Club Carlson: Best. Devaluation. Ever.

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By now you've probably heard about Club Carlson's March 15, 2014, devaluation. The short version:

  • Introduction of a 7th category, which will cost 70,000 Gold Points per award night;
  • Changes to the Silver and Gold elite earning bonuses;
  • Premium room award nights (suites and such, I gather);
  • Elimination of the online-booking bonus, except on a promotional basis;
  • and finally, award nights will count towards elite status.

In the travel hacking community we're accustomed to thinking about loyalty programs as a chess match between hotels, who try to squeeze us as much as possible while not scaring off the business travelers who make up the bulk of their revenue, and those of us who seek to stay as many nights as possible while paying as little as possible.

And indeed, that's the approach most bloggers have taken to this devaluation:

  • View From the Wing says "On net these changes are not good. You’ll earn fewer points, and it will take more points to redeem for many hotels.. especially their most expensive properties."
  • The Points Guy says "All in all, though these changes are mostly disappointing, but not entirely surprising."
  • One Mile at a Time says "These changes are no doubt negative on the whole."

I disagree completely. Of course I'm not thrilled that Club Carlson has changed elite earning and made me rework my beloved point density charts.

But allowing award nights to count towards elite status is the single most consumer-friendly thing any chain can do.

And it's good business.

Award stays are so lucrative at Club Carlson that, while everyone with one of their co-branded credit cards has Gold elite status, it has been unthinkable to achieve Concierge status since that has — to date — required 75 paid nights or 30 paid stays.

Now that award nights and stays count towards elite status, it changes the calculus for where to direct paid stays, as well. If you're a business traveler and travel hacker, before this change you might have redeemed Gold Points you earn with a Club Carlson credit card for award stays, but directed your paid stays towards Hyatt or Starwood in order to secure elite status with one of those chains. Now, one or two award stays per month gets you almost all the way to Concierge status, where you earn 75% more Gold Points on your paid stays and free breakfast on all stays. That might convince you to direct additional, paid, stays to Club Carlson properties as well.

That's why I'm inclined to not think of these changes as a devaluation, but as part of a realignment. Club Carlson is eagerly trying to position itself as an appealing brand for business travelers, especially in Europe where their properties are frequently in great downtown locations. Allowing award nights and stays to count towards elite status is going to drive a lot more business towards those properties since it puts Concierge status within reach for more casual travelers. And it's a brilliant move by Club Carlson.

Club Carlson Mega Points Promotion

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Hat tip to Mommy Points and her reader who passed along the news that at a few Club Carlson properties, you can earn 10,000 bonus Gold Points per night when you make a reservation using the promo code "MEGAPT." Here's the list of participating properties:

  • Radisson Martinique on Broadway
  • Radisson JFK Airport
  • Radisson Resort Orlando – Celebration
  • Radisson Hotel Orlando – Lake Buena Vista
  • Radisson Hotel Orlando – UCF Area
  • Radisson Hotel Fisherman’s Wharf

Of course, I'm planning a trip to New York in March, and currently have 2 nights booked at the Radisson Martinique for a total of 50,000 Gold Points, but don't have my third night booked yet. This promotion has put me in a tough position. The way I see it, I have three options:

  • Option 1: keep the 2 award nights, pay $228.42 after taxes for a "AAA Hot Deal" 20% off rate;
  • Option 2: keep the 2 award nights, pay $307.59 after taxes for the "Mega Points Promotion" rate;
  • Option 3: rebook all 3 nights, pay $1037.51 after taxes for the "Mega Points Promotion rate.

Deciding between Options 1 and 2 depends on my valuation of Club Carlson Gold Points. Are 10,000 Gold Points worth $79.17? Maybe, sometimes. But it takes more than "sometimes" to get me to spend $79 out of pocket (although I'll naturally redeem Barclaycard Arrival miles against the transaction later).

One of these options is not like the others though: why would I pay $1038 when I could pay $228 instead? Because of the other current Club Carlson promotion, which gives 38,000 Gold Points after 3 paid nights between January 6 and April 13, 2014.

By triggering that second promotion, I'd end up paying $810 for ~144,850 Gold Points (30,000 "Mega Points," 38,000 "Stay 3 Nights," and the 50,000 Gold Points I'm currently paying for the 2 nights, plus 30 Gold Points per dollar on my $895 room rate as a Gold elite), or 0.56 cents each. There's no denying that's a good rate to buy Gold Points at in bulk. It's almost enough for 6 free nights at a Category 6 property, as long as the nights are booked in blocks of 2, so conservatively $1,200 in value.

So, am I gonna do it? Of course not. The least valuable point is the one you don't spend, and I have 50,000 Gold Points burning a hole in my account. They're not going to get any more valuable by sitting on them.

My fellow travel hackers, we are the redemption we've been waiting for.

Check back tomorrow for my take on the Club Carlson "devaluation" (hint: I love it!).

Revise and extend: uses for Evolve Money

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Last Friday I was wrapping up the week and shot off a quip:

"Evolve Money is live with prepaid phone refills, but you're probably better off using a card that bonuses cell phone or telecom service."

This felt true to me at the time. After all, the US Bank Flexperks Travel Rewards card (the Olympics bonus is back!) earns double Flexpoints on cell phone services (but not cable or internet), worth up to 4% cash back in paid airfare redemptions, and the Chase Ink cards give 5 Ultimate Rewards points per dollar spent on all telecom expenses.

Those are good deals, but I was wrong to suggest that they're self-evidently better than the discount you'd realize by paying for your phone, internet, and television service using Visa or MasterCard gift cards through Evolve. Specifically, the Ink deal at Staples seems straightforwardly more lucrative than paying for your telecom service directly — especially if you're paying a service that charges sales tax depending on your credit card's billing address (like AT&T's GoPhone, my own cell phone service) but doesn't when paying from an external account like Evolve.

Anyway, I didn't want my somewhat ignorant quip to stay out there as my official opinion. Do the math for yourself, make good decisions, and save yourself some money!

Reminder: rewards aren't earned on statement credits and fees

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Over the course of about 24 hours I ran into several variations of this situation, and it took me about 25 minutes of staring at my credit card statements to figure out what was going on. In case any of my gentle readers run into a similar situation, I thought I'd share my experience.

Statement credits are treated as discounts, not payments

This is a situation you're bound to run into if you take advantage of Amex Sync deals or Visa Savings Edge. When your statement closes, you won't receive points for the part of your purchase rebated by the two programs.

So if you paid exactly $50 in flowers from 1-800-FLOWERS for Valentine's day and received a $15 Amex Sync rebate (and a 5% Amex OPEN rebate), you'll only earn miles and points on $35 (or $33.25).

Of course that's not true of portal earnings, which your credit card company doesn't see, so you'll receive portal earnings on the entire purchase as reported by the online merchant (who may exclude taxes, shipping, or gift cards, but frequently don't).

Credit card fees aren't treated as purchases

A kind of inverse problem arose when my Chase Sapphire Preferred annual fee hit this month. Since I pay off all my credit cards each month, my statement balance should always equal my purchases during the statement cycle, and I should earn exactly that number of Ultimate Rewards points (plus bonused earnings, which are listed separately).

But this month my numbers were off! Since I'm constantly running experiments with my rewards credit cards, my first thought was that I hadn't earned points for one or more of those small experimental transactions. It wasn't until I realized that I had earned exactly 95 fewer points than I expected that I realized the problem: my $95 annual fee was included in my statement balance, but wasn't treated as a purchase (which, of course, it wasn't).

Conclusion

All this is spelled out in your credit card's terms and conditions, so don't think they're trying to pull a fast one on you. However, it can be confusing the first time you notice it happen. Hopefully after reading this post you'll be both forewarned and forearmed.

Is it time to reconsider Hilton HHonors?

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[update 2/18/14: I updated the charts below to show the effect of the depreciating 5th night free for stays of 6 – 10 nights in length.]

I applied for the no-annual-fee American Express Hilton HHonors card in January of last year, in order to take advantage of its then-lucrative 6 HHonors points per dollar spent at drug stores. Of course that was rapidly followed by both the 2013 Hilton devaluation and an end to bonus points at drug stores in May, 2013.

Since my experiment buying PayPal My Cash cards for bonus points at 7-11 ended in failure, I shelved my HHonors card except for periodically taking advantage of promotions like Small Business Saturday and Amex Sync offers.

Now that I have another local gas station willing to play nice, I need to decide whether it's worth getting the card back out and potentially even upgrading to a Surpass card that would earn 6, instead of 5, HHonors points per dollar there.

Back in December I tried out a new approach to valuing manufactured spend, by calculating the value you would need to get from a night's stay to make it worth manufacturing spend on a chain's co-branded credit card, rather than a 2.22% cash back Barclaycard Arrival. The advantage of this approach is that it gives you a straightforward calculus (do I value this hotel night at more or less than the break-even point?), without needing to take into account the actual cost of an identical, paid hotel stay.

Here's that same analysis applied to the American Express Hilton HHonors Surpass card, assuming that your spend is manufactured exclusively at merchants that give 6 HHonors points per dollar.

Note two things about these charts: first, I've assumed that you'll be redeeming your HHonors points during the "high" period at Category 4 – 10 properties. If you redeem at the lower end of the award bands, the points required and consequent required value per night will be lower. Second, I haven't taken into account the additional HHonors points you would earn on paid stays. That's a real shortcoming, but I can't think of an elegant way to capture it. You should feel free to adjust these rates based on your HHonors earning rate on paid stays.

Finally, remember that you receive HHonors Diamond elite status in any calendar year you spend $40,000 or more on the Surpass card, and you keep that status through the following membership year (i.e. in March 2 years in the future).

Here's are the points and bonused spend required for 1 and 5 night stays at each category of Hilton property:

And here's the value you'd need to get per night in order to justify manufacturing spend on the American Express Hilton HHonors Surpass card:

So is it worth manufacturing spend on the Surpass card? The sweet spot here appears to be category 5-6 properties, where you can get a night for less than $200, including tax, and possibly category 7 properties on stays which are multiples of exactly 5 nights.

Of course if you're intent on visiting a resort property like the Conrad Maldives Rangali Island, where your only options are to pay a cash rate or redeem points, you'll save easily $1,000 per night on a 5 night stay by redeeming manufactured HHonors points instead.

APR and APY are irrelevant concepts in the world of manufactured spend

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When lawmakers decide to crack down on payday lenders, they invariably cite the extortionate annual percentage rate, or APR, charged by those lenders. Wikipedia helpfully provides this example:

"For a $15 charge on a $100 14-day payday loan, the annual percentage rate is 391.34%."

You won't find a bigger defender of consumer rights and economic justice than your humble blogger, but I have to confess that I've grown increasingly uncomfortable with the concept of APR and APY (annual percentage yield) as applied to my own lifestyle.

The important thing to understand is that APR and APY aren't laws of nature: they're accounting identities that are based on the idea of compound interest: if the fees you pay, or interest you earn, is added to your original balance on a daily or monthly basis, then you'll end up paying (or earning) more over the course of a year than you will if you simply multiplied your first month's balance by 12 times the monthly interest rate paid (or earned).

How, then, to account for manufactured spend? Am I earning interest when I take out a "loan" for $1007.90, with a "rebate" of $20.16, then use the proceeds to pay off my loan during its 20-50 day grace period? If so, what's the relevant time period to extrapolate over the 12 month period required for APY calculations?

The Barclaycard Arrival World MasterCard allows immediate redemptions of earned miles, meaning the total turnaround time between earning and redemption might be as little as 3-4 days; using APY calculations I'd end up with something like 202%.

What I'm trying to say is that while this sounds like an epistemological question, it's actually the opposite: it's the question of how to account for certainty.

That's why I'm increasingly inclined to think about manufactured spend not as an investment, with concomitant risk and return, but as a job. It has a more or less guaranteed return depending on the time and skill you devote to it.

You should think about APR when deciding on a mortgage lender, and APY when deciding on a retirement fund, but when thinking about manufactured spend the much more important concepts are revenue and cost.

Personally, my rule of thumb for the bulk of my manufactured spend is that every individual transaction has to be worth it. Of course I run a lot of experiments for the sake of my readers —I redeemed 8,000 Ultimate Rewards points for a roundtrip to Philadelphia on Saturday, and I don't expect to turn on a profit on those points! But if I pay $17.68 for $44.76 in travel redemptions with a Barclaycard Arrival card, I'll call that a $27.08 profit without losing too much sleep over what time period it should be calculated over: a 60% discount on my paid travel is good enough for me, without claiming to have beaten the market with my brilliant "investments."

The sun also sets on US Bank Visa Buxx

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When I started this blog, the Wells Fargo Prepaid Card still allowed users to load up to $2,500 onto the card for a flat fee of $5. The card still exists, but as of May 1, 2013, has only been loadable using Wells Fargo-issued credit and debit cards, which I believe don't earn rewards on load transactions.

Meanwhile, the Nationwide and US Bank Visa Buxx cards have kept plugging along, allowing $1,000 and $2,000 in loads monthly using any Visa or MasterCard credit or debit card (although Citi-issued credit cards are notoriously at risk of cash advance fees).

Today I saw the news that US Bank is no longer allowing new online applications for their Visa Buxx card. I'm still able to log into my existing account, and haven't seen any indication that they'll be canceling existing card accounts, although at this point I'd say it's a near certainty that they'll be restricting loads to US Bank-issued credit and debit cards sometime in the next 12 months (check back February, 2015!).

I hope that all my readers have already signed up for a least one card account, so they won't be immediately affected by this change. And as always, remember the first two laws of travel hacking:

  1. Every deal dies eventually;
  2. There will always be more deals.

JH Preferred cash advances: your miles may vary

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One last post for tonight, after my epic (and successful!) quest to Philadelphia today.

I reported back on January 31 that the JH Preferred card had some limitations that some of my more enthusiastic blogger brethren had overlooked in their original reports. Namely, unlike their "direct" competitor, the HR Block Emerald card, JH Preferred doesn't allow ACH pulls from the account, which makes it simultaneously less convenient and more expensive.

After patiently loading my JH Preferred card up with $5,000 in Vanilla Reload Network reload cards, I ran into yet another limitation: my usually-completely-reliable local Bank of America branch was unable to process a cash advance for $4,995 (why $4,995? There's a $5 cash advance fee, and I don't have any interest in trying to rip $5 off from Bancorp).

I'm not willing to rule out user error on the part of the teller, but I do want to share my experience so my readers aren't unduly surprised if they're not able to liquidate their JH Preferred cards in one go. It may still be worth trying, if you have a bank branch willing to help, since there are a few reports of successful $5,000 cash advances in the relevant Flyertalk thread.

I was ultimately able to liquidate my $5,000 JH Preferred balance by making 3 Walmart PIN-based debit transactions, so don't despair if your cash advance attempts end up not being successful.