Breaking: Iberia goes bizarre, British Airways award chart intact (for now)

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About 12 hours ago, at 10:23 am, I sent out what seemed like an innocuous tweet:

 

"Did Iberia go revenue-based while I wasn't watching? Short domestic flights are pricing out astronomically"

Here's what I was referring to. While planning an award trip using some of the 100,000 British Airways Avios I earned during that short-lived signup bonus back in January, I wondered whether I might see different availability or cheaper taxes and fees if I transferred my British Airways Avios (through Avios.com) to Iberia.

Here's the itinerary I was looking at, in British Airways' booking engine:

This is an example of an itinerary that, since British Airways prices segments out individually, is a pretty good deal despite their policy of charging three times the price of coach for US domestic first class. It's two 13,500 Avios legs paired with two 4,500 Avios legs, for a total cost of 36,000 Avios, while the same itinerary would cost 50,000 AAdvantage miles or 65,000 Alaska Airlines Mileage Plan miles.

Here's the same itinerary priced out with Iberia's award engine:

That's...weird. The same itinerary is pricing out cheaper using Iberia Avios than British Airways Avios (although the additional taxes and fees make British Airways the better deal overall).

But even weirder is that there's no reason, based on the award charts we all thought Iberia was using, for that odd number of Avios to be required at all.

Since Iberia only allows round-trip award reservations, I thought I'd see whether I got a similar result with a single-cabin reservation. Instead, it got weirder.

Here's a first class reservation between Madison and Chicago using British Airways Avios:

Just as we saw above, this roundtrip flight in first class prices out at 27,000 British Airways Avios.

Here's the same reservation priced out with Iberia Avios:

You read that right. The itinerary costs over twice as many miles using Iberia Avios (which, as a reminder, are freely transferrable to British Airways Avios).

For a final test, I thought I'd check the economy itinerary between Chicago and Lexington. Here's what British Airways shows me:

As you'd expect, the short round-trip itinerary prices out at 4,500 Avios each way.

Here's Iberia's pricing of the same award:

In this case, the economy itinerary costs almost three times as much using Iberia Avios!

The Explanation

As my Twitter follower @KennyBSAT was the first to point out, Iberia has quietly introduced what most bloggers this evening are calling a devaluation (see here, here, here, and here). They've already implemented a new award chart for partner award bookings, including American Airlines award bookings like the one I was booking today.

The new award chart will require close study, and as Gary points out, "long haul flying can be cheaper than using BA Avios."

The most interesting point my example above illustrates is that they appear to use a formula to weight mixed-cabin redemptions, such that adding short-haul economy legs radically reduces the total cost in Iberia Avios, sometimes below the cost in British Airways Avios. Since Iberia requires round-trip redemptions, it isn't obvious how to use this loophole to add a "third strike" to a reservation in order to drag down redemption costs. However, adding a short-haul economy flight to a long-haul business or first class flight may, as in my example, drastically reduce the number of Iberia Avios required for your award redemption.

Conclusion

Trust me: you'll be seeing a lot more analysis along these lines on all the most popular travel hacking blogs in the coming days and weeks. Potential arbitrage opportunities like these are the bread and butter of travel hackers, and I suspect a lot of discussions will be taking place on Twitter, as well as in the comments to this blog and others. Be sure to follow me @FreequentFlyr and check out my list of some of the best travel hacking feeds to make sure you're in the loop for this ongoing and guaranteed-to-be-lively discussion.

The Hilton smartphone app's best (new?) feature

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I don't have a very high opinion of hotel smartphone apps. Frankly, I find them pretty annoying; they constantly require me to sign in with login credentials I can never remember, and all but the simplest room searches are typically impossible. I principally use them to check whether points have posted from my co-branded credit cards and revenue stays.

One bright spot is the Club Carlson app, which allows you to easily search for both award availability and "Points + Cash" availability. That's something that's easy to do each morning while I wait for hotels to open up rooms for award redemptions.

The best Hilton HHonors app innovation

I just noticed this change today and thought I'd pass it along, although it may have been implemented a few versions ago. Hilton has a lot of brands in their hotel portfolio, and each one has different benefits included in standard room rates or provided to HHonors elite members.

As confusing as those differences are, even worse is that the HHonors account management page is notoriously unreliable, so even if you understand the choices you need to make, you're still bound to run into problems trying to adjust all the relevant account settings.

Do you know the difference between a Hampton Inn & Suites and a Hilton Garden Inn?

Neither did I, until I opened the HHonors app and navigated to "My Account" and "Hotel Benefits." There, each brand is listed and you're able to easily select which of each brand's benefits you'd like on your next stay.

That's where I found out that breakfast is included at Hampton Inn & Suites, so as a Gold member I can choose between 250 HHonors points or a bottle of water and a snack with each stay, while at Hilton Garden Inn I have to choose between free daily hot breakfast or 750 HHonors points per stay.

When it matters

Travel hackers typically relish complicated loyalty rules: the more complications there are, the more loopholes are bound to pop up. But Hilton's hellish website and byzantine brand differences just never made it fun to learn the ins-and-outs of the program.

The app's simple interface now lets you easily make split-second decisions like: on a one-night stay at a Hilton Hotels & Resorts property, would I rather get breakfast in town or pocket 1,000 HHonors points? If, like me, you typically sleep through breakfast anyway when on vacation, the 1,000 HHonors points start to look tempting – and choosing them is now just a matter of tapping an in-app sliding button 24 hours before you check in.

Do this now: register for fall/winter Hilton and Marriott promotions

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I've updated my Hotel Promotions page with information on two fall promotions announced so far. While neither promotion is particularly lucrative, it's crazy not to register for these promotions when they pop up, since it's hard to know in advance when a revenue night will end up making sense for your travel needs.

Hilton HHonors: double or triple base points

Between August 1 and October 31, 2014, earn double base points on paid weekday stays and triple base points on paid weekend stays. Register for the promotion here and find the (long) list of non-participating properties here.

Marriott Rewards: double points starting with second paid stay

Between September 15 and January 15, 2014, earn double Marriott Rewards points (up to 25,000 bonus points) starting with your second paid stay. Register for the promotion here.

Register now, before you forget.

MS for hotels: taking Matt at his word

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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

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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

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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

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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)

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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:

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

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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

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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.