Subscription week: "old" Blue Cash

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[As I explained Sunday, this week I'm re-running 5 "classic" Free-quent Flyer Blog posts, with the hope that readers, both regular and new, will decide that this blog is worth supporting through a weekly or monthly PayPal subscription. Today's post is by a huge margin my most popular, and highlights a key difference between this blog and many others in the travel hacking space: since I don't and have never received any affiliate money from credit card companies, I can write about incredibly lucrative but – because of affiliate agreements – essentially ignored products like what's known as the "old" Blue Cash card, from American Express. While the post has aged well, there are a few oversights: Reward Dollars can be redeemed for statement credits, not cash directly deposited into a bank account. Additionally, my claim that American Express doesn't code 7-11 store locations as gas station was hyperbolic; 7-11 stores with gas pumps are frequently coded as gas stations by American Express. This post originally ran on January 3, 2014 — see that original post for comments.]

I wrote early last month about my search for a new "workhorse" card to replace my Citi ThankYou Preferred card which, during my first 12 billing cycles, earned 5 ThankYou points per dollar spent at grocery stores, gas stations, and drug stores. With just a week left in that promotional period, imagine my excitement in seeing this FlyerTalk thread.

By opening this link in a new browser, "private browsing" session or "incognito" window, it's still possible to apply for what people are calling the "old" Blue Cash card. This "old" card has a totally different earning structure than the "new" Blue Cash Everyday and Blue Cash Preferred:

  • On your first $6,500 in purchases made with the card: 1% cash back at gas stations, grocery stores, and drug stores, and 0.5% everywhere else;
  • after spending $6,500: 5% cash back at gas stations, grocery stores, and drug stores, and 1% cash back everywhere else.

In other words this card is roughly comparable to the Citi ThankYou Preferred offer that's expiring for me, and I plan on applying for this card later today (after I decide on some additional cards for this impromptu application cycle).

Here are a few things to keep in mind:

  • Your net annual earning rate will be slightly less than 5% because of the lower earning rate on your first $6,500 in spend;
  • but unlike ThankYou points, which must be redeemed for mortgage checks, student loan rebate checks, or travel through the ThankYou booking tool in order to get a full 1 cent per point in value, Blue Cash "reward dollars" can be redeemed directly for cash;
  • 5% cash back is only awarded on gas purchases of up to $400;
  • and in my experience American Express does not code 7-11 store locations as gas stations and does not award gas station bonus points for purchases there.

Here on the blog I tend not to make explicit recommendations, since every reader's travel goals and application timelines are different.

In this case I'm inclined to make an exception and say that if you are able to take advantage of these bonus categories, you should strongly consider applying for this card right now. This offer will not last forever, and you will regret not carrying this card when you start reading about how much cash back other members of the community are earning.

Subscription week: Evolve Money

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[As I explained Sunday, this week I'm re-running 5 "classic" Free-quent Flyer Blog posts. One of the most exciting new developments this year in the world of manufactured spend was Evolve Money, an online bill payment service that, when launched, allowed tens of thousands of dollars in monthly online bill payments to a variety of merchants, which could be funded with prepaid debit cards. When the service first launched, payments could even be funded with credit cards, something my PayPal subscribers learned about all the way back in February, 2014. Unfortunately, that loophole was closed soon after a mainstream blogger publicized it. Much of the original research into Evolve Money took place on this blog, and can be accessed through my "Evolve Money" tag. This is the post that began it all. It originally ran on January 16, 2014 — see that original post for comments.]

HOW EVOLVE MONEY WORKS

Evolve Money is a service that allows you to pay your bills online – for free – using a Visa, MasterCard, or Discover debit card, REloadit packs (available at some grocery stores), or a product called "Evolve Pay Bucks."

You can create an account to store your payees, or use the service as a guest and input your bill information each time you pay a bill.

After searching their database of payees, you select the biller you want to pay, enter your account information, then choose your payment method.

That's it. It took me a few seconds to set up an account, add my MasterCard debit card, and make a number of experimental bill payments. I'll keep my readers updated with those results.

WHAT PAYEES ARE AVAILABLE?

There's good news and bad news on this front.

First, the bad news: as far as I can tell no bank's credit card division is listed as an eligible payee.

The good news is there are a lot of payees that are potentially lucrative. The list is incredibly long (it's free to search, so go check it out for yourself), but here are some highlights I found:

  • Mortgages: Bank of America Mortgage, JP Morgan Chase Mortgage, Wells Fargo Home Mortgage, PNC Mortgage, Countrywide Home Loans, etc.;
  • Student Loans: Federal Student Loans - All Servicers, Discover Private Student Loans, Citibank Loan/Private Student Loan/Line of Credit, Acs Educational Services, Great Lakes Educational Loan Services, etc.;
  • Savings Accounts: Utah Educational Savings Plan, TD Ameritrade 529 College Savings Plan, Schwab 529 College Savings Plan, etc.;
  • Insurance Premiums: Blue Cross Blue Shield (every state);
  • Tax Payments: hundreds and hundreds of city and county revenue departments are listed.

WHICH DEBIT CARDS WORK?

I can confirm that the PayPal Business Debit MasterCard does work for bill payments, and these transactions are processed as signature purchases which should earn 1% cash back. My regular readers know what that means: you can load your PayPal account using PayPal My Cash cards purchased with a rewards-earning credit card, then earn 1% cash back liquidating those funds paying bills you wouldn't ordinarily be able to pay with a credit card. You'll be earning your credit card rewards – and a small profit – for transactions that wouldn't otherwise earn rewards.

If you are currently paying a mortgage or student loan using withdrawals from your bank account, take a look at the list of available payees and decide whether you can take advantage of this service instead and earn rewards on those payments.

Subscription week: Walmart bill payments

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[As I explained yesterday, this week I'm re-running 5 "classic" Free-quent Flyer Blog posts. Today's post is a true classic, the first clear, public description of one of the most useful and flexible manufactured spending techniques: Walmart bill payments. The post that launched a thousand trips, it's still one of the most versatile and flexible techniques available, although there have been changes: for example, American Express-issued credit cards are no longer directly payable at Walmart. There are also a few oversights that are embarrassing in retrospect (Discover bill payments cost $1.50, not $1.88, for 3-day bill payments). This post originally ran on August 26, 2013 — check out the comments there.]

Walmart allows you to pay credit card bills using any PIN-based debit card

HOW IT WORKS

Walmart Money Center registers and, in locations without a separate Money Center, Customer Service registers are integrated with the CheckFreePay bill pay network. At any such register, you can ask to make a credit card bill payment and use any PIN-based debit card to pay the bill and the associated fee.

You can use up to 4 PIN-based debit cards per bill pay transaction, while paying a single transaction fee.

Credit and debit cards are issued by banks: Chase credit cards are issued by Chase, American Express credit cards are issued by American Express, Bank of America credit cards are issued by Bank of America. However, each card is also linked to a payment network: Visa, MasterCard, American Express, Discover.

The single most important thing you have to know in order to take advantage of this technique is that when you pay your credit card bills at Walmart, you must make the payment out to the payment network, not the issuing bank.

So even though your Chase Sapphire Preferred Visa Signature card and your Chase Ink Plus MasterCard are both issued by Chase, to pay your credit card bills at Walmart the payee for the Sapphire Preferred will be "Visa" and the payee for the Ink Plus will be "MasterCard."

WHAT IT COSTS

This section is based only on my experiments at my local Walmart store locations: your experience may differ.

There are two price points in the CheckFreePay system at Walmart: $1 "3 business day" payments and $1.88 "next business day" payments. Unfortunately, not every credit card payment network has both payment speeds enabled. Here are the results of my experiments:

  • Visa: Next business day only ($1.88)
  • MasterCard: Next business day only ($1.88)
  • American Express: Next business day ($1.88) or 3 business day ($1)
  • Discover: Next business day ($1.88) or 3 business day ($1)

So if you want to make a credit card payment to a Visa credit card at my local Walmart, you must pay $1.88: the $1 payment option is not available. This may vary by store location or employee. 

WHY IT MATTERS

Ever since the Federal Reserve issued new regulations forcing prepaid card issuers to allow their cards to be used as "true" PIN-based debit cards, we've been in a very exciting time for travel hacking. For example, Chase allows up to $2,600 in free gift card purchases per Chase credit card, per rolling 30-day period. Likewise, many grocery stores (a common bonus category) allow you to purchase $500 Visa and MasterCard gift cards at a typical cost of $5.95-$6.95.

Besides gift cards, in many parts of the country it's still possible to buy Vanilla Reload Network reload cards at drug stores like CVS, and PayPal Cash cards at 7-11 store locations that are processed as gas stations. 

The problem in this era of virtually unlimited manufactured spend is liquidating prepaid cards once you've purchased them.

Bluebird is a free option, loadable at all Walmart registers using PIN-based debit cards up to $1,000 per day and $5,000 per month, but those loads count against the same $5,000 calendar month limit as Vanilla Reload Network cards.

Gobank is another great option I've extensively covered, but while it's free to load Gobank accounts at Walmart up to $1,100 per transaction and $2,500 per day, it's a Green Dot product that's subject to shutdown if you exceed undisclosed monthly limits or if your loading pattern is deemed "unusual."

PayPal has a $4,000 rolling 30-day load limit using PayPal Cash cards, but unloading your account can cause problems since PayPal is notoriously sensitive to abusive behavior.

All of those problems have now gone away: you no longer need an intermediate product to liquidate your prepaid cards.  Instead, you can bring up to 4 PIN-based debit cards per bill pay transaction to your local Walmart and at a cost of $1 or $1.88 send the card balances directly to your credit card.

THE RISKS

There are 3 primary risks to this technique that I want to be perfectly clear about up front.

First, there's the risk of having an account shutdown. There are many reports of MyVanilla Debit cards being shutdown without warning, and it's still unclear what loading and unloading pattern is safest. I don't have an inside line on MyVanilla Debit's fraud prevention algorithms, but I believe cash advances are probably the riskiest method of unloading the cards, because of the high limits and fixed $1.95 fee. Large Walmart transactions are probably a close second. So while this is a great technique for liquidating MyVanilla Debit balances, you still should be careful about spacing your loads and unloads out over the course of the month. And of course, even being careful can't guarantee that your account won't be closed.

Second, there's the risk that Walmart will consider your payments suspicious activity. There are lots of reports in this thread of Walmart employees being prompted to record customers' Social Security numbers, home addresses, and other personal identifying details. Those requests seem to be triggered by credit card payments over $2,000, although the exact level that triggers scrutiny isn't clear. Many people are made uncomfortable by disclosing this sensitive information to Walmart tellers. It appears the best way to avoid doing so is to keep your bill payments below $2,000, although this will raise your cost per dollar of manufactured spend.

Finally, when it comes to Walmart there's always the risk of employee incompetence. This can take a number of different forms. Of course, an employee may simply not know how to make these bill payments. Alternatively, there are reports that some store locations demand that you physically bring your most recent credit card statement into the store. Further, some store locations refuse to allow bill pay transactions to be funded by gift cards (cards that don't have your name embossed on the front). Finally, some employees may feel uncomfortable with multiple, high-value transactions, and simply refuse to help you. Be aware that this is not corporate policy: you've just found an incompetent employee, or a store location with an over-vigilant store manager. Visit another location or return at a different time.

These are manageable risks, but they do exist and you should be aware of them before beginning to use this technique. As always, I recommend starting slowly, using money that you can afford to be temporarily without if something goes wrong, and watching your credit card statements carefully to make sure that each payment posts correctly.

CONCLUSION

This is a very basic overview of this technique. It works and it can increase your volume of manufactured spend while only slightly increasing your cost per point.

Tomorrow, I will provide my analysis of the volume and cost per dollar of manufactured spend that you can achieve using this technique, and I'll compare it to some other popular techniques.

Later in the week I'll discuss some of the most lucrative opportunities this technique unlocks and share my own plans to use it going forward.

If you've already been using this technique, please share your experiences in the comments. How long do your CheckFreePay payments take to post? Do they post at the beginning or end of the business day? What problems have you had dealing with Walmart employees, and how have you resolved them?

Introducing subscription week!

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About 5 months ago, I left my job in New England to move to the upper Midwest, where I've been happily plugging away on this blog and grinding out a living as a travel hacking enthusiast. I've enjoyed posting more regularly, helping readers, and the freedom that comes from having no one but my readers to answer to.

A snapshot of the Free-quent Flyer empire

After almost 2 years blogging, today this site has an average of 3,519 unique visitors per week, plus around 1,000 more who subscribe to my RSS feed or receive posts by e-mail.

Meanwhile, there are 3 main ways readers financially support the site. First is the use of my referral links, all conveniently assembled on my "Support the Site!" page. The two best performing links so far are my BeFrugal and TopCashBack referral links. Both have long delays between referrals and payouts, but enough people have signed up that I end up hitting BeFrugal's $25 redemption threshold about once a month:

On the other hand, about one TopCashBack referral goes from "pending" to "payable" status each month. You can see this month's hasn't quite reached that status yet:

The second way readers support the site is by bookmarking or clicking through my Amazon.com referral link, which kicks back a small percentage of each purchase to me. Many readers have done so, and I've been earning roughly $10 to $20 per month, for which I'm incredibly grateful to my loyal readers!

The third and most important way readers financially support the site is by signing up for weekly or monthly PayPal subscriptions. In total, I have 120 active PayPal subscribers, most of whom contribute $2 monthly, of which I receive $1.64, after PayPal takes their cut. Others contribute $5 weekly or monthly, which I earn $4.55 on, and a few heroes have signed up for $10 monthly subscriptions, of which I get $9.41. PayPal doesn't have any convenient way of displaying this kind of information, but here's the dashboard:

Last month those subscriptions added up to $309.23 after fees.

Introducing Subscription Week!

As you can see, PayPal subscriptions provide the overwhelming majority of this site's revenue, but 120 active subscriptions means that just 2.6% of my weekly readership, or roughly 0.8% of my monthly readers, have signed up!

That's why this week, I'll be re-running 5 "classic" Free-quent Flyer Blog posts, which I think illustrate the different kinds of content that I hope make this blog worth paying (a nominal sum) for.

If you're a regular reader, I do hope you'll consider subscribing.

And if you're already a subscriber, why not take the opportunity to move from a $2 to $5 subscription, or from a monthly to weekly one?

No matter what, I hope you enjoy this week's classic posts from the archive, starting tomorrow. There are a lot of gems in there – picking out just 5 was the toughest part!

Redeeming Ultimate Rewards points for cash, miles, and both

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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

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[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

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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)

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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

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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

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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.