this money? Ghilarducci would shift the funds from the retail/commercial sector...to the institutional sector, and to hedge funds that mange our nation's pension monies at a significantly lower cost."

Well, did you see the slight of hand there? The same money that was just invested in United States bonds with a guaranteed rate of return was suddenly being "managed" by the "institutional sector." So which is it: is the money in risk-free Treasuries with a special, higher interest rate, or is the money being "managed" by hedge funds, i.e., invested into markets that fluctuate over time?

What do travel hacking and personal finance have in common?

I view travel hacking as the antidote to the madness that is the personal finance industrial complex. That's because when we manufacture spend, we aren't guessing about the performance of our rental properties or scrambling to find money to pay the mortgage: we see our costs up front and we see our returns every time a credit card statement closes.

When we book award tickets, we easily calculate the value we receive per mile redeemed and compare it to our acquisition (and opportunity) costs, to make adjustments to our miles and points strategy.

So I struggled while reading Olen's book to find the best way to express this fundamental fact: the house can be beat, it just can't be beat through magic. It can be beat through a clear-eyed and thorough evaluation of all the tools available, good organization, and a willingness to change along with the game.

Conclusion

With all that said, "Pound Foolish" is a rollicking good and often funny trip through every part of the personal finance industrial complex, from advisors who are paid based on the number of times they churn their clients' investments each year to the television channels that promote day-trading as a get-rich-quick scheme for the struggling middle class. Pick up a copy at your public library (like I did) or order a copy through Amazon.

Twitter feeds worth following

/

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.

Update on life/career changes

/

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!

Manufacturing spend with low credit limits

/

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.