Things US Bank told me about Flexperks Travel Rewards

It's difficult to know how to frame information you receive from US Bank over the phone. For example, a US Bank representative once told me I could product change my Club Carlson Business Rewards card to a Business Edge Cash Rewards card. I couldn't.

But after someone on Twitter reached out to me with a question about some language in the Flexperks Travel Rewards terms and conditions, I decided against my better judgment to call and ask what the heck they meant.

The $120,000 cap on Flexperks Travel Rewards earning

If you visit the website of the US Bank Flexperks Travel Rewards credit card, you'll find the following description of the card's rewards structure:

"Yearly Award Level: For Net Purchases less than or equal to $120,000, earn one FlexPoint for every $1. If during the calendar year, Net Purchases exceed $120,000, all FlexPoints for the remainder of the calendar year are earned at a rate of one FlexPoint for every $2. Exemption: FlexPerks Travel Rewards Visa Signature AutoPay Cardmembers who select the full payment option on the first available payment date after their statement date."

I've mentioned before the $120,000 calendar year purchase limit on FlexPoint earning, but never noticed the "exemption" for people with AutoPay set up. So I decided to call.

My representative had no idea what he was talking about

This is pretty much par for the course when calling US Bank, so I wasn't terribly surprised. But I kept asking for clarification, so he put me on hold and talked to someone who had worked at US Bank for all of 2 years(!), and who gave him the "complete" picture.

My representative's (secondhand) information was that if you have autopay set up to pay your bill in full, then there's no limit on Flexpoint earning. If you don't have autopay set up, then you have to make your payment on the first available payment date after your statement closes.

That sounds like nonsense, and strikes me as vanishingly unlikely to be correct.

A quick aside on base points and bonus points

There's some important credit card terminology that's relevant here. Typically, a credit card will earn some number of "base" miles or points on purchases everywhere. The American Express Hilton HHonors Surpass earns 3 "base" HHonors points everywhere, the Chase Sapphire Preferred earns 1 "base" Ultimate Rewards point everywhere, etc.

Then in certain spend categories, a credit card will earn "bonus" points. The HHonors Surpass card earns 9 "bonus" HHonors points for purchases made at Hilton properties, for example, and the Sapphire Preferred earns 1 "bonus" Ultimate Rewards point at restaurants and on most travel purchases.

That's not how the Flexperks Travel Rewards terms and conditions are framed

The language I quoted above was from the second clause of the rewards structure. The third clause reads:

"FlexPerks Travel Rewards Visa cardmembers may earn additional FlexPoints for purchases at merchant locations in the following categories: airline, gas or grocery (each, a "Category"). You will earn FlexPoints at a rate of two FlexPoints for every $1 in the one Category in any given monthly billing cycle that has the highest total of Net Purchases charged to your Account (the "Highest Category")...FlexPerks Travel Rewards Visa Signature cardmembers will be awarded FlexPoints at the rate of two FlexPoints for every $1 in Net Purchases during the current month's billing cycle for any merchant location that classifies itself as having telecommunication services/products."

There is no language about "base" FlexPoints and "bonus" FlexPoints: these are simply given as the earning rates for a variety of purchases. The same is true of charitable contributions, in the fourth clause:

"FlexPerks Travel Rewards Visa Signature cardmembers will earn FlexPoints at a rate of three (3) FlexPoints per every $1 in Net Purchases during the current month's billing cycle for any merchant location that classifies itself as a Charitable and Social Service Organization."

But that is how FlexPoints are actually earned

Here's a screenshot from one of my US Bank Flexperks Travel Rewards statements:

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As you can see, US Bank is actually following the usual practice of awarding "base" and "bonus" points separately on each statement.

Conclusion: I have no idea what's going on at US Bank

I've never bumped up against the $120,000 limit calendar year limit, so I don't know how it's implemented in practice. But it seems to me there are three possibilities:

• Earning is actually capped at $120,000 in total purchases, and all spend beyond that earns one FlexPoint per $2 spent, unless you set up AutoPay and pay your entire statement balance on the first available date after your statement closes. If you do, your earning is uncapped. This would be the simplest reading of the terms and conditions as written.
• The above, except bonused spend at gas stations, grocery stores, air travel, and charitable contributions is completely uncapped, whether or not you set up AutoPay. This would be another literal reading of the terms and conditions, but would conflict with the above — only one of the two can be true.
• A hybrid, based on how FlexPoints are actually awarded, whereby "base" points are earned at one FlexPoint per $2 spent above $120,000 but "bonus" point are uncapped. This would mean charitable contributions continued to earn 2.5 FlexPoints per dollar, which would still be a fairly strong choice for making Kiva loans.

Of course it's theoretically possible that the version I was told by my US Bank representative is actually correct: that if you have AutoPay set up at all, then you're not subject to any limits on FlexPoint earning. Possible, but unlikely.

So I'm turning it over to my readers who do even more Flexperks Travel Rewards volume than I do: what's your experience earning base and bonus FlexPoints once you've reached the $120,000 calendar year cap?

Overpay by booking Cathay Pacific premium seats with Avios

There's a tempting intuition that says high balances across a variety of programs are a goal worth pursuing, since they allow you to deploy the right rewards currency for the right job. That's never been my view: I prefer building up balances in programs where I have planned, or at least foreseeable, redemptions in mind. That's why I don't hesitate to accumulate Delta SkyMiles, since even if I don't have planned Delta travel, I fly Delta often enough that I'm certain to be able to redeem them at some point. The same is true with Hilton HHonors points: there's no risk that I won't be able to redeem them, since there are Hilton properties everywhere.

Of course, being focused on a small number of rewards currencies has a downside: by definition, it's more expensive to book flights if you don't have the currency that makes those flights cheapest.

For example, until March 22, 2016, American AAdvantage charges 67,500 miles to fly between the United States and Hong Kong in first class on their oneworld partner Cathay Pacific, with minimal taxes and fees.

That's a great deal, and if you have a slew of AAdvantage miles and a flexible-enough schedule, it's certainly the best way to get to Hong Kong. Since I don't hoard AAdvantage miles, I'm out of luck, right?

Not so fast.

British Airways charges a lot for long premium cabin flights

The conventional wisdom says to redeem distance-based British Airways Avios for short-haul domestic flights or a few select "sweet spot awards" that fall in the top of their distance bands, and redeem region-based awards for longer and premium cabin flights.

And indeed, if you had huge quantities of every rewards currency, for any given award you would want to redeem the fewest miles or points possible, using a tool like AwardAce.

But if you don't want to accumulate huge rewards balances speculatively, you have another option: simply overpay.

British Airways doesn't charge that much for long premium cabin flights

A Cathay Pacific first class flight from Los Angeles or San Francisco to Hong Kong costs 140,000 Avios each way, plus about $50 in taxes and fees:

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After American Airlines' March 22, 2016, devaluation, they'll charge 110,000 AAdvantage miles plus the same taxes and fees. Of course, the American award, in addition to being cheaper, allows you to depart from anywhere in the United States, not just the west coast, and connect onward from Hong Kong.

140,000 Avios cost $1,400 in cash if you transfer them in from an Ultimate Rewards account, giving you about 6.66 cents per Ultimate Rewards point in value for that $9,367 flight.

If you earn your miles and points primarily through manufactured spend, 140,000 Avios are likely easier to earn than 110,000 AAdvantage miles, thanks to the Ink Plus bonus categories of office supply stores and gas stations and the quarterly Chase Freedom bonus categories allowing you to earn 5 Ultimate Rewards points per dollar spent in rotating groups of merchants.

But even more importantly, using an Ultimate Rewards point transfer to British Airways to book this flight keeps your overall miles and points strategy simple. Instead of signing up for one or more American Airlines co-branded credit cards, requiring multiple credit pulls and bearing the risk of your application being denied, you can keep doing what you're doing: aggressively earning Ultimate Rewards points in bonus categories.

If you end up finding award space for dates that work for you, transfer the points and make the reservation. If you don't, transfer them instead to Hyatt, United, Southwest, or even redeem them for cash. You haven't lost anything by earning "extra" Ultimate Rewards points. You just have to slightly overpay for your award when you decide to book it.

Speaking of award availability...

There's a reason that I've used Cathay Pacific as my example throughout this post: it's because award availability on Cathay Pacific is quite scarce, and can't be searched on American's website. Instead, you're likely going to be using British Airways to search for award availability anyway, since they display it online.

Not only that, but British Airways allows reservations to be made further in advance than American does! Take another look at the search result above: it's for a first class flight departing December 10, 2016. That's 354 days from now, while American only allows reservations to be made through November 17, 2016 — 331 days from now.

As you'd expect, award availability tightens up quickly once American's award booking window opens. Given that Cathay Pacific frequently makes just a single first class award seat available, those 23 days may spell the difference between getting your first class award or having to sit in business class.

In that sense, you aren't overpaying for Cathay Pacific first class by using British Airways Avios; you're simply paying the only price at which the first class seats you need are, in fact, available!

You should never buy points for what they're worth

The frame of reference for my manufactured spend practice is not usually the cost I pay per point that I earn, although I naturally privilege cheaper techniques above more expensive techniques, and there are certain techniques that are too expensive to fit into my practice at all.

Rather, my analytical framework is based on opportunity costs: am I better off manufacturing a hotel or airline loyalty currency, or using the same technique to manufacture cash back instead?

In the hotel sphere, it's easy to calculate "breakeven" points, which I call a property's "imputed redemption value:" the amount of cash you have to save in order to justify earning sufficient points to make a redemption instead of simply paying for a stay with cash.

It's also possible to buy points

There is a clutch of high-profile bloggers who write exhaustively about the constant stream of airline offers to sell miles at a discount compared to their normal prices. For example, American AAdvantage normally sells miles for about 3.19 cents each, but during their current promotion you can buy them as "cheaply" as 1.81 cents each (because of the fixed $30 processing charge, the rate will always be lowest when you buy the maximum allowed number of miles).

So the question is, should you buy American Airlines miles for 1.81 cents each? There are two ways to look at that question.

How much are AAdvantage miles worth?

If you redeem your AAdvantage miles for expensive flights with low or no fuel surcharges, your answer to this question might be "far more than 1.81 cents each." After all, until March 22, 2016, 67,500 AAdvantage miles and some nominal fees will get you from San Francisco to Hong Kong in Cathay Pacific's first class cabin, a $9,367 value next fall — 13.9 cents per point!

If this is your view, then paying anything less than 13.9 cents per point is a straightforward win: you get a $9,367 flight, but pay only a small fraction of that amount. Alternatively, you could pick a "realistic" valuation for the flight and use that instead. For example, if you think Cathay first class is worth just twice the price of economy, you could use that value instead ($1,486 for the same dates), and get a valuation of 2.2 cents each — still more than the 1.81 cents American is selling them for.

How much do AAdvantage miles cost?

If you manufacture AAdvantage miles instead of using a 2% cash back card, your answer to this question should be "2 cents each." In this case you might consider buying AAdvantage miles in bulk for 1.81 cents each, and direct that manufactured spend back towards your 2% cash back cards, ending up with more value overall.

On the other hand, if you earn AAdvantage miles by signing up for their co-branded credit cards and spending $3,000 to earn 53,000 AAdvantage miles, your answer should be "0.11 cents each" — that's your $60 in foregone cash back spread over 53,000 AAdvantage miles. In this case, you'd be crazy to overpay by 15 times for miles you could earn so much more cheaply.

Of course, if you're a rich weirdo, you may be burning AAdvantage miles more quickly than you can earn them exclusively through signup bonuses. In that case, the important thing is your marginal cost: how much are you paying for each additional AAdvantage mile, and is it more or less than American is currently charging for the same mile?

Never buy points for what they're worth

Travel hacking is ultimately about the spread between the price you pay for your trips and the price travel providers would like to charge you. In other words, acquire travel cheaply but redeem it dearly.

That means a basic mistake to avoid is overpaying for your miles and points. If you're currently buying AAdvantage miles for 2 cents each and an opportunity comes along to buy them for less than 2 cents each, that's a no-brainer.

But another way you can overpay is by allowing a high theoretical valuation induce you to narrow the spread between your cost of acquisition and value of redemption. For example, one of my regular readers values Hilton HHonors points at 1 cent each, since that's they value he's able to get from them as a Diamond elite with the program. If you take that valuation seriously, you'd conclude that he would be better off earning 6 HHonors points per dollar at grocery stores than 5% cash back — buying HHonors points for just 0.83 cents each.

But a moment of reflection shows that's crazy: instead, he could earn 5% cash back at grocery stores and use his American Express Hilton HHonors Surpass credit card for non-bonused spend where he'd otherwise earn 2% cash back — buying his HHonors points for just 0.67 cents each instead!

My Hyatt Gold Passport Diamond tier match experience

Background

As my regular readers no doubt already know, on November 19, 2015, the official Hyatt Concierge Twitter account sent out a tweet asking, "Looking for a new loyalty program? DM us and let’s talk."

The travel hacking blogosphere subsequently went absolutely nuts. Things then seem to have proceeded in three stages:

1. In Stage 1, the first few hours after the tweet was sent out, Hyatt was matching all elites in other hotel loyalty programs to their Diamond status. So a Hilton HHonors Gold elite could be matched to Hyatt Gold Passport Diamond status, as long as they could show a stay with HIlton in the last year.
2. The door quickly shut on Stage 1, and in Stage 2, only Starwood Preferred Guest Platinum elites were being matched to Hyatt Gold Passport Diamond status. Elites with programs besides Starwood Preferred Guest could be matched only to Hyatt Gold Passport Platinum status (the same status that comes with their co-branded credit card).
3. Shortly after that, even Starwood Preferred Guest Platinum elites were only being matched to Hyatt Gold Passport Platinum status. As I understand it, this is the current state of play, and Stage 3 continues to this date. For way, way more datapoints read the FlyerTalk thread on the topic, starting at the end for the most recent datapoints.

My tier match experience

I sent my first e-mail to Hyatt Gold Passport on November 20 with my Hilton HHonors Diamond status information. Since the door had already closed on Stage 1, I was told that only Starwood Preferred Guest Platinum elites were being matched to Hyatt Diamond status, and that I could only be matched to Hyatt Platinum status.

Since I wasn't at home, I replied with a screenshot from the SPG app on my iPhone. A few days later, they replied that they couldn't use that to match me to Hyatt Diamond because it didn't have my Starwood account number.

I replied again with a screenshot from the desktop version of the Starwood Preferred Guest website, and again a few days later they replied that they couldn't read the file I sent them.

Finally, I printed the screenshot as a PDF file and they were able to open that. Again, after waiting a few days I finally received a response that I had been matched to Hyatt Gold Passport Diamond status, which was immediately reflected online.

The total time my tier match took was 23 days from my initial submission on November 20 to my final tier match confirmation on December 13, 2015.

The key lesson is that it seems people were entitled to treatment based on the "Stage" during which they submitted their original request. In other words, even if they required additional documentation, the earlier you submitted your first request, the more likely it was to be honored.

Life as a Diamond

After being notified that I'd been matched to Hyatt Gold Passport Diamond status, I had three priorities:

• Where it makes sense, rebook stays I currently have with other chains at Hyatt properties instead. For example, for our upcoming trip to New York City, I was able to replace a $473.90 Hilton reservation with a $503.12 Hyatt reservation which will earn me 3 elite night credits and an elite stay credit.
• Where possible, apply suite upgrades to my paid Hyatt reservations.
• Match my Hyatt Gold Passport Diamond status to Mlife Platinum status.

Suite upgrade rules are confusing

Much digital ink and already been spilled on this topic, so the only point I'll make here is that each Hyatt brand — and even property — refers to their "base-level" suite differently. The Grand Hyatt Berlin has a "Grand Suite King," the Grand Hyatt New York has a "Junior Suite," and the Grand Hyatt San Francisco goes straight to "Executive Suite."

In other words, unless you're familiar with a particular property, you don't have any way to easily check whether the suites for sale online are the suites that are eligible for Diamond suite upgrades.

Mlife Platinum status doesn't seem to be instantly available

As soon as my Diamond tier match was processed I went to this page to request a match to Mlife Platinum status. While the request was processed successfully, my Mlife status wasn't updated!

I asked around on Twitter and my guess is that Hyatt only occasionally updates the database of Gold Passport elites which it makes available to Mlife. Since that process isn't instant, you won't have immediate access to Mlife Platinum benefits.

Since Hyatt Gold Passport is offline until December 19, I haven't been able to try again, but I'm optimistic I'll be matched to Mlife Platinum once the system comes back online.

Conclusion

I've mentioned to multiple folks going through the process of tier matching that this offer, while woefully mishandled and generating a lot of ill-will on the part of people who felt they'd been cheated, is still going to be a business coup for Hyatt.

That's because people like me who are already top-tier elites in multiple programs would never consider earning up to Hyatt Diamond from scratch, but as matched top-tier Hyatt Diamonds will make sure we requalify each year with 25 stays or 50 nights, which have to be either paid or "Points + Cash" reservations.

Use these 3 weird programs to search Star Alliance award space

In Chapter 5 of my occasionally-selling ebook, I discussed the technique of using All Nippon Airways' search tool to find Star Alliance award space. Recently, they made some changes to their award search function which makes it somewhat less convenient to use while searching for Star Alliance award space.

But it's still relatively easy to find partner award seats if you know where to look.

Step 1: United Mileage Plus

United Airlines is a US-based airline, which means most readers likely already have a Mileage Plus account. Log in, then search for a one-way or roundtrip award flight from your origin to destination and see what United comes up with.

Step 2: Air Canada Aeroplan

Air Canada's Aeroplan frequent flyer program has online access to partner award space on airlines that United Mileage Plus doesn't. It's slightly difficult to find their online award search tool, but just log into Aeroplan and visit this URL to get started.

Step 3: All Nippon Airlines

All Nippon Airlines has made some odd reconfigurations of their website which makes it harder, but not impossible, to search across the entire Star Alliance. You can now only search roundtrip or multi-city flights.

Once you log into your account, you can search for roundtrip or multi-city flights between any Star Alliance cities. In other words, once you find an arbitrary city pair with Star Alliance availability, you can search for availability between any other other Star Alliance cities by inputting the existing availability as the "first" or "second" leg.

Then you should be able to call and book the Star Alliance availability using whichever program you happen to have your mileage balances with.

Conclusion

You don't normally have to use every technique for every award booking you make; often, the first search you make will simply throw up the award seats you need. But when it doesn't, make sure you've exhausted every possibility before you consider paying cash for your seats.

Use a demand schedule to maximize open jaws on revenue tickets, too

The "demand schedule" is a tool I first read about at Milenomics, which has now become more or less conventional wisdom: by creating a consolidated list of all the trips you plan to take, including flights, hotels, and transportation, you're able to maximize the value (and minimize the cost) of each trip by taking advantage of stopovers, open jaws, and roundtrip pricing.

Equally importantly, when a mistake fare or generous coupon code pops up, you have an itemized list of all the reservations you need to make with it. Avoiding paralysis in that way maximizes the value you get from your travel hacking practice.

I confess I'm not terribly diligent about maintaining my demand schedule; I more or less piece together trips as award space opens up, and most of my hotel stays are paid for with Hilton HHonors or Hyatt Gold Passport points, where I almost never have trouble finding rooms available with points.

But an upcoming trip illustrates why a little planning can go a long way.

Revenue tickets can include very cheap open jaws

I have a number of pre-devaluation award nights booked at Club Carlson properties in Europe for next summer, and paid 26,000 Avios and $358.18 to book two tickets back from Berlin to New York at the end of the trip.

My initial plan was to book our outbound flights to Budapest on Turkish Airlines for 30,000 United Mileage Plus miles each, since award availability is wide open next summer. That would involve transferring 50,000 Ultimate Rewards points (with a cash value of $500) from Chase to United Airlines Mileage Plus (I have 10,000 orphaned Mileage Plus miles in my account already).

Then I realized that I still have the US Bank Flexpoints I had been saving up for this trip before I found Air Berlin award availability. I still plan to book my partner's ticket by transferring 20,000 Ultimate Rewards points to United in order to empty my Mileage Plus account, but for my own flight I decided to look into revenue tickets on the same outbound flight.

While searching for Turkish Airlines revenue tickets, I immediately noticed that a one-way outbound flight prices out at $1,010 through the Flexperks booking portal, while it's only trivially more expensive to add a return flight from most Turkish Airlines destinations in Europe back to Chicago (for example, $1,185 returning from Berlin).

Because of that fluke of pricing, whether I book a one-way outbound or a return itinerary, I'll pay 70,000 Flexpoints — an example of what I've called in the past "price compression."

In other words, I can substitute 70,000 Flexpoints for 30,000 Ultimate Rewards points and get an additional one-way flight from Europe to Chicago — but only if I can decide on the origin and date of that future flight at the time of booking! A demand schedule would help in that calculus, but I don't have any additional trips to Europe planned, aside from our summer holiday.

Is this a good deal?

There are two competing intuitions when it comes to situations like this, and I want to give each one a fair airing:

1. since 30,000 Ultimate Rewards points are worth $300 in cash, and 70,000 Flexpoints are worth $700 in cash, a 30,000-points Ultimate Rewards redemption is $400 cheaper than a 70,000-Flexpoint redemption;
2. since 70,000 Flexpoints are worth a maximum of $1,399 in paid airfare, and 30,000 Ultimate Rewards points are worth up to 12.4 cents each, or $3,720, when redeemed for Korean Air First Class flights, it's better to redeem the fixed-value Flexpoints wherever possible, while saving Ultimate Rewards points for those redemptions where their value is maximized.

In other words, you can think of the reservations as minimizing your cash-equivalent outlay or maximizing your option value by retaining your most potentially-valuable points as long as possible.

Finally, the paid Flexpoints redemption booked into the "H" fare class will earn 100% of the actual miles flown, or roughly 6,142 Mileage Plus miles if I credit the outbound flight to United. As long as I ever plan to transfer Ultimate Rewards points to United again, booking the paid fare will save me 6,000 Ultimate Rewards points at that time. If I book a return flight from Europe to Chicago at any time within Turkish Airlines' booking window (and end up flying it), that will add another 6,000 or so miles to my United balance.

Suddenly, we're talking about paying 70,000 Flexpoints or 42,000 Ultimate Rewards points (30,000 spent on the reservation booking and 12,000 foregone by booking non-mileage-earning award flights), and the Flexpoints redemption is looking even more persuasive.

So, what should I do?

My decision will ultimately depend on whether I can find a return flight from Europe that I'm more likely than not to actually take.

Spending $700 in Flexpoints in order to save 36,000 Ultimate Rewards points isn't as compelling as saving 42,000 would be (if I was able to fly both the outbound and return), since it moves the cash-equivalent breakeven point from just above $300 to just below $300, and one-way economy flights between the United States and Europe cost exactly 30,000 Ultimate Rewards points when transferred to United Mileage Plus (subject to award availability).

British Airways devaluation got you down? Book with Iberia instead!

The 4,500-Avios, short-haul British Airways Executive Club award has long been one of the most valuable things about the program for North Americans. On flights within the United States you pay neither fuel surcharges nor close-in booking fees, and your Avios are refundable up to 24 hours before departure (you forfeit only the taxes and fees).

Starting February 2, 2016, the same short-haul flights originating or ending in North America will cost 7,500 Avios per segment, although there's no indication the other two features will change.

The good news is that as far as I can tell Iberia hasn't announced any changes yet.

Iberia is still a weird program

The two key things to know about booking North America Iberia award flights are:

• Awards have to be round trip. You can't even search for one-way availability; you have to use a dummy return date (or search for availability on American Airlines' or British Airways' website first);
• Award prices are based on total trip length, adjusted by cabin.

What do I mean, "adjusted by cabin?" Hopefully the following example will illustrate the idea: a flight from Chicago (ORD) to Louisville (SDF), a 574-mile roundtrip, costs:

• 11,000 Avios and $18.70 in Blue Class (economy);
• 22,000 Avios and $18.70 in Blue Class one way and First on the return;
• and 33,000 Avios and $18.70 in First in both directions.

The same itinerary connecting in Charlotte (CLT) in each direction (1,868 miles roundtrip), costs:

• 17,000 Avios and $24.70 in Blue Class;
• 23,109 Avios and $24.70 in First on one of the CLT-SDF legs (17.9% of the total distance) with the remainder in Blue Class;
• 27,891 Avios and $24.70 in First on one the ORD-CLT legs (32.1% of the total distance) with the remainder in Blue Class;
• 29,218 Avios and $24.70 in First on both of the CLT-SDF (35.9% of the total distance) legs with the remainder in Blue Class;
• 38,782 Avios and $24.70 in First on both of the ORD-CLT (64.1% of the total distance) legs with the remainder in Blue Class;
• 34,000 Avios and $24.70 in Blue Class one way and First on the return;
• and 51,000 Avios and $24.70 in First in both directions.

The total number of Avios required very closely corresponds to the sum of the percentages of the total itinerary flown in each cabin multiplied by that cabin's roundtrip Avios award cost.

Observe two key things here:

1. Under today's award chart, a roundtrip, nonstop flight between Chicago and Louisville in First is cheaper if booked with Iberia (33,000 Avios) than if booked with British Airways (36,000 Avios), and an itinerary connecting in Charlotte is also cheaper with Iberia (51,000 Avios) than with British Airways (72,000 Avios — no, I'm not kidding);
2. After the February 2, 2016, British Airways devaluation, Blue Class nonstop flights booked with Iberia will be cheaper (11,000 Avios) than if booked with British Airways (15,000 Avios).

Takeaways

Here are a few things to take away from this post:

• You can only use Iberia to book roundtrip partner itineraries;
• Do not use Iberia to search for partner award availability;
• Once you find North American award availability with American Airlines or British Airways, check their prices against Iberia's;
• Iberia's online booking system is very frustrating but very flexible — it's easy to book short legs in Blue Class and longer legs in First for potentially big savings, because of the "cabin adjustment" mentioned above.

Conclusion

Using Iberia Avios instead of British Airways Avios for short-haul North American flights isn't a silver bullet to solve all of your award booking problems. But it is another tool you can use to let your miles take your further, faster.

Don't retire to hotels, live in them!

I've written a few speculative posts in the past based on the conceit that manufactured spend makes staying in hotels full time a cheap way to save on rent in retirement.

I recently joked on Twitter that it's cheaper to stay at the Hilton in San Francisco than it is to rent an apartment there, which got me to thinking: are there really places where the rent is so high that living in hotels could make practical sense?

Methodology

To compare the cost of renting versus monthlong hotel stays, I used the figures in this recent CBS News article about median apartment prices in the 10 most expensive cities in the United States. These are median, not average, prices, so 50% of rental units are less expensive and 50% are more expensive.

I don't have any reason to trust these numbers, compiled by ApartmentList.com, but at least they give us some concrete figures to work with.

I then looked at the imputed redemption value of a 30-day stay with four programs:

• Hilton HHonors (manufactured with an American Express Surpass card at gas stations or grocery stores at an imputed redemption value of 0.35 cents each and redeemed in blocks of five nights, with the fifth night free);
• IHG Rewards (purchased during a fake reservation at 0.7 cents each);
• Hyatt Gold Passport (1 cent per point transferred from Chase Ultimate Rewards);
• Choice Privileges (manufactured with the Chase Choice Privileges Visa at an imputed redemption value of 1.0525 cents each).

In the case of Hilton and Choice I compared their earning rate to the 2.105 cents per dollar earned everywhere on a Barclaycard Arrival+ MasterCard.

Wherever possible, I observed the following rules:

1. I used the actual municipality given by CBS News/ApartmentList.com, so in the case of Oakland I excluded properties in San Francisco, and vice versa (the exceptions were Los Angeles, which doesn't have a Hyatt property downtown — I used the Andaz West Hollywood instead, and Miami, where I included Miami Beach properties);
2. I used the cheapest property located within the central area of each city, with the exception of Washington DC, where I used the Holiday Inn Washington-Georgetown.
3. Where seasonal adjustments were small, I used the smaller figure as long as it was realistic. In one case where the seasonal increase was over 100% (Bluegreen Vacations Solara Surfside, the Choice property I used in Miami) I gave both the high and low season figures;
4. Large seasonal variations are the rule with Hilton HHonors, so in all cases I gave both the low and high season figures.

Finally there's an additional wrinkle worth noting: since hotels offer both award stays and paid stays for the same nights, you should be able to reduce your actual expenses below the imputed redemption values I give by paying cash for those nights where the cash rate is lower than the imputed redemption value of an award night.

Results

Here are my results, in all their Excel spreadsheet glory:

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For each city, I've highlighted the chain with the lowest and second-lowest imputed redemption values. That leads to a few observations:

• In four of the ten cases, the Hilton properties have the lowest imputed redemption values whether or not the property is charging low-season or high-season prices;
• In four of the remaining cases, the Hilton property is cheapest during low season and the Hyatt property is lowest during the Hilton property's high season. In these cases the logical thing to do would be to move from Hilton to Hyatt once high season pricing went into effect at Hilton;
• The IHG Rewards Club property never has the lowest or second-lowest imputed redemption value.

These results so strongly confirm my biases towards Hilton and Hyatt that I had to double-check my math to make sure I hadn't tampered with the scales.

Hilton's dominance seems to be a mechanical product of two facts: earning 6 HHonors points per dollar with the Surpass card, and taking advantage of the fifth night free on award stays. While Hyatt typically charges fewer points for award reservations than Hilton, they have to charge 72% less to get an edge on Hilton. Since Hyatt doesn't charge more for rooms during high season as Hilton does, that's where their edge tends to emerge.

Conclusions

From one point of view, my original question was answered conclusively: in none of the top ten most expensive rental markets are monthslong award stays cheaper than renting the median apartment.

This conclusion should be taken with a healthy dose of salt, however:

• as noted under Methodology above, you can save money over award stays by swapping in cheap paid nights over weekends and during low season. Doing so will also trigger points earning, which reduces the total amount of manufactured spend necessary each month;
• as a top-level elite, your stay at many properties will include a continental or hot breakfast, and may include dinner as well, depending on the food spread available in the property's lounge;
• this research compared the median rental property in a city to downtown chain hotel properties. Depending on the city, the median rental property may be in much worse condition, in a much worse neighborhood, much farther from downtown. In other words, if you're an upper middle class travel hacker working in San Jose, you're probably not living in the median rental property in the city, and you're probably paying much more in rent than the figures I cited.

Finally, while I intentionally framed it that way, living in hotels isn't an all-or-nothing proposition. For example, you may find that moving into a hotel for a month while you're between apartments, or in the process of moving to a new city, offers savings compared to other short-term housing options, or convenience compared to staying with friends or renting a room on AirBNB.

How much would you pay to be able to book any flight on any day?

Another day, another devaluation.

Yesterday American Airlines announced the changes they'll be making to the AAdvantage program next year. You've likely already read all about them, but in summary, they are:

• Revenue-based mileage earning (beginning in "the second half of 2016");
• Award chart devaluation (effective March 22, 2016);
• Elite status devaluation (effective for qualification after January 1, 2016).

Since I credit my paid American flights to Alaska, I don't care much about the first or third points. But the award chart devaluation is real and, for premium cabin redemptions, significant.

Premium cabin awards are not cheap or easy

With yesterday's announcement, American Airlines joined Delta and United in raising mileage prices for premium cabin awards, in some cases astronomically. For example, a first class award seat on a 3-cabin aircraft to Sydney from the continental United States will cost 110,000 AAdvantage miles starting March 22, 2016, up from the 72,500 miles it currently costs, a 52% increase.

Of course, that's purely academic. There are no first class award seats between the continental United States and Sydney.

Yes, if you're flexible, if you're searching far in advance, close-in, and on every single day in between, you might be able to find one or two seats during the Southern winter. But don't hold your breath.

Premium cabin seats are (not that) expensive

For a lot of people, "travel hacking" is synonymous with "loyalty program hacking." And indeed, historically the loyalty programs operated by hotels and airlines have been a great source of outsized value for people willing to dedicate the time and attention to maximizing the value of their miles and points.

But those airline award seats we hunt down so diligently are also available on the open market! Believe it or not, the airlines just sell them. Of course, in exchange for the flexibility buying revenue tickets grants, you're going to pay a little more.

Or a lot more. That 220,000-mile roundtrip first class award ticket American promised you might cost $10,000 or $15,000 if you choose the flexibility of a revenue ticket.

Well, it might cost someone $15,000. But it doesn't have to cost you $15,000, because you're a travel hacker.

The revenue premium may be smaller than you think

A $15,000 first class flight to Sydney will give about 6.8 cents per AAdvantage mile in value after the March 22 devaluation (if you could find first class award space).

Since the Citi Prestige card allows you to redeem ThankYou points for 1.6 cents each on American-marketed flights, you'd need about 938,000 ThankYou points to purchase your first class revenue ticket. That's a lot of points, but the ThankYou Premier card earns 3 ThankYou points per dollar spent at gas stations, so you'd only need to manufacture $312,666 in gas station spend to make your redemption. That's obviously not something you'll be able to do in a weekend, but it might be a reasonable goal if spread out over a year or two.

Since the Citi and Barclaycard AAdvantage co-branded credit cards earn just one mile per dollar spent everywhere, you'd need to manufacture $220,000 on those cards to make your first class award redemption. In other words, the revenue premium — the additional manufactured spend required to book any seat on any flight — in this case is about 42%.

The $15,000 flight has the additional advantage of earning an Executive Platinum 165,000 AAdvantage miles, enough for another roundtrip to Sydney (albeit in business class instead of first).

Conclusion

Most people aren't going to manufacture enough spend to pay what American is asking for a first class ticket to Australia. Those who do probably don't value a first class ticket to Australia at $15,000, and would rather redeem their fixed-value points for the domestic economy flights they'd book anyway. That's a perfectly reasonable point of view.

The point I want to make is that while I sometimes say that cash is a superior earning choice for manufactured spend unless you have a particular, high-value redemption in mind, it may be a superior earning choice even if you do have a particular, high-value redemption in mind!

In other words, it's not enough to say that an award redemption will get you more value per dollar in manufactured spend than earning a currency like Ultimate Rewards (1.25 cents per point), Flexpoints (up to 2 cents per point, redeemed in tiers), Membership Rewards (1.43 cents per point with the American Express Business Platinum), or ThankYou points. You also have to be willing to redeem your loyalty currencies exclusively on the dates, flights, and times that the airlines choose to make award seats available, and put the time into learning the intricacies of each alliance and each airline.

If you don't find that fun or interesting, you may well be better off saving your time and paying the revenue premium instead.

Towards a theory of hotel points and cash redemptions

Introduction

Regular readers know that I use the concept of "imputed redemption values" to calculate the relative value of manufactured spend on co-branded hotel credit cards. I've also written about the difficulty of thinking about "points and cash" redemptions conceptually.

Today I want to make a preliminary attempt at reconciling the concept of imputed redemption values and points and cash redemptions, something I've never seen attempted before in a comprehensive way.

I looked at five hotel loyalty programs that offer points and cash redemptions:

• Marriott Rewards
• Hyatt Gold Passport
• Starwood Preferred Guest
• Wyndham Rewards
• Hilton HHonors

For each program, I used the following assumptions:

• For Ultimate Rewards transfer partners (Marriott and Hyatt), I used a value of one cent per point (the value of the corresponding Ultimate Rewards points when redeemed for cash);
• For the other programs, I compared each card's earning rate on spend to a 2% cash back card. The Starwood Preferred Guest American Express earns one Starpoint per dollar spent everywhere (2 cents per point), the $69-annual-fee Barclaycard Wyndham Rewards Visa earns 2 Wyndham Rewards points per dollar spent everywhere (1 cent per point), and the Hilton HHonors Surpass American Express earns 6 HHonors points per dollar spent at gas stations and grocery stores (0.33 cents per point).

I used these assumptions to investigate two questions:

1. When do points and cash redemptions make sense compared to award nights?
2. When do points and cash redemptions make sense compared to cash nights?

Marriott Rewards

Starting in "early 2016," Marriott Rewards will allow cash and points redemptions based on the following chart:

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I used those values to calculate under what circumstances it would be worth making a cash and points redemptions, instead of a points redemption or paid stay:

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This chart illustrates two points:

• if your primary source of Marriott Rewards points is Ultimate Rewards transfers, cash and points stays are cheaper for all Category 3-8 properties, when compared to a points-only award stay;
• but cash and points stays, just like points-only award stays, are extremely expensive, so unless your Category 8 stay costs more than $390, you're still better off paying with cash than transferring Ultimate Rewards points to Marriott Rewards.

Hyatt Gold Passport

Here's Hyatt's points-only and Points + Cash award chart:

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And here's the same information, interpreted through a lens of Ultimate Rewards point transfers to Hyatt Gold Passport:

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As this chart shows, there are no circumstances under which Cash + Points redemptions are cheaper, on a cash basis, than point-only redemptions (although you may still want to pay with cash in order to save your Ultimate Rewards points for other, higher-value redemptions).

Starwood Preferred Guest

Starwood produces the opposite situation. If you're earning 1 Starpoint per dollar spent on a Starwood Preferred Guest credit card, you will under virtually all circumstances save money using cash and points compared to a points-only redemption:

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Wyndham Rewards

Wyndham Rewards is unique for having just one price point for points-only ("Go Free") stays: 15,000 Wyndham Rewards points per night.

For points and cash ("Go Faster") stays, all hotels in the chain cost 3,000 Wyndham Rewards points, plus a variable amount of cash.

Wyndham Rewards doesn't publish, as far as I can tell, a list of the variable cash amounts required by the hotels in their program, so this chart is based on my very extensive searching, but I can't promise it's totally comprehensive:

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As you can see, at all but the most expensive properties (like the Wyndham Garden Long Island City Manhattan View), you'll pay less with a "Go Fast" cash and points stay, when available, compared to a "Go Free" points-only stay.

Hilton HHonors

Hilton HHonors, like Wyndham Rewards, doesn't publish a list of their points and cash award levels, so the following chart is based on my own extensive research, and its accuracy is not guaranteed:

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This chart makes clear that if you're manufacturing spend on a Hilton HHonors Surpass American Express instead of a 2% cash back card, you'll come out ahead saving your HHonors points with cash and points redemptions at hotels priced in the 30,000-to-70,000-point range.

A note on the final column

The neatly highlighted calculations above are helpful, but I want to draw particular attention to the far right columns, showing the imputed redemption value of cash and points stays at each chain.

This column is relevant because in contrast to points-only award stays, which hotels are often required to offer as long as they have standard rooms available, cash and points stays are offered at the discretion of the property, and are generally made available only when rates are already unusually low.

The "Cash + Points" imputed redemption values I included for each chain is the price point above which cash and points redemptions become cheaper than cash-only stays, given the assumptions I outlined in the introduction. If you can find cash-only rooms at that price point or below, you're generally better off booking the cash rate rather than any cash and points or points-only rates available, unless you're particularly points rich and cash poor or have other extenuating circumstances.