Manufactured Spending Tournament: introduction

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Inspired by Frequent Miler's mapcap quest for 1 million miles and points last March, Matt from Saverocity recently approached me, along with several other bloggers, to propose a little good-natured competition: who can manufacture the most spend within one month, constrained by a $5,000 "bankroll," with none other than Frequent Miler himself judging the results.

Manufactured spend? Cut-throat competition? How could I refuse!

My Advantages

There are a lot of reasons why I think I've got a lock on this contest:

  1. I already have the tools. While other competitors start scrambling to apply for prepaid cards that might take weeks to arrive, I've already got plenty of products to start aggressively maximizing come March 1.
  2. I'm blessed by geography. Plentiful drug stores, a gas station or 3, and a Walmart where the associates are more than happy to humor my ridiculously spending habits are all advantages the other competitors can't necessarily count on.
  3. I've still got my Alaska Airlines debit card, which acts as a force-multiplier on all my manufactured spend. When other competitors get their money out of a product, they're done, but I get to push it through my debit card one last time, which I have every intention of doing.

My Disadvantages

That doesn't mean I won't be overcoming some obstacles along the way, the biggest of which is that since I've already been at this for so long, many products which represent the lowest-hanging fruit have already been closed to me. For example, one of my rivals could apply for a new GoBank account and push $2,500 per day through that card, while my account has already been closed, meaning I'm going to have to be more creative, and incur higher expenses. PayPal and Netspend are two more examples of opportunities closed to me, but perhaps open to my rivals.

Conclusion

What I'm most interested in seeing in this competition is the range of reselling and churning techniques the other players use. Until Evolve Money came along, I did virtually no gift card churning, on the grounds that there was too much room for potentially expensive error. Now I do some light manufactured spend at Staples, but I know there are others who buying thousands of dollars in either products or gift cards and attempt to sell them for a small loss, or even profit. While I don't expect them to share all their secrets with the world, I'm looking forward to picking up a few hints that might help me decide whether to dabble in that field myself.

May the best hacker win!

Weekend roundup from around the web

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Here's the stuff that's been cluttering up my RSS reader:

  • Chasing the Points says the Chase Amazon Visa has the same 20,000 point, $335 airfare redemption as the Chase Freedom, which makes it a 2.68% cash back card at gas stations;
  • View from the Wing wants you to redeem Virgin Australia miles for one-way Delta flights;
  • Running with Miles buys and resells electronics for fun and profit;
  • The Points Guy wants you to leave points in your flexible accounts as long as possible;
  • but that's where the banks can get them. I say transfer as soon as you have a reasonable guess of where you'll need them.

Enjoy the rest of your Sunday!

What's in my wallet?

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Reader Winston has asked what credit cards I personally carry, which I think is a great way to keep a travel blogger honest. Of course, it's slightly more relevant for bloggers who pepper their posts with affiliate links, but what's good for the goose, etc.

US Bank

US Bank is quietly a powerhouse of lucrative credit cards. I carry three cards they issue, and put spend on all three each month:

  • Cash+. 2% cash back at drugstores, with no minimum redemption;
  • Flexperks Travel. Double Flexpoints at gas stations, worth up to 4% cash back in redemptions for paid airline travel;
  • Club Carlson Business. 5 Gold Points per dollar spent everywhere.

Chase

Lots of old standbys here. The Freedom is actually the result of a product change from Chase's great Slate product, which I got back when I carried balances:

Bank of America

My oldest credit card, which I put spend on once a year or so:

  • Cash Rewards. 3% cash back on up to $1,500 on gas stations quarterly.

American Express

Three great cards:

Barclaycard

The Arrival has a $89 annual fee, so if I can't have that waived in April I'll be closing it. Lucrative, though:

  • Arrival World MasterCard. 2.22% cash back everywhere, when redeemed against travel purchases;
  • US Airways. Signup bonus.

Citi

Citi's a slum: you only visit when they have something you need. I'm actually waiting to receive the Dividend Platinum Select, which I product changed my formerly 5% cash back ThankYou Preferred card to a few weeks ago:

Discover

Fidelity

  • Investment Rewards American Express. 2% cash back everywhere.

And now my cards are on the table.

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.