MS for hotels: taking Matt at his word

Background

This week I saw a lot of reactions to Drew at Travel is Free's post on manufacturing spend for hotel stays. Unfortunately, by looking only at the dollar cost of manufacturing spend, and not the opportunity cost, Drew left out the key fact that if you're not getting 2 or 2.2 cents per point when manufacturing spend on your co-branded credit cards, you'd be better off earning cash back and paying with cash for your stays.

Matt at Saverocity took advantage of that oversight to poke fun at Drew:

"Let me ask you a question… if I gave you $10,000 (plus fees) of my float and said. Come back with as many SPG points as you could, what would you do?

• buy 285,715 points with the 10K?

• buy 20x $500 cards with your SPG Amex and earn 10,000 points?

• buy 20 x $500 cards with your 5x, earning $500 cash and use that to buy at 3.5cents each?[...

...]Option 2 (use the SPG) vs Option 3 (use a 5% and buy points) is the difference between earning 10,000 (SPG card) and 14,785 (14,285, plus the act of buying the would earn 500 more)."

Now, my readers know that this wasn't strictly speaking fair of Matt. Of course you should be putting as much spend as you can on your 5% cash back cards – until that spend is throttled.

But Matt's quip still got me thinking: are there co-branded credit cards that generate points that can't be bought more cheaply with a 5% cash back card?

Love for sale: buying hotel loyalty points

Here's the cost of buying hotel loyalty points from each program I follow (without any bonuses on purchased points):

• Starwood Preferred Guest (up to 20,000 Starpoints per calendar year): 3.5 cents per Starpoint;
• Hilton HHonors (up to 40,000 HHonors points annually): 1 cent per HHonors point;
• Marriott Rewards (up to 50,000 Marriott Rewards points annually): 1.25 cents per Marriott rewards point;
• Hyatt Gold Passport (up to 40,000 Gold Passport points annually): 2.4 cents per Hyatt Gold Passport point;
• IHG Rewards Club (up to 40,000 IHG Rewards points annually): 1.15 cents per IHG Rewards point;
• Club Carlson (up to 40,000 Gold Points annually): 0.7 cents per Gold Point.

Analysis: cash back versus co-branded credit cards

Remember, the question is: are there points that are cheaper to earn through manufacturing spend on a co-branded credit card than buying them with cash back earned with a 5% cash back credit card (within annual purchase limits)?

We can immediately rule out the Starwood Preferred Guest American Express and Chase Marriott Rewards, Hyatt Gold Passport, and IHG Rewards Club credit cards, all of which earn just 1 point per dollar spent. Earning 5% cash back, on the other hand, allows you to purchase:

• 1.43 Starpoint (43% bonus);
• 4 Marriott Rewards points (300% bonus);
• 2.08 Hyatt Gold Passport points (108% bonus);
• or 4.35 IHG points (335% bonus).

The US Bank Club Carlson Premier and Business cards, which earn 5 Gold Points per dollar spent everywhere, come closer to par, since you can buy just 7.14 Gold Points with a 5% cash back credit card – a 43% bonus, the same as purchased Starpoints.

Hilton HHonors for the (dubious) win

The only hotel program whose co-branded credit cards stand toe-to-toe with 5% cash back in this comparison is Hilton HHonors. The Hilton HHonors Surpass American Express earns 6 HHonors points per dollar spent at gas stations and grocery stores, while a 5% cash back card in the same categories would only allow you to purchase 5 HHonors points at 1 cent each.

Conclusion

As Matt correctly points out, this analysis is absurd: you'll virtually always be better off spending your 5% cash back on revenue rooms, rather than buying hotel points to redeem for the same or similar hotels. However, it is worth keeping in mind if you happen to be close to a hotel redemption (perhaps an expensive Starwood Nights & Flights or Marriott Hotel + Air vacation package) and are considering shifting some of your manufactured spend from your 5% cash back card to a co-branded hotel card in order to earn the remaining points. Except in the case of Hilton, that's a trap – keep earning 5% cash back and just buy the remaining points you need (or transfer them from a flexible points currency like Ultimate Rewards).

5 ways to unload OneVanilla cards without a trip to Walmart

Well, my post yesterday minimizing the changes to OneVanilla acceptance at Walmart did not win me any friends. Let's see if I can take another crack at it.

You're annoyed, nervous, confused, and frustrated by the strange errors you keep getting at Walmart, but love earning 5% cash back at pharmacies and gas stations that sell OneVanilla cards. Here are 5 ways to use OneVanilla prepaid debit cards that still work.

Amazon Payments

An Amazon Payments account can make up to $1,000 in outgoing payments per calendar month. I typically save that bandwidth till the end of the month, then use it to liquidate any odd amounts I still have lying around on prepaid cards or, if none, use it to hit high-spend thresholds or minimum spending requirements.

To keep from having a $1 hold placed on your OneVanilla card, use an incorrect expiration date when adding the card to Amazon Payments. After the card has been successfully added, change the expiration date to the one found on the card.

Evolve Money

OneVanilla cards can still be used on Evolve Money. Find your billers, start slow, making sure each payment posts correctly and on time, and enjoy.

Grocery store money orders

While often more expensive than Walmart's $0.70 money orders, and with lower limits, many grocery stores also allow PIN-enabled debit cards to be used to buy money orders. Take a walk around town to see which stores play along, although be careful: many grocery stores apply much more scrutiny to frequent, large transactions than Walmart does.

Load Serve cards at Family Dollar

Grab a Vanilla Reload Network reload card from the gift card rack, bring it to the front, let the cashier scan it, swipe your Serve card, choose the amount of your load and swipe your OneVanilla card. There's no fee.

Trade up and out

If you have local stores that accept debit, but not credit cards, for non-Vanilla PIN-enabled debit cards, you may find it worthwhile to buy Vanilla prepaid debit cards using a credit card and then convert them to non-Vanilla debit cards. Your costs will be higher, but the benefits may still outweigh those costs (paying, for example, $10.90 for $25.20 in cash back).

Using OneVanilla cards at Walmart has become (slightly) trickier

Over the weekend, a number of reports appeared of new problems encountered when users attempted to use OneVanilla prepaid debit cards at Walmart store locations. Now that I'm back from my quick vacation, I had a chance today to get over to Walmart and see what the fuss was all about.

Incidentally, I'm aware that there are multiple point-of-sale systems installed across the country and that individual stores and managers can impose their own restrictions, so my datapoints won't be relevant to everyone. This is not a conclusive study, it's a first glance at the situation, a workaround that worked for me, and some further observations.

The bad news is, the problems are real. The good news is, I found them to be pretty trivial.

Buy money orders "customer-first"

In my last post on Walmart point-of-sale system updates, I reported that:

It's now my belief that at some Walmart store locations with the new(est) software, split-tender transactions for money orders can still be processed "cashier first." Bill payment transactions, on the other hand, can only be processed "customer first."

Based on my experience today, I now believe that money orders must now also be processed "customer first," at least when using OneVanilla cards.

As a reminder, that means the customer must get all the way through to submitting their PIN before the cashier submits the amount of a split tender.

When my cashier submitted the amount of the split tender first, on the other hand, then after entering the OneVanilla card's PIN the system returned an "Alternative Payment Required" error.  

Problems with all-Vanilla transactions

After figuring out the above, I decided to see if I could buy a money order with only a single OneVanilla card. Even though I told the cashier to hold off on his end until after I had entered my PIN, the terminal still returned the "Alternative Payment Required" error.

While I may have been experiencing cashier error, out of an abundance of caution and laziness I'll continue combining Vanillas with other PIN-enabled cards, like my PayPal Debit MasterCards.

The final-swipe theory

The relevant FlyerTalk thread already has thousands of datapoints and plenty of speculation about why this particular brand of card causes us so much grief. One theory floated there that has a certain amount of charm to it is the idea that OneVanilla cards can't be used for the final swipe in a PIN-based transaction. That certainly fits with my experience above: when using a single OneVanilla card, it's inherently also the last card to be used and returns an error.

While it will require further experimentation, if the problem really is related to swipe order, a customer desperate to use exclusively OneVanilla cards (and not other PIN-enabled debit cards, like those sold at grocery stores or office supply stores) could use (up to 4) OneVanilla cards, while being sure to leave a small balance that could then be paid for with cash.

Conclusion

I'll obviously continue reporting if I see any further changes to the OneVanilla landscape, but for now, I'm remaining calm. I'll continue buying OneVanilla cards as long as it makes sense to do so, while being sure not to carry more than I can comfortably unload without Walmart, should the situation there suddenly worsen.

Meanwhile, I'd love to hear from readers: have you noticed any patterns in your recent OneVanilla successes and failures?

News from the front: TD Go and online Bluebird debit load limits

As I mentioned last week, I am currently traveling, hence the lighter-than-usual posting schedule. But there are two quick hits I want to share with readers before I head to the rodeo.

TD Go (slowly) sloughs off this mortal coil

As my regular readers know, I recently moved from a state where TD Go cards were issued to one where they are not. I conveniently forgot to change the billing address on my linked credit card, which gave me a few more months of cheap manufactured spend, but I'm now seeing reports (apologies to whoever posted it first) that starting September 3, TD Go cards will allow funding only from TD Bank-issued credit cards (which presumably won't award whatever rewards currency TD Bank is issuing these days).

While TD Go's $3,000 monthly load limit was a rounding error of manufactured spend, it was a cheap rounding error, and it will be missed.

Bluebird raises online debit load limits

In addition to a $2,500 daily and $5,000 calendar monthly cash load limits, American Express's Bluebird checking account alternative also allows $1,000 in monthly online debit loads.

Since the product was launched, the only way to reach that $1,000 monthly load limit has been through online loads capped at $100 per calendar day. While painless, those 10 online loads have always a bit of a recurring nuisance.

Responding, no doubt, to the plaintiff cries of travel hackers everywhere, American Express has raised those daily online debit load limits to $200.

Conclusion

Together with PayPal's move to calendar-monthly My Cash load limits and Bluebird's change to $2,500 daily cash load limits (from the previous, $1,000 daily load limit), the working travel hacker's life has been simplified immensely in just the past few weeks.

And the only sacrifice the travel hacking gods demanded was $3,000 in unbonused spend.

I'll take it.

Reminder: register for 5% cash back each quarter (please)

Since converting my Citi ThankYou Preferred card to a Citi Dividend Platinum Select card in January, I've been carrying all 4 of the "classic" rotating-category 5% cash back cards. In addition to the Platinum Select, that includes the US Bank Cash+, Chase Freedom, and Discover it (formerly Discover More).

Each of the cards has its own advantages and disadvantages, but there are several recurring, powerhouse bonus categories each year. Gas stations are typical 5% cash back categories for the Freedom and it cards, while Citi has offered 5% cash back at drugstores for the last two years, and US Bank allows you to earn 5% cash back on Kiva loans, for an easy $400 per year (minus any defaulted loan amounts).

All of which you already know.

Discover won't award bonus cash back for purchases made prior to registration

Chase is famous for retroactively awarding the 4 bonus Ultimate Rewards points to Freedom cardholders who register up until the registration deadline, typically 2 weeks before the end of each quarter.

My public service announcement today is that Discover does no such thing.

The idiot that I am, I went out at the beginning of July and made 3 gas station purchases at my trusty local service station. A few weeks later – before my July statement had closed – I realized to my horror that I hadn't registered for the quarter's bonus categories. When my statement closed today, my hopes for redemption were dashed:

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There was no 5% cash back. There was barely any cash back at all. Meaning I wasted $1,500 in spend bandwidth and barely broke even, after liquidation costs.

Do yourself a favor: register for cash back every quarter, before you start spending!

Confirmed: PayPal My Cash limits now based on calendar month

Long-time readers and blog subscribers know that I've been following with interest the irregularities that occurred last month with PayPal My Cash load limits. The My Cash website has long claimed that the $4,000 monthly load limit was based on the calendar month, but experience proved otherwise: in fact the $4,000 limit reset on a rolling, 30-day cycle, which required a certain amount of vigilance to stay on top of (I used a Google calendar).

Early last month, the My Cash website started generating errors, the most significant of which was that load limits completely refused to reset; users who had some available load space at the time of the error were allowed to use it up, but older transactions didn't "roll off" as they had so far. Finally, towards the end of July load limits were reset in a pattern that suggested the monthly load limits would now, finally be based on the calendar month.

And sure enough, my load limits on my personal and business PayPal accounts reset today with a full, $4,000 ceiling.

Conclusion

For now, it appears that PayPal My Cash monthly load limits reset on the 1st of each month. This should make it easier to plan loads, and reduce the anxiety of watching the calendar in order to load PayPal accounts on the exact day each older load rolls off.

At least until PayPal and Incomm come up with something new to throw at us!

Reminder: AAA still sells Visa gift cards

[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

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!

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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

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

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).