Let's go rail running!

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Earlier this year, Frequent Miler wrote about the possibility of achieving Amtrak elite status through "rail running:" boarding trains for the sole purpose of earning enough Tier Qualifying Points with Amtrak Guest Rewards to achieve "Select" status, which allows the transfer of up to 50,000 Amtrak Guest Rewards points to their hotel partners, Choice Privileges and Hilton HHonors.

Being based in Ann Arbor, Frequent Miler couldn't make the numbers work out for himself, but after writing about Choice Hotels a few times recently, I wondered under what circumstances rail running could make sense.

Making rail running work

Here are the basics of rail running for Amtrak elite status:

  • 5,000 Tier Qualifying Points are required to earn Amtrak Guest Rewards Select status;
  • 2 Tier Qualifying Points are earned per dollar spent on Amtrak fares, except;
  • each one-way trip earns a minimum of 100 Tier Qualifying Points, but;
  • a maximum of 4 one-way trips per calendar day are eligible for the 100-Tier-Qualifying-Point minimum.

The ideal rail run, then, is two one-way tickets in one direction, followed immediately by two one-way tickets back to your starting location. That means you need to find three stations which are close to each other in one direction and a train schedule that keeps you from having to wait very long at the second station you arrive at.

Do such stations and such a schedule, along with cheap enough prices to justify rail running, exist?

A few promising station constellations

There are a number of promising station constellations (three stations closely packed together) on the Pacific Surfliner route in California. Here's one:

  • Oceanside, CA (OSD) — Carlsbad, CA - Village (CBV) — Carlsbad, CA - Poinsettia (POI)

Tickets for each leg cost $8.10 for AAA members on the random December day I checked, for a total cost of Select status of $405. Unfortunately the schedule doesn't allow for an immediate turn in either direction (although if you go northbound POI-CBV-OSD and then turn around you may be able to rely on the southbound train being delayed as it nears the end of its route — it only has to be delayed 6 minutes for you to make the connection).

Another candidate on the same Pacific Surfliner route is SNA-ANA-FUL, at the same price.

Down South, the City of New Orleans has a slightly longer, but cheaper option:

  • Hazlehurst, MS (HAZ) — Brookhaven, MS (BRH) — McComb, MS (MCB)

AAA tickets on the same random December day cost $4.95 and $7.20, for a roundtrip cost of $24.30, or $303.75 for Amtrak Select status. Same-day turns only work starting Southbound, which would give you a leisurely 3 hour lunch in McComb, Mississippi.

Here's an easy one for our brothers in Philadelphia on the Keystone Service:

  • Philadelphia, PA (PHL) — Ardmore, PA (ARD) — Paoli, PA (PAO)

Each leg costs $5.85 for AAA members, for a roundtrip cost of $23.40 and $292.50 for Amtrak Guest Rewards Select elite status. Best of all, the train operates frequently enough that you should be able to put together an easy same-day turn, for example departing Philadelphia at 4:45 PM and returning to Philadelphia at 6:25 PM.

Amtrak Guest Rewards points are valuable!

So far I haven't mentioned the fact that during the course of all this rail running, you'll also be earning redeemable Amtrak Guest Rewards points! At least 5,000 of them, in fact.

And since the point of this operation is to transfer your Amtrak Guest Rewards points to Choice Privileges, you have to assign those redeemable points at least $50 in value, since that's the cash value of the Ultimate Rewards points you'll save. In other words, to max out your annual 50,000 in Amtrak Guest Rewards points transfers to Choice Privileges, you only have to transfer 45,000 Ultimate Rewards points to Amtrak.

If you are thinking about rail running, wait until Amtrak runs a promotion

Amtrak periodically offers double points on paid travel, their so-called "Double Days" promotions. The last Double Days promotion ran from March 16 to May 16, 2015. If you wait until the next one, you'll be able to score even more redeemable points, saving yourself the corresponding number of Ultimate Rewards points when the time comes to transfer them into your Amtrak Guest Rewards account.

Conclusion

Researching this post was a lot of fun, but I fully understand most of my readers are not actually going to go rail running in order to achieve Amtrak elite status. Nonetheless, I think it's an idea that's more defensible than it appears at first blush, especially if you have your heart set on one of Choice Privileges' Preferred Hotels & Resorts.

If you decide to go rail running, remember: you need to book two one-ways in each direction to earn the maximum of 400 Tier Qualifying Points each day, and the goal of the game is finding the cheapest trips and shortest turnaround times possible!

Citi Double Cash Purchase Tracker — Revealed!

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The Citi Double Cash is, at face value, a no-annual-fee, 2% cash back credit card. But rather than awarding 2% cash back on purchases, the geniuses in Citi's credit card division came up with a way to drag out their cash back awards over the life of a balance (compare to Barclaycard's practice of awarding Arrival+ miles as soon as purchases move to posted from pending status). 

According to the card's terms and conditions, there are two ways to earn cash back:

"Cash Back on Purchases: Unless you are participating in a limited time promotional offer, you will earn 1% cash back based upon eligible purchases appearing on your current month's billing statement. Eligible purchases you make will be accumulated in the 'Purchase Tracker' shown on your billing statement. The Purchase Tracker shows the balance eligible to earn cash back on payments each billing cycle.

"Cash Back on Payments: You will also earn 1% cash back on payments you make that appear on your current month's billing statement as long as the amount paid is at least the Minimum Payment Due that is printed on your billing statement and there is a balance in the Purchase Tracker. The balance in the Purchase Tracker is reduced by eligible payments you make. When the Purchase Tracker reaches $0, you won't earn cash back on payments until more eligible purchases are made."

This Rube Goldberg contraption raised a few obvious questions: what's a "Purchase Tracker?" How often is it updated? Most importantly, would payments made against purchases in the same billing cycle award all 2% in cash back when the statement closed, or would cardholders have to wait for a second statement to close before they earned the second 1% cash back?

Now that my first Citi Double Cash statement has closed, I'm prepared to reveal all.

What does a Purchase Tracker look like?

There are two versions of the Purchase Tracker: the one that appears on your billing statement, and the one that appears online. They reflect the same information, but in slightly different ways. Here's the Purchase Tracker that appears on my billing statement:

And here's my online Purchase Tracker:

As you can see, my Purchase Tracker reflects all the purchases and all the payments I made during my first billing statement, and I received 1% cash back on each.

The Purchase Tracker is not updated in real time

The online Purchase Tracker only reflects purchases and payments on your last billing statement; it is not updated in real time, and my best guess it that it's unnecessary to wait for your purchases to post before making payments against them.

In other words, all your purchases in the current billing cycle are added to your previous Purchase Tracker balance, and all your payments during the current billing cycle are compared to that new total. If your total payments are less than that new Purchase Tracker balance, you'll receive 1% cash back on the total payments amount.

Statement credit redemptions are not payments and are not supposed to reduce the Purchase Tracker

When redeeming your Double Cash cash back balance as a statement credit, you're informed that the redemption will not reduce the amount in your Purchase Tracker, since statement credit redemptions are not treated as payments.

On the one hand, that means you won't earn cash back on the amount of your statement credit redemption. On the other hand, that means that even when you pay off your entire remaining balance, you will still have a balance in your purchase tracker.

Direct Deposit redemptions aren't immediately available

While you can redeem your Double Cash cash back for statement credits immediately, you cannot redeem your balance as cash back deposited into a bank account until you initiate two ACH "pull" payments from that bank account. Since my "payments" were balance transfers from my new Chase Slate card, I did not have any eligible linked bank accounts, and made a statement credit redemption instead.

Conclusion

If you pay off your entire Citi balance before your statement closes each month, the Citi Double Cash card is a true 2% cash back card. If you instead take advantage of its 15-month 0% introductory APR by paying off your balance as slowly as possible, you won't receive the entirety of your second percent of cash back until you pay off your balance in your 15th month of card membership.

Fun with Choice Privileges Preferred Hotels & Resorts

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On Friday I wrote a quick rundown on the basics of redeeming Choice Privileges points at their thousands of hotels all over the world at reasonable cost, compared to the big chains I usually write about. Readers were quick to point out that I had missed a key value proposition of the Choice Privileges program, which is their Preferred Hotels & Resorts collection. So let's rectify that today.

Preferred Hotels & Resorts can be more expensive than normal Choice properties

The Preferred Hotels & resorts collection cost between 30,000 and 60,000 Choice Privileges points per night, and each property's cost does not vary by season (indeed I don't know if it varies even from year to year).

Preferred Hotels & Resorts availability can be checked online...

Just navigate to the Participating Hotels page and click on "check availability" next to the property that interests you. There are three kinds of availability: "No Availability," "Availability," and "Minimum Stay Required."

At the property I looked at (Pier 2620 Fisherman's Wharf) the minimum stay requirement for many nights was 3 nights for arrivals on the given night, while earlier arrivals could stay through the restricted nights. Those restrictions likely vary by property.

...but cannot be booked online

To book a Preferred Hotels & Resorts property, you need to call the appropriate booking phone number. For US residents, it's 888-770-6800.

How do Preferred Hotels & Resorts compare?

With that out of the way, let's see if we can get any value from this program.

There are two easy places to watch for outsized value from this program: at the low, 30,000-point-per-night level and the high, 60,000-point-per-night level.

At the low level we see an imputed redemption value of $333 per night, which is competitive with low-to-mid-tier properties in all the chains but Hilton (it's competitive with top-tier Hilton properties).

At the high level, 50,000- and 60,000-point redemptions are competitive with mid-to-top-tier properties in all the chains but Hilton (where imputed redemption values top out at $352 per night).

At the bottom end I wasn't able to find any properties that cost more than $333 per night for a random date in August I searched. That doesn't mean they don't exist, but I certainly wouldn't stockpile Choice Privileges points on the off-chance of finding one.

At the top end, Drew at Travel is Free conveniently assembled 31 Preferred Hotel & Resort properties bookable with Choice Privileges points, all of which are among the top 500 hotels in the world, apparently according to Travel and Leisure. My value added is searching for prices at all 31 properties and seeing whether any are, in fact, good deals at 50,000 or 60,000 Choice Privileges points.

These are the only two of Drew's 31 properties where I found nightly rates exceeding the properties' imputed redemption values:

  • Montage Beverly Hills – 60,000 points
  • Montage Laguna Beach – 60,000 points

That's not to say that the other properties aren't nice, or expensive. They're just not expensive enough to justify manufacturing the spend required to stay there on a Choice Privileges co-branded credit card (for the dates I searched).

Squaring the circle: the Amtrak co-branded credit card and Amtrak elite status

As Drew points out when he writes about Choice Privileges, the key to maximizing the program is not earning Choice Privileges points through hotel stays or through co-branded credit card earning. The key is transferring points from Amtrak Guest Rewards to Choice Privileges at an extremely favorable ratio: 5,000 Amtrak Guest Rewards point can be converted into 15,000 Choice Privileges points, and Amtrak Guest Rewards is a transfer partner of Chase Ultimate Rewards.

In other words, it's possible to buy Choice Privileges points for a third of a cent each (rather than 1.1 cents each) by transferring your Ultimate Rewards points first to Amtrak, then to Choice Privileges.

But there a catch.

According to Amtrak's website:

"Members that are active cardholders of the Amtrak Guest Rewards MasterCard issued by Chase Bank with an Amtrak travel spend on the card of over $200 per calendar year may redeem up to 25,000 Amtrak Guest Rewards points per calendar year for hotel points and Audience Rewards.

"Current Amtrak Guest Rewards Select or Select Plus Members...may redeem up to 50,000 Amtrak Guest Rewards points per calendar year for hotel points and Audience Rewards.

"Current Amtrak Guest Rewards Select Executive Members...are not subject to point limits when redeeming for hotel points and Audience Rewards."

Since the Amtrak Guest Rewards co-branded credit card is no longer available for new applicants, unless you already have the card, you'll need Amtrak elite status in order to take advantage of Amtrak Guest Rewards points transfers to Choice Privileges.

[update 7/13/15]

Here's the actual dollar cost of Choice Privileges properties when transferring Ultimate Rewards points to Choice through Amtrak:


Choice Privileges is a weird loyalty program

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On Monday I wrote for the first time about Choice Privileges, the loyalty program of Choice Hotels International. They have a seemingly generous rewards program, with their Barclaycard-issued Choice Privileges Visa Signature card earning 2 Choice Privileges points per dollar spent everywhere, and reward nights starting at just 6,000 points, but the program is weird enough to explore in depth before diving in.

Choice Privileges does not have an award chart

The range of points required for redemptions at Choice Privileges hotels is located nowhere on the Choice Privileges website.

But the points required for an award night at any given hotel is not a secret! Anyone can search for Choice Privileges hotels in a given city and select "Choice Privileges Reward Night" as the rate type. You'll see all the Choice properties in the city and their points cost (if rooms are available).

Choice Privileges reward nights cannot be booked far in advance

Choice Privileges includes in their "Rules and Regulations" the following restriction:

"Members who have not yet achieved Elite Status must make their free night reservation personally through the Program Line or through their online account no more than 30 days prior to planned arrival for stays in their country of residence. Sixty days prior to their planned arrival at all other locations worldwide."

Needless to say, this is not how most hotel loyalty programs work.

Co-branded credit cardholders do get to book nights 50 days in advance, which may allow them to steal a march on non-elite, non-cardholders.

Choice Privileges has hotels everywhere

It is genuinely weird looking at how many properties this chain I've never had any interest in has all over the world. Use Award Mapper to check out cities you're interested in and marvel at all the little orange dots.

Choice's "no blackout date" policy is meaningless

Many hotel chains have poorly-enforced or disingenuous "no blackout date" policies. Here is Choice's (although from context it apparently only applies to "Points Plus Cash" reservations):

"There are no blackout dates.  Restrictions, taxes and fees apply.  There are over 1,500 Choice hotels with reward nights available at 8,000 points or less.  Reward night locations worldwide are available from 6,000 to 35,000 points (excluding Australasia, where reward nights are available up to 75,000 points)."

There's no enforcement mechanism. There's no explanation. There's no guarantee at all. And indeed, it can be pretty tough to find award availability at some properties, especially within 30 days.

Choice Privileges could be the best loyalty program for many travelers

I don't have the same focus on luxury travel many bloggers — and, to be honest, many of my readers — do. But I also don't have the attitude of those who say "I don't care about my hotel — it's just somewhere to sleep." I care about my hotels a lot because I spend a lot of time in them! Hotels are fun! And after spending a week researching Choice properties around the world, I don't think Choice hotels are for me.

But if you're looking for a single loyalty program that will have properties virtually everywhere you go, and a credit card that doesn't require you to navigate bonus categories, you could do a lot worse than Choice Privileges and its co-branded Barclaycard-issued Visa Signature card. Here's the imputed redemption value table I posted on Monday:

Those imputed redemption values are low, and they're especially low in the context of where properties fall within the Choice Privileges category distribution. Here are some downtown properties in Sydney, Australia, according to Award Mapper:

The 16,000 point Econo Lodge (actually the Hotel Harry, an Ascend Hotel Collection member — I believe Award Mapper's Choice Privileges database is out-of-date) wins with a $178 IRV, compared to the Hilton's $222-$259 (depending on season) IRV, the Park Hyatt's $666 IRV (or $300 in Ultimate Rewards points), and the Radisson's $222 IRV.

It's easy to find cheaper hotels in Sydney in July (it's winter down there), but in the Southern summer paying $178 for what seems like a perfectly nice downtown hotel will seem like a steal — if you can find award availability at that rate!

Quick hit: activating Sam's Club gift cards

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Back in June I wrote about my super-boring strategy to take advantage of an American Express Offer for You of $20 off $20 or more spent at Sam's Club.

It turned out to be anything but boring: only today was the last of my $50 Sam's Club gift cards activated. Here's the story, and some advice on how to proceed if you've been having trouble with your own gift cards.

Activating Sam's Club gift cards is supposed to be easy

When $50 Sam's Club gift cards are shipped, you receive two e-mails, confusingly with almost identical subject lines:

  • Your UPS shipping confirmation and tracking number is in an e-mail with the subject line "Your SamsClub.com order has shipped‏;"
  • The link to activate your Sam's Club gift cards is sent almost simultaneously, and has the subject line "Your Sam's Club Gift Card has Shipped‏."

If you don't know that Sam's Club gift cards require activation in the first place, you might be forgiven for not even opening the apparently-duplicate e-mails.

Guilty.

Here's what my inbox looked like:

As you can see, half are actual shipment notifications, and half are activation codes.

The activation process is unreliable

Sometimes clicking on the activation link works. Sometimes it doesn't. Sam's Club is aware of the problem.

When cards won't activate, you need to call

To have your cards manually activated, call the number on your receipt (888-537-5503) and select menu options 3, 5, and 7, in that order. You'll be connected very quickly (within a few seconds) to a representative, who will ask for your order number, shipping and billing address, and the gift card number.

The gift card number they need is the number underneath the silver strip

Sam's Club phone representatives have apparently never actually seen Sam's Club gift cards, and every single representative I spoke to asked me for "the number on the back of the card." If you look at an actual gift card, however, you'll immediately see that there are 3 "numbers on the back of the card," and not one representative knew which number they needed to send an activation request.

It turns out it's the gift card number located under the scratch-away silver strip.

If at first you don't succeed, call, call again

My orders were shipped between June 3 and June 5, and were just finally activated on July 6 and July 7. That's a long time, and I wasn't sitting idle; I was calling every 2-3 days in order to find out the status of the activation request. In fact, I didn't make any progress until I had the phone representative open an actual support ticket, which finally seemed to set the gears in motion, and my cards were all activated within 5-6 days after that.

Conclusion

At the end of the day (or, in this case, the end of a month of waiting), I got a few hundred dollars of household supplies from Walmart at a generous 70% discount through this American Express Offer for You, and I'd do it again in a heartbeat, even knowing how much of an aggravation it would turn out to be. Walmart sells a lot of useful things!

I hope this post will reduce any readers' aggravation if they find themselves going through the same process, now or in the future.

Arrival+ devaluation and imputed redemption values in a 2.11% world

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Last week a number of bloggers "confirmed" some forthcoming changes to the Barclaycard Arrival+ MasterCard. The trouble is, they confirmed different things!

  • Amol at Travel Codex wrote: "The first changes for new cardmembers should go into effect sometime in September, although it may vary for different people depending on when their cardmember year begins."
  • Matt Zuzolo at Bankrate wrote: "These changes will go into effect in November for cardholders who got the card before Sept. 30, 2014, and in August 2016 for cardholders who got the card on or after Oct. 1, 2014."
  • Summer Hull at Mommy Points wrote: "For those interested in applying for either version of the card, Barclaycard is targeted mid-July for a relaunch of the products for new customers.  At that time the 5% rebate on travel purchases will be in place, but it won’t expand to all categories until November (reportedly for tech related issues)."

I really like my Arrival+ card

As a reminder, I don't have any third-party credit card affiliate links anywhere on this site (although I do have a couple of personal referral links on my Support the Site! page).

So I don't have any incentive to write about cards I don't carry or cards I don't love. And I really like my Arrival+ card:

  • True Chip-and-PIN functionality makes it fantastic for buying train tickets when you've just arrived in Europe, without exchanging money at extortionate airport rates;
  • "Travel redemptions" are eminently gameable;
  • Barclaycard treats a wide range of online transactions as purchases, and MasterCards are much more widely accepted for such transactions than American Express cards;
  • I've had the annual fee waived on both of my account anniversaries to date.

Two changes to be aware of

While I'm not entirely convinced when the new changes will come into effect, all the reporting so far indicates that they will eventually be applied to existing cardholders. For me, there are two key changes to think about:

  • the Arrival+ mile rebate on travel redemptions will go down to 5% from 10%;
  • and travel redemptions will start at $100 (10,000 Arrival+ miles).

The first change means that the card is, at best, a 2.11% cash back card, while the second change means that the $89 annual fee will no longer be eligible for rebate. In other words, if you can't get Barclaycard to waive the annual fee, you'll actually have to pay it.

That raises the breakeven point of manufactured spend on the card from $40,050 to $80,909 — that's the point at which you're making any profit over a straight 2% cash back card, if and only if you actually pay the $89 annual fee (if you have the annual fee waived, then the card is still strictly superior to a 2% cash back card like the Fidelity Investment Rewards American Express or Citi Double Cash).

Imputed Redemption Values in a 2.11% world

I use the term "imputed redemption values" to designate the amount you have to save on hotel points redemptions in order to justify earning hotel points rather than cash back on your most-profitable cashback-earning credit card. So far, I've been using 2.22% cash back as my benchmark, and you can find those imputed redemption values here, which will remain valid for existing Arrival+ cardholders, for now.

But the upcoming devaluation of the Arrival+ MasterCard means those values will not be relevant to new cardholders, so I've recalculated my imputed redemption values for the hotel chains I follow using both the new 2.11% maximum earning of the Arrival+ MasterCard and a straightforward 2% cash back earning rate, like that of the two cards mentioned above. I've also included the 2.22% earning for the benefit of existing Arrival+ cardholders.

Club Carlson

This calculation has been additionally updated to reflect the end of the last-night-free benefit for co-branded US Bank cardholders.

Hilton HHonors

Starwood Preferred Guest

Marriott Rewards

Hyatt Gold Passport

IHG Rewards

Choice Privileges

This is the first time I've included Choice Privileges, the loyalty program of the Choice Hotels chain, in my hotel analyses. The administration of this program appears to me to be a complete disaster, but they have a remarkable number of hotels all over the world and what appear to me to be fairly generous imputed redemption values.

I'll have a more in-depth post coming on this program later this week, but for now, here's the imputed redemption value of manufacturing spend with the Barclaycard-issued Choice Privileges Visa Signature card, which earns 2 Choice Privileges points per dollar spent with the card:

Those are obviously very competitive imputed redemption values for top-tier properties. The only trouble is that it's wildly unclear to me whether Choice Hotels actually has any top-tier properties.

For example, the excellently-located Comfort Inn Central Park West costs just 25,000 Choice Privileges points. But a paid stay in July (Choice Hotels only allows award bookings within 30 days for non-elite members) costs just $209 — well below the $278 imputed redemption value for such a stay.

Triggering high-interest savings accounts

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Last month I wrote about two high-interest savings accounts linked to the Mango and Union Plus prepaid debit card products. At that time, Mango was no longer available for new signups, and I speculated that Union Plus would soon be closed to new cardholders as well.

Doctor of Credit reported yesterday that, sure enough, that day has come, and it's no longer possible to open new Union Plus prepaid accounts.

If you were lucky enough to open accounts in time, however, you still have access to those accounts, including their linked high-interest savings accounts, and you may be wondering how to trigger those high rates.

Rêv gives detailed information on deposits

When you make a deposit to a Mango or Union Plus account, it appears in your transaction history with a fair amount of detail. Here are four different transaction types I tried in order to trigger my second Mango card's high-interest savings account (I did two of each):

An Amazon Payments transfer:

A transfer from the Stripe account where my monthly blog subscriptions are deposited:

A TopCashBack redemption:

And a Chase Ultimate Rewards cash redemption:

And sure enough, in June I earned 6.02% APY on my savings account.

The problem is, Mango doesn't tell you which transactions triggered the higher interest rate!

Narrowing it down to 2

That's where the process of elimination comes in, since I opened both a second Mango account and a Union Plus prepaid account. But I haven't made a TopCashBack or Amazon Payments deposit to my Union Plus account: I've only made Stripe transfers and Chase Ultimate Rewards cash redemptions.

But in June, I earned $0.27 on an average daily balance of $66.66 in the savings account linked to my Union Plus prepaid card. Since these savings accounts compound daily, that puts me right in the ballpark of the promised 5.10% APY. In other words, one or both of Chase Ultimate Rewards redemptions or Stripe transfers qualified as direct deposits for the purposes of triggering the high-interest savings account.

If I had an additional account, I would see if Chase Ultimate Rewards cash redemptions alone are enough to trigger the higher interest rate, as I suspect they are.

I'll be maxing out these accounts as quickly as possible

Now that new applications are closed for both products, it's unclear how long existing cardholders will be allowed to keep their accounts. With that in mind, I'll be maxing out these accounts as quickly as possible in order to earn the full interest rate for as long as possible before existing accounts are closed.

"The $100 Startup" is not a very good book

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This is a review of "The $100 Startup," by Chris Guillebeau. For a previous book review, see "Pound Foolish" is a pretty good book.

Chris Guillebeau has a lot of interesting friends and acquaintances

The conceit of "The $100 Startup" is that entrepreneur extraordinaire Chris Guillebeau had a flash of inspiration: everywhere he went, he met people who shared their stories of achieving "freedom" (a concept we'll return to in a moment) through low-startup-cost enterprises: at its most basic, just a website, an e-mail address, and a PayPal account.

So Guillebeau, being an entrepreneur extraordinaire, decided to survey, compile, and analyze the experiences of those entrepreneurs to see if he could identify the general principles which led to the success of their micro-enterprises, and share them with the world.

Unsurprisingly, Guillebeau's profiles of entrepreneurs are the highlight of the book. It is genuinely interesting to read about a variety of ways people are getting by in an era where anyone can be paid by anyone for anything they feel like paying for.

Guillebeau is not a particularly effective storyteller

If that sounds familiar, it's because for the last 15 to 20 years, anyone with access to the internet has access to thousands of stories of entrepreneurs starting with virtually no capital developing successful online products. Many of those articles are well-written and informative for people considering starting their own online businesses.

This is a fascinating topic that has been treated extensively by the news media, which knows a good story when it sees one. But Guillebeau brings no particular expertise to this storytelling project. Rather, he roots around in his survey data until he finds a piece of Talmudic wisdom, like, "Offer an incredible guarantee, or don't."

Well, yes, Chris, those are the options.

For someone supposedly concerned with "freedom," Guillebeau is oddly obsessed with financial success

Guillebeau frames his book as a series of stories, including his own, of entrepreneurs who, often accidentally or via unexpected misfortune, find themselves forced to support their families through small businesses of their own design.

But the more you read, the more you find that he's talking about businesses that are so profitable they replace the income the entrepreneur was earning through traditional employment. In other words, this is a world much closer to traditional entrepreneurship than he lets on: it's ambitious, money-oriented, self-motivated people making middle-class incomes through sole proprietorship.

Here's one of his informants talking about her business philosophy: "Remember that the goal of business is profit. It's not being liked, or having a huge social media presence, or having amazing products that nobody buys...Business is not a popularity contest...There's nothing wrong with having a hobby, but if you want to call it a business, you have to make money" [165].

Needless to say, that philosophy is deeply ingrained in American society — yet Guillebeau appears to believe he can claim to have discovered the profit motive by cloaking it in the language of "freedom."

Of course anyone would be excited to discover that they can make as much money from a small business as they do from formal employment; it's no doubt an incredibly exciting thing to discover. But Guillebeau never gives a coherent explanation for why formal employment is "less free" than self-employment; why making wedding dresses at home is "more free" than making wedding dresses in a factory; why making award bookings for strangers (yes, Gary Leff is one of the case studies) is "more free" than running a North Carolina research center. More profitable, maybe, but that's a much less interesting claim than the one Guillebeau seems to think he is making.

"The $100 Startup" misses the trees for the forest

Guillebeau repeats variations on the following mantra throughout the book: "You can open a PayPal account in five minutes and receive funds from buyers in more than 180 countries" [xvi].

But astonishingly, his only anecdote from an actual entrepreneur using PayPal is devastating: "The problem was access to money. Because Naomi is Canadian but has lived in the United States, the United Kingdom, and elsewhere, she often has issues with her PayPal account being closed as she travels the world, leaving her with plenty of funds in the account but no way to access them" [181, emphasis in original].

Instead of turning this into a teachable moment about the vagaries of using PayPal for your online payments processing (which I'd be happy to tell Chris all about), he describes her borrowing money from a stranger to pay conference registration fees. I'm glad Naomi worked something out, but for your typical entrepreneur who foolishly depended on PayPal for worldwide payments processing, this situation would be simply devastating.

And indeed, the entire book is full of inspirational aphorisms rather than concrete advice on the mechanics of running a small business.

Guillebeau is either gullible or naive about the 1099 economy

Repeatedly through "The $100 Startup," Guillebeau refers to people "deciding" whether to work or employ workers as employees or independent contractors.

Regarding a designer who returned to work after leaving her job to start a small business, he writes, "Also, Tsilli now worked as a contractor instead of an employee, and that gave her an unexpected but important sense of still earning all her income 'on her own,' with roughly half coming from the studio and half from her business" [230].

Regarding a transcription service: "Then she made another key decision: not to hire employees but only hire contractors. By building the team on a contract-only basis, she had more flexibility to increase or downsize the numbers, depending on market needs...(The contractors all understand that the work is cyclical and future projects aren't guaranteed)" [222].

Let me be clear: a wide swath of the American workforce is improperly classified as independent contractors in order to reduce the payroll tax burden on their employers. Employee and independent contractor status is not properly a "decision" made by either the employee or the employer: it's a legal determination based on the facts and circumstances of their employment. And the default, absent a raft of mitigating circumstances, is for employee status.

Guillebeau's studied ignorance of this problem treats the classification as a "business decision." It's not, and he invites abuse by suggesting it is.

I run a $205 startup, and I'm glad I didn't read this book before I started

Over two years into this project, I've made a lot of mistakes, many of which I recognize in the stories in this book (can you say affiliate links?). But if I had in mind the mechanistic, profit-oriented vision this book proselytizes when I started, I don't think I would have made it to my one-year anniversary, let alone still be blogging over two years later.

Guillebeau's vision of entrepreneurship is deadening, profit-oriented, and capitalistic, red in tooth and claw. That's fine: American culture is deadening, profit-oriented, and capitalistic. But his attempt to reimagine that culture and the role of the entrepreneur within it as a lone voice crying out in the wilderness for freedom does a disservice to those who truly reject the relentless pursuit of wealth as the principle goal of life.

Thinking about Starwood Preferred Guest

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Since my American Express "old" Blue Cash card was closed late last year, I've carried just two American Express-issued credit cards: my trusty Hilton HHonors Surpass, and my ill-advised but so-far-irresistible Delta Business Platinum card.

An individual is allowed to carry up to four American Express-issued credit cards and four charge cards, so I have, in principle, two "slots" I can use for additional credit cards. Casting about, there are two obvious candidates: the Amex EveryDay Preferred, which gives (up to) 3 Membership Rewards points per dollar spent at gas stations and carries a $95 annual fee, and the Starwood Preferred Guest business or personal credit card, which has an annual fee going up to $95 on August 11, 2015 (the first year's annual fee is waived).

I've written about the EveryDay Preferred card before, so for now I want to focus on the Starwood Preferred Guest American Express card.

Starpoints are expensive

Since the Starwood Preferred Guest card doesn't offer any bonus categories (besides Starwood stays themselves), any Starpoints earned with the card are by definition expensive: even if you displace only unbonused manufactured spending, you're buying one Starpoint for 2 or 2.22 cents, depending on your highest-earning card for unbonused spend.

Starpoints can be valuable for award stays

At the low end and the very high end, Starwood's award chart is intensely fair: a weekend night at a Category 1 hotel costs just 2,000 Starpoints (a $44 imputed redemption value!), and a 30,000-to-35,000-Starpoint night in a category 7 property, while having a steep $660-$770 imputed redemption value, may still offer a discount at an expensive property like the the St. Regis Princeville Resort on Kauai, where 30,000 Starpoints will get you a $992.34 room at the beginning of January:

For mid-tier award stays, unfortunately, Starwood are just too expensive: a 16,000-Starpoint stay, with its $352 imputed redemption value, will get you a night at the Westin Dublin, while just 50,000-60,000 HHonors ($185-$222 IRV) points can be redeemed for a night at the nearby Morrison, a DoubleTree by Hilton Hotel.

This is fundamentally the same problem I had with chasing Hyatt Diamond status.

Starpoints can be valuable for Cash & Points awards

If you earn your Starpoints exclusively through manufacturing spend on the American Express Starwood Preferred Guest card, you are always better off redeeming them for Cash & Points awards than for award stays (except on stays of 5 or more nights at Category 3-7 properties, where the 5th night is free).

That's because Cash & Points awards allow you to "buy back" Starpoints at between 1.1 cents (for high-season, Category 5 stays) and 2 cents (for Category 1 stays), while each Starpoint you buy through unbonused, manufactured spend costs between 2 and 2.22 cents. Here's my quick guide to how much you're paying for Starpoints when you redeem for Cash & Points awards:

On stays of exactly 5 nights, the math changes, since each Starpoint is worth 1.25 Starpoints: in other words, you're buying Starpoints at 1.776 cents each, not 2.22 cents each (the proof of this is left to the reader). In that case, low-season Category 5-7 Cash & Points awards are no longer strictly superior to points-only award stays.

Starpoints are the only way to earn bonused Alaska and American miles

Delta SkyMiles and United MileagePlus miles are trivially easy to earn. You can earn SkyMiles with any flexible Membership Rewards-earning credit card, like the aforementioned Amex EveryDay Preferred, or 1.4 and 1.5 SkyMiles per dollar spent on the American Express Delta Platinum and Reserve co-branded cards, respectively. You can earn MileagePlus miles (and lots of them!) with a Chase Ink Plus card and any number of Chase Freedom cards.

But the Bank of America Alaska Airlines co-branded credit card earns just one Mileage Plan mile per dollar spent, as do the Barclaycard and Citi American AAdvantage co-branded cards.

The only way to earn more than one Mileage Plan or AAdvantage mile per dollar spent, let alone both, is with the Starwood Preferred Guest American Express card, since Starpoints can be transferred to both Alaska Airlines and American at a 20,000:25,000 ratio, year-round.

While I wouldn't buy all my Mileage Plan miles or all my AAdvantage miles at 1.776 cents each, I'd conceivably buy some miles at 1.776 cents, for example to top up a high-value international business class award.

Conclusion

So that's where I am in thinking about my next American Express application.

There really are times when Starwood Preferred Guest properties offer the best possible value: I booked a stay at the Sheraton Memphis Downtown Hotel during a national fencing tournament for just 7,000 Starpoints per night, when the entire area around the convention center was sold out. That was a steal.

On the other hand, I get a tremendous amount of value from my Delta SkyMiles, and would certainly be able to get a lot of ongoing value from a card that earned 3 SkyMiles per dollar spent at gas stations.

What do my readers think? What considerations have I overlooked?

Paying credit card bills with money orders

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Today's post is about an issue that I've found causes the occasional misunderstanding in the travel hacking community.

Some banks are (rightly) suspicious of large money order deposits

If you've ever searched Craigslist for a job, you've no doubt come across exciting opportunities in the field of check-kiting. How this scam typically works is that you'll receive a bundle of money orders, which you are instructed to take to your own bank to deposit.

Banks are required to make the funds available within a certain number of days, whether or not the funds have in fact been made available by the bank against which the check is drawn. Once the funds become available to you within the statutory period, you're instructed to wire the funds back to your "employer," deducting a certain percentage to cover your own time and expenses, of course.

When your bank discovers the money orders are fraudulent, they deduct the entire sum from your checking account and hold you responsible for the money.

Besides being aware and wary of the above scam, banks may also be suspicious of customers who conduct large transactions in cash-equivalents like money orders. The larger the bank, the more likely they are to be unwilling to humor customers who insist on depositing vast sums of untraceable funds. That's one reason why one of the most valuable resources any travel hacker can draw on is an accommodating local bank or credit union.

Paying credit cards with money orders is no big deal

I've recited the above well-known facts because, not unreasonably, many people seem to think that the implication is that money orders are inherently suspicious. Nothing could be farther from the truth.

If you have local branches of the banks that issue your credit cards, they will be happy to accept money orders as payments against your credit cards. For example, I have local branches of both Chase and US Bank:

  • In the case of US Bank, I simply hand my credit card and money orders made out to "US Bank" to the teller and ask to make a payment.
  • In the case of Chase, I make the money orders out to "Chase Card Services" (the payee on my Chase credit card bills) and fill out the light blue "payment" slip found at the customer island.

While I've read (occasional, rare) reports of Chase and US Bank checking accounts being closed for making a single large money order deposit, I make tens of thousands of dollars in payments against my credit cards every single month, all of which my clerks are invariably happy to process.

Distinguishing between deposits and payments

The essential thing to remember here is how the bank treats the two kinds of transactions:

  • Deposits into a checking account, made available within the statutory period, can be withdrawn as cash. If money orders turn out to be fraudulent, the bank is responsible for getting the money back from you — money you may no longer have access to.
  • Payments against a credit account, on the other hand, merely reduce the outstanding balance owed. If your money orders turn out the fraudulent, the bank will versus the payment and charge a returned payment fee.

This different is key to understanding why, in general, payments against credit accounts pose a much lower risk to the banks than deposits into demand deposit accounts.

Warnings, cautions, etc., etc.

I make money order payments against my credit card accounts constantly, and my local bank branches are always happy to process them.

But as I'm fond of saying, I'm not a banker, and I'm especially not your banker. If banks in your area have been recently hit by fraudsters, they may be more cautious than necessary about money orders, regardless of the actual risk they incur by processing them.

So start slow, get to know your tellers, make sure they know what they're doing, and build relationships. Then stop worrying, and make any credit card payments you please using money orders.