Fun with Choice Privileges Preferred Hotels & Resorts

On Friday I wrote a quick rundown on the basics of redeeming Choice Privileges points at their thousands of hotels all over the world at reasonable cost, compared to the big chains I usually write about. Readers were quick to point out that I had missed a key value proposition of the Choice Privileges program, which is their Preferred Hotels & Resorts collection. So let's rectify that today.

Preferred Hotels & Resorts can be more expensive than normal Choice properties

The Preferred Hotels & resorts collection cost between 30,000 and 60,000 Choice Privileges points per night, and each property's cost does not vary by season (indeed I don't know if it varies even from year to year).

Preferred Hotels & Resorts availability can be checked online...

Just navigate to the Participating Hotels page and click on "check availability" next to the property that interests you. There are three kinds of availability: "No Availability," "Availability," and "Minimum Stay Required."

At the property I looked at (Pier 2620 Fisherman's Wharf) the minimum stay requirement for many nights was 3 nights for arrivals on the given night, while earlier arrivals could stay through the restricted nights. Those restrictions likely vary by property.

...but cannot be booked online

To book a Preferred Hotels & Resorts property, you need to call the appropriate booking phone number. For US residents, it's 888-770-6800.

How do Preferred Hotels & Resorts compare?

With that out of the way, let's see if we can get any value from this program.

There are two easy places to watch for outsized value from this program: at the low, 30,000-point-per-night level and the high, 60,000-point-per-night level.

At the low level we see an imputed redemption value of $333 per night, which is competitive with low-to-mid-tier properties in all the chains but Hilton (it's competitive with top-tier Hilton properties).

At the high level, 50,000- and 60,000-point redemptions are competitive with mid-to-top-tier properties in all the chains but Hilton (where imputed redemption values top out at $352 per night).

At the bottom end I wasn't able to find any properties that cost more than $333 per night for a random date in August I searched. That doesn't mean they don't exist, but I certainly wouldn't stockpile Choice Privileges points on the off-chance of finding one.

At the top end, Drew at Travel is Free conveniently assembled 31 Preferred Hotel & Resort properties bookable with Choice Privileges points, all of which are among the top 500 hotels in the world, apparently according to Travel and Leisure. My value added is searching for prices at all 31 properties and seeing whether any are, in fact, good deals at 50,000 or 60,000 Choice Privileges points.

These are the only two of Drew's 31 properties where I found nightly rates exceeding the properties' imputed redemption values:

• Montage Beverly Hills – 60,000 points
• Montage Laguna Beach – 60,000 points

That's not to say that the other properties aren't nice, or expensive. They're just not expensive enough to justify manufacturing the spend required to stay there on a Choice Privileges co-branded credit card (for the dates I searched).

Squaring the circle: the Amtrak co-branded credit card and Amtrak elite status

As Drew points out when he writes about Choice Privileges, the key to maximizing the program is not earning Choice Privileges points through hotel stays or through co-branded credit card earning. The key is transferring points from Amtrak Guest Rewards to Choice Privileges at an extremely favorable ratio: 5,000 Amtrak Guest Rewards point can be converted into 15,000 Choice Privileges points, and Amtrak Guest Rewards is a transfer partner of Chase Ultimate Rewards.

In other words, it's possible to buy Choice Privileges points for a third of a cent each (rather than 1.1 cents each) by transferring your Ultimate Rewards points first to Amtrak, then to Choice Privileges.

But there a catch.

According to Amtrak's website:

"Members that are active cardholders of the Amtrak Guest Rewards MasterCard issued by Chase Bank with an Amtrak travel spend on the card of over $200 per calendar year may redeem up to 25,000 Amtrak Guest Rewards points per calendar year for hotel points and Audience Rewards.

"Current Amtrak Guest Rewards Select or Select Plus Members...may redeem up to 50,000 Amtrak Guest Rewards points per calendar year for hotel points and Audience Rewards.

"Current Amtrak Guest Rewards Select Executive Members...are not subject to point limits when redeeming for hotel points and Audience Rewards."

Since the Amtrak Guest Rewards co-branded credit card is no longer available for new applicants, unless you already have the card, you'll need Amtrak elite status in order to take advantage of Amtrak Guest Rewards points transfers to Choice Privileges.

[update 7/13/15]

Here's the actual dollar cost of Choice Privileges properties when transferring Ultimate Rewards points to Choice through Amtrak:

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Choice Privileges is a weird loyalty program

On Monday I wrote for the first time about Choice Privileges, the loyalty program of Choice Hotels International. They have a seemingly generous rewards program, with their Barclaycard-issued Choice Privileges Visa Signature card earning 2 Choice Privileges points per dollar spent everywhere, and reward nights starting at just 6,000 points, but the program is weird enough to explore in depth before diving in.

Choice Privileges does not have an award chart

The range of points required for redemptions at Choice Privileges hotels is located nowhere on the Choice Privileges website.

But the points required for an award night at any given hotel is not a secret! Anyone can search for Choice Privileges hotels in a given city and select "Choice Privileges Reward Night" as the rate type. You'll see all the Choice properties in the city and their points cost (if rooms are available).

Choice Privileges reward nights cannot be booked far in advance

Choice Privileges includes in their "Rules and Regulations" the following restriction:

"Members who have not yet achieved Elite Status must make their free night reservation personally through the Program Line or through their online account no more than 30 days prior to planned arrival for stays in their country of residence. Sixty days prior to their planned arrival at all other locations worldwide."

Needless to say, this is not how most hotel loyalty programs work.

Co-branded credit cardholders do get to book nights 50 days in advance, which may allow them to steal a march on non-elite, non-cardholders.

Choice Privileges has hotels everywhere

It is genuinely weird looking at how many properties this chain I've never had any interest in has all over the world. Use Award Mapper to check out cities you're interested in and marvel at all the little orange dots.

Choice's "no blackout date" policy is meaningless

Many hotel chains have poorly-enforced or disingenuous "no blackout date" policies. Here is Choice's (although from context it apparently only applies to "Points Plus Cash" reservations):

"There are no blackout dates.  Restrictions, taxes and fees apply.  There are over 1,500 Choice hotels with reward nights available at 8,000 points or less.  Reward night locations worldwide are available from 6,000 to 35,000 points (excluding Australasia, where reward nights are available up to 75,000 points)."

There's no enforcement mechanism. There's no explanation. There's no guarantee at all. And indeed, it can be pretty tough to find award availability at some properties, especially within 30 days.

Choice Privileges could be the best loyalty program for many travelers

I don't have the same focus on luxury travel many bloggers — and, to be honest, many of my readers — do. But I also don't have the attitude of those who say "I don't care about my hotel — it's just somewhere to sleep." I care about my hotels a lot because I spend a lot of time in them! Hotels are fun! And after spending a week researching Choice properties around the world, I don't think Choice hotels are for me.

But if you're looking for a single loyalty program that will have properties virtually everywhere you go, and a credit card that doesn't require you to navigate bonus categories, you could do a lot worse than Choice Privileges and its co-branded Barclaycard-issued Visa Signature card. Here's the imputed redemption value table I posted on Monday:

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Those imputed redemption values are low, and they're especially low in the context of where properties fall within the Choice Privileges category distribution. Here are some downtown properties in Sydney, Australia, according to Award Mapper:

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The 16,000 point Econo Lodge (actually the Hotel Harry, an Ascend Hotel Collection member — I believe Award Mapper's Choice Privileges database is out-of-date) wins with a $178 IRV, compared to the Hilton's $222-$259 (depending on season) IRV, the Park Hyatt's $666 IRV (or $300 in Ultimate Rewards points), and the Radisson's $222 IRV.

It's easy to find cheaper hotels in Sydney in July (it's winter down there), but in the Southern summer paying $178 for what seems like a perfectly nice downtown hotel will seem like a steal — if you can find award availability at that rate!

Thinking about Starwood Preferred Guest

Since my American Express "old" Blue Cash card was closed late last year, I've carried just two American Express-issued credit cards: my trusty Hilton HHonors Surpass, and my ill-advised but so-far-irresistible Delta Business Platinum card.

An individual is allowed to carry up to four American Express-issued credit cards and four charge cards, so I have, in principle, two "slots" I can use for additional credit cards. Casting about, there are two obvious candidates: the Amex EveryDay Preferred, which gives (up to) 3 Membership Rewards points per dollar spent at gas stations and carries a $95 annual fee, and the Starwood Preferred Guest business or personal credit card, which has an annual fee going up to $95 on August 11, 2015 (the first year's annual fee is waived).

I've written about the EveryDay Preferred card before, so for now I want to focus on the Starwood Preferred Guest American Express card.

Starpoints are expensive

Since the Starwood Preferred Guest card doesn't offer any bonus categories (besides Starwood stays themselves), any Starpoints earned with the card are by definition expensive: even if you displace only unbonused manufactured spending, you're buying one Starpoint for 2 or 2.22 cents, depending on your highest-earning card for unbonused spend.

Starpoints can be valuable for award stays

At the low end and the very high end, Starwood's award chart is intensely fair: a weekend night at a Category 1 hotel costs just 2,000 Starpoints (a $44 imputed redemption value!), and a 30,000-to-35,000-Starpoint night in a category 7 property, while having a steep $660-$770 imputed redemption value, may still offer a discount at an expensive property like the the St. Regis Princeville Resort on Kauai, where 30,000 Starpoints will get you a $992.34 room at the beginning of January:

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For mid-tier award stays, unfortunately, Starwood are just too expensive: a 16,000-Starpoint stay, with its $352 imputed redemption value, will get you a night at the Westin Dublin, while just 50,000-60,000 HHonors ($185-$222 IRV) points can be redeemed for a night at the nearby Morrison, a DoubleTree by Hilton Hotel.

This is fundamentally the same problem I had with chasing Hyatt Diamond status.

Starpoints can be valuable for Cash & Points awards

If you earn your Starpoints exclusively through manufacturing spend on the American Express Starwood Preferred Guest card, you are always better off redeeming them for Cash & Points awards than for award stays (except on stays of 5 or more nights at Category 3-7 properties, where the 5th night is free).

That's because Cash & Points awards allow you to "buy back" Starpoints at between 1.1 cents (for high-season, Category 5 stays) and 2 cents (for Category 1 stays), while each Starpoint you buy through unbonused, manufactured spend costs between 2 and 2.22 cents. Here's my quick guide to how much you're paying for Starpoints when you redeem for Cash & Points awards:

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On stays of exactly 5 nights, the math changes, since each Starpoint is worth 1.25 Starpoints: in other words, you're buying Starpoints at 1.776 cents each, not 2.22 cents each (the proof of this is left to the reader). In that case, low-season Category 5-7 Cash & Points awards are no longer strictly superior to points-only award stays.

Starpoints are the only way to earn bonused Alaska and American miles

Delta SkyMiles and United MileagePlus miles are trivially easy to earn. You can earn SkyMiles with any flexible Membership Rewards-earning credit card, like the aforementioned Amex EveryDay Preferred, or 1.4 and 1.5 SkyMiles per dollar spent on the American Express Delta Platinum and Reserve co-branded cards, respectively. You can earn MileagePlus miles (and lots of them!) with a Chase Ink Plus card and any number of Chase Freedom cards.

But the Bank of America Alaska Airlines co-branded credit card earns just one Mileage Plan mile per dollar spent, as do the Barclaycard and Citi American AAdvantage co-branded cards.

The only way to earn more than one Mileage Plan or AAdvantage mile per dollar spent, let alone both, is with the Starwood Preferred Guest American Express card, since Starpoints can be transferred to both Alaska Airlines and American at a 20,000:25,000 ratio, year-round.

While I wouldn't buy all my Mileage Plan miles or all my AAdvantage miles at 1.776 cents each, I'd conceivably buy some miles at 1.776 cents, for example to top up a high-value international business class award.

Conclusion

So that's where I am in thinking about my next American Express application.

There really are times when Starwood Preferred Guest properties offer the best possible value: I booked a stay at the Sheraton Memphis Downtown Hotel during a national fencing tournament for just 7,000 Starpoints per night, when the entire area around the convention center was sold out. That was a steal.

On the other hand, I get a tremendous amount of value from my Delta SkyMiles, and would certainly be able to get a lot of ongoing value from a card that earned 3 SkyMiles per dollar spent at gas stations.

What do my readers think? What considerations have I overlooked?

Why I won't chase Hyatt Diamond status

[Update 6/22/15 8:17 pm: This post originally said the Hyatt Diamond status challenge requires 12 qualifying stays. It requires 12 qualifying nights.]

The travel hacking blogosphere seems to be in a tizzy lately over the return earlier this month of the Hyatt Diamond status challenge. The challenge awards Diamond elite status after 12 qualifying (i.e. not award) nights within 60 days, and the status is good through February of 2017 — a pretty long time!

People who like Hyatt Diamond status seem to value it most for the 4 confirmed suite upgrades and lounge access (or full breakfast at properties without a lounge).

Let me start by saying that no one doubts that it's possible to design a vacation schedule for the next 20 months that maximizes the value of those benefits and makes it well worth arranging to credit 12 paid stays to Hyatt in 60 days in order to earn them.

But personally, I won't be participating. Here's why.

Hyatt is a terrific transfer partner of Chase Ultimate Rewards

Hyatt is almost the only Ultimate Rewards transfer partner I take advantage of, since I don't fly United or Southwest. I transfer points to Amtrak once or twice a year for long-haul sleeper-car redemptions, but that's a rounding error with respect to my earning rate. On the other hand, where Hyatt properties are available, they frequently have extremely affordable points redemptions, like the Hyatt Place New York/Midtown-South, which costs 20,000 Hyatt Gold Passport points per night.

Since Hilton properties in New York start at 60,000 HHonors points (a $222 imputed redemption value) and Club Carlson's Radisson Martinique on Broadway costs 70,000 Gold Points (a $310 imputed redemption value), paying $200 in Ultimate Rewards points offers a relatively good value.

Hyatt has a small footprint — but that's not the problem

It's frequently noted that Hyatt has vastly fewer properties than Hilton or Marriott: just 587 hotels. But I don't actually treat this as much of a drawback. Since I only transfer points to Hyatt when I plan on making a reservation, it's not like I have an ever-growing supply of Hyatt Gold Passport points that I can never redeem. When there's a Hyatt property that's a good value, I stay there, and when there isn't, I stay at a Hilton HHonors (or, until recently, Club Carlson) property instead.

Furthermore, as I pointed out above, you can just plan a vacation around one or more Hyatt stays! Sure, people will look at you strangely when you explain that you're visiting Ekaterinburg in order to stay at the Hyatt Regency, but if we cared what people thought of our hobby we wouldn't talk about it all the time.

The problem is that Hyatt's footprint is a subset of Hilton's

Some light Googling allowed me to compile a list of some of the Hyatt properties travel hackers (and affiliate bloggers promoting the overrated Chase Hyatt Visa card) believe are the best Hyatt properties in the world. My value-added here is adding the closest equivalent Hilton property and points required:

• Park Hyatt Beaver Creek (no close equivalent);
• Park Hyatt New York (New York Hilton Midtown, 60,000-80,000);
• Park Hyatt Sydney (Hilton Sydney Hotel, 60,000-70,000);
• Park Hyatt Tokyo (Hilton Tokyo, 50,000-60,000);
• Park Hyatt Maldives Hadahaa (Conrad Maldives Rangali Island, 95,000);
• Park Hyatt Paris (Concorde Opéra Paris, 80,000)
• Park Hyatt Milan (Hilton Milan Hotel, 50,000-70,000)
• Park Hyatt Zurich (no close equivalent)
• Grand Hyatt Kauai Resort and Spa (no close equivalent)
• Hyatt Regency Hakone Resort and Spa (Hilton Odawara Resort & Spa, 70,000-95,000)
• Ararat Park Hyatt Moscow (Hilton Moscow Leningradskaya, 40,000-60,000)

As you can see, with a few exceptions luxury hotels get built because there's a demand for them. And if there's enough demand for a luxury Hyatt property, there's likely to be sufficient demand to justify building a nearby Hilton hotel, as well.

Earning Hilton HHonors points (and Diamond status) is easy and fun

The point of this exercise is that unless you are planning a trip to Beaver Creek, Zurich, or Kauai — and tens of thousands of people do indeed visit those cities each year — the Hyatt property is not your only option: there's also a convenient nearby Hilton that will be happy to serve your award redemption needs.

But unlike Hyatt Diamond status, which requires paying at least some surcharge on top of the stays you'd otherwise book, Hilton Diamond status can be earned strictly as a by-product of manufacturing $40,000 in spend on their co-branded Surpass card offered by American Express, and I find it worth my while to manufacture that much (and indeed, more) spend with the Surpass card each year purely for the value of the HHonors points I earn. Diamond status is a nice bonus, but doesn't have any effect on my decision-making.

How to think about directing paid stays to Hyatt

I don't draw a neat distinction between paid and award stays; my imputed redemption value calculations are designed to make booking stays a seamless process of comparing hotel options, whether a given stay is paid for with cash or with points earned at the sacrifice of cash back.

In other words, if you have a Barclaycard Arrival+ MasterCard, every stay is an award stay: the only question is whether to pay for it with a hotel chain's own currency or Arrival+ miles.

This means that when you book a paid stay in order to secure Hyatt Diamond status under the challenge, you don't need to consider the entire cost of your paid stay as "payment" for Diamond status. The only payment you're making for (one twelfth of) Diamond status is the difference between the price you pay to stay with Hyatt and the price of the hotel you would have stayed at instead – the "surcharge" I mentioned above.

Who should take the Hyatt Diamond challenge?

So that's where I stand: I earn enough Hilton HHonors points to cover my mid-range and luxury hotel needs, and redeem my Ultimate Rewards points only for the Hyatt stays they make incredibly cheap, where breakfast is often included anyway.

But you're not me! So here's who should at least consider taking the Hyatt Diamond challenge:

• You have 12 paid Hyatt stays in the next 60 days. This may go without saying, but that's what I'm here for.
• You're planning a luxury vacation. At the very top end, Hyatt award stays are actually cheaper than the imputed redemption value of Hilton stays: $300 in Ultimate Rewards points versus $352 in Hilton HHonors points. If you're deciding between such properties (for example, in the Maldives or in Hakone, above) Hyatt Diamond status can add additional value by giving up to 4 people per room the benefit of lounge access or a full breakfast.
• You really need a suite. If there's some reason you actually need a suite upgrade on a paid stay, and especially if you actually need 4, week-long suite upgrades, then paying a small upfront surcharge for Hyatt Diamond status can get you those suites at a vast discount. I've enjoyed every suite I've been upgraded to, but personally wouldn't assign any actual value to it. If you're traveling with a family, or need to host meetings in your hotel room, then you may assign a concrete dollar value to having a guaranteed-at-booking suite upgrade.

I want to stress that the second two categories are, while not mutually exclusive, also not complementary in any way: the suite upgrades in the third category cannot be applied to the award bookings in the second category, and at such expensive properties the idea of booking a paid, instead of award, stay merely to secure a suite upgrade is not rational behavior.

I don't fall into any of the above categories. But if one or more of them applies to you, you have my blessing to consider taking advantage of the Hyatt Diamond status challenge!

Down to the wire: booking speculative Club Carlson vacations, with examples

As faithful readers know, in the next few days the Club Carlson program will undergo two catastrophic devaluations: co-branded credit card holders will lose the free last night on award reservations of two or more nights; and a vast swath of Club Carlson's lame mid-tier properties are being bumped up to their highest rewards category, and will cost 70,000 Gold Points per night.

As has been pointed out ad nauseam, going from being able to book 2 nights for 44,000 or 50,000 Gold Points to being forced to spend 140,000 Gold Points is a disaster for those of us who have been taking advantage of Club Carlson's generosity for the past few years.

Fortunately, we were given enough notice to mitigate the pain somewhat, since we can continue to book last-night-free reservations for the next few days.

Club Carlson properties can be booked far in advance

It's an interesting fact that I find it psychologically easier to book trips speculatively far in advance than concrete plans in the near future. After all, to go on a trip next weekend we need to check out social calendar, the schedule of local music and food festivals, etc. To book a trip for next summer, we just have to come up with something that would be fun to do.

Fortunately, Club Carlson allows their properties to be booked far — in some cases years — in advance.

The Club Carlson program is not going away

The next thing to keep in mind is that the Club Carlson program is not going away. They'll continue to operate a loyalty program and you'll still be able to earn Gold Points with their co-branded credit card and redeem them for free nights at their properties all over the world.

The only thing that's going away is the last-night-free benefit, so that's the only benefit you need to worry about maximizing before June 1.

Use Award Mapper to find clusters of Club Carlson properties

Award Mapper has a terrific advantage compared to Hotel Hustle: your hotel selections persist when changing your city search term, so in order to develop a Club Carlson redemption strategy, you can just select Club Carlson as your hotel chain choice and start searching.

There are two ways to go about planning a Club Carlson vacation. You can find clusters of Club Carlson properties within a single city, like London:

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If you want to spend any even number of nights in London, you could book alternating pairs of dates at next-door properties like:

• Radisson Blu Edwardian, Kenilworth & Radisson Blu Edwardian, Bloomsbury Street (100,000 Gold Points for 4 nights);
• Radisson Blu Edwardian, Hampshire & Radisson Blu Edwardian, Leicester Square (94,000 Gold Points for 4 nights);
• Park Plaza Westminster Bridge London & Park Plaza County Hall London (100,000 Gold Points for 4 nights).

Or you can look for regional clusters of Club Carlson properties, like this one in Eastern Europe:

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Or this one in the Baltic States:

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I ultimately decided to pursue the regional option, since I find it endlessly annoying to switch hotels in the middle of a visit to a city.

Think strategically about how long you'll stay in each city

Just like in London, it's possible to plan an Eastern European vacation (Budapest-Bratislava-Vienna-Prague) or Baltic vacation (Vilnius-Riga-Tallinn) using only 2-night stays to maximize your pre-devaluation Club Carlson points.

But that's not actually necessary, because of the point I made above: the Club Carlson program is not disappearing on June 1, and (except for property-specific changes in prices) you'll still be able to redeem your Gold Points for free nights. The only benefit you need to maximize today is the last-night-free benefit.

Here's a Baltic vacation I was considering with my remaining Club Carlson points:

• June 10-12, 2016: Radisson Blu Astorija Hotel, Vilnius
• June 13-15, 2016: Radisson Blu Hotel Latvija, Riga
• June 16-18, 2016: Radisson Blu Hotel, Tallinn

As you can see, each individual reservation is 2 nights long, since that's the benefit I need to maximize before June 1. Once it comes time to actually plan the trip, we could add an extra night in Vilnius before or after our reservation, an extra night at the beginning or end of our stay in Riga, and an additional night before or after the final stay in Tallinn. There's no point tying up Gold Points reserving those third and fourth nights now: there's plenty of time for that after June 1, even if it's at annoyingly-higher rates.

In addition to two two-night stays I already had booked, here is the vacation I ultimately designed with my remaining Club Carlson points:

• June 10-12: Radisson Blu Beke Hotel, Budapest
• June 13-15: Park Inn Danube, Bratislava
• June 17-19: Radisson Blu Style Hotel, Vienna

As in the example above, this itinerary both maximizes the last-night-free benefit and leaves flexibility should we decide to extend our stay in any of the 3 cities. The longer gap between Bratislava and Vienna is in case we decide to take a trip to Brno or Prague, two relatively-close Czech Republic cities I love and where I've spent a fair amount of time.

Conclusion

After booking a few close-in trips to Texas, I only had about 82,000 Club Carlson points left in my account. Now that I've got our Central European trip squared away, here's how many points I'm left with:

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Getting as close to that number as possible should be everyone's goal in the time we still have left.

Price compression and mileage running

I like to use the term "price compression" to refer to the interaction of two benefits to travel hacking:

• The out-of-pocket price paid for travel is lower;
• The difference between the out-of-pocket price paid for more-expensive and less-expensive travel shrinks, even if the ratio between them stays the same.

The ideal cases are more-convenient or more-luxurious award redemptions that cost the same fixed number of miles and points, but you also see price compression when redeeming cheaply-acquired, fixed-value Ultimate Rewards, Membership Rewards, or ThankYou points: more expensive flights will cost more points, but the out-of-pocket expense of acquiring those points will be (in some cases much) closer than the cash prices.

Theory of mileage running

A traditional mileage run is a flight taken exclusively to earn airline miles, and will ideally cost less than 4 cents per mile flown if credited to a distance-based frequent flyer program. Personally, I understand the logic behind the traditional 4-cent-per-mile cap in the following way:

• a high-level elite will earn at least 2 redeemable miles per mile flown due to elite mileage bonuses;
• a travel hacker will attempt to redeem miles for at least 2 cents each;
• so by pre-paying for future, non-elite-qualifying travel through mileage runs, the mileage runner receives elite-qualifying miles in the present, which help them maintain high-level status and the perks that go with it.

Of course it's possible to mileage run speculatively or purposefully: someone can take every sub-4-cent flight available with the goal of earning the highest elite status possible, or they can take one or two mileage runs in order to top off an award or earn the last few elite-qualifying miles needed to reach the next level of elite status.

Price compression and mileage running

Looking at mileage runs through the lens of price compression results in some interesting conclusions.

In programs like Alaska Airlines Mileage Plan and American AAdvantage, which still feature distance-based redeemable-mile earning, price compression has no effect (besides making mileage runs cheaper): since booking more expensive flights (within a cabin of service) doesn't yield any additional redeemable or elite-qualifying miles, the goal of minimizing the cent-per-mile cost of each mileage run is still paramount. Reservations in excess of the 4-cent-per-mile "breakeven" point may still be worth making, but more expensive flights would have to be justified by an unusually high value placed on elite-qualifying miles — perhaps if you're a single flight away from the next elite status level.

In revenue-based programs where mileage earning is based strictly on the amount paid for tickets (although with a multiplier for elites in the case of Delta and United), it's only ever worth mileage running for the benefits of elite status (for example, free award changes and redeposits). In such programs, since more-expensive flights also earn more redeemable miles, part of the increased price is rebated in the form of more redeemable miles earned.

Consider the following stylized case: a United Premier 1K with the American Express EveryDay Preferred and Business Platinum combination wants to maintain her top-tier elite status with United. She manufactures spend at gas stations at roughly 1 cent per dollar in manufactured spend, and is able to redeem her Membership Rewards points for 4.29 cents on United flights after her 30% Pay with Points rebate. In other words, she is able to buy United tickets at a roughly 77% discount. As a MileagePlus Premier 1K, she earns 11 miles per dollar spent on United fares. Valuing each United mile at 2 cents each, as above, she's receiving a 22% discount on (the fare component) of each United revenue ticket she buys, meaning her net cost is just 1% of the fare, plus taxes and fees, which don't earn redeemable miles.

Let me be clear: this result only holds for someone who actually values the benefits of elite status, and is sure they'll redeem each one of their United miles for at least 2 cents (remember, unredeemed miles and points are worth nothing). But for someone positioned in this way, the cent-per-mile calculus is almost irrelevant, given the up-front discount and redeemable-mile rebate they receive on each revenue ticket they buy.

Conclusion

I don't fly United or credit my paid Delta flights to Delta, and I don't hold any super-premium credit cards since I don't find their annual fees worth paying. Still, I wanted to share this analysis to demonstrate the power of price compression when applied to a range of everyday problems in travel hacking.

Should US Bank product changes be a part of your game?

When I wrote yesterday's post, I wasn't planning to make this a series! But ever since a US Bank representative told me it was possible to request a product change from a Club Carlson Business Rewards card to the Business Edge Cash Rewards card, I've been pondering the possibilities that would open up.

I haven't requested a product change yet (in anticipation of the June 1, 2015, change to the free domestic award night bonus) but there are some strong theoretical advantages to working regular US Bank product changes into your game.

Examples of strategic product changes

A good example of integrating product changes into a strategy is offered by Chase, with their personal Sapphire Preferred and Freedom cards and business Ink Plus and Cash cards. After receiving a signup bonus on the premium, $95-annual-fee card you can request a product change to the free version, wait a suitable amount of time, and apply again. With this method you can accumulate a stable of Freedom and Ink Cash cards, allowing you to increase bonused spend as a proportion of your total manufactured spend.

Does US Bank offer similar opportunities?

As I explained in an update shortly after yesterday's post went live, the US Bank representative I spoke to offered me a product change from the Club Carlson Business Rewards card to the Business Edge Cash Rewards card, which offers 3% cash back at gas stations (redeemable in $25 increments) and an annual 25% bonus on all cash back earned, for a maximum of $250 in bonus cash back.

While gas station manufactured spend isn't available to everyone, or in every part of the country, that theoretical 3.75% cash back is extremely competitive with the $95-annual-fee Citi ThankYou Premier card — but with no annual fee.

If a product change were also possible from the personal Club Carlson Premier Rewards card, you could request a product change to either the Cash+ or Flexperks Travel Rewards card. Two Flexperks Travel Rewards card would let you earn double Flexpoints at both gas stations and grocery stores each month (and both annual fees would be waivable if you spend $24,000 per cardmember year).

Beyond that, additional Cash+ cards would let you earn 5% cash back on up to $2,000 in charitable spending per quarter, per card.

Why start with Club Carlson?

After June 1, 2015, Club Carlson credit cards will no longer offer the last night free on award stays of two or more nights.

But starting June 1, 2015, they will offer a free domestic award night each cardmember year you spend $10,000 or more on the card, and there's no reason to believe their extremely generous signup bonuses will change: up to 85,000 for both the Business Rewards card and Premier Rewards cards after spending $2,500 in the first 90 days of card membership.

There's no small business credit card offered by US Bank with a similarly generous signup bonus. On the personal side, the Flexperks Travel Rewards card has long offered 20,000 Flexpoints as a signup bonus, worth up to $400 in paid airfare. That's a strong candidate as well, depending entirely on your own air travel and hotel needs.

But most importantly, on June 1, 2015, the Club Carlson Premier Rewards and Business Rewards card will begin to offer a free domestic award night after spending $10,000 on each card each cardmember year. In other words, the signup bonus will change from 85,000 Gold Points after spending $2,500 to 85,000 Gold Points plus a free domestic award night after spending $10,000 (of course, you'll continue to earn 5 Gold Points per dollar spent as well). In my mind that slightly edges out the Flexpoint signup bonus.

So, is it possible?

There are a lot of moving parts to this scheme, any one of which would bring down the whole:

• My representative might have been wrong: product changes from Club Carlson cards to proprietary rewards cards may not be allowed.
• It may not be possible to receive Club Carlson signup bonuses more than once. I was able to receive a Flexperks Travel Rewards signup bonus twice in extremely short order in 2012, but that may have been a temporary glitch or a bug that has since been fixed.
• US Bank representatives may balk at allowing you to request a product change to a credit card product you already have.

Conclusion

On the business side, I'll be trying this in June or July, after I spend $10,000 on my Business Rewards card and my free domestic reward night posts to my Club Carlson account. I don't have a burning need for additional personal cards from US Bank, but if this technique works on the business side, I'll be more confident that it will work on the personal side as well.

If any readers decide to try it out, be sure to share your results in the comments!

Deciding between, applying for, and changing between US Bank credit cards

[update 4/29/15: I just called into US Bank to ask for compensation for the loss of the last-night-free benefit on the Club Carlson Business Rewards card. Instead, the representative offered me a product change, including to the Business Edge Cash Rewards card, which earns an uncapped 3% cash back at gas stations and a 25% bonus on all cash back earned during the calendar year, which is capped at $250. A quick calculation shows that you can maximize the value of that card by manufacturing $33,334 in gas station spend annually ($2,7778 per month), yielding $1,000 in cash back and a $250 bonus, for a total of 3.75% cash back. That's a phenomenal deal.

Additionally, the offer of a product change to a proprietary rewards card from a co-branded credit card is contrary to what I reported below from the myFICO fora. I don't know whether such changes are only possible for small business credit cards, or whether personal credit cards can also be changed from co-branded to proprietary rewards programs. YMMV.]

I currently carry all three of the US Bank-issued credit cards which I consider the most valuable for my current miles, points, and cash back strategy:

• Cash+. Has historically offered 5% cash back on up to $2,000 spent in the "charity" category each quarter. If you don't have ethical problems with Kiva (many of my readers do!), you can strategize to find high-quality, short-term loans, and earn 5% cash back each quarter on loans that last 3-7 months. That can work out to quite high annualized interest rates, although you will take on the risk of your borrowers defaulting.
• Flexperks Travel Rewards Visa Signature. I write about this card all the time, since it earns two Flexpoints per dollar spent at gas stations or grocery stores each month (wherever you spend more), worth up to 2 cents each for airfare and up to 1.5 cents each for hotels.
• Club Carlson Business Rewards. Until May 28 (or May 31 — reports are mixed) offers the last night free on award reservations. After that it will continue to earn 5 Gold Points per dollar spent everywhere, and a free domestic award night after spending $10,000 on the card each year.

Getting started

Back in May, 2013, I first shared my experience freezing my IDA and ARS credit reports. In March, 2015, Kenny over at Miles4More described his experience achieving the same result through the mid-20th century magic of the telecopying transmitter-receiver (for some reason Kenny insisted on called this "the easy way").

There's no reason to believe the fundamental situation has changed: if US Bank has access to your IDA and ARS credit reports when you apply for credit through them, they will take into account factors that those agencies use and that the major credit reporting agencies do not. If US Bank does not have access to those credit reports, they'll rely on your credit report with a major credit reporting agency.

Whether that matters to you depends on your overall credit profile, but if you apply for new credits cards several times throughout the year, you'll want to freeze your IDA and ARS credit reports before applying for a US Bank credit card.

Deciding on cards

The most important thing to know about applying for US Bank credit cards is that you're eligible for as many signup bonuses as you're able to get approved for. They have somewhat vague terms and conditions prohibiting this, but my experience was those conditions are not enforced, and I haven't seen a single report to the contrary (of a signup bonus being denied for previously carrying the card).

For example, I applied for the Flexperks Travel Rewards card for the first time in the Spring of 2012, just before US Bank announced their promotion connected to the 2012 Summer Olympic Games, under a 17,500 Flexpoint signup bonus. When the promotion was announced, I applied again and was approved for what ultimately turned out to be a 33,150 Flexpoint signup bonus.

In other words, you should apply first for cards with the most valuable signup bonuses, regardless of your ultimate plans, since the total amount of credit US Bank will extend you is limited while the number of signup bonuses you can receive is not.

Applying for cards

Doctor of Credit has noted that credit reporting agencies combine same-day credit pulls that appear to them as duplicates, which US Bank credit pulls appear to do. That means there's no risk to your credit score in applying for multiple US Bank-issued credit cards in a single day (there may be a risk to your relationship with US Bank, of course).

Requesting product changes

[Please see the update at the top of this post.]

The good folks at the myFICO fora report that It appears that US Bank, like Chase but unlike, for example, Citi, will not do product changes between co-branded credit cards and proprietary rewards cards.

So product changes between Cash+ and Flexperks Travel Rewards cards are possible, while product changes between a Club Carlson co-branded credit card and either of the former are not.

Analysis

Your overall US Bank credit card portfolio has to depend on your goals.

For example, in the near term I intend to keep the Club Carlson Business Rewards credit card despite its devaluation since I take at least one weekend trip to Chicago each year; I'll certainly be able to use the free domestic award night and 40,000 Gold Point anniversary bonus at the Radisson Blu Aqua in downtown Chicago, where my partner and I have enjoyed our 3 stays so far.

If you're more interested in using credit card rewards as a way to generate cash back, redeemable each statement cycle in any amount, the Cash+ is a terrific card.

But the Cash+ card is even better if you get it through a product change from the Flexperks Travel Rewards credit card, where you'll receive a more valuable year-round signup bonus — and an even more valuable one if US Bank renews their Summer Olympic promotion in 2016.

Finally, if you tend to travel on domestic economy flights, the Flexperks Travel Rewards card gives you an opportunity to buy those tickets at a very steep discount by manufacturing spend at gas stations or grocery stores, or by making Kiva loans, which earn 3 Flexpoints (worth up to 2 cents each) per dollar lent.

Conclusion

Of course, no post about US Bank would be complete without noting that dealing with US Bank is never a walk in the park. Forewarned, forearmed, etc., etc.

Should you use super-premium cards to pay for airfare through manufactured spend?

A few months back I wrote a breakdown of three cards which earn bonused flexible points currencies at gas stations: the Chase Ink Plus (and Bold), Citi ThankYou Premier (as of April 19, 2015), and American Express Amex EveryDay Preferred.

While flexible points are terrific for short-haul Avios redemptions and long-haul premium cabin redemptions, I also like to remind readers that sometimes it makes sense to fly on revenue tickets. With the announcement of a new, 30% rebate on "Pay with Points" tickets purchased through the American Express Business Platinum card (via Twitter user @LoyalUA1K), I thought I'd revisit the subject with gas station manufactured spend squarely in mind.

Four ways to buy cheap plane tickets at gas stations

There are four methods I want to consider for buying revenue airline tickets using points earned at gas stations (four methods, and not four cards, for reasons that are about to become clear):

• Chase Ink Plus/Bold. Earns 2 Ultimate Rewards points per dollar spent at gas stations, on up to $50,000 in annual gas station purchases. Points can be redeemed for paid airfare at 1.25 cents each. $95 annual fee.
• US Bank Flexperks Travel Rewards. Earns 2 Flexpoints per dollar spent at gas stations, if you spend more at gas stations than at grocery stores or on airline tickets during that statement cycle. $49 annual fee, which can be waived if you spend $24,000 during the cardmember year.
• Citi ThankYou Premier and Prestige. Earn 3 ThankYou points per dollar spent with the ThankYou Premier, and redeem them through the ThankYou Prestige for 1.6 cents each for tickets issued by American Airlines and US Airways or 1.3 cents each for tickets issued by other carriers. $95 annual fee for ThankYou Premier and $450 annual fee for Prestige (a $350 annual fee version may be available in-branch, although getting it sounds stressful).
• American Express Amex EveryDay Preferred and Business Platinum. Earn 3 Membership Rewards points per dollar spent with the EveryDay Preferred (as long as you make 30 purchases per month), and redeem them through American Express Travel using the Business Platinum card for roughly 1.43 cents each on the same airline you designate for your $200 annual fee reimbursement. $95 annual fee for EveryDay Preferred and $450 annual fee for Business Platinum.

Now I know what you're thinking: "Free-quent Flyer, can't you show the same information in a simple chart?"

As a matter of fact, I can:

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How much paid airfare makes premium card annual fees worth paying?

Anyone who's followed my blog for long knows what I think about annual airline fee credits: they're a way for affiliate bloggers to downplay preposterously high annual fees and move more product.

Since I'm not an affiliate blogger and don't have a dog in that hunt, I treat credit card annual fees the same way I suggest my readers do: as upfront expenses that have to be justified by the concrete value delivered by a card.

By concrete value, in this case I mean the actual surplus delivered by a premium card compared to a workhorse like the Flexperks Travel Rewards card.

As the chart above shows, the minimum value of a dollar of gas station manufactured spend with the Citi ThankYou Premier and Prestige combination is almost as much as the maximum value of a dollar manufactured with the Flexperks Travel Rewards card, and assuming you're loyal to American Airlines and US Airways, you'll receive a minimum of 0.8 cents more per dollar.

With the American Express Amex EveryDay Preferred and Business Platinum combination, you'll only want to redeem Membership Rewards points for airfare on your preferred carrier, since almost all other "Pay with Points" redemptions (except for sub-$300 airfares) will be worse values than a Flexpoint redemption.

On the other hand, those card combinations come with hefty annual fees, meaning that any surplus value earned on the redemption side compared to cheaper cards has to exceed the difference in upfront costs in the form of annual fees.

To arrive at that breakeven point, first we need to find a reasonable valuation for Flexpoints, which can be redeemed in bands at 10,000 Flexpoint intervals. While it's tempting to take a simple average of the top and bottom of each redemption band (i.e. 1.67 cents per Flexpoint), in my experience it's possible to consistently land closer to the top of that range. That being the case, let's use a point three quarters of the way from the bottom, or 1.83 cents per Flexpoint (e.g. a $367, 20,000 Flexpoint redemption).

Here's how much paid airfare you need to fly annually in order to justify $545 in annual fees, compared to the waivable $49 annual fee of the US Bank Flexperks Travel Rewards card:

• Citi ThankYou Premier and Prestige. $2,294 at American Airlines and US Airways ($47,807 in annual gas station manufactured spend)
• Citi ThankYou Premier and Prestige. $8,856 at other airlines ($227,083 in annual gas station manufactured spend).
• American Express Amex EveryDay Preferred and Business Platinum. $3,711 with your designated airline ($86,508 in annual gas station manufactured spend).

Conclusion

I'm perfectly aware that these cards offer redemption options that can be more lucrative than redeeming points for airfare at privileged rates. In fact, I wrote a whole blog post comparing their transfer partners in each alliance.

I'm further aware that the super-premium $450-annual-fee cards offer benefits like lounge access, airline fee credits, and Global Entry fee reimbursement.

So any readers who are inclined to hash out the value of those benefits are welcome to do so in the comments.

But I am also certain that simply purchasing paid airline tickets is the single most common method of flying domestically for travel hackers and civilians alike, and an analysis of these cards along those lines was overdue.

Iberia Plus requires a positive points balance to search oneworld award space

Iberia and British Airways, two of the airlines that use Avios as their rewards currency, have long had a number of differences in their award charts. British Airways charged each award segment separately, while Iberia averaged the cost of each first class, business, and economy leg over the length of the entire trip (see an illustration here).

For the last few weeks, I've run into a different problem: I have been totally unable to search and price oneworld award availability using my Iberia Plus account. Here's low-level availability between Dallas and Chicago on American Airlines on April 17, 2015:

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Here's the same seat available for 7,500 British Airways Avios:

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And here's the result that kept coming up when searching in my Iberia Plus account:

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Iberia Plus won't show oneworld availability unless you have Avios in your account

After what seemed like hours of fiddling around with my Iberia Plus account, it finally occurred to me that I didn't have any Avios in the account. What if, like some other overseas loyalty programs, Iberia required a positive account balance to search for award space?

To test the proposition, I transferred 1,000 Avios from British Airways into my Iberia Plus account, and sure enough, the (somewhat overpriced) award space immediately appeared:

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Conclusion

I've been planning to explore potentially valuable Iberia Plus awards for a few weeks, but have been stymied by this problem. So now you know: oneworld award space will only appear on Iberia Plus searches if you have a positive Iberia Plus Avios balance.