Miles and points as an (irrational!) commitment mechanism

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One of the reasons I started blogging, all the way back in the long long ago, was that I was disillusioned and furious with bloggers who each week or month would run through a whole spectrum of airline or hotel co-branded credit cards, explaining why each in turn was the one readers absolutely had to have.

Of course it can't be the case that the Marriott Rewards Premier credit card (annual Category 1-5 night certificate!), IHG Rewards card (annual night certificate!), Citi Hilton HHonors Reserve (annual weekend night certificate!) are all the best co-branded hotel credit card.

So I build this website and started writing this blog with the goal of providing as much true information as possible, and the truth is the Hilton HHonors Surpass American Express is probably the best co-branded hotel credit card, if you're willing to manufacture spend furiously, with the possible exceptions of the Club Carlson Business Rewards Visa (if you can stand their rundown properties) and the Wyndham Rewards Visa, which earns a free night at any Wyndham Rewards property in the world every time you spend $7,500 with the card.

People really don't like paying for their travel

What I didn't understand when I started writing is that people really don't like to think about the money they spend on travel. For example, when I point out that a 30,000-point Hyatt Gold Passport redemption costs $300 per night, the comments section quickly fills up with people explaining that they paid much less than $300 for their Ultimate Rewards points, so it's not fair to say they're paying $300 for their Hyatt stay.

Ultimate Rewards points are worth 1 cent each when redeemed for cash. A 30,000-point transfer costs $300.

I don't mind paying for travel

I've loved to travel for as long as I can remember. Long before I learned about travel hacking, I was taking the Chinatown bus to Boston, DC, and New York City, spending Spring Break in Ireland, getting an English-language teaching certificate in Prague, and teaching English in Moscow.

And I just paid for it. I searched for the best prices, then I booked tickets, then I traveled.

If you don't like paying for travel, travel hacking is a convenient way to hide the cost

What I've come to realize is that one thing people like about travel hacking is that it gives them permission to travel.

If you earn $250 in cash on some bank account signup bonus, then you treat that $250 like cash, as you should.

But if you manufacture $10,000 in spend on a Hilton HHonors Surpass American Express and earn 60,000 HHonors points, you don't have to think about the $200 you've given up by not using a 2% cash back credit card. Instead, you're stuck with 60,000 HHonors points you have to use on Hilton hotel stays.

If you need a commitment mechanism, then go for it

In the economics literature, a commitment mechanism is a way to "commit" your future self to some action that you're not sure you'll do in the absence of the mechanism. A typical example is the 10% withdrawal penalty on IRA balances as a way to commit your future self to not touch your retirement savings until you reach the penalty-free retirement age.

When deciding between a cash back card and a travel rewards card, you may have legitimate concerns that your future self will use cash back to make mortgage payments, save for retirement, or buy a flat-screen TV, when you know that what your future self will really value is a trip to Italy.

One way to commit your future self to the Italy trip is to make it so unreasonably expensive to convert miles or points to cash that they're compelled to use them to travel instead.

You know yourself better than I do. If that's you, then leave the cash on the table and pay a little more to commit to the travel that's really going to enrich your life.

Conclusion

This post is my way of making peace with people who really do need to "lock up" a certain portion of their earnings in order to give themselves permission to travel.

On the other hand, that will never be the approach I take to travel, or to travel hacking, so I'll keep writing about the cheapest, easiest ways to earn as much value as possible, and I'll leave it up to my readers to decide how much needs to go into a lockbox rather than into a checking account!

My top 10 most popular (and one least popular) posts of 2015

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In the spirit of shamelessly ripping off Frequent Miler, I thought it would be interesting to see what my most popular new posts in 2015 were. Since I don't use Google Analytics for, well, anything, it took me a little while to figure out how to assemble this list. In other words, accuracy not guaranteed, but I found it interesting and thought my readers might as well.

Without further ado, here are my 10 most popular posts written in 2015, ranked by total unique pageviews. I've placed an asterisk(*) next to the techniques that are still working or relevant today.

Any lessons here?

I basically write whatever I feel like writing about, so it's pretty much luck of the draw when that coincides with what readers want to read about. With that in mind, are there any lessons to be learned from this list?

  • Lots of people want to read actionable tips for upping their travel hacking game. My post on the Chase Sapphire Preferred is the only popular post that was more analytical than action-oriented. None of my posts on imputed redemption values or other methods of analyzing miles and points redemptions made the cut.
  • No one wants to read about my award redemptions. My most popular "Anatomy of an Award Trip" post in 2015 got just 363 unique pageviews.
  • The game is always changing. Of my top ten posts of 2015, only 6 are still actionable or relevant: it's become much more difficult to automate American Express offers over Twitter; American Express gift cards are no longer a lucrative method of manufacturing spend; Amazon Allowances now have a minimum of $5, making them less useful for meeting transaction requirements; and Uber no longer allows anyone to purchase gift credit.

What was my least popular post of 2015?

Just for fun, I thought I'd scroll down to find my blog post with the fewest unique pageviews. For whatever reason, that post was:

In fact, 5 of the 10 least-viewed posts were "Do this now" posts about registering for various promotions.

Expect this to have absolutely no effect on the content of my blog in 2016. Old dogs, new tricks, etc.

Use Hipmunk to find positioning flights

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There are a lot of websites you can use to search for paid flights. Kayak is one of the most popular, but Orbitz, Expedia and Priceline will all find you tickets as well. If you're booking paid flights with Ultimate Rewards points you'll need to use their internal search engine, and the same is true of US Bank Flexpoints.

All those sites work, and they all have roughly similar search features: you can search for specific dates or flexible dates, you can specify your cabin of service, and you can filter by airline and time of day.

What none of them let you do is filter by different times of day depending on the day of the flight. Let me explain.

Award availability often requires positioning flights before or after the award segments

Award availability is the aspect of travel hacking that we have the least control over. Whether or not an airline makes seats available on the dates we need them is entirely at the discretion of the airline. While much digital ink has been spilled over the best ways to find award seats, ultimately it's not something we can predict in a reliable way.

Further, when award availability does become available, it may not exactly suit our needs. There may be award seats from an alliance hub city, but not on flights from your home airport to the hub. If you're committed to booking the award seats, that means you'll need a positioning flight: either a paid flight or an award on a different carrier that gets you to the airport in time to take your award flight.

Of course, positioning flights can be necessary at the beginning or end of a trip.

Use Hipmunk to find positioning flights

When you search for flights with every other search engine I know of, you can filter by time of departure, but that filter applies to every day searched. For example, on ITA Matrix filtering by "early morning" departures returns early morning departures for every day within the search range:

HIpmunk is the only flight search engine I know of that lets you filter by departure times across day boundaries. For example, I have an upcoming award flight booked on Air Berlin between Berlin and New York City. But I don't live in New York City, and there's no oneworld award space between New York City and my hometown, which means I need a positioning flight.

Since we don't want to go into the city (we'll be getting back from 17 days in Europe), I'd like to search for the cheapest flight that leaves either the evening we arrive in New York or the next morning. In other words, I'm fine staying overnight at the airport if it saves us some money, but I'm not willing to wait to fly out until the next evening.

Lo and behold, Hipmunk found me the perfect flight:

We'll stay overnight at JFK, leave early the next morning, and be back home early that afternoon.

"Pop Finance" is a pretty good book

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This is a review of "Pop Finance," by Brooke Harrington. You can find all my previous book reviews here. If you're interested in buying a copy, I hope you consider using my Amazon Associates referral link.

I first heard about "investment clubs" from my Italian immigrant barber back in New England. He and some of his business associates and cronies get together once a month and contribute a nominal sum to a common pot. They then vote on which stocks to buy with that month's contributions.

My barber seemed to realize that this was a strange way to invest in the stock market, but explained that the real point wasn't necessarily to pick winning stocks, but as a forced savings vehicle: if you wanted to hang out with your buddies, you needed to find $50 to save each month, which was enough incentive to get people to save money who otherwise wouldn't bother.

With that in mind, I was excited to stumble across "Pop Finance," an ethnography of investment clubs in the San Francisco Bay Area written by Brooke Harrington. The principle research behind the book was conducted over the course of 1998 — in other words, at the peak of the 1990's tech bubble — with followup research in 2004, in the midst of the Bush Administration stock market doldrums.

Mass participation in the stock market is something that requires explanation

Today, popular ownership of publicly-traded shares, either individually or through mutual funds, is so common that it seems part of the natural order of American economic life. So it's worth pointing out that this isn't the only way that it's possible to save money, whether for retirement, health care, or educational expenses.

To this day, it's perfectly legal to simply save half your salary from age 25 to age 65 in FDIC-insured vehicles like savings accounts and certificates of deposit that earn market interest rates on the money saved. That volume of savings would allow you to then continue spending the same amount of money (half your lifetime salary) from age 65 to age 105, with a little left over depending on where market interest rates happen to fall during your lifetime.

Of course, Social Security exists, so you don't need to replace your entire annual consumption through savings — Social Security will replace 18-90% of your income (depending on your lifetime earnings), so you only need to replace the remaining portion, meaning you can spend more than 50% of your income and still spend the same amount during your working life and your retired years.

A private pension replacing even more of your income would mean even less savings would be required to smooth out your consumption over your entire lifetime.

Harrington convincingly argues that mass participation in the stock market, in her case in the form of investment clubs, was the result of two factors that made the above logic fall apart in the 1990's:

  • Corporate defined benefit pensions were replaced with defined contribution plans, often self-directed and invested in stocks and bonds;
  • Between 1985 and 1995, real wages declined while corporate profits tripled. In other words, for the average American, saving half their salary in FDIC-insured savings vehicles would mean a decline in living standards in retirement, while purchasing "the market" would mean an increase in living standards in retirement, or even early retirement.

Finally, I'll add that obviously the overwhelming majority of Americans today are incapable of or unwilling to live on half their salary. There are many reasons for this: status anxiety, a feeling that they've "earned" the right to enjoy their money, and of course in the case of prosperous coastal cities, the accelerating cost of living.

Ultimately, that means either settling for a much lower standard of living in retirement, or investing in riskier assets with a higher potential rate of return than FDIC-insured savings vehicles.

Day trading is a very intuitive way to invest in the stock market

Once you've decided that the stock market is the only way to secure the lifestyle you envision for yourself in retirement, day trading is the obvious method of doing so: since different stocks move in different directions on a daily basis, by buying stocks before they go up, and selling them before they go down, you can earn more on a daily basis than in a whole year of FDIC-insured interest.

In fact, if your wins are big enough and your losses are small enough, you don't even need to be right a majority of the time! After all, one 10% gain offsets four 2% losses with 2% left over as your profit, not annually, but daily!

Investment clubs are day trading by committee

Investment clubs, like day traders, also purchase individual stocks for short term profits. The problem is that unlike an actual day trader, investment clubs can't react quickly to changes in the prices of their stocks. At the beginning of March a club may vote to buy Pfizer, the stock may peak in mid-March and be lower than where they bought it by the time they get together again in April. And at that point, they have to vote on whether they think it'll do it again!

One club Harrington profiles attempts to deal with this problem by putting stop-loss orders on all their stock holdings: if a stock declines by 20%, they sell the stock — then frequently buy it again at their next meeting, when the price has had time to recover!

This is not a good way to invest

I believe virtually all people should save for retirement in Vanguard target retirement date funds.

But even if you have a different risk tolerance than the ones reflected in Vanguard's target retirement date funds, you probably should implement that risk tolerance through low-cost indexed mutual funds.

But even if you believe that you're preternaturally gifted at predicting the short-term movement of stocks, you should simply act on your gift by buying and selling stocks, not waiting weeks at a time and then spending time convincing your fellow investment club members that you know which direction a stock will move before your next meeting.

But creative forced savings mechanisms are pretty cool!

That brings me back to my Italian barber. He is really convinced that many members of his investment club would save nothing if they weren't saving $50 a month in monthly club contributions.

And at the same time, over a working lifetime, $600 per year invested in the broad stock market really will return more than the same $600 invested in FDIC-insured savings vehicles.

So I'm all in favor of crazy schemes to force yourself to save! Here a few I came up with that make at least as much sense as investment clubs:

  • Every time you withdraw money from an ATM, withdraw an extra $20 and set it aside for a monthly retirement savings contribution;
  • Deposit your credit card cash back rewards into a designated retirement savings account;
  • When you redeem your miles or points for an award trip, deposit the cash value of the trip into a designated retirement account — be your own mileage broker!

A final note on tax-advantaged accounts

It's no secret that I'm a strong advocate for simplifying the US income tax code. Not simplifying it and reducing rates, just simplifying it, full stop.

One reason for that is that the current configuration of tax advantaged savings vehicles (employer-based retirement and health savings accounts, traditional and Roth Individual Retirement Accounts, and the mortgage interest deduction) leads people to spend extraordinary amounts of time gaming the tax code instead of simply saving money.

In other words, once you've maximized your tax advantaged savings vehicles by contributing to a 401(k), IRA, and buying an unnecessarily expensive house, you feel like you've done all the savings necessary (perhaps adding a 529 College Savings Plan as icing on your tax-advantaged cake).

But that's ridiculous: it's perfectly legal to simply buy stocks and bonds. You can invest in a Vanguard target retirement date account in a taxable account, and it will generate the same long-term returns as the identical fund held in your tax-advantaged accounts. You just have to pay long term capital gains on the returns when you eventually sell (although you avoid the 10% early withdrawal penalty on the exact same fund if held in your IRA).

Portland is a city where young people go to retire

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I go to Portland, Oregon, three or four times a year. I think it's a little slice of paradise, so I thought I'd share some of the things that make it so special for me.

How to get there

  • Amtrak. Take the Empire Builder west from Chicago or the Coast Starlight north from Los Angeles. The first costs 40,000 Amtrak Guest Rewards points in a bedroom (or family bedroom), and the second costs 25,000 points in a bedroom until January 24, 2016. A single redemption includes tickets for up to the maximum occupancy of the room, e.g. 2 adults and 2 children in a family bedroom.
  • Portland International Airport. PDX has flights operated by the big 3 US carriers and Alaska Airlines, as well as Southwest. From PDX the MAX light rail will take you downtown in about 40 minutes for just $2.50 ($5 for a day pass).

Where to stay

  • Downtown. I usually stay at the Hilton Portland & Executive Tower (30,000 HHonors points November-March, 40,000 HHonors points April-October), although they sometimes play games with award availability. If you're a Gold or Diamond HHonors member, you can use your continental breakfast voucher for about $12 off anything on the breakfast menu, which I recommend since the continental breakfast is terrible. If you have Starwood Preferred Guest points, The Nines is a very fine hotel, and Urban Farmer is one of the best restaurants in Portland, located on the 8th floor of The Nines. Other than that, Marriott dominates the downtown hotel scene, and their properties are overpriced, unless you're able to get an especially good deal using Priceline.
  • AirBNB. AirBNB offers two advantages over staying at hotels: you'll often pay much less than you would staying at a downtown hotel, and you can stay in the neighborhoods, which are one of the things that make Portland so great. Three fantastic neighborhoods to check out are Northeast Alberta, between perhaps 9th and 33rd Streets; Southeast Hawthorne almost anywhere East of Grand St; and North of Burnside in the Pearl District or what's charmingly called "Nob Hill."

What to do

  • The 4T Trail. Do a loop around Portland taking the MAX light rail train, the trails between the Portland Zoo and the Oregon Health & Science University, the aerial tram down to the river and the Portland Streetcar Trolley back downtown. You can do the loop in either direction, but the aerial tram is only free going downhill. Warning: bring a printout of the trail segment, or you might get very, very lost (not that I'm speaking from experience or anything).
  • ZooLights. Speaking of the Portland Zoo, every winter the Zoo is open late and lit up with holiday lights. Fun for all ages.
  • Ground Kontrol Classic Arcade. Classic arcade games from your youth and your parents' youth, plus new additions like Killer Queen, the world's first 10-player arcade game. There's a huge selection of classic and new pinball games, as well.
  • Dante's Sinferno Caberet. Sundays at 11 pm until the wee hours of the morning, a mixture of nudity, profanity, and feats of strength. The pizza joint in the corner is now operated by Lonesome's Pizza, which is excellent.
  • Clinton Street Theater's Rocky Horror Picture Show. One of the longest-running screenings in the country, doors open at 11:30 pm on Saturday nights.
  • Laurelhurst Theater and Pub. $3-4 second run movies and classics, cheap beer and great pizza. Each seat has bar space to place your pitchers, pizzas, and salads, so you don't have to juggle your dishes.
  • Look for inspiration. Part of what makes Portland so magical is that you don't need a plan to have a good time. You can walk around, make friends, check out the local alternative weekly, and wait for inspiration to strike.

Where to eat

  • Pine State Biscuits. Three locations, always lines at all 3, but always worth the wait. Go at weird times for shorter waits, go during brunch for hour-plus waits.
  • Pacific Pie Co. Two locations. Great meat and vegetarian savory pies, sweet pies, and craft beer. Save money by going during happy hour, Monday-Friday 3-6 pm.
  • Bunk Sandwiches. Five locations. The Marinated Garbonzo Beans sandwich at Bunk Downtown is way, way spicier than it has any right to be.
  • Food carts. Portland food carts are clustered into groups called "pods." Make a food cart pod the beginning or end of a walk around town and you're guaranteed to find something delicious.
  • Anywhere. Portland bars are generally required to serve hot food, and it tends to be fantastic, or at least greasy, which can be almost the same thing.

Where to drink

  • Distillery Row. Portland's craft distilleries are clustered in Southeast Portland. Visit any one to try a flight of craft liquors, or buy a Passport and drink many flights of craft liquors.
  • Swift Lounge. Craft cocktails served in large or very-large mason jars. Great food.
  • Binks. Great cocktails made with house-infused spirits.
  • Ash Street Saloon. You will never find a more wretched hive of scum and villainy.
  • Craft breweries and brewpubs. There are a lot of them, including nationally known breweries and brewpubs like Widmer Brothers, Hopworks Urban Brewery, Full Sail, and Deschutes.

Conclusion

Remember, the dream of the 90's is alive in Portland.

American Express cards I'm thinking about

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Introduction

When I say that I don't chase signup bonuses, it sometimes gives readers the impression that I don't apply for new cards or that I don't think signup bonuses are a good deal. Nothing could be further from the truth!

If I need a new card, I'll apply for it, I'll call reconsideration lines, and I'll move credit around like anyone else hungry for approval. Likewise, if I'm planning to sign up for a card, I'll do my due diligence and hunt down the highest signup bonus available.

The difference, as I see it, come down to what cards I think I need. Since I earn the miles I redeem and redeem the miles I earn, I won't sign up for a new card just because it has a high signup bonus; I need to have a sense of where and when I'd redeem those miles. Otherwise, I might never redeem them and be left with a worthless novelty balance.

That being said, here are a few cards I'm currently thinking about adding to my collection.

Starwood Preferred Guest Business

I recently met the $50,000 spend threshold on my Platinum Delta SkyMiles Business American Express card, which makes the card all but useless for the rest of the calendar year. Last week I called American Express to ask which cards I was eligible to product change my card to, and was given two options: the Starwood Preferred Guest Business card, or the Blue for Business.

The latter product earns 1 non-flexible Membership Rewards point everywhere, which isn't very interesting, while the Starwood Preferred Guest card earns points that can be transferred to Delta, Alaska, or American (among others), in addition to booking Starwood hotel stays.

The main reason I'm interested in the Starwood card is for hotel stays. While Hilton is my primary hotel program because of their enormous footprint and the high bonused earning rate on the Hilton Surpass American Express, there are times when Hilton rooms aren't available or their properties are inconveniently located. At times like those, it's helpful to have points like Ultimate Rewards (for transfers to Hyatt) or Starpoints for booking alternatives.

On the one hand, requesting a product change to the Starwood Preferred Guest card would save me a hard credit pull and the risk of having my application denied. On the other hand, it would permanently cost me the 25,000 Starpoints I would earn if I applied for the card from scratch.

Ultimately, given the choice between canceling my Delta card, keeping it, or product changing to Starwood Preferred Guest, I'm leaning towards the product change, even if that means leaving 25,000 Starpoints on the table.

New "Old" Blue Cash

While my pre-devaluation "Old" Blue Cash card was closed by American Express in December, the "Old" Blue Cash card is still available, albeit in stunted form, and still earns up to $2,240 in annual cash back on purchases at supermarkets, gas stations, and drug stores. It's not as outrageously good a deal as it was before bonused earning was capped at $50,000 in yearly spend, but it's still low-hanging fruit, and I'm considering applying for another.

Amex EveryDay Preferred

While I'm not thrilled about the $95 annual fee, the EveryDay Preferred earns 4.5 Membership Rewards points per dollar spent at grocery stores (on up to $6,000 in spend) and 3 Membership Rewards points per dollar spent at gas stations (uncapped) when you make 30 purchases during your statement cycle.

I don't find Membership Rewards points to be particularly valuable, but this card would be a highly efficient method of earning Delta SkyMiles compared to my Delta Platinum Business American Express, and with a much lower annual fee. Delta is my primary airline program for domestic travel, so being able to earn those miles faster means paying less for the redemptions I already know I'm going to make.

The tradeoff, assuming I product change my Delta card to a Starwood card, would be giving up the opportunity to earn 20,000 Medallion Qualifying Miles per year through credit card spend.

However, I've already secured Silver Medallion status for 2016, and I don't trust Delta enough to pay a $195 annual fee purely in the hope that the SkyMiles program will retain value in 2017 and beyond.

Conclusion

When thinking about my credit card applications, as you can see above, signup bonuses play virtually no role in deciding whether to apply. If the Amex EveryDay Preferred is worth getting, it's worth getting in order to manufacture spend on the card year-round, not because its signup bonus was temporarily raised to 30,000 Membership Rewards points.

Likewise, for the convenience of a product change (keeping the same account number, avoiding a credit pull, etc.) I'll go so far as to permanently give up the chance to earn a 25,000 Starpoint signup bonus, because I believe the card is worth spending money on year-round, not just in order to trigger a one-time payday.

Having a routine is fantastic. Also dangerous

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Back in September, Matt at Saverocity wrote this post about the potential problems of a travel hacker getting so "locked in" to one or two loyalty programs that they're unable to take advantage of other, potentially more lucrative programs sitting right under their nose.

Conveniently, I was name-checked in the post, so I guess I'm entitled to respond.

Matt thinks our limiting factor is time and attention; I think it's value

Here's the marker Matt laid down, challenging us slackers to rise above the hobgoblins of our little minds:

"I don’t think anyone would have the gumption to do this. But what if you had to drop all your existing programs for 6 months. The world wouldn’t end, and if you were dedicated, you’d be forced to learn a lot about other things outside of your knowledge base. Humans are notoriously good at adapting and evolving when forced to do so, but if you give us the choice...we’d rather not."

Today, I can manufacture up to $120,000 per cardmember year on a US Bank Flexperks Travel Rewards card and earn 2 Flexpoints per dollar (at gas stations or grocery stores) or 3 Flexpoints per dollar (in charitable spending), worth up to $4,800 or $7,200 in paid airfare.

I have unlimited time and attention (this is my job), but what I don't have is the willingness to give up concrete, quantifiable value in favor of spending months diving deep into alternative rewards programs on a speculative basis.

Having a routine is fantastic

Much of my monthly manufactured spend proceeds according to a familiar routine. I know which merchants will sell me which products in which quantities, and I buy them with the cards that give me the most value, starting with bonused spending categories and working my way down.

Far from limiting my frame of reference, I find a consistent routine, developed based on the actual credit cards and loyalty programs that I use to pay for my actual travel, gives me more mental bandwidth to dedicate to studying new techniques and calculating how I can integrate them into my travel hacking practice.

Having a routine is (can be) dangerous

What Matt gets exactly right is that if you focus on a single method of manufactured spend, or on credit cards issued by a single bank, or on a single method of liquidation, then you're making yourself vulnerable to local, regional, or national policy changes.

If you travel hack recreationally, that may not be the end of the world; a lot of people who were manufacturing huge volumes before Vanilla Reload Network cards became harder to buy stopped completely once they became increasingly restricted, and never thought about the game again.

No deal lasts forever

At the time of writing, I understand that Target stores are not allowing Prepaid REDcards to be loaded with debit cards. Is this the end?

Honestly, probably not.

But if it is, did you convert all your Serve and Bluebird cards to Prepaid REDcards in anticipation of the deal lasting forever? Why? Serve cards can still be loaded at Family Dollar stores using any PIN-enabled debit card. Bluebird cards can still be loaded at Walmart with US Bank-issued MasterCard and Metabank-issued Visa cards sold at Staples.

The most lucrative deal, the biggest secret you're keeping, even from your fellow travel hackers, won't last forever. When it ends, you can either have a range of unrelated deals to fall back on, or you can find yourself scrambling to learn about other techniques to meet your ongoing travel needs.

Conclusion

There are only 6 programs I earn miles and points in with any intensity:

  • US Bank Flexperks
  • Hilton HHonors
  • Chase Ultimate Rewards
  • Delta Skymiles
  • Barclaycard Arrival+ miles
  • Alaska Airlines Mileage Plan (for crediting paid flights operated by American and Delta)

On the one hand, Matt is right to point out that any constellation of miles and points programs that are earned to the exclusion of other programs raises risks: the risk of devaluation, the risk of increased attention to accounts, the risk of available techniques changing or drying up.

On the other hand, a simplified routine based on the actual value of the points you're earning and, even more importantly, the points you're redeeming, may give you the cognitive freedom you need to stay on top of new and developing techniques.

Two new tools to help plan airline redemptions

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An impressive achievement of the travel hacking community is spreading information about the frequent flyer programs of non-US carriers, which allow Americans to take advantage of their award chart sweet spots, earning rates, routing rules, and even domestic lounge access in the case of Star Alliance carriers.

On the other hand, that's a lot of information. I can't do much more than keep a few rules of thumbs in mind when searching for award tickets: Avios for short flights, American for off-peak awards, Lufthansa for domestic first class.

In the last few weeks two travel hackers contacted me to share tools they've designed to streamline the process of comparing award charts. I told them I'd take a look and share my thoughts here.

Eric Boromisa's Award Calculator

Eric contacted me in September to share his Award Calculator. He's selling the Calculator through a site called Gumroad. If you use the offer code "freequentflyer" you'll get $7 off either the "economy" or "full" version of the product. Full disclosure: Eric gave me a free copy of the file to experiment with.

So what is the Award Calculator? It's an Excel spreadsheet that's been programmed to calculate the cheapest mileage cost for awards between "North America" and another country. The "economy" version can calculate award costs in economy, and the "full" version returns the mileage cost of premium cabin awards as well.

The most important thing about the Calculator is that it doesn't find the mileage redemption which costs the fewest miles (although it does show the mileage cost in all the included programs). It calculates the cheapest mileage redemption using values you yourself provide.

This creates the program referred to in data processing as "garbage in, garbage out." If you don't provide the right values, then the calculating function will generate useless values. Unfortunately, rather than simply telling you to provide you own values, Eric provides default "market" values.

These "market" values are nonsense: Lufthansa and Air Canada are both Starwood Preferred Guest transfer partners, but Eric's default value for Miles & More is 2.8(!) cents each, while Aeroplan miles are valued at just 1.9 cents each. Is it because Aeroplan is also an American Express transfer partner? Maybe, but there's no way to tell.

In other words, if you want to use the "best value" calculating function, be sure to manually assign each program's currency the correct value, which I would argue is the cash value of the manufactured spend you use to generate that currency rather than cash back. If you don't have access to a currency (for example, I don't have any Membership Rewards-earning cards), just assign an arbitrarily high value to that currency.

I've played around with the Award Calculator for a few weeks now and my overall impression is that it's an impressive first step, but it's not a finished product and it's not yet worth $12-$22. A few funny oversights (Air France doesn't fly La Première to France anymore? Someone should tell them!) need to be fixed, and it would be nice if assigning a value to transferrable currencies automatically populated all their transfer partners with imputed values at the correct transfer ratio.

Again, if you're interested in trying it out for yourself, you can buy it at Gumroad for $12-$22 using the offer code "freequentflyer" (I don't receive any compensation if you do, I think Eric is just trying to track where his sales are coming from).

AwardAce is simple and beautiful

Just this morning a reader reached out to share his site AwardAce with me, and it blew my socks off. The site is simple, powerful, and beautiful (also free).

In its current form, you only have to make three selections: your departing airport, arriving airport, and whether your flight is one-way or roundtrip. You can also filter by award program (basically making it a simple, uniform award chart for every included program) or transfer partner (Chase, American Express, Citi, or Starwood Preferred Guest). 

Then AwardAce produces a color-coded table showing you the mileage cost in a variety of programs:

The site just launched in August and it's not perfect yet. For example, in my searches the large grid only showed "off-peak" American Airlines and "short-haul" MileagePlus award prices, and the creator doesn't appear to be aware that British Airways Executive Club miles can be redeemed on Alaska Airlines. Additionally, Lufthansa Miles & More isn't shown as a transfer partner of Starwood Preferred Guest, which is an easily-fixed oversight.

The site works best on international flights where its database really shines, rather than on domestic flights where there are more moving pieces than it can easily accommodate.

The site is also restricted to nonstop and one-stop flights, so if you are planning a trip that requires two connections, you have to eliminate one or more stops to find the correct cost. For example, the site easily calculates the mileage cost in 7 programs between Detroit and Prague:

But a search between Indianapolis and Prague generates an error, even though Delta flies 7 nonstops daily between Indianapolis and Detroit. That's not a bug, it's simply a limitation built into the tool you need to be aware of.

I'm not sure what the creator's eventual plans are to monetize AwardAce, but for now it's free and awesome.

Beware Delta bearing voluntary denied boarding compensation

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It's no secret that I think Delta runs the best domestic airline operation in the United States. They have incomprehensibly good on-time and completion statistics compared to the competition, and their mainline jets are clean and comfortable. It's a great airline.

However — and this may not be totally surprising — they don't love giving away money.

Delta's voluntary denied boarding compensation is more restrictive than their competitors'

When you volunteer to give up your seat on a flight that's overbooked, airlines will offer voluntary denied boarding compensation, which usually takes the form of a voucher valid for use only on the airline you were originally scheduled to fly on (rather than the cash you'd be entitled to for being denied boarding involuntarily).

Both United and American allow such vouchers to be redeemed for any passenger. It's true that American doesn't make redeeming vouchers easy (you have to present your voucher in-person at an American ticket counter or mail it to a post office box in Florida), and it's true that flying United is a special kind of hell, but the vouchers are, in fact, relatively easy to redeem (in American's case, as long as you have a stamp handy!).

For a few years now, Delta's electronic credit vouchers have only been redeemable in situations where the "bumped" passenger is one of the passengers on the new reservation. According to the terms and conditions of the voucher I received back in August:

"5. REDEMPTION/TRANSFERABILITY: VOUCHER IS NON-TRANSFERABLE UNLESS ASSIGNED TO SOMONE TRAVELING WITH THE ORIGINAL VOUCHER OWNER ON THE SAME RESERVATION AT THE TIME THE VOUCHER IS BEING REDEEMED."

My experience redeeming an electronic credit voucher

When I lucked into a $1,300 voluntary denied boarding voucher back in August, I knew the restrictions on transferability and assumed that I would redeem the voucher for my own flight to Europe next summer, while redeeming Flexpoints or Skymiles for my partner's ticket.

Then life got in the way. And by "life," I mean my partner listened to the original cast recording of Hamilton and said, "Hey, let's go to New York."

Fortunately, we have two daily nonstop flights to New York City, so this was not a heavy lift. Even better, those nonstop flights were just $206 roundtrip! In fact, those flights are so cheap that it became hard to decide how to pay for them. They're far too cheap for a Flexpoints redemption. Ordinarily I'd redeem Ultimate Rewards points at 1.25 cents each, but all my current Ultimate Rewards earning is reserved for a few upcoming transfers.

That's when I remembered: I have $1,300 in Delta credit!

Electronic credit vouchers can't be redeemed for multiple passengers online

When redeeming an electronic credit voucher for a single-passenger itinerary, it is either greater than or less than the cost of the flight you're redeeming it for. In other words, you either owe money, or will be issued a residual credit voucher.

When redeeming a voucher for two passengers, things aren't so simple. Here's what it looks like when I try to redeem my residual balance for a similar itinerary:

What you're seeing is the that my $862.60 voucher is only being applied against my own fare. The second passenger's $341.20 fare has to be charged to a credit or debit card.

When I asked Delta's normally-helpful @DeltaAssist Twitter team what to do, they told me the only way to redeem my voucher was to call in:

Delta tried to charge me for two direct ticketing fees — then lied to me and charged me one anyway

Call in I did, and eventually got on the line with a reservations agent who understood exactly what I wanted to do.

But instead of the $412.40 my tickets had priced out to online, he quoted me a whole $50 more. When I asked about the discrepancy, he explained that since I was making my reservation over the phone, there was a $25 per-ticket direct ticketing fee.

I told him that since the tickets couldn't be booked online, I expected him to waive the direct ticketing fee. He agreed, and came back again telling me that my total was $437.40 — again, $25 higher than the tickets had priced out online.

This time he explained that while he could waive my direct ticketing fee, he couldn't waive the second passenger's direct ticketing fee.

At this point my readers can imagine that I was more than a little frustrated. So I explained again that the only reason I was calling in the first place is that the ticket I wanted to book couldn't be booked online (you'd have to be crazy to book a ticket over the phone if you could help it!).

My agent went back to his supervisor again, then came back and told me that my residual travel voucher would be $887.60 — $1,300 less the correct $412.40 my tickets priced out at online.

I immediately logged into my account and saw this:

The residual voucher had been reissued less the $25 direct ticketing fee the agent assured me had been waived.

Conclusion

I immediately contact the @DeltaAssist Twitter team — again — and they submitted a refund request on my behalf.

This is the kind of miserable nickel-and-diming that it would be nice to believe Delta was capable of rising above. How many people have to call in to redeem these vouchers and don't think to ask how the phone agent arrives at the final price?

At the end of the day, when you accept voluntary denied boarding compensation for taking a later flight, you are doing a favor for the airline that is able to get their flight out full and on time. It would be nice if the airline was able to appreciate that and make it as painless as possible to redeem those vouchers for any eligible itineraries.

Read the comments!

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I've mentioned before that I rarely read other blogs anymore. Of course the affiliate bloggers just repeat the same bought-and-paid-for content over and over, but even the good guys only occasionally post something that piques my interest. There are a few reasons for that:

  • deals come in waves, and the current wave involving buying and reselling discounted gift cards while earning bonus Ebay credit doesn't have any interest for me;
  • even many non-affiliate bloggers focus on earning huge airline mile balances for premium cabin international travel. I only take one or two international trips per year, so those aren't awards I chase as diligently as other bloggers do;
  • I'm already earning the miles and points I need for the trips I want to take, so big signup bonuses or earning rates in unrelated programs don't interest me much.

There are exceptions: I'll certainly hop on the Discover/Apple Pay 10%/20% cash back deal, for example.

The experiment

Having said that, I know that a lot of the best information on my blog is found in the comments that readers leave about their own experiences testing out the ideas I write about and sharing their own tips and tricks. That being the case, I decided to run a fun experiment: I'd take a popular blog with a focus on manufactured spending, and go back and read every single comment in a range of recent posts (excluding weekend reviews, roundups, and summaries).

I was hopeful that there would be gems even more valuable than those found in the posts themselves. Here's what I found.

Hack Uber surge pricing

In order to avoid Uber surge pricing, reader Mike commented:

"You could also be dishonest and drop your pin somewhere outside the surge zone, then call the driver and tell them where you actually are. I’ve never done this before but it works if he driver agrees."

Open American Express Offer-eligible subaccounts

Since Serve and Bluebird (but not Prepaid REDcard) accounts are eligible for Amex Sync offers, you might want to create multiple subaccounts, each of which can be synced with a separate Twitter account. Frequent Miler responds to a reader by saying:

"You can use your own name if you want to. You might want to change something each time to be able to tell them apart."

Use American Express offers to buy cheap Southwest and Delta miles

Over the holidays last year 1800Flowers offered 30 Southwest or Delta points per dollar. Frequent Miler reminded a reader how to use these offers to buy Southwest and Delta miles for 1.33 cents each.

Amtrak's new program won't allow "saver" redemptions

In the comments to his review of the new Bank of America Amtrak co-branded credit card, Frequent Miler points to this FlyerTalk post where an Amtrak representative says "saver" fares won't be eligible for redemption under the new Amtrak Guest Rewards program.

Acme Markets accepts Apple Pay

If you live in New Jersey, you might be excited to know that Acme Markets, "a supermarket chain in the Delaware valley," sells $500 Visa gift cards and accepts Apple Pay, according to commenter DavidNJ.

Conclusion

Keep in mind that these are just the five comments that jumped out at me from the first three pages of Frequent Miler's blog archives. But there are many, many pages of blog archives, and there's also a search function!

So if there's a particular technique you're interested in datapoints about, you should search for posts about it, and read every comment.

There's no telling what you'll find!