Who is the Inspirato Pass ripping off (and who is rich or dumb enough to find out?)

Every 21st century tech scam involves ripping off some combination of three groups of people: customers, service providers, and investors. If you can exploit regulatory loopholes it’s icing on the cake.

Customers

You might expect customers to be the biggest victims of tech scams, but in my experience that’s relatively rare, simply because customers have the least money of the three groups, and tend to guard it best. Customers are most vulnerable when it comes to subscription services, but in those cases the scam is fairly transparent, or even harmless: gyms sell more memberships than they have equipment with the understanding that most members won’t show up very often, and dedicated athletes simply plan their workouts during slower periods.

Another frequent occurrence is customers victimized not by the platform, but by the service provider. A wonderful Vice article from last October described how scammers used AirBNB to advertise properties they would then substitute for uninhabitable units when guests arrived. AirBNB’s technology and policies made the scam possible, but the company itself wasn’t actively participating in it.

But ultimately, customers are not often the victims of tech scams. Uber has never and will never turn a profit, but their customers really do receive the transportation they pay for. MoviePass never stood a chance, but their customers really did get to see movies.

Service Providers

Service providers often end up being the victims of tech scams, especially in fragmented and competitive markets. Restaurants, particularly during the pandemic, may feel they need to participate in delivery services in order to stay in business, and are thus willing to sign over a huge share of their revenue over to platforms like DoorDash and Grubhub.

Contrast that with MoviePass: logically, movie theater seats, like airline seats, are the ultimate “expiring” good: the second the movie starts or the plane takes off, empty seats lose their entire value. In the case of aircraft, the mere presence of the seat adds to the flight’s fuel expense with no off-setting revenue. But movie theaters, unlike restaurants, operate in a super-consolidated market, with even very large cities having just 4-5 companies operating all or almost all of their movie theaters. That gave AMC, Regal, Loews, and Carmike leverage over MoviePass: if MoviePass wanted customers, it had to pay the theaters whatever they demanded, and what they demanded was full price.

Investors

In most cases, it’s obvious who’s getting ripped off by tech scams: it’s the investors. Ride-share services like Lyft and Uber cannot be operated profitably, but they are being operated: customers get the rides they order, and drivers are paid to provide them. The difference between the price riders pay and the amount it costs to operate the service comes from the only place it can: investors. This is good and right, since investors also have the most money to lose of the three groups of potential victims.

Of course, these three models can mix in different amounts. Customers who paid up front for year-long MoviePass subscriptions were certainly victims of the company’s insolvency right alongside the company’s investors, and even movie theaters that had adjusted their expectations based on the surge in MoviePass ticket sales had to adjust them back down after the sales vanished overnight.

How Inspirato is supposed to work

That’s the framework I brought while reading yesterday’s Miles to Memories post about the Inspirato Pass. For a $2,500 initiation fee and $2,500 per month, you get what works out to about 14 days per month of hotel stays, with “no nightly rates, taxes, or fees.” The mechanics are a bit complicated, and completely opaque unless you have a membership, but it seems that each Inspirato Pass allows you to make one 7-day reservation at a time, and on the day you check out, you are allowed to make another reservation at a minimum of 7 days out. That means 14 nights are included for every 28 days, or roughly 182 nights per year. Including the initiation fee, maximizing the pass during the first year works out to roughly $178 per night ($164 per night for future years).

Hilariously, Inspirato explicitly says you are allowed to have more than one Inspirato Pass, which would allow for back-to-back 7-night bookings: “If you are interested in multiple reservations for Inspirato Pass, you can simply purchase another Pass."

Before we get too off-track, let’s be clear: at face value, this is a pretty good deal, if it works even close to how it’s advertised. If you’re the kind of person who would pay $6796 for a 7-night stay at The Westin Snowmass Resort from Christmas through New Years, then paying $2,500 for the same stay is a good deal. Paying $1,250 for the same stay is an even better deal, which is where you’d end up if you booked two week-long stays the same month, 7 days apart.

How does the Inspirato Pass really work?

Inspirato does have a booking engine that appears to reflect availability in real time, so I ran two simple tests: a 7-night reservation in the United States beginning two days out (the minimum booking window) and one beginning 7 days out (the minimum booking window after a completed stay). The two-day booking window was pretty grim, with only 4 properties available for 7-night stays, in Savannah, Portland, Baltimore, and San Francisco:

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To save you the trouble, here’s the breakdown of paid rates at these hotels for these dates:

• Hyatt Regency Savannah: $844.30

• Portland Marriott Downtown Waterfront: $1,023.97

• Baltimore Marriott Waterfront: $732.03

• InterContinental Mark Hopkins San Francisco: $1,156.05

In other words, at none of these properties would you be better off paying $1,250 for a 7-night stay rather than the rate publicly available to anyone with a web browser.

The 7-day advance booking window is at least slightly more interesting, with options in Las Vegas, Boston, Colorado, and Texas. The Vdara in Las Vegas cracked the $1,250 barrier at $1,749.50, but that difference depends largely on whether the Inspirato’s “no nightly rates, taxes, or fees” claim includes resort fees, which make up a whopping $357.15 of the stay’s cost.

Is the Inspirato Pass a gym membership or a MoviePass?

This is the question I keep returning to. The logic of 21st century tech scams is always the same: [W capital asset] is unused [X percent of the time], why not charge [Y percent discount] or [Z subscription fee] to people who have have more time than money to maximize the usage of the fixed capital investment?

Like a very expensive gym membership, obviously Inspirato is capable of being profitable: any business that charges customers $30,000 annually is capable of being profitable! Since Pass members can only make one reservation at a time, surely around holidays some customers will feel the impulse to “lock in” their reservation in a single high-value reservation, even if that means paying multiple months of membership fees for a single week-long reservation a month or two in the future.

Like MoviePass, Inspirato doesn’t seem to have worked out any particular bargains with any of the hotels on their site. Their availability roughly matches the publicly available rooms. That inclines me to think they’re operating like a MoviePass, paying full freight (or perhaps slightly discounted corporate rates) for rooms, and using their inactive members’ money to pay for their active members’ rooms.

Conclusion

I don’t have any insight into Inspirato’s business model or balance sheet. But my very strong hunch is that we will see the same “observer effect” as we saw with MoviePass. As long as the company flew under the radar, they were able to finance the difference between the membership fees they collected and the ticket prices they paid. As soon as it became a nationwide phenomenon, their ticket purchases swamped their revenue and the company collapsed.

Inspirato has a built-in bulwark MoviePass didn’t have: they charge $30,000 per year! And maybe that incredible price point will discourage enough people to keep the platform viable. But, in my experience, rich people are even more meticulous about maximizing the value they get from every service they subscribe to, and I can’t imagine the Inspirato Pass will be any exception.

As long as the Inspirato Pass remains an affectation for rich weirdos, it might survive, and there’s no reason not to look into the value they’re offering for close-in trips. Just keep in mind, the second people start hammering it as hard as they can, the booking restrictions, “abuse” allegations, and insolvency are likely to follow. It’s a movie we’ve seen so many times we can recite the lines by heart.

More Delta Platinum and refund hijinx

Right now all travelers, but especially travel hackers, are juggling even more decisions than usual. In the before time, we might make speculative bookings far in the future as soon as award space opened up for trips we weren’t sure we’d be able to take. Now even a last-minute trip is “speculative,” depending on constantly changing infection numbers and quarantine restrictions, not to mention our own health conditions.

Back in May I wrote a couple posts about cancelling airline tickets for a refund instead of store credit and my plan to use Delta’s COVID-19 flight change policy to lock in a low-cost companion ticket that I hoped could then be used on other, more expensive dates.

As a reminder, the key to that second trick was that travel to any destination, booked before May 31 for travel before September 30, 2020, could be changed to any dates before September 30 with no difference in fare charged. The policy’s intention was obvious: they wanted people to be comfortable booking flights with the knowledge that if they need to postpone their trip they won’t be on the hook for more money. But taken literally, it also meant you could search the schedule for the cheapest available travel dates, then change your flights to any desired dates before September 30, as long as the destination remained the same.

Of course, back in May there was still hope the country would pull together and defeat the virus. Once it became clear that wasn’t going to happen, my focus shifted from getting a deal on a New Orleans trip to getting a refund.

Fortunately, as early as June my outbound 10:14 am flight was cancelled and I was rebooked on a 8:20 am flight, so I knew I was entitled to a refund. With the original reservation dates finally approaching, last week I pulled the trigger.

Don’t cancel your flight, apply for a refund

In the e-mail notifying me of the schedule change, Delta wrote:

“We also understand that your new itinerary may not be best suited for your travel needs and we have the following options to give you flexibility.

• “If you prefer to change your trip from the itinerary listed below, please visit My Trips on delta.com or follow the step-by-step instructions here. If you need additional assistance, please contact us at 1-800-221-1212.

• “If you would like to cancel your flight, the value of your ticket will become an eCredit, and you can find more details available here. You'll be able to use your original ticket number as the eCredit number when you are ready to redeem it by following the step-by-step directions here.”

As you can see, Delta doesn’t even mention the possibility of a refund, despite knowing perfectly well I’m entitled to one. My main concern was that if I canceled my reservation and received an eCredit, that might break the link in their system showing that I experienced a schedule change as well. So instead, I applied for a refund without canceling my reservation. Fortunately, Delta lets you apply for a refund online.

Redeposited companion ticket

My secondary worry about canceling my flight was that the terms and conditions of the companion ticket are crystal clear:

“Cancellations/Ticket Changes/Reissuance: If the primary ticket or the Companion ticket is cancelled, both tickets will be cancelled and the Companion ticket will not be reissued. Subject to the fare rules of the primary ticket, the value of the primary ticket, less a $200 administrative service charge and any fare difference, may be applied to future travel. Cancellations are subject to the rules of the fare purchased. Neither a new Companion Certificate nor Companion ticket will be issued upon a cancellation.“

If I canceled my ticket, I thought there was a good chance I’d be both stuck with store credit and out a perfectly good companion ticket, the worst of both worlds.

Thankfully, a few days after my refund was processed, I logged into Delta and saw my previously “closed” companion certificate had been restored with a reassuring checkbox next to it, ready for use. I recalled that when I submitted my refund request, the confirmation page mentioned in passing that companion tickets would not be reissued “unless they are subject to our COVID-19 cancellation policies.” But of course I didn’t request a refund under their COVID-19 cancellation policy, I requested a refund under longstanding Department of Transportation guidance on flight cancellations!

A classic case of good execution but poor communication.

Conclusion

Obviously we play a lot of games with loyalty programs, so I try to stay philosophical about the games travel providers play with us. Turnabout is fair play and so on, after all. If they think they can get a few bucks more from customers by charging for seat assignments or priority boarding, I’m inclined to say more power to them.

Refunds on the other hand are a real opportunity to put companies’ values (if any) on display, since it’s a situation where they’re the ones in a position of power: they already have your money, you want it back, and there’s no particular reason to believe you’ll spend it with them in the future once you have it back. No one expects a company to be exactly eager to issue refunds, but especially under conditions when customers are clearly entitled to them, I have a lot more respect for companies that issue them gracefully rather than belligerently.

Although Delta could have been more proactive about alerting me to my right to a refund, their simple online form and reissuance of a companion ticket they weren’t strictly speaking required to offer left a much better taste in my mouth than the lecture I got from my Alaska Airlines representative.

Once (if) we get out from under COVID-19, I’ll be interested to see whether Delta continues to reissue companion certificates on refunded tickets. It’s a small gesture, but given the importance of their relationship with American Express, I think it would behoove them to adopt a single policy on companion ticket cancellations — and follow it.

Virginia's Eastern Shore: our first road trip out of quarantine

The pandemic has caused different kinds of pain for different people. For the very social, the pandemic has meant losing the ability to visit with friends and family in person. For the unemployed, it has meant the loss of income, health insurance, and experience. For those in nursing homes and prisons, it has meant the loss of contact and physical and emotional support. And for people who love to travel, it has meant the shrinking of the world down to a few grocery stores, restaurants, and hardware stores within driving or walking distance.

Over the last 3-4 weeks I’ve seen more and more people I follow in the travel hacking community venturing outside those narrow limits. Usually by car, or by short, non-stop, masked, socially-distanced flight, people are trying to see whether travel can be safe again. After reading and listening to a number of reports, last weekend I put together a short road trip to Virginia’s Eastern Shore.

Renting the car

In the past when we needed to rent cars, the most convenient location was a Hertz desk at the Washington Hilton on Connecticut Avenue, a short walk away. Whether due to the pandemic, Hertz’s Chapter 11 bankruptcy filing, or both, that location is (at least temporarily) closed, and the best option Autoslash came up with was Hertz’s Union Station location.

I ended up making a week-long reservation from one Wednesday to the next, although we only planned to use the car over the weekend, since it turns out the breakeven point was just around 3-4 days, and we thought the car might be nice to have to run errands on either side of the trip. We did end up using the car to pick up a takeout order on the other side of town on Tuesday, so I think the extra couple bucks turned out to be money well spent.

I hate renting cars, but the experience wasn’t noticeably different from before the pandemic. After going through the tax/gas/insurance rigamarole, the agent told me where the car was parked, and I found it had two “Hertz Gold Standard Clean” stickers “sealing” the front driver and passenger side doors, so to open the door you’d “break” the seal. The car certainly looked clean, but I still couldn’t help but laugh — does that mean they didn’t clean the back seats?

Getting there

I’ll be honest, I grew up in Montana, so the whole “toll road” thing has always been a bit of a mystery to me. Back in Wisconsin we had an “I-Pass” transponder for trips to Illinois, but it disappeared in one of our recent moves, so when Google Maps warned me that our route to Virginia “included toll roads,” I went to the change drawer and put together a formidable stack of quarters, safely stuffing them into the driver side door.

It turns out, the route to Virginia’s Eastern Shore does not include “toll roads.” It includes a single toll bridge, which hilariously only charges for eastbound trips, and not at all hilariously no longer accepts cash. As we neared the bridge and the signs for the toll bridge became more and more frequent, I got more and more anxious. It turns out there’s some way to pay your toll after the fact by mail, and presumably Hertz is going to get a bill sometime in the next year and come after me for it.

My recommendation is just to pick up an E-ZPass transponder. Each state that participates in the E-ZPass system sets its own charges for these things. They’re currently free for Maryland residents and appear to be free in Virginia as well (with a $35 prepaid balance) so if you know anyone you can have one mailed to in those states, that’s probably your best bet. Other state charges are:

• Delaware: $15

• Maine: $10

• Massachusetts: $20

• New Hampshire: $6.99

• New Jersey: $10

• New York: $10

• Ohio: $3

• Pennsylvania: $3

• Rhode Island: $10

• West Virginia: $13

• Illinois: $10

• North Carolina: $7.40

• South Carolina: $40

• Indiana: $15 (plus $1.25 monthly!)

• RiverLink (Kentucky and Southern Indiana): $3

• Central Florida: $14.95

Staying there

There are a number of larger tourist towns on the Eastern Shore, including Ocean City in Maryland and Chincoteague in Virginia, but we weren’t comfortable staying there, so we opted for the Hampton Inn & Suites in Exmore, Virginia. At 30,000 Hilton Honors points per night, that ended up being a phenomenal redemption at 0.6 or 0.7 cents per point. Due to a coding error (or one of Hilton’s overlapping promotions) I also got a rack of points back at the end of the stay, which brought the total cost down to just 55,000 points — a great deal.

Just as with the car, the housekeeping staff had placed a tearable sticker on our door before arrival, which one assumes was supposed to indicate that no one had entered the room after it was cleaned. Unfortunately for the pandemic theatrics, the sticker simply fell off, instead of tearing, when I opened the door.

The hotel was by far the place we felt least safe during this trip. Our room was fine, and they proactively asked at check-in whether we wanted to skip housekeeping during our stay, but other than the actual hotel staff themselves (who were great), no one was observing any of the practices we’ve become used to in preventing the spread of the virus. The situation finally reached peak absurdity when I noticed what the unmasked workmen were doing in the lobby on our second day in town: installing the virus prevention signs the hotel had undoubtedly been shipped from Hilton headquarters. Guests were also congregating, eating, and drinking throughout the day in the hotel’s common dining area.

After our first night, we just used the stairs on our end of the building to exit and avoided the lobby area completely.

Eating there

We ordered dinner takeout from two Exmore restaurants, the Exmore Diner and the the Great Machipongo Clam Shack. Both are local institutions that are surely swamped during normal travel seasons. Both are now offering only takeout and drivethrough, and when we called our orders in ahead of time we had a 15-25 minute wait time at each.

Annoyingly, the Exmore Diner has a vast daily specials menu they only post on their Facebook page, so I ordered a serviceable but boring burger instead of the daily steak or pasta dish I would have ordered if the person taking my order had thought to mention it.

The Great Machipongo is one of the weirdest places I’ve ever eaten, which I will illustrate with the following image. This is the “2 Baked Stuffed Clams” listed in the “Sandwiches” portion of their menu:

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These are, clearly, two baked stuffed clams. Then they are served, for reasons I cannot begin to fathom, on clam shells.

Besides the perfect hush puppies (pictured above), the “She Crab Soup” was a fascinating and delicious twist on clam chowder based on Maryland’s official mollusk (I have no idea if the crab is actually Maryland’s official mollusk, but go with me here).

Chincoteague and Assateague Islands

On Saturday, we drove about an hour north from Exmore to Chincoteague Island and the Chincoteague National Wildlife Refuge. Besides what I would call an “excessive” mosquito population, this part of the trip was great. The Refuge had a $10 per vehicle entrance fee, which gave you access to the entire Virginia side of Assateague island (I’m not sure if the Maryland side is accessible from Chincoteague or whether you have to drive around), including hiking trails, scenic turnoffs (there’s a herd of feral horses managed by the Chincoteague fire department), and Assateague Beach. A number of locations are designated as approved fishing and crabbing spots, for enthusiasts of the region’s famous soft-shell crabs.

We spent an hour or two walking around the beach, and it gave me a chance to reflect on one of the stupid fights people insist on having online about social distancing during the plague. There is a certain faction of online scolds who insist that newspapers showing large groups of people gathering outdoors are misleading people about the relative risks of indoor and outdoor socializing. But that’s not the actual experience anyone has of going to the beach.

On a windy, rainy day, all the groups of people I saw had plenty of space to separate themselves. I can’t imagine any virus transmission happened on Assateague Beach itself. Even the restrooms seemed to have been recently cleaned and were stocked with plenty of hand sanitizer. But the thing beach truthers can’t get their heads around is that “beach” transmission doesn’t happen at the beach. It happens in the car you fill with your friends to drive to the beach.

If we can get groups of people to isolate themselves, we can contain the virus’s spread. If people continue to socialize, they’ll continue to spread the virus. Whether you’re driving to a movie theater, a restaurant, a beach, or a doctor’s appointment doesn’t make the slightest difference to the virus.

Two Chincoteague highlights

After meandering around Assateague Beach, we passed back through Chincoteague proper and got some lunch. Pico Taqueria had awesome vegetarian and fish tacos, and a much better “vibe” than Lily’s Little Mexico, the first place we stopped before being discouraged by the astonishingly slow line and limited menu.

The Black Narrows Brewing Company is also located on Chincoteague, and we enjoyed stopping in for a few sips of beer. They have outdoor seating, where we split a cup of their Weathered Together pale ale, but were not currently selling cans to go due to the now-years-long “aluminum shortage.” The front deck was more crowded than we were comfortable with, but on a rainy afternoon we enjoyed a break on their back lawn, which had some ornamental cover.

Revisiting the Bumped App

Back in November, 2018, I wrote about a then-new app called Bumped which awarded fractional shares of stock when using linked credit cards at participating merchants. Over the last few weeks as I sorted through every bank, brokerage, and loyalty account to update my address, I discovered that Bumped not only survived, but I had also forgotten to unlink several of my credit cards and had accumulated a tidy stash of $10 or so in fractional shares.

In a comment to that original post, reader ABC pointed out some important limits on earning: $50 in rewards per purchase and $250 in rewards per brand, per year. Oddly, these limits are not disclosed in the current (May 2019) customer agreement. Instead, you can find them by clicking through to each brand in the “Loyalties” section of the app.

In any case, having essentially discovered $10 in change under the cushions, I thought I’d share some additional thoughts with my beloved readers.

Use Bumped for reimbursable expenses at pharmacies

Even if you have health insurance, you might still be on the hook for hundreds or thousands of dollars per year in pharmacy expenses. If you have a pre-tax flexible spending account at work, or a health savings account connected to a high deductible health plan, you may have the ability to pay for your prescriptions with your own credit card and then request reimbursement from the health plan.

Both CVS and Walgreens participate in Bumped, and offer a 1% payout (on all merchandise, not just pharmaceuticals), so this technique might allow you to receive your normal credit card rewards, an additional 1% in the form of company stock, and then pay for the charge with pre-tax money.

Use Bumped for deductible or reimbursable business expenses

The Kroger “family” of grocery stores, and Walmart and Target stores (classified as “superstores”), are also in the app at the 1% rewards level. While all three stores sell PIN-enabled prepaid debit cards, if you assume the folks at Bumped have an eye out for abusive behavior, you may still be visiting those stores to source toys for your reselling business, or produce for your catering company, or baked goods for office birthday parties.

The point is simply that when someone else is footing the bill (for reimbursable expenses) or subsidizing your expenses (for deductible expenses), then directing your spending towards merchants that offer you personal rewards is an easy way to come out (even further) ahead. Some Kroger and Walmart stores even sell gas at competitive prices, and Bumped may make it worth directing your reimbursable or deductible gas spending towards those stations.

Verizon Wireless, AT&T, and T-Mobile are also options at a 0.5% reward level, so if your employer reimburses you for some or all of your mobile or internet expenses, that’s another easy opportunity to come out ahead.

Use Bumped to steal from venture capitalists

One option that never would have occurred to me if it hadn’t been laid out explicitly in the customer agreement, is abusing returns. For example, by spending $5,000 at Walmart, you can earn the maximum $50 per-purchase quantity of Walmart stock. After executing this procedure 5 times, you could then sell the stock, withdraw the proceeds, and return the $25,000 in merchandise. The other obvious candidates are Sam’s Club and The Home Depot (where you need to spend $10,000 per transaction, given Home Depot’s lower earning rate of 0.5%).

I think this behavior would certainly get your account closed, and may result in them pursuing some kind of legal action against you. On the other hand, we’re talking about making off with a maximum of perhaps $1,000, which is so much lower than the cost of filing a lawsuit or arbitration claim it’s hard to imagine them trying very hard to get their money back.

It’s not for me, but I’m also not going to judge anybody who tries to pull off this little stunt.

Conclusion: what do you do with the stock?

Obviously if you’re making some kind of huge play on Bumped, whether because you despise venture capitalists or you just don’t think the company will be around much longer, then you should pull your money out as soon as possible. If you plan to continue using the program as intended, then I actually think you’re better off leaving the money in your companies’ shares.

This is for a very boring reason: since you receive your shares for free, they are (correctly) treated by Bumped’s brokerage house as having a “cost basis” of $0, and the entire amount of your sale proceeds is treated as a capital gain. This is not a big deal in terms of its tax burden, but it has the capacity to grossly complicate your life or that of your financial advisor or tax preparer, especially if you transacted in any of the same companies in your non-Bumped accounts. In other words, a savvy tax-loss harvest in one account can be offset by a thoughtless sale in another.

Within the Bumped app, dividends seem to be properly paid and reinvested, so as long as you’re earning anything less than $50-100 per year in rewards, I would simply let them ride. In 20, 30, or 50 years, you might be looking at a few thousand dollars, or you might be looking at $0, but at least the rewards were free and you didn’t cause yourself any unnecessary tax headaches in the meantime.

Stop It

I’ve become increasingly annoyed by an expression journalists and commentators use to describe public policy responses to the COVID-19 pandemic in the United States. It seems like every day I read or hear somewhere that there’s “no plan” to deal with the surge in cases and overwhelmed hospital ICU’s, there’s “no plan” to deal with the looming economic catastrophe when expanded unemployment benefits expire at the end of July and the nation is gripped by an unprecedented wave of evictions, there’s “no plan” to provide education or childcare when the school year is supposed to begin in August or September, and so on.

This is a fundamental misunderstanding of the situation. There is a plan, and denying it won’t make it any less horrifying.

Stop saying there’s no plan just because the plan is horrifying

If you spend much time at all around poker players, you quickly learn to identify a kind of charming fatalism: obviously poker players prefer to win hands rather than lose them, but there’s no skill in being dealt winning or losing combinations of playing cards. What poker players take the most pride in is not winning, but correctly calculating their odds of winning, and then betting, calling, raising and folding accordingly.

Poker players, and occasionally economists, tend to assert that this attitude is natural, common and desirable: people do, and should, go through life making calculated bets on various outcomes, and those with better calculators see more success than those who calculate poorly, just as over the course of a week, year, or career poker players who are able to calculate their odds faster and better tend to win money from those who calculate poorly or slowly (or not at all, like most of us weekend poker warriors). The retired player Annie Duke wrote a whole book with this very premise.

There are two related problems with this idea: humans are exceptionally bad at calculating odds, and humans know they are exceptionally bad at calculating odds. If only one were true, there might still be hope: good calculators would rise over bad calculators, precisely as good poker players over time outperform bad poker players. But because people are self-aware enough to know they’re bad calculators, they largely refuse to participate. To put it slightly differently, getting to the final table at the World Series of Poker requires a tremendous amount of skill, but which of the nine highly-skilled players takes a ring home reverts to a matter of luck.

What are sometimes called cognitive “errors” are often adaptations to our self-conscious inadequacy as calculators. For example, “loss aversion” is sometimes used disparagingly to describe the willingness of people to “overpay” for products like life insurance or annuitized income compared to their actuarial value. But it’s at least equally true to say the so-called “error” is a recognition of the difficulty of quickly and accurately calculating the value of those products. Likewise, health insurance deductibles and cost sharing are supposed to encourage people to carefully calibrate the amount of care they need and are willing and able to pay for. Unsurprisingly, people hate them because they recognize the task is beyond their abilities.

For precisely the same reason, rich democratic societies implement income redistribution, old-age and disability pensions, and public service provision not as well-calibrated bets on their likely costs and benefits, but in acknowledgment of the uncertainty of those costs and benefits. It’s better to have SNAP benefits and not need them than to need them and not have them.

I say all this because it gets to the core of the public policy response to the pandemic. It is incorrect to say that there is “no plan” to respond to the wave of death, homelessness, and poverty about to sweep the country. The problem is that the nation’s governing party is attempting to follow Annie Duke’s advice and “think in bets,” perfectly sizing policy according to the weighted average of all the possible outcomes. As we saw in the example of poker, the fact that public policy has failed does not mean the calculation was wrong — even a perfectly sized bet will lose if the cards fall the wrong way. But that is why we do not ask and should not ask our politicians to think in bets: we know, as they should know, that it is not something we or they are capable of doing with any precision.

Over and over again the Republican Party has placed bets on the course of the virus, and over and over again the nation has lost those bets. This does not mean the bets were improperly sized, or the odds incorrectly calculated. But it does mean our leaders were attempting something they should have known they have no capacity to do, and so we pay the price for their hubris.

Stop saying schools can re-open

While the idea of the Senate going on a three-week holiday while the country braces for impact is revolting, I find the best illustration of this problem to be various states’ plans to begin the school year on schedule at the end of August or beginning of September (a bit less than two months away). Perhaps students will alternate weeks of in-person instruction in order to allow for social distancing, or perhaps they’ll attend on alternating days, or perhaps we’ll repurpose recreational facilities or football fields to allow mass instruction on Jumbotron screens.

This is fiction. By October 1, virtually every school in the country will be closed. I can say this with complete confidence not because I know anything about epidemiology, disease transmission, vaccine development, or the latest clinical trial results. Instead, I say it with complete confidence because it is an example of public officials doing something they cannot and should not try to do: perfectly calibrate a policy response so that the downside risks and harms are perfectly matched by the upside risks and benefits.

Again, if you don’t like the outcome of millions of parents forced to choose between working or childcare, paying rent or facing eviction, feeding themselves or feeding their children, living independently or moving in with friends or family, then say so. But don’t say there’s no plan. That is the plan.

Stop spreading the virus

Of course, we’ve known the solution to the pandemic for months, because it has worked everywhere it has been tried: stay at home whenever possible, practice social distancing, wear a face covering over your nose and mouth whenever possible, wash your hands with soap and warm water whenever possible, use a 60%+ alcohol hand sanitizer when soap and water aren’t available.

But note, this is the opposite of thinking in bets. Don’t go to bars or restaurants when they “aren’t too crowded.” Don’t hold parties with “just a few friends.” Don’t leave your face covering at home when you’re just running a “quick errand.” You aren’t capable of making those calculations, and you know it.

Of course, if our rulers knew it, we wouldn’t be in this mess to begin with.

When better-than-free grocery store manufactured spend pours

I don’t think it’s an exaggeration to say we’re in a kind of golden moment for grocery store manufactured spend, with widely-held credit cards like the Chase Sapphire Preferred and Reserve, the Chase Hyatt cards, and the American Express Hilton Honors Surpass and Aspire cards all offering increased earning at grocery stores (in the last case until the end of July), while grocery stores have been sending out volley after volley of negative-cost manufactured spend opportunities.

The fact that, yet again, two of my local chains are offering bonuses on the purchase of prepaid debit cards nudged me to think a little more deliberately about the various shapes these bonuses take.

Cash, groceries, or gas

In my neighborhood, I basically have two equally-distant grocery stores: one, a Safeway, participates in the “just for U” (alternately spelled “Just For You”) rewards program, along with Vons, Randall’s, Albertsons, Tom Thumb, Acme, Jewel, and Shaw’s. The other, Giant, belongs to the same corporate structure and shares a similar loyalty program with Stop&Shop and Martin’s, although there are sometimes-significant regional differences. Of course, other folks have access to different chains and loyalty programs, with Hy-Vee, Kroger, and HEB being important regional grocery chains with their own loyalty programs.

Currently, both Safeway and Giant are offering incentives to purchase MasterCard prepaid debit cards:

• Safeway: “Save $10 when you buy $100 or more in Mastercard gift cards.”

• Giant: “Earn 2x points when you purchase any Mastercard gift card with your Giant card.”

Normally these deals hopscotch around each other, so it’s rare (though not unheard of) to see virtually identical deals running simultaneously. The basic value proposition is, you can either save $10 up front (buying a $500 MasterCard gift card for $495.95 at Safeway), or you can earn 1,012 points to redeem later (buying a $500 MasterCard gift card for $505.95 at Giant). Since my market is a “Flexible Rewards” region, those 1,012 points can be redeemed for $10 off my next grocery purchase. In other words, as long as I’m sure to use my discount before it expires, and as long as I’m willing to shop at the Giant, the two promotions should be more or less identical. When they’re offered simultaneously I’ll still prefer Safeway’s upfront cash discount (money can be exchanged for goods and services), but Giant’s grocery discount works for me too.

The wrinkle is, those Giant/Stop&Shop/Martin’s points can also be redeem for per-gallon discounts on gas, and if you drive, you might have a strong reason to favor Giant promotions over Safeway. That’s because, even in markets where gas discounts are capped at $1.50 per gallon (1,500 points), you only need to buy a little under 7 gallons to come out ahead compared to a $10 grocery or upfront discount.

This creates a kind of charming game of rock-paper-scissors:

• A cash discount from Safeway beats a grocery discount from Giant;

• A grocery discount from Giant beats a gas discount if you buy less than 6.66 gallons at a time;

• And a gas discount beats a cash discount — but only if your gas savings are higher than your cash savings.

Of course, this is another way of saying, “the more money you save, the more money you save.” If Giant is already your lowest-cost grocer, then every dollar you save there is worth a dollar. If Shell is already your lowest-cost gas station, then every dollar you save on gas is worth a dollar.

If the need to redeem your savings drives you to a higher-cost grocery store or gas station, that won’t eliminate all your savings, but remember to keep in mind it does reduce them.

Conclusion

Grocery store manufactured spend is one of the most geographically varied techniques out there, with the same corporate parent sometimes having different policies between brands and stores in different regions. For folks with unlimited liquidation capacity, the purchasing side might pose the biggest hurdle to scaling up, while folks with limited (or extremely limited) liquidation capacity may need to carefully select only the highest-earning purchase and redemption opportunities.

In either case, make sure that when you make or refine a manufactured spend strategy you’re comparing apples to apples.

The Plastiq website redesign and a "known issue" with recurring payments

Plastiq occupies a strange space in the world of travel hacking, since almost everyone seems to have strong feelings about it, but for a wide range of different reasons. When Five Back Visa Gift Cards could be used to manufacture spend at eligible merchants, you’d often be left with a “rump” balance on the cards once the cash back posted, which was easy and cheap to liquidate with Plastiq. When certain prepaid debit cards could be liquidated for a 1% fee, it was a convenient way to scale up your volume from home, albeit at a relatively high cost.

But my favorite use of Plastiq has nothing to do with manufactured spend. Rather, it’s been to automate transactions made with bank-issued debit cards, like the 12 monthly charges required to trigger an elevated interest rate on the Consumers Credit Union Free Rewards Checking account, or to maximize deposits to “round-up savings” accounts which can only be funded by making debit card transactions (ideally transactions ending with $0.01, so the maximum amount of $0.99 is transferred to your savings account).

Plastiq broke their website

The beauty of using Plastiq for these transactions is they require minimal maintenance: you can schedule monthly or weekly transactions far into the future, requiring upkeep only when a payment schedule is about to expire or a debit card needs to have its expiration date or CVV code updated.

What I found when I went to restart another 6 months or so of daily round-up transactions was that my Plastiq account had been “upgraded” to their new interface. Most or all of the same features were still there, but they were all a little more annoying to access. Instead of selecting your payment card at the beginning of a payment, you select it at the end. There’s an ambiguous prompt to upload a billing statement or invoice from your payee. But worst of all, when I went to set up more recurring payments, the website returned a generic message: “Sorry, an unexpected error occurred. Please try again.”

There were two odds things about this: I was able to schedule one-time payments for the future, and all my existing recurring payments (for my Consumers Credit Union account) were still active. I just couldn’t configure new recurring payments.

Fortunately, Plastiq has a pretty good live chat feature, so I hopped on the horn with one of their representatives and was told that:

“This is a known issue we are working on fixing. At this time, we recommend making single payments scheduled for future dates. I have escalated your case and will reach out to let you know when this issue is resolved.”

Obviously, not ideal, but presumably the scheduled payment feature with either get fixed or permanently removed eventually.

A “charitable” alternative

A reader e-mailed a few months back saying that he’d set up a public website to help automate transactions like these. This seemed like a pretty good idea (an idea so good long-time subscribers may remember I actually attempted something similar many years ago), but with Plastiq on the fritz, I thought I’d finally cruise over and check it out.

The website is called Automate To Donate, and as the name suggests, it configures repeating payments which go, not to your student loan, mortgage, or HELOC, but instead to a charity called “Giving to the Givers.” Now, this charity does not appear to have any public presence whatsoever, so this is absolutely not an endorsement of any kind, but it does at least appear to actually exist as a “DOMESTIC NOT-FOR-PROFIT CORPORATION” in New York State, and is listed by the IRS as a “Public Charity,” so let your tax preparer know if you’re eligible to deduct charitable contributions.

Conclusion

Hopefully Plastiq will work out the kinks in their new website soon, but in the meantime, if you have trouble setting up recurring payments, you should still be able to schedule one-time payments for the future. I’ll probably just set mine up a week at a time until the problem is resolved, which isn’t the end of the world. Alternately, you might try out Automate to Donate in order to configure recurring transactions in variable amounts. Just be sure that your transactions are actually counting towards your requirements; in the past, I’ve seen PayPal transactions processed as “PIN-less debit” and not count towards my 12-transaction requirement.

Interest rates on rewards credit cards are all over the place — act accordingly

In the range of hobbies between croquet and wingsuiting, most people recognize that travel hacking is on the more dangerous end of the spectrum. Not because you’re likely to be turned into a red blotch on the side of a mountain, but because signing up for credit cards, manufacturing spend, or buying and reselling merchandise or giftcards can expose you to substantial financial risk.

Of course, some commonsense advice helps to mitigate those risks: start slow, make sure you understand a technique from beginning to end, don’t be afraid to lose small amounts of money while you get familiar with a new area, location, or technique.

And one of the most common pieces of advice is, “never carry a balance,” since the interest charged on a single month’s balance can easily exceed an entire year’s rewards. This is good advice, until it isn’t: I’m a big fan of the Chase Slate $0 balance transfer fee and 15-month 0% APR signup offer, particularly since at the end of the promotional period you can request a product change to another valuable Chase product like the Freedom or Freedom Unlimited (note that the Slate seems to be currently unavailable for new applications). The Discover it currently has a slightly less generous 14-month 0% APR balance transfer rate, with a 3% balance transfer fee.

If it’s a cliche that more valuable rewards credit cards have higher interest rates than other credit cards, I got to wondering: just how high are the interest rates? And it turns out, they’re all over the place, so I thought it might be interesting to compile all the interest rates on my credit cards in one place. Note that these rates are based on “creditworthiness,” so they’re purely illustrative: your interest rates will certainly be different on the exact same cards. These are also variable rates, so they’ll change along with the prime rate.

My credit card purchase interest rates, from high to low

• Chase Slate: 20.74%

• Discover it: 19.99%

• American Express Delta Platinum Business: 19.24%

• Barclaycard Arrival Plus: 18.99%

• Citi Double Cash: 18.99%

• Chase Freedom(1): 17.24%

• Chase Hyatt: 15.99%

• Chase Freedom(2): 15.24%

• Chase Ink Plus: 15.24%

• American Express Hilton Honors Surpass: 15.24%

• US Bank Flexperks Travel Rewards: 14.99%

• Fidelity Rewards: 13.99%

• Bank of America Better Balance Rewards: 13.24%

• Chase Freedom Unlimited: 12.99%

Four observations on my credit card interest rates

I’d never laid out my interest rates like this before, but once I did, I immediately noticed four things.

First, the Chase Slate and Discover it, the two cards I had singled out above as low-cost balance transfer cards, ended up with the highest interest rates after their promotional periods elapse. This is strong evidence (although I don’t know why you would need evidence) that Chase and Discover use those low-interest introductory periods to encourage customers to incur high balances they’ll have difficulty paying off in time. That highlights the need to have a plan to pay off your entire balance before your introductory period expires.

Second, the same banks, and even the same products, offer different interest rates. For example, I have two Chase Freedom cards, one of which was a product change from a Slate card, and the other from a Sapphire Preferred. I believe each Freedom “inherited” the interest rate terms from the previous card, and my previous Sapphire Preferred account inherited a higher interest rate than my previous Slate card.

Third, there’s no obvious connection between the value of a credit card’s rewards and its interest rate. My Freedom Unlimited, which I consider one of the most valuable workhorse cards for unbonused manufactured spend, charges the lowest interest rate, while my Delta Platinum Business card, which is barely worth its annual fee, charges the third highest.

Finally, the difference between the highest interest rate and the lowest interest rate charged by my cards is enormous. In the personal finance world there’s a somewhat pedantic controversy over whether it’s better to pay off your highest-interest debt first (saving the most on interest) or your lowest balances first (in order to “generate momentum”). In my opinion, for people with low balances and relatively similar interest rates, it simply doesn’t matter much. If you want to “optimize” your repayment, pay off high-interest debt first. If you want the psychological satisfaction of zeroing out balances, pay off low balances first. Who cares? But as the interest rate spread above shows, if you’re carrying balances on multiple credit cards and you see a spread like the one illustrated above — almost 8 percentage points — then the decision becomes a lot simpler: the higher-interest balances have got to go first.

Conclusion

Every dollar you pay in interest is a cost incurred against the profit of your travel hacking strategy. The less interest you pay, the more profitable your strategy is. But (especially during a global pandemic and economic crisis!) I’m not going to shame anyone who needs or wants to carry a balance on their credit cards. Fortunately, travel hacking also gives you the tools to easily (and even profitably) move balances from one card to another. So if you do find yourself carrying a balance on one more credit cards, it’s worth going through the above exercise and making sure you’re paying as little interest as possible on those balances.

Making the decision to keep my Delta Platinum Business card

I wrote last month about a little experiment I was running with my American Express Delta Platinum Business companion ticket. By booking a ticket before May 31, 2020, for travel before September 30, 2020, I should be able to move the ticket to any dates before September 30 with no difference in fare, or use the ticket value towards travel anywhere on Delta after that date. Additionally, since my annual fee appeared on my May statement, this would allow me to get my last companion ticket “free” by cancelling my card and having the annual fee refunded (in some states American Express is required to pro-rate annual fee refunds so residents of those states needn’t feel the same urgency).

Against my better judgment, I ultimately decided to keep the card for another year.

American Express gave me an “Appreciation Credit”

As I wrote back at the beginning of May, American Express increased the earning rate on the consumer Delta credit cards to 4 Skymiles per dollar spent at grocery stores through July, 2020. That’s a pretty good earning rate, and if I had a consumer card I’d be hitting it hard. Unfortunately, they didn’t extend the same courtesy to business card holders, so it didn’t affect my decision to close my card.

However, at the end of May, I refreshed my Mint account and found a pleasant surprise: American Express had credited my account with a $75 “Appreciation Credit.” Doctor of Credit had shared some information about the similar ($200) credit for Business Platinum cardholders, but American Express never communicated anything about it to me, by e-mail or in my online account, so I simply don’t know whether I would “keep” the credit if I cancelled my card and had the annual fee refunded. In other words, was the “Appreciation Credit” a retention offer, which in effect lowered my annual fee from $250 (itself an increase from the previous $195 fee), or a free statement credit like the ones provided through Amex Offers, in which case closing my account would produce a negative-$75 account balance and (eventually) a refund check.

Ultimately, I decided to treat the credit as an annual fee reduction, and that the card was worth keeping for another year at $175.

Is the Delta Platinum Business card worth $175 a year?

There are four potential sources of value from a Delta Platinum Business card (as mentioned, the consumer card has the additional temporary benefit of increased earnings at grocery stores):

• a domestic (lower 48 except for residents of Hawaii, Alaska, Puerto Rico or the United States Virgin Islands whose flights also originate there) companion fare;

• free checked bags for the cardholder and up to 8 others traveling on the same reservation;

• access to certain Amex Offers;

• bonus Medallion Qualification Miles at the $25,000 and $50,000 spend thresholds.

The list above is roughly in the order I value the benefits in.

Domestic companion tickets are most valuable when simply sold to someone who is willing to pay some fraction of the fare’s value. For example, someone who would otherwise pay for two $500 fares in cash should be happy to buy a companion ticket for $250, wiping out your annual fee and letting you enjoy the other benefits for free. Unfortunately, unlike Alaska Airlines companion fares, the Delta offer is strictly limited to the cheaper fare classes, making that kind of win-win exchange hard to arrange; no one likes to be told what flights they have to take based on fare buckets!

If you’re going to use a companion ticket for yourself, then you should value it well below your nominal savings — you should value it at what you would other pay for the same tickets, either with a traditional mileage redemption or using a cheaply-earned currency like US Bank Flexpoints or Chase Ultimate Rewards. For that reason, I value Delta companion tickets much more conservatively than many travel hackers, perhaps $100.

Free checked bags, on the other hand, I value more or less at face value, because I don’t have elite status anymore and I really like checking bags! Delta now charges $30 for your first checked bag (and $40 for the second!), so two travelers making 2 round-trips per year with one checked bag each will save $240 just on those fees. We don’t fly Delta quite as much as we used to since our families are now easier to reach on Alaska and American, but between trips to see friends and domestic vacations I’m very comfortable valuing our free checked bags at $120 per year.

The third source of value, Amex Offers, used to be more valuable when each offer could be added to and redeemed on multiple cards; having more American Express cards mechanically increased the savings available to you. That’s less true now, but there are still some offers that are only made available on business or Consumer cards, so having at least one of each gives you the maximum likelihood of being targeted for the most valuable ones. Since my Delta Business is my only business American Express card, I’d assign perhaps $50 in value purely to the additional Amex Offers I receive.

Finally, since I don’t travel on Delta more than once or twice a year (and 2020 will be even less than that), I don’t assign any value to the card’s ability to earn bonus Medallion Qualification Miles. Until we move somewhere with more convenient Delta service, I won’t be coming close to earning even Silver Medallion status. The value you assign to this feature should depend on both how necessary it is to earn status (does it make or break your ability to achieve the status you’re chasing) and how you value that status (how frequently do your upgrades clear, etc.).

So in my case, the $270 in value I conservatively get from the card clears the $175 annual fee hurdle comfortably enough that I reluctantly decided to keep the card for another year, while if I had to pay the entire $250 annual fee, I would have proceeded to cancel the card.

The annual fee isn’t the only cost!

That was my calculus: the card is a little bit better than a wash, so I’ll keep it around and see what develops. I still plan to cancel it next May, but I’m equally prepared to be surprised on the upside as the downside.

Besides assigning the above benefits different values than I did (for example, if you have a particularly high-value companion fare redemption or a good opportunity to sell or gift the companion fare), your cost calculus might also be different than mine. For me, the annual fee is the only cost of holding the card. But since the Delta Business card is a credit card, it counts against your four-card (or five-card) limit with American Express. If you already have four or five American Express credit cards, then an additional cost of holding onto any one card is the inability to open additional American Express credit cards.

That means if your Delta Platinum card is your least valuable American Express credit card, then it is by definition the one keeping you from signing up for additional American Express credit cards, whether your intention is to trigger a signup bonus or add new, different, or more valuable bonus categories to your manufactured spend strategy.

Conclusion

Obviously there are some cards so valuable that this exercise isn’t worth going through in such fine detail, like the Chase Hyatt and legacy Ink Plus and Ink Bold cards. But for most cards with an annual fee, seeing that fee hit is as good an opportunity as any to take a step back and evaluate exactly what role the card is playing in your travel hacking strategy, and whether it still belongs there.

By default, your answer should be “no:” an annual fee is a hole you have to climb out of over the course of the year. Some cards make it relatively easy to get out of that hole and some cards make it relatively hard, but if you’re not digging up, you’re digging down.

Pro tip: using the 1Password iPhone browser to painlessly add just for U offers

On the occasion of a new Safeway offer for $10 off $100 in Visa gift cards, I thought I would share my preferred technique for adding these offers to all my just for U accounts.

Logging in and out of just for U is a pain

Like all such services, just for U is designed to keep you logged in as long as possible. If you use the internet in a tracked browser window (i.e., not in “incognito” or “private browsing” mode), then just for U will load you up with cookies that even logging out may not completely clear.

This is inconvenient if you manage multiple just for U accounts and want to add these single-use coupons to each account. Even if you use a private browsing mode which clears your tracking cookies, you then can’t use the same window for anything else simultaneously or the cookies will still be retained!

Using the smartphone app for your local stores is an alternative, but it still requires remembering usernames and passwords, or constantly flipping back and forth between the app and your password manager.

The most elegant workaround I’ve found is the built-in browser in the iPhone app of my password manager, 1Password.

Configuring the 1Password browser

I’m sure all password managers have a similar tool, but since 1Password is the one I’m familiar with, here’s how I use it.

1. For each just for U account, enter the URL of your store’s login page in the “website” field so that clicking on the website takes you directly to the login page.

2. Click on “Settings,” then “1Password Browser.” I set the User Agent to “Safari (Mac)” so that the browser loads the desktop version of the website.

3. Click “Clear Web Data” so you don’t have any cookies lingering around.

Adding just for U coupons to multiple accounts

Now you can easily add coupons to multiple accounts with just a few clicks:

1. If you have a standard naming convention for your accounts, you can click on “Categories” and type the name into the search bar, e.g., “Safeway.” This will pull up all your just for U accounts.

2. Click on the first one, then the website bar, and the 1Password browser will open and automatically enter your login credentials.

3. Add the relevant offer, and press “Done” in the top right corner.

4. Press settings, then “Clear Web Data” to reset the browser.

5. Press “Categories,” and repeat steps 2-4.

Using this technique it takes 30 seconds or less to add offers to each account, and doesn’t require messing around with my desktop browser settings.

Conclusion

1Password is a paid product, but the version I have doesn’t require an ongoing subscription. I believe there are other free or “freemium” password managers on the market, and they all should have some kind of similar functionality. The important thing is simply to put in the time up front to configure your login credentials. Given the “better than free” nature of these gift card deals, as long as grocery stores are willing to keep printing money that investment is almost certain to pay off in the long run.