Maximizing Gobank and Bluebird

Over the weekend I reported on Gobank (part 1, part 2), the new banking product ​from Greendot.  Today I'll discuss what this means for your miles and points earning strategy.

Points-Earning Debit Loads

Just like the Bluebird, Gobank can be loaded at any Walmart register with a PIN-based debit card.  If you have a debit card that earns airline miles on PIN-based transactions, this is an easy way to generate spending on the card.  

Unfortunately, there aren't very many remaining debit products that earn rewards for PIN-based transactions.  One, the Bank of America Alaska Airlines debit card, earns 1 Alaska Airlines mile per $2 spent on the card.  However, the card is no longer being issued to new customers.  If you already have an Alaska Airlines debit card, this is a great way to earn valuable Alaska miles while paying your bills each month.

A second debit card product, the Suntrust Delta Skymiles debit card, earns 1 Delta Skymile per dollar spent on the card, including on PIN-based transactions.  While Suntrust representatives claim that Bluebird (and, similarly, Gobank) loads at Walmart won't earn Skymiles, there are lots of reports of success receiving miles for these transactions.

Since online Gobank debit loads are ​treated as signature purchases by the issuing bank, you can earn your usual rewards on signature purchases, for example 1% cash back using the PayPal debit MasterCard, a great way to unload PayPal My Cash cards, similar to the technique I described in this post.

Prepaid Debit Card Loads

A slightly more involved technique is to use reloadable PIN-based debit cards to load your Gobank account.  For example, as I reported on Saturday, I was able to load my Gobank account using a MyVanilla Debit card which I had loaded using Vanilla Reload Network cards I purchased at CVS using a rewards-earning credit card.  Similarly, you can load your Gobank account with a Nationwide Visa Buxx card you've loaded using a rewards-earning credit card.

If you dont have access to Vanilla Reload Network cards, or your local merchants won't allow you to use a credit card to purchase them, beginning this month another opportunity has become available: ​many, although still not all, prepaid gift cards sold at grocery stores, drug stores, and gas stations have begun to work as true PIN-based debit cards.  Since this is a rapidly developing situation, I strongly recommend you first buy a small-denomination gift card in order to see whether it can be used as a PIN-based debit card.  The fees can be somewhat higher than Vanilla Reload Network fees, but those fees can be offset if you're able to use a credit card that gives bonus points for that type of merchant.

Comparative Advantages of Gobank and Bluebird

If you're like me and have both a points-earning debit card and access to Vanilla Reload Network reload cards, then each month Bluebird posed a dilemma: every dollar of Vanilla Reloads I used to fund Bluebird was a dollar of points-earning debit load I couldn't do.  With the introduction of Gobank, that dilemma disappears: Bluebird can be funded directly with Vanilla Reloads, and Gobank can be funded with my points-earning debit card.

Meanwhile, instead of expensive money orders and cash advances, I can easily and cheaply ($0.50 per load) unload up to $2,500 per day from my MyVanilla Debit cards, which I've likewise loaded with ​Vanilla Reloads.

Gobank vs. Bluebird

[Updated 4/15/13: ​Since writing this post I have tested and confirmed that Gobank, unlike Bluebird, allows ACH pulls.  In other words, you don't need to initiate bill payments from Gobank, you can initiate the payment from your account with your bill payee.  However, Gobank account numbers are several digits longer than traditional checking account numbers, and some of my credit card companies were not able to accept the entire account number.  Nonetheless, this somewhat mitigates the shortcomings of Gobank's bill pay feature which I identified below.]

Yesterday I reported on the capabilities, fees, and limits of the new Gobank product from Greendot.  I compared it to the similar, groundbreaking Bluebird card from American Express.  Today I'll make that comparison in more detail, and in tomorrow's post I'll take a look at some of the opportunities created by this new product.

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• Direct Deposit: Both Gobank and Bluebird allow direct deposit of paychecks, and accept incoming ACH transfers from other banks and payment services like Paypal.
• Prepaid Reloads: Gobank is reloadable using Greendot Moneypaks, which can be purchased using cash at many drug and grocery stores.  Bluebird is reloadable using Vanilla Reload Networks prepaid reload cards, which can be purchased using rewards-earning credit cards at many, but far from all, drug stores, gas stations, and grocery stores.
• Walmart Register Reloads: Both Gobank and Bluebird can be reloaded at any Walmart register using cash or PIN-based debit cards.​  Gobank has a $2,500 daily reload limit, and it's unclear whether there is a monthly limit on these reloads.  Bluebird has a $1,000 daily limit and $5,000 monthly limit, which is shared with reloads done with Vanilla Reload Network cards.
• Online Debit Card Loads: both products allow $1,000 in monthly debit card loads online.  However, Bluebird charges $2 for online debit loads, with a daily $100 limit, while these loads are free using Gobank, with a daily load limit of $200.

Winner​: the two products are very evenly matched on the load side, with Bluebird having the advantage of accepting more flexible Vanilla Reload Network cards, while Gobank has higher daily Walmart load limits and free online deposits, which can save you trips to Walmart.  I call this a tie.

ATM Withdrawals

When it comes to ATM withdrawals, the two cards are very evenly matched since they both use the same third-party network of free MoneyPass ATMs.  However, Bluebird technically requires you to have a monthly direct deposit in order to use these ATMs for free, while Gobank doesn't have that requirement.​

Likewise, both products have a daily ATM withdrawal limit of $500, but Bluebird also imposes a monthly ATM withdrawal limit of $2,000, while Gobank doesn't have a published ATM withdrawal limit.

Winner: Gobank​ by a hair.

Bill Pay

One of the most obvious advantages of Bluebird over Gobank is that Bluebird's bill pay interface is so effective, while Gobank has a handsome but comparatively clunky bill pay tool.  Additionally, Bluebird allows multiple pay-to accounts per payee, while Gobank doesn't, a major limitation if you have multiple accounts with a single company: it essentially forces you to have a backup banking product with which you can pay your other accounts.​

Winner: Bluebird​

Fees

​Most users will never pay a fee for using either of these cards.  The exception is when using the cards abroad: Bluebird has no foreign transaction fee, while Gobank charges a 3% fee for foreign transactions (no matter what currency they're conducted in).  Since I use my Bluebird card as a safe alternative to carrying my credit and debit cards while traveling abroad, this is a major shortcoming of Gobank.

Winner: Bluebird​

Conclusion

As you can see, ​these products are very evenly matched.  Since Gobank is still in its beta testing stage, it's certainly possible that some of its problems, like foreign transaction fees and a clunky bill pay interface, will be fixed by the time the product is ready for open enrollment.  In the meantime, there's no reason not to have both, since the slightly different configuration of features allows them to be used in different ways to maximize your points and miles haul.  Come back tomorrow, when I'll discuss precisely that.​

Gobank's Launch Challenges Bluebird

For the last week I've been experimenting with ​the beta version of Gobank, the new simplified, smartphone-centered bank product from Green Dot, the same people who sell cash-only Moneypaks at retailers all over the country, which can be loaded to many prepaid products, as well as PayPal accounts.

​I'm happy to report that Gobank is a true competitor for American Express's Bluebird banking product.  Unsurprisingly, as a product in beta release, Gobank is still very poorly documented.  That's why I'm here to walk you through all the features I've explored so far.  There's a lot of information here, so read this post carefully, and if you want to know more about Gobank, post your questions in the comments section of this post and I'll do my best to answer.

Getting an Account

Since Gobank is still in beta, you first need to sign up to receive an invitation​.  After a few weeks of waiting I reached out to their extremely active social media team on Twitter @Gobank and asked if they could help.  A day later I was able to create an account (although strangely, I didn't receive my invitation until a day or so after that).  This seems to be the main function of their Twitter team, so don't hesitate to tweet them and ask for an invite once you've signed up to receive one.

The best way to get a Gobank account, however, is to have someone who already has an account send a nominal amount of money to your e-mail address.  The notification gives you the option of receiving the money in a newly ​set-up Gobank account.

Online Debit Card Loads

The first, most obvious feature of Gobank is the ability to load your account online using a debit card.​  In principle this is limited to $200 per day and $1,000 per month.  Based on my limited experience (5 successful loads) of unsuccessful and successful debit load attempts, I believe that either the Gobank servers are located on another continent in a different time zone, or the $200 limit is a rolling 24-hour limit.  My unsuccessful load attempts returned an error that only one load "per day" is possible, even if the first load was the previous calendar day.  Later in the evening I was then able to make the load successfully.  This needs to be explored further in order to use this service consistently.  My tentative recommendation is to either leave 2 or more days between loads, or wait 24 hours between loads.

According to some reports on Flyertalk​ the account can also be funded using credit cards, by ignoring the "debit" prompts throughout the process.  I personally won't be using this option, since I think the risk of having the charge classified as a cash advance outweighs any marginal benefit.  Having said that, this does appear to be a viable option for now.

ATM Withdrawals

One of the most exciting aspects of Gobank is their promise of free ATM usage at over 40,000 ATMs nationwide.  According to the Terms & Conditions,

You may only withdraw up to $500 from an ATM in a single day.

​Yesterday I visited one of the ATMs the Gobank iPhone app directed me to, and was able to withdraw $400 without any ATM fee or fee from Gobank.  I only withdrew $400 since that was the ATM's transaction limit, though I do suspect that Gobank would allow a withdrawal of up to $500.

This is in contrast to the Nationwide Visa Buxx card, which is a great product, but which charges $1 per ATM withdrawal (even at their "free" ATMs!), and limits ATM withdrawals to $200 per week (7-day rolling period).​

Walmart Rapid Reload Network Loads

Today I visited my local Walmart and loaded my Gobank account with about $800 from a MyVanilla Debit Visa card, one of the true pin-based debit cards I discussed in one of my very first posts.  I was not charged any fee by Gobank or Walmart (although I was charged a $0.50 transaction fee by MyVanilla, one of the reasons it's among the worst prepaid debit card products on the market).  Just like with Bluebird, you can load the card at any Walmart register, even at stores that don't have a dedicated MoneyCenter.

The ability to load cash from a PIN-based ​debit card is game-changing, since it allows you to avoid the high fees imposed on cash advances, money orders, or ATM withdrawals, and use the money to pay anyone in Gobank's bill pay database.  Be aware that some users have reported having their MyVanilla Debit cards closed by Incomm, the company that issues them, for using their accounts too aggressively.

Bill Pay

Bill pay is one area where Gobank falls short, so far, of American Express's Bluebird banking product.  Bluebird allows you to create multiple "pay to" accounts for a single payee: for example, if you have multiple Chase credit cards, or multiple bills through a single utility company (gas and electric), you can clearly separate each account number as a separate "bill pay" account, and even give each account a different nickname.  

As of now Gobank's bill pay feature doesn't allow multiple account numbers for a single payee.  While this may not seem like a big deal, for those of us with multiple credit accounts at one bank this radically decreases the usefulness of the bill pay feature, since only one account per payee can be paid from the Gobank account, and the others need to be paid through other banking products like Bluebird.

Person to Person Transfers

​Like Bluebird, Venmo, and Paypal, and as mentioned about Gobank allows you to send money to a person's e-mail address, cell phone number, or Facebook account, and fund the transaction with your available Gobank balance.  If the recipient doesn't have a Gobank account, they can deposit the money instantly into their Paypal account

Limits

• ATM withdrawals: $500 per day.  Self-explanatory.
• Deposits: "The most you can deposit to your account in any day in cash is $2,500."  I interpret this to refer to the sum of online debit card loads ($200 per day) and in-person Walmart Rapid Reload Networks loads ($2,500 per day).  So, if you load $200 online, you should only be able to load $2,300 at Walmart.
• Person to person transfers: ​$500 per day ($2,000 starting April 17, 2013), $5,000 per month.

Fees

• Monthly fee: $0.  Like the Bluebird, Gobank doesn't charge a monthly fee, although they do allow you to pay up to $9 per month voluntarily.
• Foreign transaction fee: 3%.  Unlike the Bluebird, which charges no foreign transaction fee, Gobank charges 3% on foreign transactions.  This is not a foreign currency fee, so it will still be charged even if the transaction is conducted in US currency.  Additionally, it applies to all transactions, not just purchases, so foreign ATM withdrawals are also assessed this fee.
• Out-of-network ATM withdrawals: $2.50.  Fortunately Gobank has a very large network of ATMs, and you can get cash back at most grocery stores, so you should be able to ​avoid this fee.

Summary

Gobank is an exciting new development in the rapidly changing market of alternatives to traditional brick-and-mortar banks, which has so far been dominated by American Express's well-designed and well-implemented Bluebird product.  Gobank has a lot of promise, and a lot depends on the continuing implementation of their product.  Over the next few days I'll be giving some more analysis and suggestions of ways to maximize the value proposition offered by Gobank, as well as a bit of a refresher on the granddaddy of these products, Bluebird.

Spring mileage promotions with Hilton HHonors

​Paid stays at Hilton can earn points and miles in one of three ways, called "My Way Earning Styles."  

In general, I prefer to select "Points & Points" as my earning style when staying at Hilton properties.  The reason is that while I value the 5 bonus Hilton HHonors points per dollar at about 2 cents, and I value one United MileagePlus or Delta Skymile at about 2 cents, I earn Skymiles through flying domestically on Delta and partner flights, and can transfer Chase Ultimate Rewards points to United, while earning Hilton HHonors points will become much harder after the changes to the earning structure of their co-branded American Express credit cards go into effect in May.

However, periodic promotions offered by Hilton may make it worth switching your earning preference for one or more stays.  For example, by changing my earning style to "Points & Fixed" Delta miles back in December, I was able to earn 250 valuable Medallion Qualification Miles on a short paid stay:

There are currently two potentially valuable ​promotions running through June 30 which might be worth changing over to a "Points & Miles" earning preference:

• ​Earn 1,000 United MileagePlus miles per stay of 2 or more nights, up to 5,000 miles (for 5 stays).  Register here, and don't forget to switch your earning preference to "Points & Variable Miles" or "Points & Fixed Miles" in your Hilton HHonors profile, and designate United as your preferred earning partner.
• Earn 2,013 Delta Skymiles per stay of 2 or more nights, up to 14,091 miles.  Register here, and the same caveats apply as above (set Delta as your preferred earning partner).

For most stays of 2 or more nights, taking advantage of one of these promotions will offer somewhat higher value than a "Points & Points" earning preference.  The one situation where these promotions are strictly superior is in the case of award stays.  There is no language in the terms and conditions of either promotion excluding award stays of 2 or more nights from eligibility for this promotion.  Therefore, if you are already making an award reservation, for which you will typically earn no HHonors points or airline partner points, you can earn 1,000 United miles or 2,013 Delta Skymiles for that same stay.

When is an annual fee worth paying?

A travel hacker who applies for 2-4 new credit cards every 3-6 months soon ends up having to decide whether their rewards-earning credit card is worth keeping after the first year.  Today I want to take a look at a variety of factors to take into consideration when deciding whether to keep a card once the annual fee comes due.

Every rewards card should be compared first and foremost to the no-annual-fee, flat 2% cash back Fidelity Investment Rewards American Express: no card is worth paying an annual fee for if you don't think you'll make back enough value to pass up 2% cash back.

1. Low/no annual fee

This may go without saying, but if a credit card doesn't have an annual fee, or has a sufficiently low annual fee, it can be worth keeping in order to lengthen the average age of your credit accounts, which is one of the factors that determines your credit score.  The obvious examples are the Chase Freedom, Discover It, Citi Dividend Platinum Select, and US Bank Cash+ (apply in-branch only), all of which have no annual fee and feature rotating quarterly 5% cash back categories.

A slightly more interesting case is that of low-annual-fee cards, like the US Bank Flexperks Travel Rewards Visa Signature card, which has a $49 annual fee.  If you aggressively take advantage of this card's bonus categories (2x on whichever of gas, groceries, or airfare you spend most on each month; 2x on cell phone expenses; 3x on charitable contributions), then you can earn back the $49 annual fee after just $1166-$1750 in purchases or charitable contributions, since you can redeem 3500 FlexPoints to pay your annual fee.

Other cards in this category include the no-annual fee American Express and Citibank Hilton HHonors co-branded credit cards.  There's no reason not to keep the cards and put an occasional purchase on them in order to help age your credit report, and earn Hilton points if you happen to be short for an upcoming redemption.

That brings us to the second case where a card might be worth keeping after the first cardmember year:

. Bonus categories

There are common purchase categories, like groceries, gas, and restaurants, where you may spend enough money each year to make up for the annual fee on a card which bonuses those categories.

he Chase Sapphire Preferred Visa and Mastercard offer double flexible Ultimate Rewards points on restaurant and travel spending (but not gasoline!), and come with a $95 annual fee.  If you value Ultimate Rewards points at a conservative 1.5 cents each, then you'll need to spend $9,500 in bonused categories each year in order to make back the $95 annual fee and the 2% cash back you've foregone.  Why?  Because the first $3,167 you spend in bonus categories will earn you 6,333 Ultimate Rewards points, which you value at $95, enough the cover the annual fee.  However, to break even, you also need to make back the $63.34 you would have earned using a no-annual-fee 2% cash back card, which will take you another $6,334 in bonused spending (since you're earning one "extra" cent in value per dollar of bonused spending).  In other words, $9,500 in bonused spending is worth $285, minus a $95 annual fee, while $9,500 spent on a flat 2% cash back card is worth $190.  

If you value flexible Ultimate Rewards points at a more realistic 2 cents each (for example, for redemptions with United Airlines and Hyatt), then you'll need just $2,375 in bonused spending to make back the annual fee, and then another $2,375 in order to break even (since in this case you're earning 2 "extra" cents per dollar of bonused spending).  Everything you spend in bonus categories after that $4,750 is pure profit.

3. Annual benefits

Some cards are worth keeping for benefits you receive either every calendar year or every year when you pay your annual fee:

• merican Express Delta Platinum ($150 annual fee) and Reserve ($450).  These premium Delta co-branded cards offer a free annual companion ticket, good for domestic travel, economy in the case of the Platinum card and first class in the case of the Reserve card.  Although there are some limitations on the fare classes you can redeem these tickets for, this is still an easy way to make back most or all of your annual fee: you buy one ticket, and you get to bring a companion along, paying only nominal taxes and fees on the second ticket.
• Additionally, the American Express Delta Reserve card includes a Delta Skyclub membership: if you pay for a Skyclub membership each year (for example, if you aren't a Delta Diamond Medallion), you're strictly better off paying the Reserve card's annual fee and getting a free companion ticket as well.

• US Bank's Club Carlson ewards ($50 annual fee), Premier Rewards ($75) and Business ($60).  The Rewards card offers a 25,000 Club Carlson point bonus each year, while the Premier Rewards and Business cards offer 40,000 bonus points per year.  Since these cards also give you the last night free on all award redemptions of 2 or more nights, keeping these cards after the first year is a no-brainer: cardholders can redeem 50,000 points for two(!) award nights at any Club Carlson property in the world.

4. Bonuses for high yearly spending

Annual spending bonuses are one of the trickiest areas to evaluate objectively.  The following cards offer annual spending bonuses which may make an annual fee worth paying:

• American Express Delta Platinum.  10,000 redeemable miles and 10,000 MQM after each of $25,000 and $50,000 are spent on the card each year.
• American Express Delta Reserve.  15,000 redeemable and 15,000 MQM after each of $30,000 and $60,000 are spent on the card each year.
• Chase United MileagePlus Explorer (although check here to see if you qualify for a better offer).  10,000 redeemable miles after $25,000 in spending on the card each year.

or each of these cards, the annual fee is more than made up for by the bonus miles scored at each card's annual spending threshold, as long as you have a high-value redemption planned for those miles.

5. Cards that aren't worth keeping

Above I've outlined some suggestions for when a card is worth keeping.  Now we can take a look at a few cards whose rewards are just not rewarding enough to justify the annual fee.

• American Express Premier Rewards Gold ($175 annual fee).  While this card occasionally has signup bonuses that are high enough to justify applying for the card, it doesn't provide enough value added in any of the above categories to justify paying the annual fee.  First, the annual fee is twice that of comparable cards (Chase Sapphire Preferred).  Second, while the card earns triple flexible Membership Rewards points on airfare purchases, the Sapphire Preferred can ALSO earn up to 4x flexible Ultimate Rewards points on airfare, while saving you $80 per year (see an upcoming post here on the blog).  Third, the card has no annual benefits that make it worth keeping year after year.  And finally, while the 15,000 bonus Membership Rewards points are certainly worth earning the first year you have the card, they barely cover the value of the annual fee.  No matter how highly you value Membership Rewards points, it's just too difficult to squeeze value out of the annual fee, year after year.

Conclusion

I hope this brief discussion clarifies some of the issues involved in deciding whether to keep a card once its annual membership fee is due.  The most important thing to remember is that the goal of this game is not to break even; it's to win.

Chase Ultimate Rewards adds Virgin Atlantic as transfer partner

Today's big news in the world of rewards programs is the addition of Virgin Atlantic's Flying Club program as a transfer partner of Chase's flexible Ultimate Rewards points, earned with the Chase Sapphire Preferred, Ink Bold, and Ink Plus credit cards.

Virgin Atlantic Flying Club points have two obvious uses: transfers to HIlton HHonors and upgrades on aid fares.

Hilton HHonors Transfers

Virgin Atlantic points can be transferred to Hilton HHonors at a 1 : 2 ratio, which can be useful for topping up your HIlton account before you make an award redemption (the transfer to Virgin Atlantic is instantaneous; the transfer to Hilton can take up to 30 days).  However, his is not the most lucrative way to earn Hilton HHonors points, since unbonused spending on the basic co-branded Hilton American Express card earns 3 HHonors points per dollar.  It's still a great option for those without the American Express or with more Ultimate Rewards points than they can use, and increases the flexibility of Ultimate Rewards points even more.

Upgrades on Paid Virgin Atlantic Fares

If your employer buys you flexible Economy (Y, B, R, L, U, or M fare classes) or remium (W or S fare classes) on Virgin Atlantic, then you can use a very reasonable number of Flying Club miles to upgrade one or two cabins, although you also have to pay the difference in taxes and fees, which are upwards of $200 per leg.  This could certainly be worth doing for the experience of Virgin Atlantic's "Upper" class cabin, as shown in this fairly entertaining promotional video.

Travel hacking: making money or saving money?

One question that travel hackers spend a lot of time thinking about is hether, at the end of the day, it's best to think of our hobby as making us money or instead as a way to save money.  The question I prefer to ask is, how much of the travel I now do for free would I pay money for if I weren't the Free-quent Flyer ("saving" money on travel I would do anyway) and how much additional travel do I do just because I know I can do it for free ("making" money in the form of more and better vacations)?

If you go to see family in New York City for a week each year, you might expect to spend $400 on a plane ticket, plus $200 per night to stay at a 3-star hotel in Manhattan, for a total of $1,800.  If instead you applied for the BarclayCard Arrival World Mastercard or the US Bank Flexperks Travel Rewards Visa, after earning the signup bonus you'd be able to pay for your $400 airline ticket using those cards' fixed-value rewards currencies.  Instead of spending $1,400 for a hotel room, you could apply for the Club Carlson Premier Rewards Visa and after manufacturing $43,000 in spending (at a cost of $344, if you can manufacture spending at .78 cents per dollar), you'd have 300,000 Club Carlson points, enough for a 7-night stay at the Radisson Martinique on Broadway (since as a cardholder your last night is free).  Now you're paying just $344 for a trip you normally spend $1,800 on, saving $1,456.

On the other hand, let's say you don't normally take a long annual vacation, but now that you've read my book and spent some time here on the website, you've decided you'd like to take a week-long vacation in New York.  Using the same techniques as above, you can buy an $1,800 vacation for $344.  In this case, you haven't saved any money; indeed you've spent $344 that you wouldn't have spent if you had you decided to stay at home that week instead!  On the other hand, at a cost of $344, you've bought a vacation worth $1,800.  In this case, it makes more sense to say that you've "made" $1,456 in value.

Of course, those are two extreme examples, and most real-life situations fall somewhere in between.  For example, I take at least one trip to Prague in the Czech Republic each summer, and I can usually find a ticket in economy class on Delta for $1,200—$1,400.  An economy class award ticket costs 60,000 Delta Skymiles, which I can manufacture at a cost of $400 using the American Express Delta Platinum (you only need to manufacture $50,000 in spending since you'll receive 10,000 bonus miles at the $25,000 and $50,000 spend levels, for a total of 70,000 Skymiles after $50,000 in spending).  Now, that's obviously a great deal: a $1,200 plane ticket for $400, a savings of $800!  However, for 40,000 more Skymiles, you can fly to Prague in business class instead of economy.  You'll spend $240 more if you exclusively manufacture the spending at .78 cents per dollar, so you'll be saving less money versus a paid economy class ticket.  On the other hand, you're flying in business class instead of economy, meaning a more spacious, more comfortable seat; better food and service; complimentary alcoholic beverages; and so on.  This situation is more ambiguous than the two extreme examples above, and require a judgment call.  Since I value the benefits of business class at more than $240, it's worth it for me to pay the additional Skymiles, while it may not be worth it for you, if you prefer to instead spend that money on some delicious Czech beer once you arrive!

Maximizing fixed-value travel rewards points

Today I'd like to take a closer look at the value proposition offered by some of the cards discussed in Chapter 2 of my book: fixed-value travel rewards cards.  When looking at any card, you should ask three questions: is it worth signing up for; is it worth making purchases with; and is it worth renewing when the annual fee is due?

Signup Bonuses

The first question is easy to answer: since the annual fee is waived for all these cards, you can apply for any of them when the signup bonus is high enough to justify the hard credit inquiry, and you aren't applying for any other cards from the same issuer in your current application cycle.

Here are the current signup bonuses available for these cards: 

• Capital One Venture Rewards.  10,000 Venture miles after $1,000 in spending within 3 months.  Earn 2 points per dollar, redeem them at 1 cent each for statement credits against travel purchases made with the card.  No partial redemptions (you must have enough points to pay for the entire travel purchase).  $59 annual fee, waived the first year.
• US Bank Flexperks Travel Rewards Visa Signature.  17,500 FlexPoints after $2,500 in purchases within the first 5 months.  Earn 1 point per dollar, 2 points on airfare, groceries, or communications expenses, 3 points per dollar for transactions coded as charity.  Redeem points for travel redemptions using the Flexperks travel booking tool at up to 2 cents per point, in defined tiers.  No partial redemptions.  $49 annual fee, waived the first year.
• Citi ThankYou Premier.  25,000 ThankYou points after spending $2,000 in the first 3 months.  Earn 1 point per dollar, 1.2 points at supermarkets, gas stations, commuter transportation and parking.  Redeem points at 1.33 cents each for travel purchases using the ThankYou Rewards booking tool, with partial redemptions allowed.  $125 annual fee, waived the first year.
• BarclayCard Arrival World Mastercard .  40,000 points after $1,000 in spending within 90 days.  Earn 2 points per dollar spent on the card.  Redeem points for statement credits against travel purchases made on the card at 1 cent per point, and receive a 10% rebate after each redemption.  No partial redemptions.  $89 annual fee, waived the first year.
• Priceline Rewards Visa Signature.   5,000 points after first purchase.  Earn 2 points per dollar spent on the card, and 5 points per dollar spent on Name Your Own Price reservations.  Redeem points at 1 cent each for statement credits against purchases made on the card, with no partial redemptions.

As you can see, the Priceline Rewards card has a signup bonus worth $50, the Venture Rewards card's signup bonus is worth about $100, the Flexperks card $260-$350, ThankYou Premier $332, and Arrival World $444.  In general, it's never worth signing up for the Venture Rewards card except during the periodic promotion when they offer a signup bonus of twice the number of miles you earned on a competing card during the previous calendar year, which can be quite lucrative.

Earning Points

All these cards, except the Venture Rewards and Priceline cards, are worth applying for and spending enough on to earn the signup bonus.  But are any of them worth making purchases on after you've spent enough to trigger the signup bonus?  The answer is usually no, since the Fidelity Investment Rewards American Express card offers 2% cash back on all purchases and the Fidelity Visa Signature card offers 1.5% cash back on the first $15,000 in spending each calendar year, and 2% thereafter, while also having no annual fee. The chart below illustrates the value proposition offered by spending on each of these cards:

View fullsize

This chart makes clear that the standout value among these cards is the US Bank Flexperks Travel card, which offers up to 6% back on charitable spending (which earns 3 Flexpoints per dollar), but also up to 4% back on airfare, gas, or groceries (whichever you spend most on each billing cycle), plus telecommunications expenses, when you redeem your points using the Flexperks booking tool.  

Redeeming Points

This brings us to the most fundamental difference between these cards: the method of redemption.  As you saw above, fixed-value rewards points are divided into two groups: those that require you to make prospective bookings using your points through their travel tools (ThankYou, Flexperks) and those that allow you to redeem your points for a statement credit against a purchase you've already made with the card.

When you have a choice, you should redeem for statement credits against paid hotel stays, and use rewards booking tools for airline reservations.  This is for the simple reason that unlike airline frequent flyer programs, hotel loyalty programs generally only award points for paid reservations made through the hotel's own website.  By booking a paid hotel reservation through the hotel's website, then redeeming your points for a statement credit against the cost of that reservation, you'll earn hotel loyalty points for your reservation, while you won't do so when you make a hotel reservation through a loyalty program's award booking tool.  This increases the value of your fixed-value points by allowing you to double-dip.

Summary

For everyday purchases, only the US Bank Flexperks Travel card can compete with the Fidelity Rewards 1.5% (Visa) and 2% (American Express) cash back cards.  However, several of the other cards discussed here can offer great value when you take advantage of their lucrative signup bonuses.  Just don't be suckered into paying an annual fee for a card that isn't worth keeping!

Hilton HHonors devaluation now in effect

​As I reported last month, the Hilton HHonors program underwent a serious devaluation on March 28.  I've updated the website with an updated award redemption chart and point density analysis.  In summary, redemptions for top-tier hotels have become about twice as difficult to earn through spending on paid Hilton hotel stays.  While still easier to earn than Starwood top-tier redemptions, the difference in point density between the two programs' top-tier points redemptions has definitely narrowed, to Hilton's disadvantage.

One side benefit of the Hilton devaluation is that their introduction of seasonal pricing at some properties has caused them to develop an extremely useful tool for viewing year-round pricing at their properties ​worldwide.  The Points Pricing tool allows to you search by city and view all the Hilton properties in that city, and each properties standard room award price by month.  This makes it easy to see how the award pricing at different properties varies throughout the year.  Here a search for Portland, Oregon, shows how some properties jump in price between June and July:

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Alaska one-way partner awards are here!

As I reported a few weeks ago, Alaska irlines phone agents have been telling people that they're preparing to offer one-way award redemptions for half the cost of round-trip redemptions (instead of paying the round-trip cost for one-way redemptions, as you do using Delta Skymiles).

Well, I'm excited to announce that this change is now being rolled out for two of Alaska's domestic airline partners, American and Delta.  Tickets on both partners can be searched and booked online.  As of now one-way Delta awards are not yet pricing out at half the cost of round-trip awards, and it's ot clear whether this will be changed in the future.  However, they can now be combined with legs on Alaska or American to create much more flexible round-trip award redemptions than in the past, since previously it was impossible to combine partners on a single award.  This meant that if any of your legs was on Delta, Delta was the only partner you could use.  This was a serious drawback because of Delta's extremely limited award availability.  Now that airline partners can be combined on a single award, however, you can take advantage of what Delta award availability does exist in order to book trips combining flights on Alaska, American, and Delta.

Leveraging the Alaska Award Chart

Check out the Alaska award chart to see how many miles are required for various award redemptions.  While it's broadly similar to the award charts of other traditional airline loyalty programs, there are several nuances in the Alaska award chart which offer either better or worse value than redeeming partner miles on their own flights.  The best example of this is Business class flights from North America to Europe on Delta, which only cost 90,000 Alaska miles.  The same flights on the same Delta aircraft cost 100,000 Skymiles (although taxes and fees can be slightly ($20-$30) higher on Alaska).

Earning Alaska Airlines Miles

You can earn Alaska Airlines Mileage Plan miles by crediting paid flights flown on heir partner airlines to Alaska, as discussed in Chapter 4 of the book.  This is also a great way to earn elite status, if you don't have enough paid flights on either Delta or American to earn elite status in either of those programs.

There are also two credit cards which allow you to earn Mileage Plan miles:

• Bank of America Alaska Airlines Visa Signature.  Currently a standard offer of 25,000 Alaska miles upon account approval (no minimum spending requirement).  $75 annual fee, not waived the first year.  The card also offers an annual $99 coach class companion ticket valid only on flights operated by Alaska Airlines.  Earn 1 mile per dollar spent on the card, and 3 miles per dollar spent on Alaska Airlines tickets.
• Starwood Preferred Guest American Express Personal and Business cards.  Both cards offer 25,000 Starpoints after spending $5,000 in the first 6 months of card membership, and have a $65 annual fee, waived the first year of card membership.  As I discussed last month, You can transfer 20,000 Starpoints into Alaska miles and receive a bonus of 5,000 Starpoints, meaning you can earn 1.25 Alaska miles per dollar spent on this card, and making this signup bonus worth 30,000 Alaska miles, better than Alaska's own co-branded credit card!  Since the annual fee is waived the first year and the signup bonus is higher, this is a strictly better offer than the Alaska Airlines Visa Signature, although there's no reason you can't apply for both cards as part of the same churn.