I don't buy points, but maybe you should!

Every major loyalty program sells their points for cash, normally at a fixed rate through the industry-sponsored site Points.com.

For example, you can buy up to 60,000 Delta SkyMiles per calendar year for 3.76 cents each, up to 75,000 United MileagePlus miles for 3.76 cents each, up to 150,000 American AAdvantage miles for 3.19 cents each, and up to 60,000 Alaska Mileage Plan miles for 2.96 cents each.

Hotel programs likewise sell their points currencies for cash, with IHG Rewards Club selling up to 60,000 points for 1.15 cents each, Hilton HHonors selling 80,000 points for one cent each, Marriott Rewards selling up to 50,000 points for 1.25 cents each, Starwood Preferred Guest selling up to 30,000 points for 3.5 cents each, and Hyatt Gold Passport selling up to 55,000 points for 2.4 cents each.

Purchased points are too expensive for me

I don't personally buy miles or points because it's a more expensive way of acquiring miles and points than the other methods I have available.

United MileagePlus miles and Hyatt Gold Passport points cost just 1 cent each when purchased with Ultimate Rewards points transferred from a Chase Ink Plus account.

I happen to have a Citi AAdvantage Platinum Select MasterCard, so if I ever needed to stock up on AAdvantage miles, I can do so for 2.105 cents each — the cash back I'd earn manufacturing the same unbonused spend on my Barclaycard Arrival+ MasterCard.

And of course I earn 6 HHonors points per dollar spent with my American Express Hilton HHonors Surpass card at grocery stores, so even compared to an "optimal" redemption rate of 2 cents per US Bank Flexpoint, I'm already buying HHonors points at a mere 0.67 cents each, 33% less than the 1 cent per point Hilton wants to charge.

Purchased points may make sense for you

As the examples above make clear, the decision whether to purchase miles and points or manufacture them rightly depends upon your next best alternative: your opportunity cost.

If you're currently manufacturing the bulk of your otherwise-unbonused spend on a 5% cash back card like the Wells Fargo Rewards Visa during the introductory promotional period, then manufacturing spend on a one-mile-per-dollar card costs not 2.105 cents per mile, but 5 cents per mile, 57% more than, for example, American is willing to sell them!

Likewise, if you have $100,000 on deposit with Bank of America, you might be earning 2.625% cash back with a BankAmericard Travel Rewards card. That may make purchasing Hyatt Gold Passport points at 2.4 cents each worthwhile, compared to manufacturing spend on a Chase Hyatt credit card.

Purchase small numbers of points for high-value, upcoming redemptions

While you usually see affiliate bloggers advocate buying large numbers of points speculatively when loyalty programs offer the highest bonuses on purchased points (bringing down the cost per point), I have exactly the opposite view.

If you find yourself with an upcoming, high-value redemption, and don't have the time to manufacture the required points, then go ahead and buy them. Paying "too much" per point, if it drastically brings down your total out-of-pocket cost, makes perfect sense: the goal isn't to pay as little as possible per point, it's to spend as little money as possible on the trips you actually want to take!

But the money you spend speculatively buying miles for redemptions you don't actually have planned could almost invariably be better spent building a credit card and manufacturing spend strategy that generates the trips you want to take at far lower out-of-pocket expense.

Travel hacking without spend

While I write a lot about strategies for using manufactured spend to get pay for travel at deep discounts, I know that many of my readers find manufacturing spend to be distasteful, time-consuming, or impossible (I know because you never hesitate to tell me in the comments section).

So at a reader's suggestion, I want to share some thoughts on travel hacking without manufacturing spend, and indeed without the requirement to spend any money on credit cards at all (besides annual membership fees).

Annual benefits

There is a not-unreasonable intuition that in the absence of manufactured spend, which properly focuses on high earning rates, bonus categories, and valuable points, annual recurring benefits of credit cards would become more important in developing a travel hacking strategy.

For airlines, those benefits include things like American Express Delta Platinum and Reserve companion tickets, the Chase Southwest Airlines 3,000 (Plus) or 6,000 (Premier) annual bonus points, the Bank of America Alaska Airlines annual $99 companion ticket and, for those grandfathered in, the 10,000 bonus anniversary miles offered by the Barclaycard American Airlines Aviator card.

Many hotel co-branded credit cards offer anniversary nights: the Chase IHG credit card gives a free night worldwide, Chase's Hyatt credit card gives a Category 1-4 night annually, and US Bank's Club Carlson credit cards give 40,000 (Premier Rewards and Business Rewards) or 25,000 (Rewards) bonus Gold Points on each account anniversary.

If our intuition that recurring benefits are more valuable without manufactured spend is true, then one credit card strategy might be to carry:

• both a personal and small business version of both the Platinum and Reserve cards ($1290 in annual fees);
• a Chase Southwest Premier card ($99 annual fee);
• a Chase IHG credit card ($49 annual fee);
• a Chase Hyatt credit card ($75 annual fee);
• and one or more US Bank Club Carlson Premier Rewards and Business Rewards credit cards ($75 and $60 annual fee, respectively). Note that US Bank doesn't impose a hard cap on the number of its products you're allowed to have.

For $1,648 in annual fees per year, you could thus buy 4 domestic companion tickets on Delta (subject to fare bucket constraints), 6,000 Southwest Rapid Rewards points (worth perhaps $100), a free night at any IHG Rewards property, a free night at a Category 1-4 Hyatt property, and 80,000 Club Carlson Gold Points (good for at least one free night at any Club Carlson property).

I'm deliberately leaving out the Citi Hilton Reserve free weekend night benefit and the Club Carlson free domestic night benefit, since they each require $10,000 in annual spend.

Without price compression, free nights are an expensive trap

In a world with plentiful manufactured spend, travelers experience a phenomenon I've dubbed "price compression:" nights and flights that have large differences in retail price have much smaller or nonexistent out-of-pocket differences in cost to the travel hacker.

For example, a free Category 4 Hyatt night from the Hyatt credit card can be combined with Hyatt Gold Passport points transferred from a Chase Ink Plus, where you've manufactured cheap Ultimate Rewards points.

Without manufactured spend, and the price compression it produces, you'll be paying the retail price of your stays out of pocket, less any rebates earned by booking through shopping portals and online travel agencies. Unless you typically spend only a single night in each city you visit, travel solo, or have a very understanding travel companion, this can become very expensive very quickly.

To see why, take a stylized example of a city with a Category 4 Hyatt that costs $125 per night and a nearby Holiday Inn that costs $100 per night. On a four-night stay, you'll pay $375 out of pocket for the Hyatt, and $400 out of pocket for the Holiday Inn: a savings of $25.

So far, so good. But remember you paid a $75 annual fee for your Hyatt credit card! If you only compared the value of your night to your annual fee, you'd mistakenly believe you saved $50. By taking into account how the "free" night benefit affects your behavior, you'll realize the truth: the Hyatt credit card in fact cost you $50.

Of course if you are a solo traveler or have an understanding travel companion, moving hotels in the middle of your stay may not be a big deal. If you have a lot of one-night stays, you may also save real money. But that's an individual assessment you should take seriously before paying hundreds, let alone thousands, of dollars in annual fees.

You'll find a similar principle applies to the airline credit cards: if Delta flights are consistently more expensive, or less convenient, than competitor flights you may find yourself over-paying just to take advantage of your companion ticket. Southwest Rapid Rewards points, likewise, are only valuable if you're able to earn enough of them to redeem them for the flights you want.

None of which is to say these are bad credit cards or bad benefits. They just need to approached critically if you're to have any hope of using them to save money on travel.

Everyday spend

My standard response when asked which credit card people should use for their actual purchases is that actual purchases should represent a rounding error in your miles and points balances. Without manufactured spend, of course, that rounding error may turn into the bulk of your balances!

In my view, there are only a few credit cards that have any measurable advantage over paying for your purchases with cash.

• Discover it Miles. If you can sign up for a Discover it Miles card that doubles your cash back after your first year, you'll earn 3% cash back on all purchases and pay no annual fee or foreign transaction fees. You can boost your earning even more by redeeming your cash back for certain gift cards — you can currently redeem $90 in cash back for $100 in Hyatt gift cards, turning a Discover it Miles card into a 3.33% cash back card. Canceling and applying for a new card each year may let you continue on an ongoing basis.
• BankAmericard Travel Rewards. If you have $100,000 on deposit with Bank of America, Merrill Lynch, or MerrillEdge, you'll earn 2.625% cash back on all purchases, and pay no annual fee or foreign transaction fee.
• American Express Amex EveryDay Preferred. If you make 30 purchases per month, this card earns 1.5 Membership Rewards points per dollar spent everywhere, 3 points at gas stations and 4.5 points at grocery stores. Because of its $95 annual fee, you should only consider this card if you spend a lot of money each year. If you do, you might find the ability to transfer points to Delta, Air Canada, British Airways, or American Express's other partners more valuable than cash back.

Travel hacks that don't require spend

Of course, credit cards are just one tiny corner of the travel hacking universe. It's just a corner that's become unusually prominent because there's so much money to be made selling credit cards to the unwitting.

So here's a brief list of other travel hacking techniques, no credit card required:

• Mistake fares and attack fares. Among the original travel hacks are simply waiting for an airline to slip up and forget to add a zero to an airfare, or to "attack" a rival's hub by cutting fares far below normal. By following Twitter accounts like @TheFlightDeal and @EscapeATX, and bookmarking sites like Flyertalk's mileage run forum, you can handily see whenever those hard workers find a new error fare or attack fare. Julian the Devil's Advocate wrote up a terrific guide to getting text alerts for a particular city or airline that interests you.
• Stacking portal and online travel agency rewards. In the bleak world without manufactured spend, you've got to make every dollar count. By clicking through shopping portals to online travel agencies before making hotel reservations, you can earn portal rewards plus the rewards offered by whichever travel agency you select.
• Best rate guarantees. I've written before that I find best rate guarantees to typically be a waste of time, and I don't think it makes a whole lot of sense to make booking decisions around best rate guarantees. But once you've identified a hotel and rate, it's common sense to check if there's a lower rate elsewhere that's eligible for a best rate guarantee claim.
• Hidden city ticketing. It's not for everyone, and it won't work for every itinerary, but it's possible to save a lot of money searching for flights using Skiplagged, a service that takes care of the hard work of finding cheaper "hidden city" tickets. Note that you usually will not be able to check bags when flying domestically on such tickets.
• Corporate rates and other discounts. There are a number of lists circulating of corporate rate codes, which can bring down the cost of chain hotel stays significantly. Likewise, if you find out there's a convention, conference, or athletic event in a city being held during your visit, you may be able to piggyback on their lower negotiated rates.
• Aggressively book and rebook. Autoslash makes it easy to monitor rental car rates so you can rebook your car if and when the price goes down. By booking cancellable hotel reservations early on, periodically checking for price changes lets you lock in any price declines while being protected from any price increases.

None of those techniques will save you as much as manufacturing spend will, which is why I write a lot about the benefits of manufacturing spend. But the universe of travel hacking, like the universe itself, is vast and growing, so it pays to keep an open mind and to keep exploring!

In defense of mileage running for top-tier elites

I have the rather unfashionable view that mileage runs on Delta, American, and United are more likely to be worthwhile for top-tier elites now that those programs are revenue-based than they were under the previous, distance-based regime.

Mileage running is definitely not for everyone: it takes time, and unless you actually like flying, it's not particularly fun. You may end up paying for transportation, parking, and meals, so it's far from free besides whatever you pay for your actual airfare. But there are still reasons you might consider it.

So here's why I don't think mileage running is dead.

Revenue-based programs give a fixed rebate on airfare dollars

Top-tier elites in all three of the legacy carrier frequent flyer programs earn 11 redeemable miles per dollar spent on airfare on their own flights.

That fixed rebate in miles produces a rebate in value that's likewise fixed, although not by the carrier, but rather by your own planned pattern of future redemptions. If you redeem miles for domestic economy flights, you might get 1.5 cents per mile in value. For international business class flights, you might get 2.5 cents per mile. And on partner first class flights, you might get 4 or more cents per mile in value.

In an extreme case, you could imagine a top-tier elite consistently getting 9.09 cents or more per mile in value, in which case their entire airfare expenditure would be rebated back to them in the form of a future high-cost flight: buy one get one free.

Most travelers, however, don't consistently get 9.09 cents per mile in value, and so even top-tier elites don't earn enough miles to completely rebate their out-of-pocket expenses, if they're paying cash.

Using fixed-value points to fund mileage runs

The above is a strong argument against paying for mileage runs with cash: the difference between the amount paid and the rebate earned in miles is too large to justify wasting a day or more in flight, unless you're very close to top-tier elite status and have no opportunity to qualify otherwise (and plan to fly enough the following year to take advantage of your top-tier benefits).

But what if you're able to fund mileage runs with cheaply-acquired fixed-value points? How would that change the calculus?

Rather than look at the out-of-pocket cost of manufactured spend, as I did last Thursday, let's look at four fixed-value currencies and compare a straightforward cash redemption value of 1 cent each to the redemption value when spent on a mileage run.

• Chase Ultimate Rewards are worth 1.25 cents in paid airfare, earning 13.75 redeemable miles for a top tier elite. To break even compared to a one-cent cash redemption, you'd need to get 7.27 cents in value per redeemable mile.
• Citi ThankYou points in a Citi Prestige account are worth 1.33 cents when redeemed on Delta or United, or 1.6 cents when redeemed on American. Compared to a one-cent cash redemption (for example, for a student loan or mortgage rebate check), you'd need to get 6.8 cents per SkyMile or MileagePlus mile, or 5.7 cents per AAdvantage mile to break even.
• American Express Membership Rewards points in a Business Platinum accounts are worth 1.43 cents each when redeemed for flights on your selected airline, requiring a value of 6.4 cents per redeemable mile to break even compared to a cash redemption.
• US Bank Flexpoints are worth 2 cents each when redeemed for paid airfare, requiring 4.55 cents per redeemable mile in value compared to redeeming the same Flexpoints for cash at one cent each.

Obviously your out-of-pocket cost for those fixed-value points currencies will be lower than one cent each. However, once you've earned them, the question is how you'll redeem them, and at that point they're worth roughly one cent each in cash (slightly less in the case of Membership Rewards points, which have to be liquidated with American Express gift cards).

Why swap fixed-value points and time for redeemable miles and elite status?

My beloved readers sometimes accuse me of making arguments just to be difficult. My defense is that I don't give advice — my only advice is that people should do whatever they want to do!

But top-tier elites who have access to cheap fixed-value points and who redeem their Delta, United, and American miles for long-haul premium cabin awards may do well to consider mileage running to requalify for top-tier status for a few reasons:

• Upgrade priority. Smaller domestic first class cabins and more pressure to sell first class seats for cash means top-tier elite status is the only reliable way to secure free first class upgrades on routes with a lot of elite volume. If you fly on paid economy fares regularly, that may matter to you.
• Award flexibility. I haven't had high-tier elite status for a few years now, but when I was a Delta Platinum Medallion I used free award changes and redeposits constantly to make slight alterations to my itineraries or to recoup miles when cheaper awards became available. On my last trip to Europe business class award availability opened up at the last minute, which would have made our trip much more comfortable, but I couldn't bring myself to pay United's extortionate award change fees — top-tier elite status would have made the free change a no-brainer.
• Top-tier elite status benefits. United Global Premier Upgrades, American systemwide upgrades, and Delta's Platinum and Diamond Choice Benefits have concrete value if you're able to take advantage of them. Not everyone will, so like everything in the world of travel hacking, they're not worth pursuing if you don't have a plan or intention to use them. But for many people, being able to upgrade paid economy tickets may provide even greater value and flexibility than booking award tickets in premium cabins.

If redeemable miles are based on revenue, only distance matters

One important thing to note is that unlike the previous era of mileage running, the number of cents paid per mile flown is totally irrelevant to this calculation: if you've accurately calculated that you'll receive the total price of your airfare back in redeemable miles, your only goal should be to maximize the distance flown on any given mileage run, in order to secure top-tier elite status while spending as little out-of-pocket time as possible.

Long, multi-leg, inconvenient flight routings are ideal regardless of whether they're more or less expensive than direct flights.

Conclusion

Most people rightly think that mileage running, if it ever made sense, only did so in the distant past. However, for top-tier elites with access to cheap fixed-value points, mileage running in revenue-based legacy mileage programs may still make sense, if they plan to redeem their miles for long-haul premium cabin awards, if they have a realistic expectation that they will take full advantage of top-tier elite benefits, and if they have the time to do so.

That may be a smaller subset of the travel hacking population than it was when the legacy carriers offered miles based on distance, but it's not nobody.

About Hyatt suite upgrade awards

Hyatt Diamond enthusiasts know that there are three kinds of room reservations at Hyatt properties: paid reservations, Free Nights, and Points + Cash reservations.

Points + Cash reservations are popular for two key reasons: they earn elite-qualifying stay credits and, like paid reservations, they're eligible for Diamond suite upgrade awards.

During my stay at the Park Hyatt Vienna, I got the best of both worlds.

Hyatt is thrilled to combine reservations into a single stay

There are few trivialities more annoying than having a room key deactivated in the middle of a hotel stay because you made two or more reservations as award availability or points became available.

As Joe Cheung pointed out during my most recent appearance on the Saverocity Observation Deck podcast, Hyatt is able to combine reservations so that multiple reservations are treated as a single stay, which is a terrific convenience given how some of their properties throttle Points + Cash award availability, potentially making you piece together a stay gradually over many months.

How I applied a suite upgrade award to two award nights

Soon after being matched to Hyatt Diamond status, I booked three Points + Cash nights at the Park Hyatt Vienna, and applied one of my four Diamond suite upgrade awards.

Then, since I don't chase signup bonuses and was well below the supposed "5/24 rule" for new Chase credit card approvals, I applied for a Chase Hyatt credit card and was approved, which quickly earned me two free nights at any Hyatt in the world, as long as award space was available.

I bided my time (i.e. set a Hotel Hustle award alert) and finally award availability opened up for my second and third nights in Vienna. I placed a quick call to Hyatt and had my Points + Cash award nights replaced with free credit card nights.

That made me wonder: would I have to change rooms after my first night, since that was the only night I had the right to apply a suite upgrade award to?

Of course not.

Can you apply suite upgrade awards to award nights? Maybe!

If you can replicate my experience, the advantages are obvious: you can earn a stay credit based on your first, Points + Cash night, but save cash by redeeming only points for all your subsequent nights.

So to review, here was my experience applying a suite upgrade award to my Park Hyatt Vienna stay:

• book a Points + Cash stay;
• apply a suite upgrade award to the entire stay;
• replace all but the first night with award nights;
• enjoy my suite for the entire stay.

Since my first night was also my 5th paid night during the current Stay More Play More promotion, I even got to take home 5,000 bonus Hyatt Gold Passport points for my trouble.

What did I miss: JetBlue edition

I got back last night from New York, the final leg of a ridiculously circuitous trip through Hungary, Slovakia, Austria, Bavaria, and Berlin.

It was fun!

After managing to go all last week without a blog post (subscribers did get a newsletter out of me) this week I'll be easing back into the old blogging routine with some reflections on what I've learned. I mostly can't stand trip reports, so don't expect one! But it's an ironclad rule that travel hacking involves a lot of things that aren't immediately obvious, or spelled out in terms and conditions, and I've always sought to help readers understand how those things really work.

But first! Let's talk about JetBlue.

JetBlue is running a generous points match from Virgin America

You've certainly seen a rundown of this deal other blogs, but to refresh your memory, JetBlue is offering a tiered points match to Virgin America Elevate members with points in their Elevate account who book a new roundtrip JetBlue ticket after registering and before August 31, 2016.

To break that down even more clearly, the terms state:

• you will receive bonus TrueBlue points up to 300% of your current Virgin America Elevate balance (30,000 TrueBlue points for a balance of 10,001 Elevate points);
• if you submit a screenshot of your Virgin America Elevate dashboard and your TrueBlue account number by July 4, 2016;
• and book and fly a new roundtrip JetBlue reservation after having your request approved but before August 31, 2016.

Should you go for it?

If you are planning to book a roundtrip JetBlue flight between now and August 31, 2016, and have a screenshot of your Virgin America account dashboard with more than 500 miles in it, you should definitely register for this promotion!

There's nothing glamorous about picking up nickels in front of steamrollers, but there's always a nickel in it for you.

Should you hack it?

On the other hand, a lot of bloggers are recommending "maximizing" the value of the promotion by transferring 40,001 Starwood Preferred Guest Starpoints to Virgin America (yielding 50,001 total Elevate points), then requesting the match, and then flying the cheapest JetBlue roundtrip flight they can find out of nearby airports.

As you might have guessed, I have a couple of problems with this.

First, a transfer of 40,001 Starpoints does not maximize the value of the promotion; a transfer of 10,001 Starpoints does. That's because at the 10,001-Elevate-point level JetBlue adds 30,000 TrueBlue points to your account, while at the 50,001-point level they add just 75,000 TrueBlue points. If 45,000 TrueBlue points are worth $630, you'll get just 2.1 cents per Starpoints for the additional 30,000 Starpoints transferred, which is below their imputed redemption value of 2.105 cents! That is, in short, not a promotion at all.

Second, even at the most valuable 10,001-point level, you're required to make and fly a new roundtrip JetBlue reservation by August 31, 2016. Maybe you have access to cheap JetBlue flights. Maybe you don't place a high value on your time. But you need to have access to cheap JetBlue flights and not place a high value on your time to justify booking a mileage run in order to trigger the promotion.

Finally, let me gently remind my readers that the point of travel hacking is not to accumulate as many points as possible in as many programs as possible, but rather to pay for the trips you actually want to take, while spending as little money as possible. If you are able to successfully redeem 30,000 TrueBlue points for $450 worth of travel, and you're able to successfully redeem 10,000 Virgin America Elevate points for $220 worth of travel, and you manage to trigger the roundtrip flight requirement on a trip you were planning to take anyway, then congratulations: you'll have earned $670 worth of travel for $210 worth of imputed redemption value (assuming you manufactured all 10,000 Starpoints at an otherwise-unbonused merchant). That's a pretty good discount of 68.7%.

But to secure that pretty good discount, you have to build your redemptions around maximizing the value of your TrueBlue and Elevate points, even if another points currency would have offered you better connections, availability, or out-of-pocket cost.

Conclusion

There are a lot of people served by JetBlue and/or Virgin America, and a disproportionate number of travel hackers no doubt live in the large urban centers those airlines serve. If the stars align such that this promotion scores you huge, valuable points balances at little or no out of pocket cost, rest assured that I'm here cheering you on.

But if you've never flown either JetBlue or Virgin America and you find a credit card huckster is trying to get you excited about JetBlue because they've temporarily raised affiliate payouts to accompany this promotion, feel free to come back and re-read this post for a slightly different perspective.

Related reading:
On the value of not chasing deals
The JetBlue Points Match Is Worth It And You Should Do It
JetBlue Points Match Promotion: Is It Worth It?
 

Paid flights are not a strategy for earning redeemable miles

This week as the blogosphere erupted like a school of piranhas around the bloody calf of the American AAdvantage devaluation, I quipped on Twitter that "'Where to credit your paid flights' should be of tertiary interest to travel hackers. Interesting question, but not very lucrative."

Let's break that down.

Primary interest: how much are you paying?

Due to the phenomenon I call price compression, how much you pay for your flights has only a glancing connection to the retail price.

• If you manufacture spend on a US Bank Flexperks Travel Rewards card, you'll enjoy a discount of 62-75% off of retail, depending on where in a redemption band your flight falls.
• A Citi Prestige credit card gives a 37.5% discount off ThankYou point redemptions on paid American flights, which increases to 79% if you're able to manufacture spend with a Citi ThankYou Premier card at gas stations.

Paying less for your travel may not be your only interest, but it should be a primary interest for the simple reason that the less you pay for your travel, the more of it you can afford!

Secondary interest: what are you getting?

Of course there's a difference between being frugal and being cheap: what you get for your money matters too, or we'd all be flying in the back of Spirit Airlines planes with our knees pressed against our chests (once — never again!).

In my experience, Delta Airlines is the domestic carrier most likely to get me where I'm going on time and in comfort. That doesn't mean I'll go out of my way to book Delta flights, but once price compression levels the differences in fares, Delta is far and away my preferred carrier.

Tertiary interest: where should you credit?

The reason I call the decision of where to credit paid flights of tertiary interest is that it's difficult to imagine a situation in which it would outweigh the factors of cost and convenience. In other words, there's no reason a travel hacker should pay more for less convenient flights that happen to earn a particular rewards currency.

There are two reasons for this. First, redeemable miles are cheap. When you can manufacture spend to earn exactly the number of redeemable miles you need, whenever you need them, miles earned through paid flights should be a rounding error in your overall rewards portfolio. Admittedly, it's a rounding error in your favor, and I'm not suggesting flying without a frequent flyer number attached at all. But if you have an award redemption in mind, it would be strange to count on your revenue flights to earn the needed miles.

Second, I'm happy to admit that elite status is valuable. But under most circumstances, it's unpredictably valuable. Here's a real-life example: I'm currently booked in economy on a United award reservation to Europe. I've been occasionally checking for business class award availability, and yesterday it suddenly appeared. For 40,000 more United miles, I can move to a premium cabin on a flight over 10 hours. Good deal! But as a MileagePlus general member, United also wants to charge a $100 change fee for each ticket. As a Premier Silver, I'd pay $50 per ticket, a Premier Gold would pay $25, and Premier Platinum and 1K members would pay nothing. That's real value: not some kind of squishy mental accounting, but cold hard cash that would be left in my pocket due to elite status.

The same example shows the problem with counting on elite status to generate big savings: to get predictable value from elite status you would need to know in advance which reservations, booked with which miles, are likely to require changes. If you spread your award reservations around between Alaska, Delta, American, and United, let alone the other transfer partners of your flexible rewards currencies, you will be left paying change fees (or keeping suboptimal reservations) on all the ones you don't earn elite status on.

Conclusion

When elite status is the natural byproduct of your travel hacking practice, it's a fine way to stretch the value of your rewards. As a checked-bag enthusiast, I enjoy my Delta SkyMiles Silver Medallion status, which saves me a few hundred dollars a year in checked bag fees.

But the less a person flies, the less value they receive from elite benefits. The problem with chasing elite status is not that there's anything wrong with elite status, but that it's expensive and inconvenient. If you live in a city where two or more airlines battle each other constantly on price and convenience, then it makes sense to pick one with which to run up your elite-qualifying tally.

Otherwise, chasing elite status and redeemable miles is playing the airlines' game, not ours.

Excited about Ultimate Rewards transfers to Flying Blue? Let's talk about it

In case you've been staying in a buddhist travel hacker monastery for the last week, the big news to come out of the loyalty world this week was the unannounced addition of Flying Blue, the loyalty program of Air France and KLM, as a transfer partner for "flexible" Chase Ultimate Rewards points.

This post is going to come across as a bit cynical, so in the hopes of heading off sniping in the comments, let me first explain why this is phenomenal news.

Korean Airlines is not a great Skyteam program

While it's true that Ultimate Rewards already had transfer partners in oneworld (British Airways), Star Alliance (United), and Skyteam (Korean Airlines), Korean Airlines SKYPASS is a notoriously complex program to work with, with the gaping drawback that you can only book award tickets for relatives — and if you take them at their word, that even excludes stepchildren!

By contrast, Flying Blue has an online award search engine that allows you to book award tickets for anyone you like (as long as you don't get caught in one of their fraud traps).

Ultimate Rewards is a vibrant and growing program

Any expansion of a loyalty program to include new ways to earn or redeem points is an objective positive. If I never book a Flying Blue award ticket, I'll still be glad to know that it's someone's job at Chase to hunt down loyalty programs, negotiate transfer agreements, and implement the technology required to expand our Ultimate Rewards redemption options. To me that's a sign that the program still has a degree of vibrancy and is not yet ready to stagnate, like American Express Membership Rewards.

With that out of the way, let's talk about Flying Blue redemptions.

Delta makes life as hard as possible for their partners

To understand how difficult it is to redeem Flying Blue miles on Delta, it's important to understand how Delta makes award space available to its own members and to partners.

Delta dynamically prices awards for its own members. It's no longer rare to find cases where the constituent flights on a connecting award ticket are more or less expensive than the complete itinerary. Here's an itinerary connecting in Minneapolis that's more expensive than either of the constituent flights on their own:

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The constituent flights price at 12,500 SkyMiles:

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And 11,500 SkyMiles:

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Unrelated to SkyMiles pricing for their own members, Delta makes some seats on some flights available to partners for awards.

Let's see those same three searches using Alaska Airlines Mileage Plan. Here's the first leg (it's 25,000 instead of 12,500 because I'm searching for one-way flights):

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Here's the second leg:

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Here's the catch: Delta doesn't make that complete itinerary available to partners, which we can only surmise is because it prices higher at the 15,500-mile level. Here are the only options Alaska shows when doing a one-way search between BWI and MSO on September 19:

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Fortunately, Alaska allows you to construct your own Delta routing as a "Multi-city" flight search. By feeding Alaska the flights I know have award space (because I checked earlier), I can easily produce my desired award:

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It's important to understand exactly what's happening here: Delta is making its cheapest award space available to its own members and to partners on individual segments, but charging its own members more on the complete itinerary and not making that complete itinerary available to partners. The reason the Alaska workaround works is that Alaska is willing to search for each leg individually in a multi-city search, and then price the entire itinerary according to its own routing rules, which make it a valid one-way itinerary.

Flying Blue does not allow multi-city awards to be booked online

This is what Flying Blue's multi-city search engine looks like:

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Flying Blue doesn't let you construct Delta itineraries online because your final destination must be your originating airport.

I assume you could construct this itinerary over the phone

Good luck with that.

Conclusion: how I'll be using Flying Blue

So Flying Blue isn't the key to unlimited cheap flights on Delta. That doesn't mean it's useless! On the contrary, it's going to be one of my first stops along with Alaska, British Airways, and United, each time I start planning a new trip. The search engine makes it easy to see at a glance whether there are award seats available, and if there are, they will usually be among the cheapest, not because of their great award chart or their low fuel surcharges (on the contrary, they have a fairly standard award chart and pass along fuel surcharges to customers), but because the miles themselves are so cheap when transferred from a Chase Ultimate Rewards account.

To make the same point another way, a redemption of 12,500 SkyMiles manufactured with a Delta Platinum American Express card costs $188 in opportunity cost ($8,929 manufactured on a 2.105% cash back card), while a 12,500-mile Flying Blue redemption costs just $125 in Ultimate Rewards points: a 33.5% discount.

I don't expect those redemption to be very frequent — but I do expect to make them each and every time the opportunity presents itself!

Membership Rewards points aren't worthless, but they are worth less

If you follow the miles and points bloggers who churn out a constant flood of material on signup bonuses, you already know that earlier this week there was an untargeted offer available for the American Express Platinum card which earned 100,000 Membership Rewards points after spending $3,000 in 3 months of card membership.

After the first day or so of unceasing posts about the offer I responded uncharitably on Twitter.

Since the blogosphere is going to keep trying to shove these offers down your throat, let's do a quick recap of why chasing offers like this is unlikely to be a great use of your travel hacking time and money.

Statement credits are worth (much) less than cash

When I wrote a post of this name, reader MJC helpfully suggested in the comments:

"The Amex Platinum 'airline credit' is also as good as cash, given that you can book a Delta ticket without attaching a Skymiles number to it, then pay for Economy Plus after the reservation is made, then cancel the reservation within 24 hours, and Amex Platinum will always refund your Economy Plus fees even though Delta refunds them as well"

Perfectly true — someone could do this over and over again until they'd redeemed their entire $200 airline fee statement credit each calendar year.

But, and I don't want to sound patronizing, are you going to do this? I ask because a lot of people get into travel hacking thinking they're one type of person, only to discover they are, in fact, the type of person who pays $95 annual fees on the Chase Sapphire Preferred year after year out of habit, fear, and/or greed.

Most importantly, the people trying to convince you to sign up for American Express Platinum cards aren't asking you whether you're the type of person who's actually willing to jump through all those hoops. And if they won't, I'm sure as hell going to.

Global Entry statement credits are worth $100 (to almost no one)

If you don't have Global Entry, and were just about to apply and pay for it, then you are fully justified in treating the American Express Platinum $100 Global Entry statement credit at its face value of $100.

But if you already have Global Entry and are planning to use your statement credit on a friend, or family member, or even sell it online, then it would not make sense to value it at $100. After all, you weren't willing to pay someone else's Global Entry fee if you had to pay out of pocket. That's what we call a "revealed" preference for cash over others' participation in Global Entry.

Membership Rewards points are valuable if you redeem them. Will you?

Finally we've come to the crux of the problem: are 100,000 Membership Rewards points worth a lot, or a little?

And my answer is an emphatic: maybe.

I was speaking yesterday to a subscriber who had already spent $50,000 on his American Express Delta Platinum card, and didn't have any good remaining options for earning large numbers of Delta SkyMiles easily (at least until next calendar year). He applied for the 100,000 Membership Rewards point offer because he knows how valuable SkyMiles are for flying from our local airport, and I congratulated him. That's as good as money in the bank.

Likewise, if you are planning a high-value Hilton vacation, being able to transfer 100,000 Membership Rewards points to 150,000 Hilton HHonors points and pay just $450 in fees (less whatever statement credits you're able to wrangle) is an easy one-off source of points.

But if you're signing up because, as one person responded on Twitter, "Singapore?" then you need to take a nice long walk around the block and decide when, exactly, you are planning to go to Singapore. Next month? The next six months? The next 10 years?

This matters because the longer your time horizon is, the more likely you are to be able to accumulate the needed points in better, cheaper ways than with a one-off Platinum signup bonus. A single Chase Ink Plus lets you earn up to 250,000 Singapore miles per year by manufacturing spend at office supply stores. But even more importantly, the Chase Ink Plus and Ultimate Rewards points in general are more valuable than Membership Rewards points, so you're unlikely to need to do an emergency transfer of points to Singapore (or any other program) in order to avoid paying a second (or third, or fourth) annual fee on the Platinum card.

I'm not angry, I'm just disappointed

Longtime readers know that I do not find arguments centered on "personal responsibility" particularly convincing. But there is one kind of responsibility that you are literally the only person who can take: knowing what kind of person you are.

Bloggers I consider irresponsible promote travel hacking as a way to experience the lifestyles of the rich and famous, as if all we can ask for out of life is a glass of champagne at 35,000 feet. If that is, indeed, all you can ask for out of life, then there's a flight to Singapore with your name written all over it.

But if you never felt the slightest longing to see the storied Singapore food courts before this 100,000 Membership Rewards point offer came around, it would be very strange indeed for such a promotion to instill such a longing in you at this late date.

Is that you, or is that the steady drumbeat of bloggers trying to sell you more and more expensive credit cards?

The chief business of the American people is business

Cool Calvin Coolidge, in a 1925 address to the American Society of Newspaper Editors, told the assembly:

"After all, the chief business of the American people is business. They are profoundly concerned with producing, buying, selling, investing and prospering in the world. I am strongly of opinion that the great majority of people will always find these are moving impulses of our life."

And yet whenever I discuss the superiority of the Chase Ink Plus small business credit card over the worthless Chase Sapphire Preferred, readers invariably remark how difficult it is to get the Chase Ink Plus "without a genuine business."

Normally I keep my business ideas close to my vest, but out of an overabundance of altruism, I've decided to share three easy ways to turn you from an employee into a proud self-employed American.

The gig economy makes business easy and fun

If you're a driver for the ride-sharing services Uber or Lyft, you've got a lot of expenses that you should be keeping strictly separate from your personal expenses: gas, vehicle maintenance, and car insurance for starters. Likewise if you do work through an app like TaskRabbit, you'll need to carefully separate any expenses you incur while on the job in order to correctly report your self-employment income come tax time.

Note that this is true no matter how much gig work you actually perform.

You don't have to be good at reselling to make it a business

Reselling is of course a term of art in the travel hacking community for folks earning miles, points and cash by buying up goods they think they'll be able to sell to others at a small, medium, or large markup, while pocketing the rewards currency of their choice.

But you don't need to a reselling savant to turn it into a business. Have you heard of random crap? Well before you start reselling random crap, you'll want to open a small business credit card to keep your random crap reselling business expenses separate from your personal expenses.

We are all content creators now

If you have something to say, you're definitely going to need your own website. That's going to come with all kind of expenses: hosting fees, maintenance fees and image licensing fees, just to name a few. And those are all fees you're definitely going to want to charge to a small business credit card.

Conclusion: unsuccessful businesspeople are businesspeople too

The Chase Ink Plus small business credit card exists so people will carry it. Those people are businesspeople. But if Chase limited card membership to people with longstanding and successful businesses, they wouldn't have very many cardholders at all, would they?

Your job, therefore, is to be the kind of small businessperson that gives Chase a reason to say "yes" to you and your small business.

What do I think about the 100,000 Hilton HHonors Surpass offer?

Yesterday blog subscriber JH wrote to ask me, "what's your opinion on the current 100k Hilton card offer?" JH is referring to the current offer of 100,000 Hilton HHonors points after spending $3,000 within three months on the Hilton HHonors Surpass American Express. The offer is available until May 4, 2016. Incidentally, I don't include personal referral links here on the blog, but you can find the relevant offer on my "Support the Site!" page.

Since I wrote JH a detailed answer, I thought it may be useful to share and expand on it here.

Higher signup bonuses are better than lower signup bonuses

In general, if you've been going through life vaguely considering signing up for a Hilton HHonors Surpass American Express, but have been waiting to sign up until the bonus goes up to an all-time high, well, you're in luck: the bonus is at an all-time high.

If that's you, this is the time to sign up.

What do you call 100,000 Hilton HHonors points?

A good start.

The fact is, 100,000 HHonors points is not an interesting number of HHonors points. The key characteristic of the Hilton HHonors program is that award nights at desirable properties are extremely expensive (up to 95,000 points per night), but Hilton HHonors points are easy to earn at bonused grocery store and gas station merchants using the Hilton HHonors Surpass American Express.

Two approaches to an unusually high signup bonus

There are two ways to approach a 100,000 Hilton HHonors point signup bonus.

If you are already planning an expensive vacation to a Hilton HHonors property, signing up for the Hilton HHonors Surpass American Express with a 100,000 points signup bonus will get you a minimum of one night free at that property (and breakfast, if you don't already have Hilton HHonors Gold elite status). That could mean saving real money compared to your cash rate!

Alternatively, you can use this unusually high signup bonus as an impulse towards earning large numbers of Hilton HHonors points on an ongoing basis in bonused spending categories.

But most readers shouldn't care about signup bonus fluctuations

The third approach, and the one I personally take, is to not pay any attention to the barrage of blog posts and twitter feeds dedicated to identifying the highest and shortest-lived signup bonuses.

The difference between a 50,000 and 100,000 Hilton HHonors Surpass American Express signup bonus is $8,333 in grocery store or gas station spend. If it wasn't worth spending that much on the card before the 100,000 signup bonus came around, what makes you think it is now?

These increased signup bonuses occupy an outsized portion of the attention of the travel hacking blogosphere, and the best thing you can do for yourself is to simply ignore them.