Best rate guarantees: a waste of time?

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One of the biggest challenges I had when writing my eBook, The Free-quent Flyer's Manifesto, was the question of how to deal with hotel loyalty programs. I don't think it's any secret that "frequent guest" programs are far more complicated than they need to be, and the reason is obvious: by increasing the amount of time required to understand all the nuances of their loyalty program, each chain hopes to discourage defections to their competitors – once you've mastered Hilton's program, you'd be crazy to throw all that work away and stay at a Marriott! As a consequence, it can be difficult even to figure out how many points you'll earn on any given stay.

My favorite example of this is Hilton's "earning style," where you can select "Points and Points," "Points and Variable Miles" or "Points and Fixed Miles." In order to maximize your points haul, you would have to decide before every stay  which earning preference will reap the most valuable rewards.

Over on my hotel rewards page, you can see how I've attempted to cut through the noise and provide a simple calculation of what I call "point density:" the rate at which you earn hotel points, taking into account your elite status and whether or not you charge your room to a co-branded credit card, and the rate at which you redeem those points. Unfortunately, even this isn't 100% complete since I take into account only "base" points, not the bonus points you earn if you select, for example, "Points and Points" as your Hilton "earning style." If you haven't checked it out yet, take a look and tell me what you think.

All of this brings me to one of the most frustrating elements of the hotel booking experience: the best rate guarantee. When you book a room through an online travel agency, the property kicks back a big chunk of your rate to the agency. That's how sites like Expedia pay for their own loyalty programs: they share part of their commission with their users. It's also why reservations made through online travel agencies typically don't earn hotel rewards points.  The third leg of this stool is the "best rate guarantee," whereby the hotels promise to match a lower rate you find through other booking channels.

Just for reference, here's a rundown of the best rate guarantee programs of the chains I follow: 

It sounds great, right? You pay the lower rate, get an additional discount or, at IHG properties, a free night, plus earn elite status credit and hotel rewards. Well, I've filed a lot of best rate guarantee claims over the years, and as far as I'm concerned, it's a waste of time.

Don't get me wrong: the people who are good at finding eligible rates are VERY good at it. You can find almost 2,000 successful reports from Marriott alone in this thread over at Flyertalk. But these guarantees cost the hotel chains real money, so it's not surprising that they are experts at finding ways not to honor them.

Here's an example from just the other week: as I mentioned in another context, I was planning on spending my last night in Prague at the Courtyard Marriott Prague Airport across the street from the terminal. Instead of redeeming points, I thought it would be interesting to see if I could get a better rate using Marriott's Look No Further guarantee. I started on Kayak, and immediately found a much lower rate, one that's actually still available as I write this.

As you can see, a site I'd never heard of, Olotels, is offering a rate that's much lower than that offered through Marriott directly, or the other agencies which use Marriott's inventory.

Obviously, Marriott didn't honor my Look No Further claim, or I wouldn't be writing this blog post! Here's the relevant part of their response:

According to the Terms and Conditions of Marriott's Look No Further(SM) Best Rate Guarantee, the guarantee does not apply to pre-paid rates that involve a voucher (including electronic vouchers) for a hotel stay outside of the United States and Canada.  According to our review, we have determined that a travel voucher will be issued for the accommodations with which your comparison was made.

This is all perfectly correct from the point of view of the Look No Further program, but it doesn't change the crux of the matter: whether it's a "travel voucher" or not, a lower room rate is actually available : It's not like you'll show up to the hotel and they'll make you sleep on the roof.

So that's why I've more or less given up on best rate guarantees. I book so few paid stays, preferring to use my points either for free award nights or even "cash and points" redemptions, that staying up-to-date on the terms and conditions of all the relevant programs is a project that is just not worth my time.

For a different perspective, Mommy Points wrote up a number of techniques that she has been able to use successfully for best rate guarantee claims with Club Carlson.

Do this now: Starwood's fall promotion

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Registration for Starwood Preferred Guest's Fall promotion is now open.  You'll earn double Starpoints on paid stays between September 1 and December 15, 2013, and 2,500 Starpoints for every 5 paid nights during the same period, up to 10,000 Starpoints after staying 20 paid nights (award nights and Cash & Point nights do not count). Unfortunately, once again there's a long list of non-participating properties.

Register now, before you forget. 

Has affiliate blogging gotten worse?

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I might just be jet-lagged, sleep-deprived and cranky, but I've grown increasingly annoyed over the last few weeks by many of the travel hacking blogs I subscribe to, and I'm curious whether the situation has actually gotten worse, or whether I'm just becoming more sensitive in my old age. One thing is clear: affiliate link-driven blogging is bad blogging.

Back on the 11th I saw this headline on Gary's View from the Wing:  You Really Don't Have an American Express Bluebird Yet? Bluebird is pretty much the simplest product out there: you load it, either with Vanilla Reload Network reload cards or a miles-earning debit card (like Bank of America's Alaska Airlines debit card). Then you unload it using an ATM, bill pay, or a bank transfer. So why was Gary posting 776 words (yes, I checked) on this product, and why was he using that obnoxious tone? Of course: they've started offering referral credit. How do I know? Because on the 13th and 14th, the Points Guy posted his referral links as well.

For me, the worst offender lately has been Frugal Travel Guy's August countdown of what they're calling the Top 30 Credit Cards. Take a look at that page and you'll see what I'm talking about. While they claim to have "scrutinized and judged" on the basis of "initial signup bonus, category payouts, card perks, and point values," they don't actually provide any of that analysis. Instead, you get a one paragraph summary and an affiliate link. That's bad blogging.

For me, good blogging means first and foremost ideas, analysis, and experiences.

Ideas

For a long time, Frequent Miler was the thought leader in this space. He sought to understand the nuances of various products and find new ways to exploit them. Not all of his experiments are successful, but his site is a great resource for outside-the-box thinking. Examples from my own blog are my PayPal Debit MasterCard hack and possible uses of Plink.

The problem with affiliate-driven blogging is that if you're getting referral credit for everyone who signs up for the America Express Hilton HHonors Surpass card, you can't tell people,

You should be using this card to buy $500 gift cards at grocery stores, earning 3036 HHonors points at a cost of $5.95, or 0.195 cents each, then unloading the gift cards for free onto a Bluebird or Gobank card at Walmart.

In other words, you can't say the one thing that people getting the card actually need to know. 

Analysis

Analysis means understanding that not every card is right for everyone, and taking seriously a framework that helps people decide which cards are right for them. This is where Frugal Travel Guy's list of top 30 credit cards becomes really egregious. Take a look at the top 5:

1. Ink Bold Business Charge Card
2. Ink Plus Business Card
3. Chase Sapphire Preferred Card
4. Starwood Preferred Guest Business Card
5. Starwood Preferred Guest Credit Card from American Express

No one could seriously suggest that a single person should carry all three of the "top 3" cards: the Ink Bold and Ink Plus have the same category bonuses, so unless you actually spend $100,000 at office supply stores every year, you'd be crazy to carry both. 98% of hackers would be better off with either a no-annual-fee Chase Sapphire and one of Ink Bold or Ink Plus, or a Chase Sapphire Preferred and a no-annual-fee Ink Cash.

With my point density charts, I try to provide actionable analysis on which hotel programs you should be using to maximize the rebate value of the points you earn on paid stays.

Experiences

This is the area where travel hacking blogs may have degraded the least. A good blog should provide actual experiences with each technique so readers know what works, what doesn't, and what to expect when they try the same techniques.

Jason Steele got a lot of people into trouble over at the Points Guy by recommending AccountNow for manufactured spend. Of course it turned out that AccountNow was a disaster waiting to happen, and that left a lot of people with a lot of money tied up in what was essentially an elaborate scam. It should be no surprise that AccountNow offers referral credit.

Most travel hacking bloggers post trip reports, and while I normally skip them, I'm glad they're there as a resource I can go back to and check later, when planning my own trips.

On my blog, I share the actual nuts and bolts of various travel hacking tools, which too often are shrouded in mystery and superstition. For example, to the best of my knowledge I'm still the only person to report that US Bank doesn't verify the "teen" identity information provided when registering for a Visa Buxx card. That's actionable information that can help you manufacture an additional $2,000 per month in spend at a cost of $10. Likewise, I reported that American Express doesn't bonus spending at 7-11 store locations, even ones that are recorded as gas stations.

Conclusion

This post isn't intended to be a self-satisfied claim that I'm doing everything right and all other bloggers are doing everything wrong (even if it feels that way sometimes). 

Instead, I'm genuinely curious: have travel hacking blogs recently become even more focused on generating credit card signups, and less focused on providing ideas, analysis, and experiences, or have I just become more sensitive to these ridiculous posts that serve as vehicles for affiliate links?

 

My PayPal shutdown story

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One of my favorite travel hacking techniques, and one which I've written about repeatedly in the past, relies on a unique feature of the online payments processor PayPal: it's the only product I'm aware of that allows you to earn miles and points when loading your account (by purchasing a PayPal Cash reload card using a rewards-earning credit card), and also when unloading your account (by earning 1% cash back using a PayPal Debit MasterCard).

Now that there are broad reports of Vanilla Reload Network reload cards no longer being sold via credit card at 7-11 store locations, this technique has become even more valuable. By purchasing PayPal Cash cards at a 7-11 location that posts as bonused "gas station" spend, you can earn double Chase Ultimate Rewards points or US Bank Flexpoints, then earn an additional 1% cash back by using a PayPal Debit MasterCard to load a Visa Buxx card or simply purchase Vanilla Reload Network reload cards at a CVS or other unbonused store location that continues to allow them to be sold. Using this simple technique, I've earned $189 in cash back just since March – and that's in addition to the miles and points I earn from purchasing the PayPal Cash cards.

Unfortunately, the single most important ingredient in this technique is an open PayPal account...and I don't have one anymore. That's right, last week I was completely shut down by PayPal. I want to share some of the things I was doing that did or could have contributed to my shutdown, so you can avoid repeating my mistakes.

  1. I used PayPal overseas. This is a weird one, since PayPal has users all over the world. However, this is the very first thing I did that raised red flags with PayPal. They closely track where you typically log into your account from, and if they detect an unusual login they will freeze your account until you prove your identity.
  2. I logged into PayPal using Tor. Tor is a web service that allows you to surf the web anonymously.  Since Tor routes your internet traffic all over the world, it's a turbo-charged corollary of the point above: it looks very suspicious to PayPal.
  3. I had multiple PayPal accounts.  I've had a PayPal business account for years, since I use to do a fair amount of buying and selling on Ebay. Towards the beginning of this year, when I started using PayPal to travel hack, I decided to see if I could open a new account, which would allow me to double my rolling 30-day PayPal Cash load limit from $4,000 to $8,000. I was able to do so easily, and I "verified" the account by adding a bank account and providing my Social Security number. Once I'd done that, I loaded PayPal Cash cards to my new, personal account and send the money to my business account to be liquidated.
  4. I got greedy.  Sometimes, I didn't bother spending the money I'd loaded to my account through PayPal Cash – instead, I withdrew it immediately to my bank account. Now, there's a minor distinction here: I always spent the money I loaded directly to my business account; however when I sent money over from my new, personal account I assumed that the money had been cleared into the system so it was safe for immediate withdrawal.

In retrospect these are all obvious mistakes with simple solutions: when overseas, use a VPN so you always appear to be located in the US; never login to PayPal while using Tor; stick to one PayPal account; and always spend your PayPal Cash loads – never withdraw them directly to your bank account.

Daraius at Million Mile Secrets had a somewhat similar experience, which you can read about here, and the Points Guy got a warning from PayPal after loading and unloading funds using Green Dot MoneyPaks.

I still think this is a great strategy to bring down your cost per dollar of manufactured spend. However, it does take some care to make sure you don't trip over any of PayPal's red lines when it come to fraud and money laundering controls.

Delta devalued their award chart, Alaska didn't

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I consider Alaska Airlines Mileage Plan miles to be among the most valuable rewards currencies, since in addition to Alaska's own flights, they can be redeemed on a range of airline partners, including both American Airlines and Delta Airlines. Alaska has access to American's MileSAAver award space and "low-level" Delta award space. You can view all their airline partners here.

Alaska miles just got even more valuable.  On August 14th, Delta announced they were increasing the cost of low-level BusinessElite awards from the United States to Europe, Australia, Asia, South Africa and South America for awards beginning on or after June 1, 2014. Here, Frequent Miler shares his thoughts on "tricking" the devaluation by adding a domestic one-way before June 1.

Alaska's award chart hasn't changed.  It's long been a curious fact about the Mileage Plan program that BusinessElite redemptions on Delta to Europe cost just 90,000 Mileage Plan miles, while the same ticket would cost 100,000 Skymiles. Here's a chart showing the Delta devaluation and the cost of the same flights in Alaska miles:

Here's a sample flight I found on Delta from Los Angeles to Sydney on June 5, 2014, after the devaluation has gone into effect. You can see the price is showing correctly at 160,000 Skymiles:

And here's the same flight, on the same day, but booked using Alaska Mileage Plan miles. It costs just 105,000 Mileage Plan miles:

What does this mean for you? I've long said that if you don't have or want elite status on Delta or American, you should be crediting your flights on those airlines to Alaska. That's now even more true if you plan on using your miles for premium international awards. Additionally, if your paid flights are primarily international, so you don't have to worry about missing domestic upgrades, you may want to think about getting elite status with Alaska, which comes with 50% and 100% bonus miles on paid flights, free checked bags, and other benefits.

Besides flying, you can earn unlimited Alaska miles using the Bank of America Alaska Airlines debit card (I do this – it works), or the Bank of America Alaska Airlines Visa Signature.

Additionally, Mileage Plan is a transfer partner of Starwood Preferred Guest, and you'll earn 25% bonus miles when you transfer 20,000, 40,000, or 60,00 Starpoints into your Mileage Plan account. The Starwood Preferred Guest American Express card currently has a signup bonus of 30,000 Starpoints.

US Bank Kiva loans aren't a hack: they're policy

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It's long been an open secret in the travel hacking community that US Bank credit cards which have "charity" as a bonus category also bonus loans make through the micro-lending site Kiva.org. This is one of the first hacks that I took advantage of, since if you're using a US Bank Flexperks Travel Rewards credit card you can earn 3% cash back or 6% back in paid airfare by making Kiva loans. Many of those loans have repayment periods between 4 and 6 months, so if you have cash that you're willing to tie up in these loans, you can earn a decent annualized return, even if you're just redeeming your Flexpoints for cash back, instead of airline tickets.

While I mention this trick in my ebook, The Free-quent Flyer's Manifesto, it's never been entirely clear whether this was an oversight on US Bank's part, a side-effect of their payments being processed by PayPal, or was in fact an intentional policy decision.

I've discovered that rather than an oversight, bonused Kiva loans are an advertised benefit of at least one US Bank credit card program.

As I mentioned last month in my post on product changes, I recently changed one of my two US Bank Flexperks Travel Rewards cards into a US Bank Cash+ card (apply in-branch only, or ask for a product change), which has no annual fee and offers 5% cash back on up to $2,000 in spending per quarter in two categories of your choosing (and 2% cash back in your choice of gas stations, grocery stores, or drug stores).

My US Bank online rewards center has now updated with the Cash+ rewards program, so I decided to check out what the 5% categories were this quarter. "Charity" was among them, as it has been since the card first became available. Unlike with the Flexperks Travel Rewards card, however, the Cash+ rewards center provides a lengthy list of organizations where spending is eligible for 5% cash back. And sure enough, there in the second column is Kiva: 

 

Of course, the fact that US Bank advertises Kiva as one eligible merchant that's eligible for the "Charity" category bonus right now doesn't mean they will do so forever, or even that "Charity" will return as a bonus category next quarter, since these categories are regularly changed and reshuffled. However, at this point I think this is the low-hanging fruit of the travel hacking game, and I do strongly recommend at least thinking about getting in on the Charity category bonus with one of those two cards.

Things to keep in mind

Of course, this isn't a risk-free play and it isn't for everybody. Here are some things to keep in mind:

  1. Kiva loans are not risk-free. I've never had a default among the approximately $10,000 I've loaned through Kiva, but it certainly happens. The average default rate appears to be about 0.98%.
  2. You can minimize, but not eliminate, the risk of default by selecting loans that are offered by partners with a 0% delinquency and default rate, and that have a risk rating of 5 out of 5 stars. This will reduce the number of loans you can consider, however.
  3. Kiva deposits and withdrawals are processed by PayPal . That means you need an open PayPal account in order to make Kiva loans. This may not be an option if you've have your accounts closed or if you've been blacklisted by PayPal (more on this coming soon).
  4. Deposits to Kiva are instantaneous, withdrawals take 1-2 weeks. This has actually improved considerably: formerly withdrawals could take up to a month to process.
  5. US Bank credit cards can be difficult to be approved for. I've always received immediate online approval, but that's not the case for everybody, especially those with lots of recent credit inquiries. One of my most popular blog posts was my step-by-step instructions for one trick you can use to increase your chances of approval for US Bank cards.

Let me know in the comments if you have any more questions on making Kiva loans with US Bank credit cards. 

The best hacks I've missed out on

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By now, a lot of people have heard about classic hacks of days gone by, like ordering presidential dollar coins from the US Mint with a rewards-earning credit card, depositing the coins unopened into a bank account, and then paying off the credit card balance. What's often forgotten is the incredible amount of work that went into carrying out this hack: lots of trips to the post office or Mail Boxes Etc.; negotiating with bank managers to accept your coins for deposit; and of course hauling a bunch of heavy coins around town. All to manufacture non-bonused credit card spend! It might have been good work, but it was still work, and it wasn't free.

On the other hand, other hacks really are too good to be true, and these are the ones I really regret not taking advantage of.

Priority Club to Amtrak Transfers

The day before Christmas last year, I woke up to a series of confusing messages about Priority Club and Amtrak. Since Priority Club isn't a program I focus on, I put it on the back burner. Later that afternoon, after lots of trips to the airport picking up family members, I went back and discovered I'd missed out on an incredible deal: the ability to transfer 5,000 Priority Club points into 6,666 Amtrak Guest Rewards points.

Since you can purchase Priority Club points at a cost of 0.7 cents each, this was a chance to buy Amtrak Guest Rewards points at just over half a cent each. Since I value Amtrak Guest Rewards points at between 4 and 6 cents each for Acela First Class tickets and long-haul sleeper accomodations, this was a chance to buy those tickets for pennies on the dollar. Needless to say, I wasn't as merry as I could have been that Chirstmas!

Home Improvement Gift Cards

Last week Frequent Miler gave a great rundown of this short-lived opportunity. Basically, if you were in the right place at the right time, you could purchase – in-person – vast quantities of "Home Improvement Gift Cards," which had begun to be treated as true PIN-based debit cards at merchants like Walmart. The window of opportunity quickly slammed shut, but there was a day or two where points could be purchased for free (if you had load room on your Bluebird or Gobank cards) or for the price of a Walmart money order (around 0.14 cents per dollar of manufactured spend).

Unfortunately, I wasn't in the right place at the right time – they don't sell Home Improvement Gift Cards in Europe! 

Chase Gift Cards

For months now, Chase has been selling gift cards online with no purchase or shipping fees. Best of all, these cards can be configured with PIN codes, which allow them to be used to load Bluebird or Gobank at Walmart, or purchase money orders in many stores that accepts PIN-based debit cards (though USPS code their money orders differently and do not consistently work with all kinds of gift cards).

There are a few limitations on the purchase of these cards: 

  1. they can only be purchased using credit cards issued by Chase;
  2. each Chase credit card can be used to purchase up to $2,600 per rolling 30-day period;

If this deal's still going on, why have I missed out on it so far? Well, there is a third restriction listed on Chase's gift card website: 

This website does not support online sales of Chase Gift Cards to residents of the following states: AR, CT, HI, ME, NH, NJ, RI, VT. We apologize for any inconvenience.

I presume this is because of the abandonment laws in these days, which require merchants to turn unused gift card balances over to the state. Abandoned gift card balances are a big source of profit for banks and gift card companies, and they might not think it's worth offering the cards if they can't keep abandoned balances.

Now, this isn't an insurmountable problem: I could change my billing address to a state where shipments are allowed, then have the cards mailed back to me in New England. But at that point, there are more moving parts than I'm comfortable with, especially since it's not clear how much longer this opportunity will be available.

No, buying miles and points still (usually) doesn't make sense

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On Sunday I described a mistake I made when making an upcoming Marriott reservation: since Marriott allows you to purchase points for 1.25 cents each, if a Marriott redemption makes sense on the merits (I wanted to stay at the airport the night before my departure) then you should buy any points you need. Instead, I transferred super-valuable flexible Chase Ultimate Rewards points from my Sapphire Preferred account, even though those points are worth at least 1.25 cents each when used to purchase paid airline tickets through the Ultimate Rewards portal.

That reminded me of an e-mail I received recently from reader Kimberly in San Diego. She asked:

When I checked in for a united flight from San Diego to Chicago they asked if I want to get double miles (over 1700 extra) for around $60 I think. The ticket was $400. Should I do it?

This is the kind of split-second decision that frequent flyer programs love forcing their customers to make. After all, checking in at the airport you might not have any idea whether this is a once-in-a-lifetime opportunity to stock up on points, or even whether it's a better deal than buying points online at united.com. That's one reason why you should always have a general idea of what a mile or point is worth to you.

Now, some travel hackers take this to extremes and try to establish specific prices they're willing to buy points at and specific values they're willing to redeem points at. Those travel hackers also accumulate vast quantities of miles and points because they're always waiting for the perfect redemption. 

My approach is slightly different, and it works better for my lifestyle: I'm always eager to redeem my miles and points instead of spending cash, but I also only acquire them at the lowest cost possible: that's why I have a single-minded focus on my cost per point. For example, when the no-fee Hilton American Express card gave 6 Hilton HHonors points per dollar spent at drug stores, it was possible to earn HHonors points at a cost of 0.13 cents each. For me, that makes it academic whether I'm redeeming my HHonors points for 0.55 cents each or 0.8 cents each: either way I'm beating the house every time.

That brings me back to Kimberly's question: should she buy 1,700 United MileagePlus miles for $60 when she checks into her Chicago flight? For me there are three numbers that make this decision easy:

  • 25,000: the number of MileagePlus miles required for a domestic round-trip award ticket;
  • 60,000: the number required for an economy transatlantic award ticket;
  • 100,000: the number required for a business class transatlantic award ticket. 

Those are the three awards I redeem my MileagePlus miles for most frequently. And purchasing United miles for 3.5 cents each would value those tickets at $875, $2,100, and $3,500, respectively.  Since I know I would never spend that much money on one of these tickets, I know that I should pass on the offer to buy miles.

Should you care about the 30,000 Starpoint signup bonus?

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 It's no surprise that the travel-hacking blogosphere has lit up this week with links to the Starwood American Express personal and business cards, which through September 3, 2013 offer 10,000 Starpoints after first purchase and 20,000 additional Starpoints after spending $5,000 within 6 months. The card usually has a signup bonus of 25,000 Starpoints, so this is a 20% increase over the standard signup bonus.

I've never had a Starwood American Express, so I'm eligible for both signup bonuses, but I'll probably take a pass this year (the increased signup bonus is typically offered once a year). Since this promotion is getting so much play on other blogs, this is a good time to breakdown who this card might be right for. For more detail on all the information below, check out all the Starwood redemption options I explain here.

Hotel Stays

There's no question that Starwood, along with Hyatt and Club Carlson, has devalued their award chart least among the major chains, although the changes to Cash & Points rates did not win them any new fans.

Category 4 properties can cost many hundreds of dollars per night, but cost just 10,000 Starpoints, which could make this signup bonus worth well over $1,000 if used solely for Starwood reservations you were going to make anyway.

Elite Status

Indeed, if you regularly book paid stays with your own money at Starwood properties, then this card is a no brainer, because you probably value elite status highly. Starwood is exceptional among major hotel programs for awarding elite stay and night credit for award stays, so with the 35,000 Starpoints you'll have after meeting the minimum spending requirement, you could make 8 one-night reservations at Category 1 or Category 2 hotels. Those 8 stays, plus the 2 elite stay and 5 elite night credits you are credited with just for having the card, would already get you to Gold elite status (10 stays or 25 nights).

If you direct a majority of your paid stays towards Starwood properties, then elite status could make these cards worth carrying, thanks to the 50% earning bonus elites earn: 3 Starpoints per dollar spent on paid stays, instead of 2 Starpoints per dollar. Plus you'll earn 2 Starpoints per dollar spent on the card at Starwood properties, bringing your haul to around 5 Starpoints per dollar (slightly less, since you won't earn base Starpoints on taxes charged by the hotel), plus any promotions.

Airline Transfers

Like flexible Chase Ultimate Rewards and American Express Membership Rewards points, Starpoints can be transferred to many airlines at a 1 : 1 ratio, with a 5,000 Starpoint bonus at the 20,000, 40,000, and 60,000 Starpoint levels. This naturally creates the temptation to use this card to manufacture spend in order to secure award tickets. Even better, the Starwood American Express has an annual fee of just $65, compared to the $95 annual fee of Chase's flexible Ultimate Rewards cards, or $175 annual fee of the flexible American Express Membership Rewards cards.

You can find Starwood's airline transfer partners here.  The most important programs to note are Alaska MileagePlan, American AAdvantage, Delta Skymiles, and US Airways Dividend Miles. That gives you coverage in all four major alliances and partnerships, at least until US Airways leaves the Star Alliance for oneworld.

Flight Redemptions

Many Starwood loyalists prefer to transfer their Starpoints to frequent flyer programs to redeem for premium cabin tickets. However, Starpoints do have value beyond Starwood stays and airline transfers, so I always try to mention Starwood Flight Redemptions awards, which allow you to redeem Starpoints for paid airline tickets. 35,000 Starpoints can translate into one paid ticket costing up to $215 (15,000 Starpoints) and another ticket up to $280 (20,000 Starpoints), making this signup bonus worth up to $495 in paid tickets, plus the value of the frequent flyer miles you'll earn for those flights.

That's why even if you don't ever intend to stay at a Starwood hotel or book a premium international flight using frequent flyer miles, you may still want to consider this card since the points are between $315 and $495 in paid airfare. 

Drawbacks and Alternatives

Unfortunately, there's a drawback to this card: the Starwood American Express doesn't have any category bonuses except Starwood hotels, which would also be bonused by the Chase Sapphire Preferred (travel bonus) and Chase Ink (hotel bonus) cards. That makes it difficult to justify abandoning a flexible Chase card in favor of a Starwood American Express purely for the sake of manufacturing spend, since the bonus categories of those Chase cards (especially when combined with a Chase Freedom) can be so much more lucrative.

For example, if you have access to PayPal Cash or Vanilla Reload Network cards at a 7-11 that is coded as a "gas station," a Chase Ink card would allow you to purchase Ultimate Rewards points at a cost of 0.39 cents each, compared to 0.78 cents each with the Starwood American Express. That difference means you can pay for the $30 difference in annual fees after just $3,000 in manufactured gas station spending annually.

I consider Alaska MileagePlan miles to be wildly lucrative, since they can be used for Delta or American award tickets (among many other partners). But if you're interested primarily in earning Alaska miles, you can do so with the Bank of America Alaska Airlines Visa Signature credit card (with its annual companion ticket) or with a Bank of America debit card which gives you virtually unlimited free miles earning potential.

Conclusion

Of the three flexible awards currencies, Starpoints are probably the most valuable – each – because of the redemption options outlined above. However, that doesn't mean that the Starwood American Express is the most valuable credit credit to manufacture spend on: depending on your spend pattern, that distinction probably belongs to the Chase Sapphire Preferred or Ink Bold/Plus. Still, "second most valuable" is a strong endorsement, and this is the right card for a lot of people, especially with the current, higher signup bonus.

Right now I'm happily manufacturing spend at 5% cash back with the now-expired Citi ThankYou Preferred offer; 2.22% cash back with the Barclaycard Arrival World MasterCard, during my first, fee-free year; up to 4% cash back with my US Bank Flexperks Travel card; and 1.4 Skymiles and 0.4 Medallion Qualification Miles per dollar with the Delta Platinum Business American Express card. And frankly, that's about all I can fit into my current schedule. In January and April, respectively, I'll lose the first two opportunities and move that manufactured spending onto other cards. At that point I'll definitely consider making the Starwood American Express one of my workhorse cards for manufactured spend.

Buying points: when it makes sense

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My regular readers know I have a pretty straightforward approach to miles and points valuation: the least valuable point is the one you don't use. That's why even though I earn hundreds of thousands of points through credit card signup bonuses and manufactured spending, my points balances are often embarrassingly small. 

A good example of this is my Delta Skymiles account, where I noticed today that I only have about 36,000 Skymiles, not even enough for a coach ticket to Europe! And that's despite the fact that I do about 90% of my paid domestic flying on Delta. How did I end up so Skymiles-broke? Because I aggressively look for opportunities to redeem my Skymiles. In addition to my current 100,000 Skymile business class trip to Prague, in the last few months I've booked a 25,000 Skymile domestic award for Labor Day weekend and a 32,500 Skymile domestic award (outbound low-level leg, inbound medium-level leg). All those tickets offered 1.8+ cents per Skymile, so I didn't think twice about redeeming my Skymiles instead of spending cash.

However, sometimes this puts me in a tough position when a situation comes up where I need more miles or points than I have banked in one program.  For example, on my way back from Prague to the States I planned to stay at the Courtyard Marriott Prague Airport, which is about a 3 minute walk from check-in at Ruzyně (now Václav Havel International Airport), and would let me sleep in the day of my departure. This property is one of the great values in the Marriott system: a Category 2 property, costing just 10,000 Marriott Rewards points per night, that can have a nightly rate of over $150 (although rates are much lower on weekend nights).

Unfortunately, even though in April I received the Chase Marriott Rewards Premier card, I had already used the free night and bonus points at the Courtyard Portland City Center back in July for my brother's wedding. My remaining balance: 6,500 Marriott Rewards points.

Figuring I was getting slightly more than 1.5 cents per point, I transferred 4,000 Ultimate Rewards points from the flexible Ultimate Rewards account I have through my Chase Sapphire Preferred card. And then when I went to book my room, I realized my mistake: Marriott Rewards allows you to buy points at 1.25 cents each: I could have purchased the same 4,000 Marriott Rewards points for just $50, and kept my 4,000 flexible Ultimate Rewards points.

Why was this a mistake? Because flexible Ultimate Rewards points are worth a minimum of 1.25 cents each when used to book paid travel.  When transferred to a program like Amtrak Guest Rewards, where the rewards chart is wildly lucrative, they can be worth from 5 to 6 cents each, and with United or Hyatt they'll usually be worth around 2 cents each.

Instead, I could have paid $50 for 4,000 Marriott Rewards points and emptied my Marriott Rewards account without touching my Ultimate Rewards account. Given the potential value of those Ultimate Rewards points, that was the correct move.