Reminder: AAA still sells Visa gift cards

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[Note to readers: I have an old friend visiting town starting tomorrow so this may be the last full post for the week, unless I find some downtime and inspiration in between our adventures. Next week I'm traveling to the Western Montana Fair, where I will hopefully be able to get a few blog posts up in between trips to the rodeo. And no, I'm not competing.]

Last year there was a flurry of excitement on FlyerTalk when, as a holiday promotion, AAA branches in some parts of the country began selling PIN-enabled Visa gift cards with no processing fee. It was possible to use a credit card for the purchase, earn points, and pay only the cost of liquidating the gift cards. Once the promotion ended, folks realized that even with the processing fee, those gift cards may still be worth buying under certain circumstances.

Not all AAA locations sell Visa gift cards

I discovered once I returned from Chicago, where I was able to buy fee-free Visa gift cards over the holidays, to New England, that the AAA of Southern New England did not sell Visa gift cards at all; they have an exclusive relationship with American Express, whose gift cards, not being PIN-enabled, were useless to me.

Here in the Midwest, I found my local AAA branch to be well-stocked with Visa gift cards and more than happy to sell them to me by credit card. The cards cost $3 each, can be loaded with up to $500 each, and there is no discount for buying the cards in bulk.

AAA Visa gift cards are registered in the office

Unlike other brands of prepaid Visa debit cards, like OneVanilla cards, which allow but don't require you to register a ZIP code online, each AAA Visa gift card is registered to you (or perhaps, theoretically, another person) in-store at the time of purchase.

Once your card is activated in-store, you can call in to set your PIN number by following the telephone prompts.

There are unpublished limits on purchases

Since these cards are registered to the purchaser immediately, it's easy for Metabank, the issuer of the cards, to track purchase and unloading activity down to the dollar.

Unfortunately, that appears to be exactly what they do.

Back in November and December, when the deal first broke, the usual suspects went big, buying tens – or perhaps hundreds – of thousands of dollars in gift cards and unloading them as quickly as possible. Once such unusual activity was detected, Metabank froze their remaining gift cards and I believe insisted on mailing them refund checks.

Further attempts by those customers to buy gift cards at AAA were refused, either by managers or by the sales system itself.

During that promotion, I bought just $2,000 in gift cards and immediately liquidated them. I never heard anything from AAA or Metabank, but also didn't attempt to buy any more once the promotion ended since they weren't available locally.

For more information on these unpublished limits, you'll need to dig into the relevant FlyerTalk thread. Further, the usual caveats apply when using Citi credit cards for these purchases. There's at least one report of AAA gift card purchases being treated as a cash advance.

Conclusion

I don't consider AAA gift cards to be a highly scalable technique for manufacturing spend, but it is one that is still viable under some circumstances, and I wanted to remind my readers it exists.

Update: Suntrust lets me make next-day transfers

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Earlier this month I mentioned in passing that ACH pulls to my Suntrust checking account invariably took 3 business days to process, unlike the next day transfers I was able to request with my Bank of America checking account.

I assumed that was a deliberate choice Suntrust made, perhaps because next-day ACH transfers are more expensive, or perhaps simply because the Automated Clearing House makes the funds available to them immediately and they prefer to hold them for a few days before releasing them to clients.

Lo and behold, I logged into my Suntrust account today to transfer some money in from my local, money-order-friendly credit union and found that a new option had appeared: free next-day transfers!

Why me? Why now?

I asked on Twitter whether anyone else noticed the new external transfer option appear recently, and heard from one reader who had been using it for some time and one who still didn't have it.

My best guess at this point for what triggered its appearance on my account is simply the passage of time. I initiated the process of opening my account in early April, and had my first account activity on May 5 (it took me a long time to receive all my credentials). That gives a timeframe of 2.5 to 3.5 months months before next day transfers became available for me, depending on when the clock started.

The other alternative is that Suntrust has a risk model that combines age of account with other factors: number of transactions, average daily balances, or others.

Are there limits?

I'm not embarrassed in the slightest to say that I have so far pushed far less money monthly through my Suntrust account than other players; the only absolutely essential thing in this game is to know the limits of your own comfort, and I'm very, very comfortable with mine.

However, an additional limit to the amount of spend I could put on the Suntrust card each month was that 3-business-day waiting period between initiating a transfer and the funds becoming available. Next day transfers mean there are fewer tradeoffs between Suntrust spend and transactions made through other sources (since less money is ever held out of play in ACH Limbo).

On the other hand, while Bank of America clearly publishes the limits for 3-day and next-day external transfers, Suntrust does not appear to (although I'd be happy to be corrected in the comments). That doesn't mean such limits don't exist but rather that, if they do, additional experimentation is required to discover them.

Conclusion

Of course, this post is only relevant to those readers who listened to my exhortations to apply for a Suntrust Delta Skymiles Check Card before they stopped accepting applications. For those of you who did, congratulations, and as your account ages watch for the appearance of online, next-day transfers.

Additional datapoints are, as always, welcome in the comments. See you there!

Update: permanent PayPower cards and REloadit

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Last month I reported on two potentially useful tools for manufacturing spend at grocery stores: PayPower cards and REloadit packs.

Now that I've had more time to experiment with both, I can share my update.

PayPower's website doesn't work very well

In addition to a prepaid debit card (with a steep $5.95 monthly fee which, unlike the T-Mobile Visa Prepaid Card's, can't be waived – but more on that below), a permanent PayPower account also includes a rudimentary bill pay feature similar to that offered by some smaller, regional banks and credit unions. Rather than having billers pre-loaded or searchable, you need to type in your biller's payment details, which are then cross-referenced with their database to see if the payment can be made electronically or if it requires a paper check to be mailed.

The website doesn't work very well, and saved payees periodically disappear before unexpectedly reappearing days or weeks later. At other times the bill payment page completely fails to load. I suspect this is an issue with how PayPower interacts with their 3rd-party bill payment service, and it's something you should certainly be aware of.

Online bill payments are possible, however

I have been able to make online payments to my Barclaycard Arrival+ MasterCard using the payment details on my statement (the "Card Services" address in Philadelphia). Since PayPower required the same information as my credit union to add a biller, I suspect they may use the same 3rd-party service provider. I've now made two bill payments and both were received by Barclaycard in 2 business days, indicating the payments are being made electronically.

There is a substantial shutdown risk

There are many reports of shutdowns in the FlyerTalk thread on PayPower accounts and the co-branded T-Mobile Visa Prepaid card, which has all the same functionality as PayPower and is also administered by Blackhawk Network. Particular flags seem to be large online bill payments and heavy unloading activity at Walmart. This is not surprising: we want our money back as quickly as possible, while they want to hold onto our money as long as possible.

The difference is that when they don't get what they want, they take their toys and go home.

The monthly fee may be avoidable

I can't seem to find any similar reports, but by keeping the balance in my PayPower account at $0, I have not been charged a monthly fee yet. In other words, they don't charge the monthly fee against an account with insufficient funds to pay it. It's unclear to me whether my approach is sustainable or if my account will quickly be flagged for closure.

Conclusion

For now, my account is still active, but I plan to use it very lightly, for 2-4 bill payments per month. The ability to buy REloadit cards for $3.95 in the powerful bonus category of grocery stores is a tempting enough opportunity to keep me coming back once a week or so. I will be immediately emptying the account, however, and won't be surprised when my account is ultimately closed.

I'd love to know: what experiences with PayPower (and T-Mobile) have my readers had? See you in the comments.

Chase Ink Plus and reflections on urgency

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As you may have heard, Chase is currently offering a signup bonus of 70,000 Ultimate Rewards points to new applicants for the Ink Plus business credit card, which is as high as I recall ever seeing it go. The offer appears to only be available in-branch, which has the added benefit of meaning not a single affiliate blogger will receive a dime for any applications made under this offer.

I applied for the card yesterday afternoon, and my Chase banker promised to e-mail me by Saturday with the status of my application. I did call into a Chase application status number (I used 888-338-2586, but it seems there are many working numbers), but the frontline representative was only able to tell me that my application status was still "pending."

The Chase Ink Plus and Bold are cards I write about with some frequency as powerhouses for manufactured spend. But I'd never applied for one before.

The lie of urgency

If you started reading a range of travel hacking blogs on any given day, you would be bound to think that it was a stroke of luck that on that day only there were so many hyper-lucrative credit cards to apply for. Since there's no way offers that good can last, the blogger would naturally urge you to, in the Points Guy's famous words, "apply for both!"

Rick Ingersoll, a former blogger and occasional contributor over at Frugal Travel Guy, actually formalized this attitude in one of his screeds back in March. After a major devaluation of the American Express Platinum card, he urged readers to apply anyway:

"Decision time is upon us here with less than one month to go. Will you act in April of 2014 for either the Mercedes Benz version or straight out Platinum card? I will not be sending you Cheese to go with your Whine if pass on the opportunity."

The card has a $450 annual fee, by the way.

The truth of urgency

The reason I have never felt any urgency in signing up for an Ink Bold or Plus card, despite their lucrative bonus categories, is that those bonus categories are capped at $50,000 in spend per cardmember year, or a little over $4,000 per month on average. That means by delaying my signup, I'm not sacrificing all 250,000 Ultimate Rewards points earned in the office supply bonus category each year, I'm sacrificing just 20,000 points per month of delay.

On the other hand, I did know I would apply for an Ink Bold or Plus eventually since I want to get rid of one of my most expensive and least valuable cards, the Chase Sapphire Preferred, while retaining the ability to transfer Ultimate Rewards points.

Which brings me to the truth of urgency, which is that very, very occasionally, there are signup bonuses so good that you should consider timing an application while the bonus offer is in effect. The Chase British Airways offer of 100,000 Avios after $20,000 in spend, available late last year and early this year, was one such offer, which I took advantage of in January while signing up for an American Express Blue Cash.

Keep an eye on cards you know you want

Due to the lie of urgency, you're not going to be able to tell when a signup bonus is unusually high by reading most blogs. It's your responsibility as a travel hacker to investigate the cards you're interested in and keep an eye on their signup bonuses. That's the only way you'll know that a "higher-than-usual" 30,000 mile Bank of America Alaska Airlines card offer is 40% lower than the 50,000 mile offer available last December.

And be ready to apply when the time is right

Over at Hack My Trip, Scott is hosting a hysterical new guest series called Devil's Advocate, where they pierce conventional wisdom in the travel blogosphere. My favorite piece in the series so far is "App-O-Ramas Are Your Father’s Oldsmobile," where he demolishes the idea (which I've wrongheadedly spouted in the past) that you should apply for multiple cards on the same day to "hide" the applications from each other.

If so-called "app-o-ramas" are just an artfully concealed version of the lie of urgency ("quick, apply for another card!"), what's true is that unusually high signup bonuses can come along at any time. If there's a card you're interested in applying for, then to improve your chances of approval make sure that your credit score is always ready for a new application, for example by paying off your balances before they're reported to the credit bureaux (I use Credit Karma to see what dates my balances are reported).

The Free-quent Flyer's 2014 mid-year financial report

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As long as I've been running this website, I've said that it's a partnership between my readers and I. I go out every day to manufacture spend, book award travel, and exploit mistake fares, and you write in with questions and suggestions, support the site, and subscribe through PayPal or Amazon Payments.

Since I treat this project as partnership, I want to share the internal financials of the site so you know not just what you're getting out of it (my original reporting and help) but also what I'm getting out of it.

PayPal subscribers are my heroes

Since January of this year, readers have had the opportunity to support the site directly by making monthly or weekly contributions through PayPal. There are 5 contribution levels, which you can see by clicking on the pull-down menu on any page of the site.

What I've been most amazed by are readers who initially sign up for a $2 per month subscription and then after a few weeks or months decide to increase their commitment to $5 or $10 per month. That's real, direct feedback from my readers that I'm doing something right here.

With all that being said, I currently have 109 active PayPal subscribers, plus 6 subscribers who have contributed through Amazon Payments or other means. The overwhelming number of those subscriptions are at the $2 per month level, and my subscription revenue (after PayPal transaction fees) is currently between $200 and $300 per month ($275.40 in June).

Besides the knowledge that they're essential to the continuation of this project, my subscribers also receive my occasional subscribers-only newsletters.

Amazon Associates links are a new revenue stream

Since I moved from a state where Amazon Associates was not allowed, readers are now able to support the site by clicking through to Amazon using my Amazon Associates link. That's an easy and free way to support the site, and many readers have taken advantage of it. Here's my current Amazon Associates balance:

Still no affiliate revenue

I have still never received a dollar from any credit card affiliate program, and I will never receive a dollar from any credit card affiliate program as long as this site exists (see here for my previous experience trying the affiliate game and here for the inevitable denouement).

I do carry a large number of credit cards, and occasionally those credit cards offer referral credit to me just as they do to any cardholder. I won't promote that on the blog, but you can see the current cards I can refer readers to on my "Support the Site!" page (currently only the US Bank Flexperks Travel Rewards Visa Signature card).

Books sales are no longer a significant revenue stream

Longtime readers know this site started as a companion to my path-breaking book, The Free-quent Flyer's Manifesto. It's sorely out of date and it's largely been replaced by the content on this site, but there's a lot of great content there and I'm glad to see folks occasionally buy or borrow it (I make the same, roughly $2, either way). I now make $5 to $10 per month on book sales and rentals.

Meanwhile, I'm working on putting together a new book proposal which my PayPal subscribers will be the first to hear about. It has a slightly different subject matter, but one that I think is of more importance than ever in our current, hyper-financialized economy.

Costs are high and steady

Here are some of the costs that reader support covers:

Conclusion

I know from the tremendous feedback I get from my readers that they're grateful this site exists. Unfortunately, it's not yet self-sufficient, and my goal for the rest of this year is to convince more readers that it's worth contributing $2, $5, or $10 per month to the ongoing existence of this project. Naturally, I'll report on my success meeting that goal at the end of the year in my next shareholder report, when I'll have to make a decision about whether to continue or not.

Hilton's odd premium award night pricing

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It's no secret: I'm a big fan of Hilton, and it's one of the first chains I check for convenient downtown locations, free breakfast with HHonors Gold elite status, and affordable redemptions (well, as long as you're earning 6 HHonors points per dollar spent in the ubiquitous gas station and grocery store bonus categories).

In the last month or so, while planning my winter jaunt to Italy, I've been noticing some odd premium award night pricing, and today finally decided to get to the bottom of it.

What's an "odd" premium award night price?

To give you a taste of what I'm talking about, here's a standard award night redemption at the Hilton Molino Stucky Venice in early January:

Fair enough: it's a Category 8 property, which should price between 40,000 and 70,000 HHonors points, depending on the season (for some reason Venice doesn't appear in the HHonors Points Search Tool so I don't know precisely when seasonal pricing is in effect).

Here's the oddity I'm talking about:

A premium room award (in this case a "King Hilton Deluxe Room") costs fewer HHonors points than a standard award. That's what I'm calling an "odd" price for premium award nights.

While I'm happy to book the discounted rate, I've been digging around trying to find some explanation (was there a European premium room award promotion I missed?). Here's what I found.

Premium room awards are revenue-based

When the Hilton booking engine determines the number of HHonors points required to book a premium room award night, it applies a mechanical calculation, multiplying the revenue cost of the room by a constant HHonors point valuation to arrive at a total cost in HHonors points. For example, here are two premium room awards at the Hilton Portland & Executive Tower:

As you can see, the HHonors point valuation for both rooms is identical to many decimal places, at 0.278 cents each. This may be slightly misleading since I believe they're internally using the total price including taxes, bringing the internal valuation to 0.318 cents each. Since manufacturing spend on an American Express Hilton HHonors Surpass card is only worth it if we plan on redeeming points for more than 0.37 cents each, that's not typically going to be an ideal forward-looking redemption (but may be worth it if you've already banked plenty of HHonors points).

The internal valuation varies by property

The tricky thing here is that the valuation used by Hilton to calculate the number of points required for premium room awards isn't constant across properties. Here's a valuation of 0.36 cents each (0.41 cents after taxes) per night at the Hilton Austin:

Odd premium award night pricing is a natural consequence

Fortunately for us, Hilton doesn't bother checking that the premium room award price is in fact higher than a "standard" award redemption. In all fairness, it usually will be: premium rooms are usually at least a little more expensive than standard rooms, and HHonors points are typically only worth 0.3 to 0.5 cents each for standard redemptions anyway.

Odd premium award pricing results from low premium room rates and high internal valuations. To open up a pricing opportunity, premium room rates have to be fairly close to standard room rates and the internal valuation has to be fairly high.

It's still unclear to me which currency internal valuations are denominated in and how often they're adjusted; sudden currency fluctuations may open up more opportunities for odd premium award nights, but I haven't been able to test that yet.

Conclusion

This post serves more to sate my curiosity than as a call to action, since it's hard to predict when a premium room award is going to end up pricing out cheaper than a standard room. For further reading, here's an example of Loyalty Lobby finding an odd premium award night price in Shanghai back in 2012, and here's a somewhat dated Points Guy mention of the same phenomenon.

Anatomy of an award trip: Winter jaunt to Italy

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This is another entry in my occasional series, "anatomy of an award trip."

Background: the fuel dump

Back in May, an apparently-longstanding fuel dump broke into the open on Flyertalk. Low base fares on Alitalia-coded flights meant it was possible to book tickets from New York City to Milan for between $100 and $250, as long as you added a leg at the end of the trip from one of a number of European cities to Asia. The fuel dump was bookable for a huge range of dates through the end of the flight schedule, so folks rushed to book summer, fall, and spring trips before the mistake was caught and fixed.

Since my partner abides by an academic's calendar, my only options were to book something in January or speculatively for next Spring. I booked a few one-ways for various available dates and waited for her to get home.

We ended up settling on an early-January flight that priced out at $233.20 each.

Once we settled on a date for the outbound flight to Milan, I naturally had to put together the rest of the trip.

Getting there: Upper Midwest to New York City

Since the fuel dump was booked out of New York City, first we had to get there.

This part was easy, since there was low-level award availability on American Airlines through Chicago, so I booked 2 tickets for 12,000 British Airways Avios and $5 each. While Avios are rightly praised for short, non-stop flights, I found that even with the connection in Chicago, the flight priced out cheaper than it would have using any other currency (plus I still have too many Avios from my January credit card application).

It's true I could have saved 9,000 Avios by driving to Chicago instead, and if our connection looks hazardous due to weather conditions we may still end up having to do that. But if the skies are clear, I'd much rather fly than drive.

Total cost: 24,000 Avios and $10. Total value: $300. Value per point: 1.2 cents per Avios.

While this would be considered by some travel hackers as an embarrassingly low redemption for Avios, I had way too many Avios in my account and was eagerly searching for a way to redeem them. Remember: the least valuable mile will always be the one you don't redeem.

Getting back: Rome to Chicago

While I briefly considered popping up to Budapest and making the second flight to Tokyo, my partner needs to get back and I realized that I'm already locked into a potentially expensive 9 days of eating and drinking all over Italy, so I started looked for return flights from Milan and Rome.

There were a lot of options for the return, but I ended up settling on a non-stop flight on US Airways from Rome to Philadelphia followed by a short hop up to Chicago. Since there was low-level availability and the flights are during American Airlines' "low" European award season, I was able to book the tickets for 20,000 AAdvantage miles and $69.60 each.

I briefly considered using Iberia Avios to connect in Madrid, but while Iberia charges lower fuel surcharges on their own flights than British Airways does, they're still not cheap: $352 compared to BA's $506.

Total cost: 40,000 AAdvantages miles and $139.20. Total value: $3,707 (the price of the cheapest flight that doesn't involve overnight stays). Value per point: 8.91 cents per AAdvantage mile.

Note: this is the kind of absurd award valuation you get when you value particular awards independently of the trips they're a part of. A round-trip flight to Milan in January costs $1,162; the fact that one-way flights are outrageously priced is interesting, but not dispositive when deciding whether to purchase a round-trip flight or redeem miles for a one-way.

Using that $1,162 price, you can arrive at a much more realistic 2.67 cents per point (saving $854.20 while spending 12,000 Avios and 20,000 AAdvantage miles per ticket).

Staying there: Italian vacation

I've done Italy before, but this is my partner's first time so I'm still in the process of putting together a trip that's going to let her see as much as possible. Here's the rough outline so far — it would be great if readers could chime in with their own Italian experiences!

  • Park Hyatt Milan, 1 night. 30,000 Hyatt Gold Passport points, located right in the center of town at the Duomo;
  • Hilton Molino Stucky Venice, 1-2 nights. 50,000 Hilton HHonors points per night, and I've heard great things from a reader about this property;
  • AC Hotel Bologna, 1 night. 1 Category 4 Marriott Rewards certificate;
  • Hilton Florence Metropole, 1 night. 30,000 HHonors points;
  • Radisson Blu es. Hotel, 2 nights, 66,000 Club Carlson points (for a premium room award – why not, I have the points);
  • Renaissance Naples Hotel Mediterraneo, 1 night. 1 Category 5 Marriott Rewards certificate;
  • Hilton Sorrento Palace, 1 night. 30,000 HHonors points.

Conclusion

It turned out that I was able to build a very reasonable award trip around a very cheap flight between New York City and Milan. But that won't always be the case, and it's worth pointing out that once you've booked a mistake fare like this, there's no shame in walking away from it if you can't put together an itinerary that makes sense for you and your travel companions.

How is spend throttled?

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I've written recently that while the American Express "old" Blue Cash card is the single best card to manufacture spend on, with its powerful 5% cash back earning rate in lucrative spending categories, use of the card is inherently "throttled." A reader commented to ask what I meant, and I thought it could be useful to explain here.

Varieties of throttles, or, watch for chokepoints

There are at least 4 distinct kinds of throttles to be aware of:

  • Issuer-based: what kinds of limits does your card issuer impose on your spending ability?
  • Inventory availability: do your nearby bonused merchants restock promising cards frequently? Do they impose daily, weekly, or other limitations on volume?
  • Liquidation availability: how cooperative are merchants that facilitate money order purchases, bill payments, or prepaid card loads? How cooperative are your banks and credit card issuers?
  • Physical constraints, namely time and geography: what are the limits on the amount of time, gas, and vehicle depreciation you're willing to commit to manufacturing spend?

Let's examine each of these throttles more closely.

Issuer throttles

These will vary primarily depending on each card's issuer and the history of your banking relationship.

For example, my American Express- and Barclaycard-issued cards will invariably approve purchases in excess of my "available credit;" American Express even has a function on their online banking website to check whether purchases will be approved before you make them.

Meanwhile, FIA Card Services, who administer the Fidelity Investment Rewards 2% cash back American Express card, will automatically deny any purchase that exceeds the amount of my available credit.

Another issuer throttle to be aware of is how quickly your credit limit becomes available after making a payment to the card. Barclaycard and American Express will typically make credit available late in the day a payment is received, while there are widespread reports that Wells Fargo can take days or weeks to restore available credit — even after a payment has been processed and appears online!

A final throttle to be aware of is each card issuer's risk tolerance for what they may view as abusive behavior. Those risk algorithms are closely-guarded proprietary secrets, but classic examples of high-risk behavior are spending multiples of your credit line each month and spending more than your reported annual income.

Inventory throttles

These throttles take many forms, but come down to this: even with the highest credit limit in the world, you can manufacture a single dollar unless you can find merchants willing to sell you the tools you need to do so.

While grocery stores are one of the most-frequently-bonused categories, they're also the category that in my experience is most vulnerable to manager and cashier intervention. Even stores that don't explicitly prohibit the use of credit cards for purchases of useful products can be shut down by accounting departments that don't like seeing such large, frequent purchases; I was recently shut down at a nearby grocery store chain for precisely this reason. This will sometimes be cast as "fraud prevention," and once the bean counters have their say there's not much you can do to reverse their decision.

Another example of an inventory throttle was the nationwide change at CVS in April restricting the use of credit cards for the purchase of some prepaid and reloadable cards.

Liquidation throttles

When I first wrote about Walmart bill payments in August, 2013, it was possible to pay American Express credit cards using PIN-enabled debit cards at any Walmart store location. In February, 2014, that stopped being possible, turning American Express bill payments into a potentially multi-day chore: buying money orders, depositing them, waiting for the deposit to clear, and finally initiating a bill payment. There's a straightforward relationship between the length of time it takes to pay down a card balance and the amount of spend you're able to put on that card each month.

Another liquidation throttle eventually encountered by many serious travel hackers is the finite willingness of banks to accept money order deposits. A bank that happily accepts $10,000 per month in deposits may call you to the carpet once you deposit $11,000. Those risk tolerances will depend on the bank and your relationship, but almost every bank will impose some kind of limitation eventually.

Adding additional banks is inconvenient and time-consuming, which leads me to a final throttle on manufactured spend.

Physical throttles

The single most important throttle on your manufactured spend is baked into the cake: how much time are you able to dedicate to this hobby. Complacent merchants, banks, and cashiers mean nothing if you don't have the time to manufacture as much spend as they're willing to help with.

Time in many cases also translates into a geographical constraint. If your merchants aren't located along your commute or within walking or biking distance of your home or workplace, you may only be able to visit them occasionally. Despite all the stars being aligned in your favor, your manufactured spend can still be physically throttled by the other components of your lifestyle.

Conclusion

The main point I hope to make with this post is that when you hear someone claim to be able to manufacture "unlimited" spend per month, that person shouldn't be understood to be bragging about their comprehensive knowledge of the game or their prowess as a travel hacker.

They're really bragging about factors that are almost entirely out of their control: their relationship with their banks and card issuers, their well-stocked stores, and their compliant cashiers. With all of those variables fixed in place, the only thing they're really saying is that they choose to dedicate more time to this hobby than others.

And good for them. But that's a lifestyle choice, not an achievement.

Point density versus imputed redemption values

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There are two related, but distinct, concepts that bear thinking about when contemplating hotel loyalty currencies. The same concepts are involved in airline mile redemptions, but in a much more nebulous way since airline award availability is much more closely tied to fares than in the hotel world, where (in some cases and under some circumstances) you are able to redeem your points for hotel rooms year-round.

Those concepts are "point density" and what I've called in the past (Club Carlson, Hilton) the "value per night required" to justify manufacturing spend on a co-branded credit card rather than a 2.22% cash back credit card like the Barclaycard Arrival+ MasterCard.

What's the difference?

Point Density

Point density, in the sense I use it, is a specific measure of the rebate value of a dollar spent with a hotel chain when the earned points are used for award stays with that chain.

On this page, I've calculated the point densities for 6 hotel loyalty program under a variety of conditions. Point density takes into account 2 variables: your elite status with the chain in question (and use of a co-branded credit card, if applicable) and the desired hotel category you aim to redeem your points in, and generates a single number: the number of dollars you need to spend to generate that award night redemption.

Some of this information was assembled by Travel is Free in this sprawling infographic (now slightly dated). You'll want to examine my complete point density charts if you want to make an educated decision about your own loyalty.

To give the most trivial example of point density, here's the amount of money that has to be spent with each hotel loyalty for a non-elite member using a third-party credit card to earn an award night at a top-tier property in that program, notwithstanding any promotions:

  • Starwood Preferred Guest (excluding "suite-only" properties): $17,500
  • Hilton HHonors: $9,500
  • Hyatt Gold Passport: $6,000
  • IHG Rewards: $5,000
  • Marriott Rewards (excluding Ritz Carlton properties): $4,500
  • Club Carlson: $3,500

Point density is the concept you want to focus on when you're paying out of your own pocket for your travel or have a choice where your employer puts you up. By examining the various point density charts, you can decide where the rebate value of your hotel spend will be highest: which chain will reward you with free nights at the properties you want to stay the most quickly?

Imputed Redemption Values

What I've previously called the "value per night required," but which is better called "imputed redemption value," measures something different: the value you need to get from redemptions of your manufactured spend to justify putting it on a hotel's co-branded credit card rather than a 2.22% cash back card like the Barclaycard Arrival+ World MasterCard.

My updated calculation of these imputed redemption values for Club Carlson are illustrative:

Reading this chart is simple: if you're redeeming 70,000 Gold Points for one night at a Category 7 Club Carlson property, your imputed redemption value is $308, since that's the value of the Barclaycard Arrival miles you could have earned with the same $14,000 in manufactured spend. If a revenue room at the same property is less than $308, you would have been better off manufacturing that spend on a 2.22% cash back card — or staying at a cheaper property!

However, as I've stressed before (here and here), that doesn't mean you shouldn't redeem your Gold Points for that night. On the other hand, if you find yourself consistently redeeming your points for below their imputed redemption value, you should take the time to reconsider your overall miles and points strategy.

Here's the chart I assembled for the Hilton HHonors program, assuming your spend is manufactured with the HHonors Surpass card at 6 HHonors points per dollar spent:

Here's a real-life example of decision making using this chart: I'm planning a 2-night stay at the Hilton Molino Stucky Venice this January, when the cheapest standard room award is 50,000 HHonors points. When I pull up room rates at the property, I find that rooms on my travel dates are costing $193. Since that's $8 above the imputed redemption value of $185 for 2-night, 50,000 point stays, I know that I'm not going to be leaving money on the table booking with HHonors points rather than my Arrival+ card.

This analysis doesn't take into account the points and elite night and stay credit earned on paid stays. In this case, by booking with HHonors points I'm foregoing about 3,700 HHonors points (as a Gold elite), or more depending on any promotions running in January.

That's a trivial enough sum that I'm comfortable disregarding it, but if you're gunning for high-level elite status with a chain that rewards loyalty better than Hilton does, like Starwood or Hyatt, foregoing your elite stay and night credits might require a larger redemption surplus.

Remaining Imputed Redemption Values

The remaining co-branded credit cards don't feature high earning on everyday spend like Club Carlson or lucrative bonus categories like the HHonors Surpass, so their imputed redemption values are easy to calculate:

Starwood Preferred Guest

Marriott Rewards

Hyatt Gold Passport

IHG Rewards

Remember: lower imputed redemption values are better

When deciding whether to redeem a fixed-value points currency or a hotel's own loyalty currency, you'll ideally maximize the difference between the value of your stay and your imputed redemption value. That's the money you "save" by manufacturing spend on a co-branded credit card instead of a 2.22% cash back credit card.

In this light, some of the higher imputed redemption values in the charts above are so high it's hard to imagine their relevance. In reality, if you look closely at the properties involved you might find the values are not completely unrealistic.

True, in a few minutes of surfing I wasn't able to find a single IHG property that retailed for over $1,100 per night. But Park Hyatts like Milan ($662 for the first date I checked), Paris Vendome ($730), and Sydney ($939) can easily exceed the $660 imputed redemption value for Category 7 properties. That's worth keeping in mind if you have your heart set on a specific property in an exotic locale (so-called "aspirational" award trips).

Conclusion

Imputed redemption values give you a simple method to decide how to achieve your travel goals as effectively as possible.

On that note, consider that cash and points awards, such as those offered by Hilton, Hyatt, and Starwood, sometimes provide the best of both worlds: the ability to redeem your Arrival miles against the cash portion of the award, while cashing in your hotel points at a value that exceeds the "remaining" imputed redemption value for your stay.