It could happen to you: improperly activated OneVanilla cards

There are a few situations that are guaranteed to strike horror into the heart of any travel hacker: denied boarding on a cabotage fare; having to make or change a reservation through a BA call center; making a United connection in Chicago.

If you manufacture spend, you may lose sleep over closed bank accounts or American Express financial reviews, but there's no worse possibility than your money just...disappearing.

Last week, I bought an improperly activated OneVanilla card. Now that the situation has been resolved, I want to share my experience.

Why are OneVanilla cards improperly activated?

In the last few years, I've purchased hundreds of thousands of dollars in OneVanilla prepaid debit cards. While they're not as useful as they once were, due to the recent inconvenience of using them at Walmart and new limits on Evolve Money bill payments, for example, they're still useful for Serve loads at Family Dollar store locations and other debit transactions, like grocery store money orders (where available) and Kmart bill payments.

On Thursday, for the first time, next to the OneVanilla card on my receipt, instead of the word "ACTIVATED" I saw the word "ACCEPTED," and below that the phrase "PREPAID CARD ACTIVATION WILL OCCUR WITHIN 24 HOURS:"

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It's impossible to say for sure why the card was improperly activated, but in hindsight one thing has assumed greater importance in my mind: while purchasing the cards, I somehow ran up against the $5,000 daily CVS purchase limit, even though this was my first purchase at CVS that day. Whether it was a computer error or a function of the daily cutoff time CVS's servers use, it was an ill omen.

What to do if your card is improperly activated

Sure enough, when I attempted to check the card's balance online and over the phone, the system responded that no such card existed.

I remembered reading reports from some folks on FlyerTalk that their cards sometimes weren't immediately activated, so I waited the full 24 hours before calling into the number on the back of my OneVanilla card: 1-877-770-6408.

It was a fairly simple matter to reach an actual person, to whom I explained the situation. He looked up the OneVanilla card's number, saw it was improperly activated, and then needed to collect some information:

• The date and time of the purchase;
• the STR# number from the receipt;
• the last four digits of the card's packaging (also available on the receipt);
• the address and phone number of the store where I purchased the card.

Finally, he asked that I fax or e-mail a copy of the receipt and my driver's license. I opted to e-mail the documents to the address he provided, USConsumed@incomm.com.

While the customer service representative said the activation process could take up to 3 business days, I found my OneVanilla card had been activated by this morning, or a day before the self-imposed deadline he gave me.

While for some reason I was still unable to use the OneVanilla card at Family Dollar this morning (a problem I've had once before), I was able to fund an Amazon Payment with it, and consider this particular case "closed."

Lessons learned and reinforced

While my fairly meticulous bookkeeping made this situation a minor annoyance, rather than a catastrophe, it certainly drove home the importance of tracking every dollar of manufactured spend until it's safely ensconced in an FDIC-insured bank account or has posted as a payment to a credit card.

Here are three more tips to keep yourself out of trouble:

• Check receipts immediately to make sure they correspond to the packaging of the cards you purchased. After opening the packaging, write down the last four digits of the card number (I write the digits directly on the packaging);
• If a card hasn't activated properly, point it out to the cashier immediately and see if they can resolve it in-store. If not, note the cashier's name in case you later need to file a chargeback with your credit card company;
• The sooner you contact the prepaid card issuer, the sooner the problem can be resolved. Don't just hope an improperly activated card will eventually be activated.

Subscription week: Walmart bill payments

[As I explained yesterday, this week I'm re-running 5 "classic" Free-quent Flyer Blog posts. Today's post is a true classic, the first clear, public description of one of the most useful and flexible manufactured spending techniques: Walmart bill payments. The post that launched a thousand trips, it's still one of the most versatile and flexible techniques available, although there have been changes: for example, American Express-issued credit cards are no longer directly payable at Walmart. There are also a few oversights that are embarrassing in retrospect (Discover bill payments cost $1.50, not $1.88, for 3-day bill payments). This post originally ran on August 26, 2013 — check out the comments there.]

Walmart allows you to pay credit card bills using any PIN-based debit card

HOW IT WORKS

Walmart Money Center registers and, in locations without a separate Money Center, Customer Service registers are integrated with the CheckFreePay bill pay network. At any such register, you can ask to make a credit card bill payment and use any PIN-based debit card to pay the bill and the associated fee.

You can use up to 4 PIN-based debit cards per bill pay transaction, while paying a single transaction fee.

Credit and debit cards are issued by banks: Chase credit cards are issued by Chase, American Express credit cards are issued by American Express, Bank of America credit cards are issued by Bank of America. However, each card is also linked to a payment network: Visa, MasterCard, American Express, Discover.

The single most important thing you have to know in order to take advantage of this technique is that when you pay your credit card bills at Walmart, you must make the payment out to the payment network, not the issuing bank.

So even though your Chase Sapphire Preferred Visa Signature card and your Chase Ink Plus MasterCard are both issued by Chase, to pay your credit card bills at Walmart the payee for the Sapphire Preferred will be "Visa" and the payee for the Ink Plus will be "MasterCard."

WHAT IT COSTS

This section is based only on my experiments at my local Walmart store locations: your experience may differ.

There are two price points in the CheckFreePay system at Walmart: $1 "3 business day" payments and $1.88 "next business day" payments. Unfortunately, not every credit card payment network has both payment speeds enabled. Here are the results of my experiments:

• Visa: Next business day only ($1.88)
• MasterCard: Next business day only ($1.88)
• American Express: Next business day ($1.88) or 3 business day ($1)
• Discover: Next business day ($1.88) or 3 business day ($1)

So if you want to make a credit card payment to a Visa credit card at my local Walmart, you must pay $1.88: the $1 payment option is not available. This may vary by store location or employee. 

WHY IT MATTERS

Ever since the Federal Reserve issued new regulations forcing prepaid card issuers to allow their cards to be used as "true" PIN-based debit cards, we've been in a very exciting time for travel hacking. For example, Chase allows up to $2,600 in free gift card purchases per Chase credit card, per rolling 30-day period. Likewise, many grocery stores (a common bonus category) allow you to purchase $500 Visa and MasterCard gift cards at a typical cost of $5.95-$6.95.

Besides gift cards, in many parts of the country it's still possible to buy Vanilla Reload Network reload cards at drug stores like CVS, and PayPal Cash cards at 7-11 store locations that are processed as gas stations. 

The problem in this era of virtually unlimited manufactured spend is liquidating prepaid cards once you've purchased them.

Bluebird is a free option, loadable at all Walmart registers using PIN-based debit cards up to $1,000 per day and $5,000 per month, but those loads count against the same $5,000 calendar month limit as Vanilla Reload Network cards.

Gobank is another great option I've extensively covered, but while it's free to load Gobank accounts at Walmart up to $1,100 per transaction and $2,500 per day, it's a Green Dot product that's subject to shutdown if you exceed undisclosed monthly limits or if your loading pattern is deemed "unusual."

PayPal has a $4,000 rolling 30-day load limit using PayPal Cash cards, but unloading your account can cause problems since PayPal is notoriously sensitive to abusive behavior.

All of those problems have now gone away: you no longer need an intermediate product to liquidate your prepaid cards.  Instead, you can bring up to 4 PIN-based debit cards per bill pay transaction to your local Walmart and at a cost of $1 or $1.88 send the card balances directly to your credit card.

THE RISKS

There are 3 primary risks to this technique that I want to be perfectly clear about up front.

First, there's the risk of having an account shutdown. There are many reports of MyVanilla Debit cards being shutdown without warning, and it's still unclear what loading and unloading pattern is safest. I don't have an inside line on MyVanilla Debit's fraud prevention algorithms, but I believe cash advances are probably the riskiest method of unloading the cards, because of the high limits and fixed $1.95 fee. Large Walmart transactions are probably a close second. So while this is a great technique for liquidating MyVanilla Debit balances, you still should be careful about spacing your loads and unloads out over the course of the month. And of course, even being careful can't guarantee that your account won't be closed.

Second, there's the risk that Walmart will consider your payments suspicious activity. There are lots of reports in this thread of Walmart employees being prompted to record customers' Social Security numbers, home addresses, and other personal identifying details. Those requests seem to be triggered by credit card payments over $2,000, although the exact level that triggers scrutiny isn't clear. Many people are made uncomfortable by disclosing this sensitive information to Walmart tellers. It appears the best way to avoid doing so is to keep your bill payments below $2,000, although this will raise your cost per dollar of manufactured spend.

Finally, when it comes to Walmart there's always the risk of employee incompetence. This can take a number of different forms. Of course, an employee may simply not know how to make these bill payments. Alternatively, there are reports that some store locations demand that you physically bring your most recent credit card statement into the store. Further, some store locations refuse to allow bill pay transactions to be funded by gift cards (cards that don't have your name embossed on the front). Finally, some employees may feel uncomfortable with multiple, high-value transactions, and simply refuse to help you. Be aware that this is not corporate policy: you've just found an incompetent employee, or a store location with an over-vigilant store manager. Visit another location or return at a different time.

These are manageable risks, but they do exist and you should be aware of them before beginning to use this technique. As always, I recommend starting slowly, using money that you can afford to be temporarily without if something goes wrong, and watching your credit card statements carefully to make sure that each payment posts correctly.

CONCLUSION

This is a very basic overview of this technique. It works and it can increase your volume of manufactured spend while only slightly increasing your cost per point.

Tomorrow, I will provide my analysis of the volume and cost per dollar of manufactured spend that you can achieve using this technique, and I'll compare it to some other popular techniques.

Later in the week I'll discuss some of the most lucrative opportunities this technique unlocks and share my own plans to use it going forward.

If you've already been using this technique, please share your experiences in the comments. How long do your CheckFreePay payments take to post? Do they post at the beginning or end of the business day? What problems have you had dealing with Walmart employees, and how have you resolved them?

Introducing subscription week!

About 5 months ago, I left my job in New England to move to the upper Midwest, where I've been happily plugging away on this blog and grinding out a living as a travel hacking enthusiast. I've enjoyed posting more regularly, helping readers, and the freedom that comes from having no one but my readers to answer to.

A snapshot of the Free-quent Flyer empire

After almost 2 years blogging, today this site has an average of 3,519 unique visitors per week, plus around 1,000 more who subscribe to my RSS feed or receive posts by e-mail.

Meanwhile, there are 3 main ways readers financially support the site. First is the use of my referral links, all conveniently assembled on my "Support the Site!" page. The two best performing links so far are my BeFrugal and TopCashBack referral links. Both have long delays between referrals and payouts, but enough people have signed up that I end up hitting BeFrugal's $25 redemption threshold about once a month:

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On the other hand, about one TopCashBack referral goes from "pending" to "payable" status each month. You can see this month's hasn't quite reached that status yet:

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The second way readers support the site is by bookmarking or clicking through my Amazon.com referral link, which kicks back a small percentage of each purchase to me. Many readers have done so, and I've been earning roughly $10 to $20 per month, for which I'm incredibly grateful to my loyal readers!

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The third and most important way readers financially support the site is by signing up for weekly or monthly PayPal subscriptions. In total, I have 120 active PayPal subscribers, most of whom contribute $2 monthly, of which I receive $1.64, after PayPal takes their cut. Others contribute $5 weekly or monthly, which I earn $4.55 on, and a few heroes have signed up for $10 monthly subscriptions, of which I get $9.41. PayPal doesn't have any convenient way of displaying this kind of information, but here's the dashboard:

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Last month those subscriptions added up to $309.23 after fees.

Introducing Subscription Week!

As you can see, PayPal subscriptions provide the overwhelming majority of this site's revenue, but 120 active subscriptions means that just 2.6% of my weekly readership, or roughly 0.8% of my monthly readers, have signed up!

That's why this week, I'll be re-running 5 "classic" Free-quent Flyer Blog posts, which I think illustrate the different kinds of content that I hope make this blog worth paying (a nominal sum) for.

If you're a regular reader, I do hope you'll consider subscribing.

And if you're already a subscriber, why not take the opportunity to move from a $2 to $5 subscription, or from a monthly to weekly one?

No matter what, I hope you enjoy this week's classic posts from the archive, starting tomorrow. There are a lot of gems in there – picking out just 5 was the toughest part!

Reminder: status match to Alaska Airlines

Regular readers may remember my intention to request a status match to Alaska Airlines' MVP Gold status from my current (and soon to expire!) Delta Platinum Medallion status.

Platinum Medallion status is certainly the best value in Skymiles elite status, since it gives free award changes and redeposits (outside of 72 hours of departure). That has long been an invaluable benefit, allowing you to book each leg of an award trip as it becomes available, instead of relying on an entire, round-trip award reservation being available at the low level at the time of booking.

On January 1, 2014, Platinum Medallion status is about to become much less valuable. That's for two reasons:

• On the earning side, Delta's Skymiles program is going to become "revenue-based," meaning you'll no longer earn twice the number of miles flown in redeemable Skymiles as a Platinum Medallion.
• On the redemption side, Skymiles will be redeemable for one-way tickets, meaning there's no need to "lock in" low-level seats on one leg of your trip; instead, you can just book one-way reservations as low-level award seats become available.

Alaska Airlines status matches are good through 2015

While I've long planned to request a status match from Alaska Airlines, the FlyerTalk thread on the subject is surprisingly sparse. Most importantly, there's no definite answer to the following question: starting on what date are Alaska Airlines status matches valid through the entire following membership year?

In September one member claimed the cutoff date was November 1, while all the way back in July another member quoted an e-mail from Alaska saying the cutoff date was October 1.

To be safe, yesterday I sent in my status match request without the supporting documentation, so that I could wait if the critical date turned out to be November 1. I wrote:

"Dear sir or madam,

I’m currently a Platinum Medallion elite member of the Delta Skymiles program, and I’m disappointed with the changes Delta has planned for the Skymiles program in 2015.

I’m switching as much of my travel as possible to Alaska, and I’d like to know whether it’s possible to request an elite status match or challenge to Mileage Plan MVP or MVP Gold status based on my current Platinum Medallion status?

If so, could you inform me of the procedure and any additional documentation Alaska requires to process a status match or challenge?"

I almost immediately received back the following automated response:

"Thank you for your interest in our award winning Mileage Plan. To submit your request for a Tier Match, send a copy of both sides of your current elite card, an e-Statement showing current status and your drivers license. If your original email did not include all of these documents, please resubmit with all three attached. Allow 2-4 weeks for processing once we have received your documents. When your Tier Match is complete, you'll receive a welcome email and can check your status at alaskaair.com/myaccount.

Please note that Tier Matches can only be extended once during the life of your account and the status is valid through 12/31/2015.

We look forward to welcoming you into our program and flying with you for many years to come!

Also note, we only offer a Tier Match for: AeroMexico, Air Canada, American, Delta, Frontier, Hawaiian, Jet Blue, Southwest, United, US Airways, and Virgin America" (emphasis mine)

So it's official: get your status match started, and enjoy distance-based redeemable mile earnings for at least another year with Alaska's generous Mileage Plan!

Why would you book a stopover on a one-way trip?

On Wednesday I saw this post by The Miles Professor explaining how to book stopovers on one-way Alaska Airlines award tickets.

The thing is, it's not immediately obvious why you would ever do this.

As The Miles Professor writes:

"One of my favorite ways to use stopovers is to schedule a stopover in my actual home city and use the stopover to connect two completely different trips."

Of course Alaska Airlines has a zone-based, not distance-based, award chart, so there's no reason you would need to book two round-trip tickets from your home city as two one-way trips with stopovers in your home city. For example, a Seattle resident could book the following two one-way tickets:

• LAX-SEA (stopover)-BOS
• BOS-SEA (stopover)-LAX

Each of those tickets would cost 12,500 Alaska Mileage Plan miles, assuming there's low-level award availability. But remember, our hypothetical passenger is a resident of Seattle, so they'd need to find some way to get to LAX in the first place, and some way back from LAX at the end! Each of those one-ways would also cost 12,500, bringing the total cost for 2 roundtrips to 50,000, just as it's supposed to be.

Now, at this point you've probably seen the sleight of hand I'm pulling; in fact our passenger knows better than to spend 12,500 valuable Alaska miles on a short West Coast hop, and instead transfers 7,500 Chase Ultimate Rewards, Starwood Preferred Guest, or American Express Membership Rewards points to British Airways Avios, and ends up with reservations that look like this:

• SEA-LAX – 7,500 Avios
• LAX-SEA (stopover)-BOS – 12,500 Mileage Plan
• BOS-SEA (stopover)-LAX – 12,500 Mileage Plan

Here we've booked two-and-a-half round-trips for the price of one-and-a-half roundtrips. Not bad! Of course our passenger still has to find a way back from LAX if they decide to fly that leg, but even if they don't, they still end up a one-way flight ahead of the game, which isn't nothing.

If that's the obvious use for stopovers on one-way trips, I thought it'd be interesting to see which others I could come up with.

4 reasons to book stopovers on one-way award tickets

1. See more cities. As you can see in the comments to The Miles Professor's post, you can also book stopovers on one-way Alaska Airlines partner awards, so if you're booking an award ticket on a partner airline like KLM, you can stop over for a few days and enjoy Amsterdam on your way.
2. Cheap awards to Hawaii and Mexico. Since you can book award tickets from anywhere in the continental United States to Hawaii and Mexico for the same price, which is less than twice the cost of domestic awards, you can book future, onward travel to Hawaii for just 7,500 miles or Mexico for 5,000 miles, compared to the 20,000 and 17,500 Mileage Plan miles, respectively, you'd have to pay to book a separate itinerary.
3. Position for future flights. I showed one example of this technique above, but you can also use it to position for flights on other carriers. For example, United operates an international hub out of San Francisco, but you might have difficulty finding low-level award space between Seattle and San Francisco on United-operated flights. Instead, you can use your free one-way flight to position to San Francisco on an Alaska Airlines-operated flight.
4. Because you can. As long as you book your speculative onward connection at the end of your itinerary, you may as well tag an extra leg onto your reservation. Who knows, you might even end up using it! Just don't book a speculative connection at the beginning, since a missed first leg will typically cancel your entire itinerary.

Conclusion

Free one-ways are a fun and easy way to take advantage of airlines' generous award routing rules.

Which reasons to book a stopover on award tickets did I leave out?

Confirmed: multiple same-day Serve loads at Family Dollar

Back in July I mentioned my intention to load my Serve card at Family Dollar for the time being, using easily-acquired OneVanilla prepaid Visa debit cards, and just last month shared my local store manager's theory about the kinds of limits Family Dollar registers impose on Serve loads.

As I explained in that second post:

"However, using Family Dollar raises its own issues; in particular, you can generally only load a Serve card once per day, per store location. Since I only have one convenient Family Dollar location, that means loading $5,000 in OneVanilla cards over ten days, compared to the 2 days possible at Walmart registers ($2,500 per day)." (emphasis added)

While it's true that I have only one convenient Family Dollar location, it's not precisely true that I have only one local location.

Multiple same-day Serve loads are possible at different Family Dollar locations

A reader had privately e-mailed me to let me know he was able to load his Serve card multiple times on the same day at different Family Dollar locations, so this morning I set off to cruise around the suburbs and collect my own datapoints.

I ended up visiting 3 Family Dollar locations: my own local, convenient location, and two suburban locations:

• My $500 load went through as usual at my local store;
• the first suburban location's card readers and PIN pads were out of order;
• and the second suburban location allowed me to complete a second, $500 load.

My working hypothesis for now is that you can load up to $2,500 per day (Serve's daily cash load limit, per the Serve website), by visiting 5 different Family Dollar store locations.

Family Dollar loads have their drawbacks

Those with access to more store locations will benefit most from this fact, and not just because you need access to 5 stores in order to complete 5, $500 loads.

In addition to the one-load-per-store-per-day limitation, Family Dollar registers also have an overreactive fraud detection algorithm, such that you might be unable to load your Serve card at any given store even once, depending on that store location's previous daily load activity, as I described here.

And of course, as my experience today showed, Family Dollar stores are not necessarily reliable partners; both technical difficulties and undertrained personnel can make life more frustrating that you'd like.

Conclusion

I know there are metropolitan areas with dozens of Family Dollar locations, and for residents of those areas the possibility of multiple, same-day Serve loads using OneVanilla cards is yet another advantage of Serve over Bluebird.

As Serve becomes ever more useful than Bluebird, it seems to me that it must be a matter of time until Bluebird cards are discontinued and Serve remains as American Express's flagship prepaid card product.

Comparing distance- and revenue-based airline loyalty programs

In 2015, there will be two major distance-based airline loyalty programs based in the United States – American's AAdvantage and Alaska Airlines' Mileage Plan – and two major revenue-based loyalty programs – Delta Skymiles and United Mileage Plus. US Airways Dividend Miles will presumably disappear sometime in 2015, so I won't treat that program here.

A lot of digital ink has been spilled about whether individuals will earn more miles before or after the changes, but I think that's a relatively unimportant question – not just because I earn the overwhelming majority of my airline miles through manufactured spend, rather than flying, but also because it's irrelevant: the changes are coming, on January 1 in Delta's case and March 1 for United.

In other words, what's needed is a forward-looking analysis of earning under the revenue- and distance-based programs under a variety of circumstances.

Example: my 2014 travel projected into 2015

I noticed recently that Delta makes it easy to compute exactly how much better off you'd be crediting your paid miles flown on Delta tickets to Alaska, rather than Delta. I currently have 28,000 Medallion Qualifying Miles, which consist of a 10,000 Delta Platinum American Express bonus, 1,142 Rollover MQM, and 16,858 miles flown this year on paid tickets. Meanwhile, my Medallion Qualifying Dollar balance for the year is $1,150, which gives me a cost per flown mile of 6.8 cents.

Next year, as a Silver Medallion, I would earn 8,050 Skymiles over the course of the year if I credited the same amount of paid travel to Delta. Since I'll be requesting a status match to Alaska's MVP Gold status on October 1, I'd earn 33,716 Mileage Plan miles for the same amount of paid travel on Delta.

Of course, a more fair comparison is to my current Delta Platinum Medallion status, which would earn me 10,350 Skymiles – still roughly a third of the Mileage Plan miles I would earn.

Analysis: comparing apples to apples

You may have seen travel bloggers suggest a "breakeven" point of 20 cents per mile flown: those who spend more than 20 cents per mile will earn more miles under the new system, while everyone else will earn fewer.

This ignores the fact that there will still be distance-based loyalty programs that offer elite bonuses on miles flown. To give a more comprehensive view, I decided to compare the 2015 revenue- and distance-based loyalty programs taking into account both the cost per mile flown and elite status.

Here's the result:

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As you can see, the actual breakeven cost per mile flown varies tremendously – in both directions. If you're a 25,000-mile-flyer deciding between a United ticket and one operated by American, Delta, or Alaska, know that you need to be spending not 20 cents per mile, but 21.4 cents per mile, to earn as many miles as you would crediting a flight the same distance to Alaska.

A Delta flyer deciding between maintaining Delta Platinum Medallion or Alaska MVP Gold status would need to spend on average 22.22 cents per mile flown to earn as many Skymiles over the course of the year as she would Mileage Plan miles – that's over 3 times more than I actually spend per mile flown on revenue tickets.

Conclusion

This analysis isn't meant to be dispositive: you may value the perks of elite status with Delta or United, like waived award change and cancellation fees, more than the miles you're foregoing by not crediting your flights to Alaska (in the case of Delta) or another Star Alliance partner in the case of United.

But it is an easy way to determine just how many miles you're leaving on the table by doing so.

Back-of-the-envelope assessment of the Diners Club Card Elite

I saw today that Diners Club is now issuing consumer credit cards in the United States, and I mentioned on Twitter that the $300 annual fee might be worth paying if you value miles transferred from the program at more than 1.7 cents. That's an extortionate annual fee, and I won't be applying for the card myself, but in case you do value your airline miles that highly I want to show my work to explain how I arrived at that number.

The Diners Club Card Elite card gives 3 points per dollar spent at gas stations, grocery stores, and drug stores. The problem is that gas stations and grocery stores are already such heavily-bonused categories that neither, alone or together, could justify paying a $300 annual fee.

You can already earn 3 flexible Membership Rewards points per dollar spent at gas stations with the Amex Everyday Preferred card, and earn 2 US Bank Flexpoints per dollar spent at grocery stores (worth between 1.33 and 2 cents each when redeemed for airfare) while paying just under 50% the annual fee of the Diners Club Card Elite.

Drug stores, on the other hand, are not as frequently-bonused as they used to be, so the most relevant comparison is the "old" American Express Blue Cash card, which earns 5% cash back at drug stores after the first $6,500 in spend per membership year.

The Comparison

I consider the risk-minimal amount of spend at drug stores per month to be $13,000 for a single person, in most parts of the country (two PayPal accounts and a Serve account, if you have access to Family Dollar store locations). It's easy to spend more, but that provides a benchmark for monthly drug store spend.

Over the course of a year, that amount of spend would earn $7,540 with the "old" Blue Cash card (since the first $6,500 would earn just 1% cash back), or 468,000 transferrable Diners Club points (in which case you'd incur an annual fee of $300).

At that point it's easy to see that the surplus of $7,840 implies a value per transferred mile of 1.67 cents. If you value each one of your transferred miles at more than that, you might be better off with the Diners Club Card Elite.

Note the emphasis above: it's not worth earning the transferrable points if you occasionally redeem them for high-value awards – you need to value all the miles you earn, on average, at over 1.67 cents each.

While I used the "risk-minimal" amount of drug store spend in this comparison, in fact this is very close to the analytical limit: doubling annual drug store spend yields $15,340 in cash back and 936,000 transferrable points, or 1.63 cents per mile, because of the slowly diminishing importance of the $6,500 "penalty." In other words, having either or both cards doesn't affect the imputed mile valuation by much, regardless of your annual spend.

So, what are your miles worth?

From FlyerTalk, here are the transfer partners for the Diners Club rewards program (the catalog requires you to log in to view redemptions):

• OneWorld: British Airways
• SkyTeam: Delta Airlines, Korean Air.
• Star Alliance: Air Canada, Eva Airways, SAS, South African Airways, Thai Airways.
• Independent: Alaska Airlines, El Al Airlines, (1000:20), Frontier Airlines, Hawaiian Airlines, Iceland Air, Southwest Airlines (1500:1200), Virgin Atlantic.
• Hotels: Best Western (1250:3300), Choice (1250:2400), Hilton (1250:2000), Hyatt (1250:750), Intercontinental Hotel Group (1250:1500), Marriott (1250:1500), Starwood (1250:750).
• Rail: Amtrak.

What caught my eye here is the not-totally-unreasonable hotel transfer ratios, particularly the "mere" 40% penalty you incur transferring your points to Starwood Preferred Guest. At 0.6 Starpoints per Diners Club rewards point, you can earn 1.8 Starpoints per dollar spent at drug stores. While it doesn't convince me personally, there's certainly a lot of value that can be unlocked there — plus it's a good escape valve in case you decide to apply for the Diners Club card and end up unable to use the points for direct airline transfers.

Conclusion

In any case, that's how I glance at an earning ratio and decide what mile valuation is imputed – plus a quick review of the Diners Club Card Elite!

Redeeming Ultimate Rewards points for cash, miles, and both

I frequently redeem my Ultimate Rewards points for cash. Not statement credits, not mile-earning revenue airline tickets, but cash, deposited into a checking account.

There are a lot of reasons I do this. Here are a few:

• The least valuable mile or point is always the one you don't redeem. An Ultimate Rewards point sitting in my Chase online banking account is, by definition, not working for me in the way that a dollar deposited into a 6% APY savings account or a checking account linked to a rewards-earning debit card is. That's why I keep my rewards balances as low as possible; when I see my Ultimate Rewards balances creeping up towards 50,000 or more, I know I'm doing something wrong, and it's time for a redemption.
• I rarely value Ultimate Rewards transfers program currencies as highly I value the equivalent amount of cash. Flying United makes me feel like I'm watching a tragedy unfold around me in slow motion; Hyatt points are more valuable, but rarely coincide with my needs; Marriott points are worth fractions of a cent; IHG Rewards points still less; and so on.
• Chase ultimately controls my points as long as they remain in my Ultimate Rewards accounts. I don't have an overwrought fear of being "punished" for manufacturing spend the way some folks do, but Chase's ability to do whatever they want with my Ultimate Rewards balance is a fact, and it needs to be hedged against.

However, one of my goals here is to provide an objective accounting of travel hacking strategies, and I try not to let my own prejudices (like a preference for cash over miles and points) to influence my analysis. So I decided to figure out just what exchange rate is implicit in a variety of theoretical situations, just as I did with the imputed redemption value of hotel points.

Reminder: once you've earned points, speculative valuations are worse than useless

It's a point I've made before (see here for more), with which apparently no one agrees, but it's still true: you should value your point balances and point opportunities in a forward-looking way, based on the redemptions you actually intend to make and informed by the redemptions you have actually made.

The speculative valuations, right or wrong, used to justify acquiring points go out the window once the points have been earned, since the points are worth nothing until redeemed (and invariably lose value the longer they sit unused).

You may have acquired a million Ultimate Rewards points based on a speculative valuation of 2.2 cents each, but they're worth nothing until you redeem them, while the $10,000 you can redeem them for today is worth exactly $10,000. Not only that, but the option value of keeping them in your Ultimate Rewards account isn't free: you're paying $95 per year for that privilege.

If a high speculative valuation (or the obsession with aspirational redemptions some affiliate bloggers use as bait) is keeping you from redeeming your points, it's not helping you make objective decisions – it's blinkering you and playing right into the banking and loyalty industries' hands.

Imputed United redemption values

Starting March 1, 2015, United's Mileage Plus loyalty program is becoming "revenue-based:" the miles you earn for revenue flights are determined first by the dollar value of your ticket (less certain taxes and fees), adjusted for your elite status. As a reminder, here's United's earning chart, starting March 1:

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Since (flexible) Ultimate Rewards points are worth 1.25 cents each when used to book paid, mile-earning airline tickets, we can generate the following table (on the assumption that you do or can – at least occasionally – book revenue tickets out of your own pocket, rather than redeeming a more valuable rewards currency like Flexpoints):

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The first two values given are fixed, as is your cost per mile when transferring Ultimate Rewards points: no matter your Premier elite status, you're buying United miles for 1 cent each when you transfer Ultimate Rewards points to your Mileage Plus account instead of redeeming them for cash.

The last line reflects the fact that when you redeem Ultimate Rewards points for flights, you're getting more cash value from your redemption (1.25 cents per point) and earning fewer miles (the number depending on your elite status).

That imputed "cost per mile" is the amount of cash value you're foregoing per 100 Ultimate Rewards point when you transfer 100 Ultimate Rewards points into 100 Mileage Plus miles, rather than redeeming the points for a mileage-earning flight; in other words, the price you pay for the additional miles over those you'd earn on a paid ticket.

Starting March 1, a general member of Mileage Plus will be buying more miles (about 93) for her $1.25 in foregone value than a Premier 1K, who buys just 86 miles for the same $1.25 (since both members could redeem 100 Ultimate Rewards points for $1.25 in paid United tickets).

For that reason, it should be easier for a non-elite member to justify transferring miles to United than a Premier 1K, who's buying fewer miles (and foregoing precious Elite Qualifying Miles at the same time).

On the other hand, the Premier 1K may well value her United miles more highly, because of the added flexibility afforded by her status, such as waived close-in booking fees and free award changes and redeposits.

Imputed Delta redemption values

Of course, Ultimate Rewards points aren't directly transferable to Delta Skymiles. However, they are indirectly transferable in that you can book paid Delta flights using Ultimate Rewards points.

On January 1, Delta is adopting the same redeemable-mile-earning structure as United is in March:

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This conveniently makes the math the same as shown above, but rather than an equal exchange of $1.25 in foregone ticket value for the difference in miles received, you're paying $1.25 to exchange a smaller number of Skymiles for a larger number of Mileage Plus miles.

In other words, if a general member of Delta values a Skymile more highly than a Mileage Plus mile, they need to value Mileage Plus miles more than 1.33 cents each to justify transferring Ultimate Rewards point to United.

If they value Mileage Plus miles more highly than Skymiles, they can justify transferring points despite valuing Mileage Plus miles less than 1.33 cents each, and so on across the board.

Conclusion

This post was originally supposed to include another line of analysis as well, but it's late on a Friday afternoon and I haven't been able to gather my thoughts quite as cogently as I'd hoped to when I started writing. So that's something to look forward to this weekend!

Instead let me conclude like this: Ultimate Rewards transfers to partners can be the most valuable uses of those points, but they aren't unless you actually redeem them in ways that are valuable to you: never redeem Ultimate Rewards points for less than 1 cent each with a transfer partner (since you can pocket the difference in cash), and when making an airline partner transfer, be sure you're getting more than the imputed value of both your paid airline ticket and the miles (both redeemable and elite-qualifying) you'd earn flying it.

UFB Direct Airline Rewards Checking accounts (amazingly) still available

I get it. You didn't read this blog back when the Bank of America Alaska Airlines debit card was still available, so you missed out on hundreds of thousands of free or cheap airline miles. Then you ignored me when I told you the Suntrust Delta SkyMiles World Check Card was being retired, so you're not earning 1 SkyMile per dollar spent on PIN transactions today.

No hard feelings. Live and learn.

But I want to point out that a third account that earns miles on PIN transactions is still publicly available: the UFB Direct Airline Rewards Checking account. The name is slightly aspirational, since for as long as I've been around the only airline you can choose to earn miles with has been American Airlines. You'll earn 1 AAdvantage mile for every $2 spent with your debit card (confusingly called "Point of Sale (POS) debit transactions," presumably in contrast with ATM withdrawals).

There's no monthly fee or fee to open an account.

The card isn't, strictly speaking, as valuable as the Alaska Airlines debit card was (because those miles can be redeemed on both American and Delta flights), or the Delta debit card still is (since it earns miles twice as quickly), but AAdvantage miles are among the most valuable traditional airline rewards currencies, and you can redeem them for AAnytime awards on American Airlines-operated flights.

AAnytime awards aren't usually a great deal, but that's because you usually aren't earning AAdvantage miles hand-over-fist like you can with this debit card; cheap, plentiful miles make award redemptions even better, compared to spending cash.

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