Here's when it really makes sense to make Evolve Money payments with credit cards

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It's no secret that I'm proud of my initial research on Evolve Money soon after the service first launched. I experimented with and described a number of possible uses of Evolve Money, like making contributions to 529 College Savings plans and making mortgage and student loan payments. If you were buying prepaid debit cards with a 5% cash back credit card, or American Express gift cards, making such payments with Evolve Money might completely negate any interest on the underlying loan, or give your college savings a nice upfront bump in value (since your true basis in the savings would be lower due to your credit card rebate).

In conducting that research I even discovered (and shared in the newsletter I send out to blog subscribers), that Evolve Money accepted some Visa and MasterCard credit cards, and that such payments were processed as purchases. Pace affiliate blogger Daraius Dubash this was not a "short-lived" glitch, but rather one that worked continuously from the time I discovered and shared it on February 2, 2014, until a few days after he publicly and excitedly revealed it to his readers on May 15, 2014.

Now Evolve Money is again allowing credit cards to be used for bill payments, but with a 3% surcharge. This is a terrible idea, but you already knew that. Rather than tell you what you already know, I thought I'd brainstorm: when does it make sense to pay a 3% fee to charge bill payments to your credit card?

You need time to pay

On the one hand, paying 3% up front in order to take out a short-term loan is a terrible idea. It's loans like that which result in the insane interest rates you hear about on payday and car title loans.

On the other hand, if you don't have the cash available, I can imagine a few instances where the numbers add up. For example, if you're in a high tax bracket and your state allows you to deduct contributions to a 529 College Savings plan from your income, and you forgot to contribute until the end of the year, you might not have the cash for a contribution immediately available. Instead, you could make a payment using Evolve Money, taking a 3% hit up front but saving more than that when you file your taxes.

Likewise, if your landlord is a biller in Evolve Money, you don't have the cash available to make your rent payment, and your landlord charges more than 3% in penalties for late payments, you might come out ahead taking out a short-term loan by paying him using your credit card (keeping in mind that if your rent is less than $500, you'd be better off buying a prepaid debit card and paying with that).

You're incapacitated

If you're in an accident and wind up in the hospital, or you're stranded by an avalanche in a ski chalet with nothing but firewood, a bearskin rug, and your smartphone, you may find that you can't log into your accounts in order to make payments. As long as you have your smartphone, remember your Evolve Money login credentials, and have a linked credit card, you can make essential payments like your cell phone (or, given the first example, your health insurance). It's not ideal, but these things do happen!

You're abroad

Even if you find the last few scenarios outlandish, you might be able to relate to this one. If you're overseas and a big credit card signup bonus comes along, you might be tempted to apply, but not have access to the techniques you usually use to manufacture spend. There are a number of cheaper ways to meet minimum spend requirements (even if you're committed to using Evolve Money, you could fund a Nationwide Visa Buxx card and use that to make an Evolve Money payment for free), but as a last resort you could fund bill payments directly with your new credit card.

Likewise, if your credit card is lost or stolen shortly before the end of the period allotted to meet your minimum spending requirement, but you have the card's information recorded separately, you could use Evolve Money rather than wait for a new card to arrive in the mail.

Any others?

Hopefully these examples illustrate the outlandishness of funding Evolve Money payments with credit cards! Just go to the drug store, gas station, or grocery store, pick up a prepaid debit card, and pay with that instead.

Can my readers think of any other situations where a 3% fee would be a small price to pay?

Evaluating point transfers to airlines by alliance

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Last month I wrote that the addition of gas stations to the Citi ThankYou Premier "travel" bonus category, and raising that bonus to 3 ThankYou points per dollar, had leveled the playing field between that card, the Chase Ink Plus, and American Express Amex Everyday Preferred, all three of which will have $95 annual fees starting April 19, 2015, when the ThankYou Premier card's annual fee is lowered from $125.

Of course, the definition of a card that earns flexible points is the ability to transfer those points to airline and hotel partners. So which airline transfer partners are best for each of the three rewards currencies?

SkyTeam

Chase Ultimate Rewards. Here you have just one transfer partner, Korean Air. The good news is, they have a pretty decent, zone-based award chart for SkyTeam partner awards:

The bad news is, they pass along fuel surcharges on their own flights and SkyTeam partner flights. For flights to South Korea from the United States, one interesting option is paying 35,000 Delta SkyMiles and $24 for your outbound ticket, since Delta doesn't pass along fuel surcharges on Korean Air flights, and using SKYPASS miles for the return on Korean Air, where you'll pay just 83,100 Korean Won (about $75) in taxes and fuel surcharges. That's about $266 less than you'd pay booking the entire trip with SKYPASS miles, and only $14 more than you'd pay booking the entire trip with SkyMiles.

American Express Membership Rewards. Membership Rewards points transfer to Delta and a number of other SkyTeam carriers: AeroMexico, Air France KLM, and Alitalia. For most redemptions from the United States, you'll be best off redeeming Delta SkyMiles, unless you want to book First Class tickets, since Delta doesn't have access to those seats (they don't operate a First Class cabin themselves).

For redemptions originating outside the United States, you'll need to consider another carrier (or more realistically, another alliance), since Delta passes along fuel surcharges on those flights. Air France KLM and Alitalia charge punishing fuel surcharges even on their own flights.

Aeromexico is an interesting case. I was unable to price out any SkyTeam partner awards using their online booking engine, so I don't know if they pass along fuel surcharges, although that's my impression from the little information I was able to gather. If any readers have experience booking SkyTeam awards through Aeromexico, I'd love to hear it!

Citi ThankYou. In addition to Air France KLM, here you have the unique transfer partner of Garuda Indonesia. To quote from the GarudaMiles website: "Award Tickets redemption for any of Garuda Indonesia partner airlines, including Air France & KLM, can only be conducted at Garuda Indonesia Sales Offices." Unfortunately, that's not going to be very useful for most people, so your best best will likely still be Air France KLM.

oneworld

Chase Ultimate Rewards. British Airways is your only option here, and you know what that means: domestic economy flights on American Airlines or US Airways, transatlantic flights on Aer Lingus and air berlin, and transfers to Iberia Avios for redemptions on their own flights.

American Express Membership Rewards. Here you can choose between Cathay Pacific and British Airways (or Iberia) Avios. While both programs are distance-based, and both pass along fuel surcharges from partners, Cathay Pacific's award chart is based on the total distance traveled on an award itinerary, rather than the length of each segment, which should make awards that require connections cheaper. Additionally, on April 28, 2015, Avios redemptions for most long-haul segments in premium cabins will increase by 50% (Business) and 33% (First). That'll increase the value of Cathay Pacific miles compared to Avios. For example, a First Class redemption on American Airlines between JFK and LAX will cost 50,000 Avios (currently 37,500), but just 40,000 Asia Miles, as a "single carrier award." There's additional value in Cathay's multi-partner awards, though you'll see excessive fuel surcharges on many of those awards.

Citi ThankYou. Here you can choose between Cathay Pacific, Malaysia Airlines, and Qatar. Qatar Qmiles appear to be completely worthless. Malaysia Airlines has a distance-based award chart with fairly steep single-partner award redemptions (JFK-LAX on American Airlines would cost 132,000 Enrich Miles in First!), but much more reasonable multi-partner awards. Drew at Travel is Free has looked at a number of routes where Malaysia Airlines miles are competitive, particularly on their own flights, so I'll call this a tie between Malaysia Airlines and Cathay Pacific.

Star Alliance

Chase Ultimate Rewards. Between United and Singapore Airlines, you'll typically want to transfer your Ultimate Rewards points to United, since they don't pass along fuel surcharges on partner awards. The most popular exception is if you're committed to redeeming Ultimate Rewards points for Singapore Airlines Suites Class redemptions, since you may find KrisFlyer miles more useful because of their increased access to those seats.

American Express Membership Rewards. With the same caveat as above, Air Canada Aeroplan miles will usually be more valuable than Singapore Airlines miles, since they don't pass along fuel surcharges on many of their partners, although ANA can make sense on Star Alliance routes with fuel surcharges where their distance-based award chart requires fewer miles than Aeroplan, or on United, where ANA passes along low or no fuel surcharges.

Citi ThankYou. Citi has two unique transfer partners in Star Alliance, Thai Airways and EVA Air, in addition to Singapore. Thai Airways recently gutted their award chart, and EVA Air passes along fuel surcharges, so if you have to redeem ThankYou points for Star Alliance travel, Singapore is likely to be your best bet.

Conclusion

The point of this post is to emphasize that bonused earning rates, like those at gas stations, change the value calculus of various loyalty programs.

Much hay is made of the fact that Starwood Preferred Guest Starpoints have a 20% transfer bonus when transferred in increments of 20,000, or that Membership Rewards points can sometimes be transferred to British Airways with a 40% bonus.

But if you're earning 2 Ultimate Rewards points, or 3 Membership Rewards or ThankYou points, per dollar spent at gas stations, you should be putting equal weight on the 100% or 200% "transfer bonus" that category spend gives you; after all, the Starwood Preferred Guest American Express earns just 1 Starpoint per dollar spent everywhere.

Finally, this is not encouragement to sign up for all three cards that earn bonus, flexible points at gas stations. On the contrary, it's an invitation to take a look at your upcoming trips, the award reservations you intend to make, and the loyalty currencies that can make that possible. Then find the credit cards that offer bonus points in the categories that are going to get you those points as easily and cheaply as possible. If you have access to cheap gas station manufactured spend, it might be one of these cards. If you don't, then you'll need to keep looking!

Personal finance digression: my beef with Future Advisor

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This isn't a personal finance blog, or a financial independence blog, or an early retirement blog. But I understand there's a lot of overlap in interest between those subjects and travel hacking, so every once in a while I let myself vent about the personal finance industry (see: "Pound Foolish" is a pretty good book").

I was complaining on Twitter about Future Advisor the other day and got into a back-and-forth with their social media team. I want to expand on my point and explain why Future Advisor does not and cannot do what they claim to do: "actively monitor and manage our clients' IRA, Roth, and taxable accounts from a household-wide, long-term perspective."

How Future Advisor works

When you create a Future Advisor account, you're asked for just three pieces of information: your current age, your target retirement age, and your risk tolerance ("Conservative," "Moderate," or "Aggressive"). Based on that information, Future Advisor creates a "Target Portfolio" and a recommended asset allocation. Here's their recommended asset allocation for me:

Next, Future Advisor asks for your current "financial profile." You can either manually input your current investments, or enter your login information and Future Advisor will download the details of your investments automatically. Here's my current financial profile:

Once you've completed those two steps, Future Advisor gives you an "Action Plan," telling you what to do with your current assets in order to bring your plan in line with the asset allocation they recommended based on your age, target retirement date, and risk tolerance. Here's the action plan for my Vanguard Roth IRA account:

Future Advisor does not consider interest earned on cash savings

Note in the current asset allocation picture I showed above, Future Advisor only allows you to add "cash you would like to invest."

The cash I have in my Mango savings account is not "cash I would like to invest," however. It is cash I already have invested — in a 5.28% (after $36 in annual fees) APR savings account! There's no way to tell that to Future Advisor. On the contrary, if I input the value of my Mango savings account, I'm told to move it all into investments that mirror the original target asset allocation Future Advisor proposed:

The explanation for this recommendation leaves me (almost) speechless:

Future Advisor is projecting an average growth of 5% in my cash — cash I'm holding in a savings account that already earns more than that!

This means Future Advisor cannot do what it claims to do

While looking at your target asset allocation, you can see an explanation of each proposed investment. Here's the important part for my point:

The "green" portion of my recommended asset allocation (15% of the total in the first picture) is intended to "reduce overall risk" and "offer growth in bear markets." If I have $5,000 invested in an FDIC-insured savings account with a high, fixed interest rate, and the goal is to reduce overall risk and offer growth in bear markets, logically I shouldn't invest any money in "Investment Grade Bonds," "Inflation Protected Bonds," or "International Bonds" until the total size of my portfolio is over $33,333 (15% of which would be the $5,000 balance in my high-yield savings account).

By ignoring the interest rate on my cash savings, Future Advisor gives inappropriate advice given its own stated investment objectives when designing a target portfolio.

What I'm saying (and what I'm not saying)

Let me be perfectly clear before this becomes a discussion of ideal asset allocations: I am not saying that the target asset allocation designed by Future Advisor is a "bad" asset allocation.

I'm also not saying that my current asset allocation is a "good" asset allocation. Indeed, the same criticism of Future Advisor could be applied to the target retirement date mutual fund my Roth IRA is invested in: since that target retirement date fund also has a bond component (10.1%), I would logically be better served by replicating the stock holdings of the target retirement date fund, while using my high-yield savings account to replicate the bond component with higher yield and lower risk.

I'm not going to do that, but it's a legitimate suggestion.

What I am saying is that Future Advisor, which claims to provide exactly that kind of advice, is incapable of providing it since it doesn't ask what the current yield is on your FDIC-insured savings accounts. Without having that information, it provides bad advice by its own standard of optimizing your holdings across all "IRA, Roth, and taxable accounts from a household-wide, long-term perspective."

In fairness, Future Advisor's social media team doesn't even dispute this.

The only remaining question, then, is why they are still in business?

American sure makes buying tickets confusing

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Regular readers know that my plan for air travel in 2015 is simple:

  • I requested a status match to Alaska Airlines MVP status, and received MVP Gold 75K status, valid through 2015.
  • Until the end of 2014 I continued to credit my paid Delta travel to Skymiles, and reached Silver elite status for 2015.
  • For award flights on Delta, and paid flights where I know I'll have to check bags, I'll continue to enter my Skymiles number in order to check a bag for free.
  • For paid flights on Delta without checked bags, and all paid flights on American, I'll credit my miles flown to Alaska, in the hopes of earning MVP status again for 2016.
  • I don't fly United.

Since I love flying Delta, and live in the upper Midwest, until this year I only rarely had any reason to stray.

Now that Alaska has gutted mileage earning on paid Delta flights, however, I'm looking at more American flights. After all, a 1,000 mile Delta ticket in an "L" fare class will earn just 500 Mileage Plan miles (1,125 after the MVP Gold 75K 125% mileage bonus), while the same flight on American will earn 2,250 miles. The farther the distance traveled, the more valuable an economy ticket on American is, compared to the same distance flown in a cheap Delta fare bucket.

But American's website is a terrible place to buy American Airlines tickets!

There is way less going on than meets the eye

Here's the first flight option for an upcoming trip I'm planning:

If you're used to any other airline, you might assume these are 4 different fare classes, at 4 different price points. You'd be absolutely wrong. The first three options all book into the "O" fare bucket. Rather than different fare classes, they're different fare basis codes, which indicate to American what services are bundled into your ticket. Here's Choice Essential:

In other words, on the one-way flight I searched for, you can prepay your checked bag fee and pay an extra $4 for Group 1 boarding priority. I get free checked bags through my Alaska status, and priority boarding isn't a big deal for me, but many people seem to love boarding early, so maybe it'll makes sense for them.

And here's Choice Plus:

On the flight I looked at, for $80 you can get all the benefits of Choice Essential, plus a 50% AAdvantage mile bonus and free same-day travel changes. Paying $51 for 1083 AAdvantage miles is not a good deal. But if you anticipated making same day travel changes anyway, the bonus AAdvantage miles would be a nice touch.

The problem is that to earn them, you'd need to travel under your AAdvantage member number, instead of your Alaska Airlines Mileage Plan number, defeating the purpose of flying American to begin with!

Why does it matter?

There are a few reasons why it's good to understand what's going on here. First of all, so you don't unwittingly book one of these Choice Essential or Plus fares!

But secondly, you might actually want to book one of these fares, and you definitely don't want to do it through American's website. Since Choice Essential and Plus fares have unique fare basis codes, travel agents should be able to manually book these fares over the phone.

For example, when searching the Chase Ultimate Rewards travel portal or US Bank Flexperks travel portal, you won't see these fares since they are all in the same "O" fare bucket. 

But by calling in to Chase (866-951-6592) or Flexperks (888-229-8864), you should be able to ask the agent to book your ticket into a specific fare basis code, not just fare bucket. It's safe to assume not all phone agents will know how to do this, since it's a bit of an odd request, but if you try a few times you'll hopefully get one who can help you.

The obvious reason to do this is if you're planning to credit a flight on American to the AAdvantage program, and the flight you want is towards the bottom of a Flexperks Travel redemption band. By booking your ticket on a more expensive Choice Plus fare basis code, you'll earn the bonus 50% AAdvantage miles, without spending any more Flexpoints.

Conclusion

Choice Essential and Plus fares are overpriced, and strike me as a fairly shameless cash grab by American. But that doesn't mean there aren't situations when we can use them to squeeze a few more cheap miles out of the airline. The benefits seem to be primarily for passengers who credit their miles to AAdvantage (and don't have elite status), so I doubt I'll personally be taking advantage of these fare options.

Should all manufactured spend go through American Express gift cards?

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Earlier this week the BeFrugal shopping portal temporarily raised their payout on American Express gift cards to 2.2% from 1.5%. Several shopping portals (including my favorite, TopCashBack) periodically raise their earning rates on these cards, so many folks wait to buy their American Express gift cards until payouts are increased.

I don't write very much about American Express gift cards because I don't use them very much, but they're extremely popular, and for good reason.

Why buy American Express gift cards?

The argument for buying American Express gift cards is simple: they turn every credit card into a cashback-earning American Express card. Instead of just earning United miles with a Chase United MileagePlus Explorer card, you can earn United miles and 1.5% cash back.

If that sounds to you like it's too good to be true, then you're in good company! Lots of travel hackers find it worthwhile to direct much or most of their manufactured spend through American Express gift cards.

Why not buy American Express gift cards?

There are a number of potential issues to be aware of if you're considering using American Express gift cards:

  • The gift cards are (obviously) American Express cards. Some techniques for liquidation either don't allow American Express cards to be used, or specifically refuse gift cards for purchases (some Simon Mall locations are notorious for this). Plan in advance which merchants you'll spend the gift cards at;
  • The cards are shipped out activated and ready to use, and in my experience usually don't require a signature for delivery. If you have a day job, you may not feel great about having thousands of dollars left out on your doorstep all day.
  • If you order personalized cards, they can take anywhere from a few days to a week to ship and be delivered. You'll need to build that dead time into your strategy, and be willing to tie up the available credit on your cards for days with nothing to show for it;
  • Finally and most importantly, orders are often denied for little or, most frequently, no reason at all. After moving in May, I couldn't get a single order approved for months, although my approval rate has noticeably increased lately.

There is so much more to say about American Express gift cards, and fortunately most of it has already been said by Frequent Miler! Check out that page for a tremendously helpful resource.

Should all manufactured spend go through American Express gift cards?

In recent months I've done as much as possible to tighten up my own manufactured spending strategy.

First I should say that unlike many of my readers, I don't place a high value on my time, or rather, I don't treat manufactured spend as a time "suck:" I do much of my manufactured spend on foot, which makes it feel vaguely healthy; I listen to funny and educational podcasts while I work; and I'm always gathering more news and updates for this blog, increasing the value I provide my readers. So I don't feel the need to put a dollar cost on my time spent, since I love my job!

At the same time, I do put a dollar cost on my dollars, and aim to maximize the value I get from each dollar spent manufacturing spend. For me, that means using cards exclusively at merchants where my spend is bonused, while using my cash back cards at cheap, unbonused merchants and for American Express gift cards.

The interesting thing about American Express gift cards, however, is that just as you can impute redemption values by comparing a 2.22% cashback-earning credit card to a hotel's co-branded credit card, you can also impute redemption values by comparing your bonused earning rates to American Express portal payouts.

For example, when you use an American Express Hilton HHonors Surpass at a grocery store, you earn 6 HHonors points per dollar spent. When purchasing American Express gift cards through a 1.5% cash back portal, you earn just 3 HHonors points per dollar spent — and 1.5 cents in cash back.

In other words, your "bonused" earning rate allows you to buy HHonors points at 0.5 cents each, which is at the high end of the range of real-world Hilton redemptions.

When portal payouts on American Express gift cards are raised to 2.2% cash back, spending with your card becomes an even worse deal, allowing you buy HHonors points for 0.73 cents each. Realistically, you're not going to consistently redeem your HHonors points for that much value.

Within reason, more points are more valuable than fewer points

Everything I've said so far is true, and you can take a look for yourself at the numbers — and the potential problems I outlined — to see whether American Express gift cards make sense in your own miles and points strategy.

However, there's one final issue that's worth mentioning. As regular readers know, I'm the biggest advocate of earning only as many miles and points as you can reasonably expect to redeem, since an unredeemed mile is worse than worthless: it actually cost you the cash back you could have earned instead.

At the same time, within reason, at the margin points become more valuable the more you have of them: 12,499 Delta SkyMiles can't be redeemed for travel, but 12,500 can. In that situation, the last SkyMile you earn is in a concrete way the most valuable SkyMile, since it unlocks the value of all the other ones!

How about a concrete example? I have an upcoming Hilton stay I'm currently saving up HHonors points for:

  • I'll redeem 200,000 HHonors points for a 5-night stay in New Orleans that would cost $820, or roughly 0.41 cents per HHonors point;
  • At 6 HHonors points per dollar spent, that's more valuable than a 2.22% cash back card;
  • But if I instead earned 3 HHonors points per dollar spent on American Express gift cards, I'd fall short of the 200,000 HHonors points I need to receive the 5th night of my stay free, and have to pay 50,000 HHonors points per night instead;
  • 3 nights would cost 150,000 HHonors points and I'd be saving $492 for those three nights, a redemption rate of just 0.32 cents each.

I'd be better off using a 1% cash back card!

Note that these numbers are specific to my own situation. That's exactly why I preach that miles and points shouldn't be earned speculatively, but rather with specific redemptions in mind.

Of course, the other possible conclusion you could reach is that Hilton HHonors points just aren't very valuable!

Using my Barclaycard Arrival+ PIN in Italy

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If you're a citizen of the United States, the Barclaycard Arrival+ card is likely the only "chip and PIN" card you carry. These cards are popular outside of the United States, but for economic and historical reasons they have not and, in my only-slightly-educated opinion, likely will never dominate the credit card market in the United States: plans by several issuers to issue chip and PIN cards have already fallen through; merchants have no interest in buying new equipment; and Americans just don't travel internationally very much!

But Barclaycard issues one, and it happens to be a card lucrative enough (because of the 10% points rebate on travel redemptions) that many travel hackers carry it.

Set your PIN online

One thing I didn't realize until I received my chip and PIN card is that the PIN is not hard-coded onto the chip. My understanding was that US-based issuers were resistant to adopting chip and PIN technology because their customers would be frustrated if they had to memorize a different PIN for each card. But with Barclaycard, you can set your PIN to the same number you use for all your other cards (and your phone, and your bank accounts, and your home security system...), and you can do it online.

Just go to "Account settings" in your online account and look for "Manage your PIN:"

Use your PIN at unattended kiosks

I used my PIN exactly twice in Italy: buying a train ticket from Milan's Malpensa airport into town, and buying a train ticket from Rome's Termini train station to Fiumicino airport. Both times were at unattended kiosks: I inserted my card, left it in the slot until prompted for my PIN, entered my PIN, then withdrew my card when prompted.

I had read a few posts around the blogosphere suggesting that the first time a card is used abroad, the cardholder has to sign the purchase in order to "activate" the card's PIN. That's completely incorrect: the first purchase I made on arrival in Milan was a PIN transaction at an unattended train station kiosk.

Sign everywhere else

I was surprised to find that every other merchant we visited in Italy had signature-compatible terminals. Some of the merchants themselves seemed surprised when the receipt printed with a blank space for my "firma," but we had no issues with acceptance.

This won't be true everywhere: I've visited Russian grocery stores that flatly refused to process signature transactions, so you still shouldn't travel abroad relying completely on your credit cards.

Bonus: Bluebird is still awesome for foreign ATM withdrawals

I mentioned this once before during a trip to the Czech Republic, but Bluebird is still a slam dunk for ATM withdrawals while traveling abroad.

I withdrew 200 euros twice at ATM's, and the total charges to my Bluebird account were $240.48 and $238.98, including all ATM fees. That gives exchange rates of 1.202 and 1.195 euro per US dollar, both within 2% of the financial market rates on the days in question (according to xe.com).

It's hard for consumers to exchange currency at the prevailing market rates, and ATM fees can add substantially to currency exchange costs, while Bluebird offers exchange rates very close to market rates, along with flat international ATM fees. Unfortunately, not all ATM's are configured to process American Express withdrawals, so it may take some trial and error to find ATM's you can use your Bluebird card at (my card was rejected at one of the ATM's I tried).

Marriott rollover nights and the hunt for Gold elite status

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Last October I wrote a couple of posts about an idea I had to use Marriott rollover nights in order to earn elite status once every two years. The technique takes advantage of the principle that elite status is valid for the remainder of the year in which it's earned, plus the entire following elite membership year (which may even reach into the year after that, depending on the loyalty program).

In other words, if you were somehow able to earn elite status on January 1st, you would have that status for two full calendar years.

Marriott Rewards isn't a program I find particularly lucrative for my own travel, which is 100% leisure, but I know many business travelers love their essentially universal footprint and elite recognition.

I love digging into the nitty-gritty of loyalty programs, so I decided I'd give this technique a try to see how it works in practice. 

Elite-qualifying night breakdown

When you log into your Marriott Rewards account, you can click on your "Account Overview" and see the breakdown of all your elite-qualifying nights so far this year. It looks like this:

My Chase Marriott Rewards Premier card has an anniversary date in April, when 15 additional "Rewards Credit Card" nights will post to my account, bringing my "2015 Total" to 34. At that point, I'll need 16 additional elite-qualifying nights, or $48,000 in spend on my Premier card, in order to reach Gold elite status with Marriott Rewards. At that point I'll have exactly 50 elite-qualifying nights, and in January 2016 my total will reset to 0, since I won't have any 2015 rollover nights.

Rollover nights don't roll over!

What I didn't appreciate, Marriott Rewards not being one of my primary or even secondary loyalty programs, is that elite-qualifying nights only roll over one time.

At the end of 2014, I had 42 elite-qualifying nights: 8 paid nights, the 15 bonus nights I receive from my credit card every April, and 4 nights I'd earned through spend on the Premier card, plus 15 nights I rolled over from 2013. I assumed that I would roll over all 32 nights in excess of the 10 elite-qualifying nights required for Silver elite status.

But instead, only 17 nights rolled over: my 2013 rollover nights simply vanished.

Does it matter?

When I originally hatched this elite-qualification scheme, it was in the form of a question: if the Marriott Rewards Premier credit card earns 15 bonus nights per year, and only 10 are required for Silver status, doesn't that mean the 5 rollover nights will accumulate so that every 8 years cardholders will suddenly receive Gold elite status?

The answer to that question is "no:" each year, 5 rollover nights will "expire" and 5 rollover nights will be added, leaving the cardholder running in place towards Gold status.

On the other hand, this has no effect on the strategy of earning Gold elite status every two years using rollover nights.

  • In year 1, receive 15 annual bonus nights and manufacture $45,000 in spend to end the year with 30 elite-qualifying nights;
  • In year 2, receive 15 annual bonus nights and roll over 20 nights;
  • Also in year 2, manufacture $45,000 in spend to reach Gold elite status;
  • In year 3, receive 15 annual bonus nights and manufacture $45,000 in spend to end the year with 30 elite-qualifying nights;
  • In year 4, receive 15 bonus nights and roll over 20 elite-qualifying nights;
  • Also in year 4, manufacture $45,000 in spend to end the year with 50 elite-qualifying nights.

Using this technique, you'd only be without Gold elite status in "even" years, and only until you met that year's $45,000 spending goal.

Is it worth it?

Absolutely not.

Remember, when you manufacture spend on any credit card that earns just 1 mile or point per dollar, as the Marriott Rewards Premier card does, you're buying those points at 2 cents each, since you could put the same spend on a 2% cash back credit card. That means besides the Marriott Rewards Premier card's $85 annual fee, you'd also be foregoing at least $900 per year in exchange for Gold Elite status.

In fairness, you would also receive 45,000 Marriott Rewards points for your purchases, which are worth perhaps $450, if you're consistently strategic in your redemptions.

Who might seek Gold status in this way?

Everything I've said so far implies you never stay at Marriott properties, which would generally make you a poor candidate for Marriott Rewards Gold status! This strategy is vastly more realistic for members who actually have paid elite-qualifying nights at Marriott properties.

Since Marriott allows elite members to renew Gold elite status each year by simply paying 25,000 Marriott Rewards points, which can be transferred in from Chase Ultimate Rewards, the absolute most money you should be willing to spend pursuing Gold status on an annual basis is $250 (the cash value of the transferred Ultimate Rewards points).

A rough guideline that $3,000 spent on the Marriott Rewards Premier card earns $30 in points and costs $60 in foregone cash back would imply that you should be willing to manufacture no more than $25,000 per year on the Premier card pursuing Gold elite status. That would get you to 23 elite-qualifying nights annually (15 annual nights plus 8 nights earned through spend).

In other words, since Gold elite status requires 50 elite-qualifying nights, this strategy might be worth pursuing if you have 27 or more paid nights per year. In that case, manufacturing just $24,000 per year on the Premier card would earn you the marginal elite-qualifying nights you need to reach Gold status.

Weekend blog housekeeping

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Here are a few updates I thought I'd share with my readers.

New blog subscription provider

If you were signed up for a PayPal subscription back in December, before the account I was using to handle subscriptions was closed by PayPal, you should have already received multiple communications from me about resubscribing through my new subscription provider, Moon Clerk.

If you weren't a PayPal subscriber, you may still have noticed that the PayPal subscription box in the right-hand sidebar has been replaced with a Moon Clerk subscription box.

If you enjoy getting news, analysis, and laughs from this site, I hope you'll consider signing up for a blog subscription. It's by far my largest source of income from this site.

As my small way of saying thanks, blog subscribers receive my occasional subscribers-only newsletters and access to the complete archive of past newsletters.

In case you're concerned about the security of your data, I looked into this, and Moon Clerk is an API for Stripe.com, a very reputable payments provider. Arguably more reputable than PayPal, for instance (see: account closures). You can read more about their security protocols here.

Thoughts on Google AdSense

A few months back, I got around to signing up for Google AdSense, and added a little AdSense box in the right-hand sidebar. Personally, I use AdBlock, so I never see the thing, but if you visit my website without AdBlock you might see something like this:

I don't know what a Simplify Commerce by MasterCard is, but if they want to throw a few shekels my way, who am I to complain?

After signing up for an account, I went through and blocked the "Credit Cards" ad category, since Google ads invariably offer the very worst signup bonuses, and I didn't want there to be any suggestion that I recommended the cards being served by Google:

Unfortunately, that had almost no effect on the credit card ads being served. So then I manually blocked each credit card URL as I came across it in my "Ad review center:"

 

That seems to have mostly staunched the flow of credit card ads (though let me know if you see any and I'll try to figure out what's going on).

In any case, I periodically check in on my Google AdSense account to make sure it's still chugging along. Here are my earnings from last month, for instance:

I guess no one had anything to do but visit my site on Christmas day!

What I didn't realize until I started digging into my ad "revenue" (I haven't actually received a payment yet) is that I'm not just paid when people click on my ads. Apparently I also earn a few tenths of a cent whenever anyone visits my site:

That may sound obvious, but I'm having a hard time describing the effect this realization had on me. After all, I basically don't promote my site at all. I have a Twitter account where I joke around with other travel hackers, but that's about it. But it turns out, every time a reader decides to visit my site, instead of reading my posts on Feedly or receiving them by e-mail, I earn as much as half a cent!

I don't know what I'm going to do with this information yet. Should I post more often? Start more fights with other bloggers?

In any case, the least I can do is encourage my readers to visit the site! Read the comments; there's often a ton of information there I didn't know or forgot to mention in the body of my posts. Leave a comment of your own!

The site's really an incredible resource, and I learn more from my readers every day than I could ever possibly hope to share. So stop on by! I think you'll like it.

Regional: new AAA Visa gift card daily limits

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I often joke that I'm the only person left buying Visa gift cards from AAA. And before anyone complains, I understand:

  • Yes, you have to be a AAA member;
  • Yes, they're only available in some regions;
  • Yes, purchases can be pretty time-consuming if the person helping you isn't familiar with the Metabank system they have to interface with;
  • Yes, frequent large purchases with immediate liquidation can result in being blacklisted from further purchases.

But the cards are PIN-enabled, they cost $3 most of the year and are free for 2-3 months per year (around the May/June graduation season and the winter holidays), and they're coded as purchases with every credit card I've used.

Changes to daily purchase limits

When I went in for my weekly purchase at the beginning of January, the clerk who always helps me told me that there was a new limit on daily purchases. Rather than the theoretically unlimited number of Visa gift cards customers were previously able to purchase, purchases were now limited to $1,000 per day.

I didn't ask whether this is a new national policy, is limited to my AAA region, or something in between.

Analysis

It's hard to say whether this is, on balance, good news or bad news.

On the one hand, $1,000 is less than I had previously been purchasing per trip, so this means I'll be manufacturing slightly less spend with these cards going forward.

On the other hand, the "unlimited" purchases AAA was previously willing to process was a honey trap for an unbelievable number of travel hackers. I've heard the same story repeatedly: "The first day I purchased $5,000. The second day I purchased $20,000. The third day I'd been blacklisted."

If the new $1,000 daily purchase limit keeps members of the community from falling into that trap, and therefore able to continue earning cheap miles and points, I'll consider it a net positive. If the new limit is instead designed to slow people down so their accounts can be blacklisted before they can reach the total purchase numbers that were previously possible, it'll be a net negative.

Conclusion

It was about AAA Visa gift cards that I first remarked on "What you miss when you miss MS." Affiliate bloggers who pretend that it's possible to earn significant travel rewards through everyday spending are lying to their readers in order to generate credit card commissions.

For example, talking about bonused restaurant earning on every affiliate blogger's "favorite" card, the Chase Sapphire Preferred, is preposterous when rather than spending $500 at restaurants in order to earn 1,000 Ultimate Rewards points, I can spend $6 at my local AAA branch.

Instead, the card you put your actual restaurants purchases on should be a card you carry anyway, either because of its annual benefits or because it's worth manufacturing spend on that card.

My 2014 in miles and points

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It's still January, and that means the blogger's code entitles me to write a 2014 retrospective on the miles and points I earned and redeemed in 2014. Last year I wrote an in-depth 2013 end-of-year accounting that included detailed information about all the fees I incurred manufacturing spend. My manufactured spending has sprawled a bit too much to make that practical this year, but I'll still give the total figure for everything I classified as "fees and charges" in my Mint account in 2014.

Here are my best estimates and calculations of all the miles and points I earned and redeemed in 2014:

There are a few obvious discrepancies in this chart.

  • My Barclaycard Arrival+ miles don't quite square up, I assume because the 10% rebate is screwing with my calculations in some way; I may be double-counting some miles incorrectly, for example. I'm only 10,000 miles off, though, which is actually a pretty small margin of error, all things considered..
  • The other discrepancies are mostly related to points transfers; for example I currently have (many) more Hyatt points than I earned since I transferred some points from Ultimate Rewards that I didn't ultimately redeem.

Regarding the fees I incurred in 2014, I should note this includes things like my monthly $3 Mango prepaid card fee and $12 Suntrust checking account fee. In other words, they aren't all directly connected to manufactured spending.

Why do I travel hack?

You don't typically read about me redeeming my miles for first class flights or my hotel points for 5-star resorts. That's not because I have any objection to comfort (and I have a lot fewer objections after my 11-hour flight from Rome in economy!), rather it's because I'm traveling more or less constantly, and want to stretch my miles as far as possible.

I love being able to take a trip to Portland just to see Star Trek in the Park, to Boston to see my best friend perform in a standup showcase, or to Lexington for a long weekend of pony racing and breweries with friends, paying a fraction of retail by redeeming miles or points I've acquired cheaply.

I redeemed a bit over 240,000 Skymiles, for example, in 2014, and I redeemed them exclusively on domestic roundtrips. Instead of 2 roundtrips in Business Elite, I took a bunch of vacations to visit friends and family all over the country.

I don't think that decision is "superior" in any way to the Business Elite alternative, but it's the strategy that works for me, for now.

Thoughts on 2015

At the beginning of 2014 I was still somewhat attached to the circus of chasing high signup bonuses. Today, I'm focused on cards that provide valuable recurring benefits and those that are worth manufacturing spend on. I'd rather have 5,000 miles I made a deliberate calculation to earn, knowing I'll redeem them, than 50,000 "opportunistic" miles I have no idea what to do with.

For example, today I have over 60,000 miles in what will become the combined American Airlines AAdvantage program, and no plans or really even interest in redeeming them, a result of last year's January application cycle.

With that in mind, here are some of the cards I plan on picking up at some point in 2015:

  • Citi Double Cash. Negative 2% interest rate on a 15-month loan? Yes please!
  • Starwood Preferred Guest American Express. I'm tired of asking my (working stiff) brother to book my Starwood reservations for me.
  • Chase IHG Rewards Club Select MasterCard. I'll use the signup bonus (and 20,000 current points) to turn my 2 "Into the Nights" award nights into a longer vacation.
  • US Bank Club Carlson Premier Rewards Visa. I already have the small business version of this card, which has a lower annual fee of $60, but I'm interested in finding out whether a second card account, linked to a second Club Carlson account, will let me redeem more than one consecutive "last night free." Even if that isn't possible, I value the 40,000 annual anniversary points at substantially more than the $75 annual fee, and will happily keep the card until that benefit is ended (or Club Carlson undergoes a massive devaluation!).

Besides those, I plan on applying for and taking advantage of the high promotional cash back earning rates that continue to be offered by a few regional and national banks.

Because cash is the one thing I'm always willing to acquire opportunistically!