Impressed by first MaxMyPoint hotel award alerts

A few weeks ago I read a post comparing various hotel award alert tools that concluded MaxMyPoint was the only one that did the job (since the internet is no longer searchable I can no longer find that post; if you wrote it, let me know and I’ll link to it!).

Years ago I used and recommended Seth Miller’s Hotel Hustle to find award availability optimized by point value, but the functionality of that tool died before too long and we were back to searching for award space manually.

Fortunately for me, I actually had a very specific need for an award alert, and to my shock, MaxMyPoint met it perfectly and saved me a few hundred dollars by swapping my paid reservations for award nights.

Two missing nights in Prague

The last time I visited Prague, World of Hyatt had finally secured a property in the city: the Lindner Hotel Prague Castle. To my genuine surprise and delight, it was a Category 1 property, costing between 3,500 and 6,500 points per night.

Compare this to the other obvious properties in Prague. The Hilton Prague and Hilton Prague Old Town, both great hotels I’ve stayed at many times, have standard pricing between 40,000 and 50,000 Hilton Honors points, or roughly $200-250 in value. The three centrally-located Marriott properties all cost 33,000 points and up. IHG starts in the same range: they’re non-starters.

So Hyatt giving away nights for $65 was pretty exciting. The property is located in the heart of Hřadčany flush up against Prague Castle, so while it is in a tourist area, it’s not actually an area where most tourists stay, which makes it remarkably quiet in the evening once they decamp to their hotels in the city center.

I had a simple problem: my first, third, and fifth nights were available on points, my second night was available with cash and points (for a premium room), and my fourth night was only available with cash. So that’s how I booked it: five reservations for five nights.

Then I set a MaxMyPoint alert for the entire 5-night stay, on May 17.

On May 27 at 3:22 am, I got my first alert (subject line “Your Hotel Alert Update”) saying the nights were available. Perhaps because the alert came while I was asleep, by the time I checked availability it was no longer there, if it had ever been.

On June 4, at the perfectly sensible hour of 12:08 pm, I got my second alert. This time, awake as I was, I immediately popped over to the Hyatt app and saw the alert was correct: all five nights were available. I canceled my existing 5 reservations (technically risky, but I didn’t want to transfer over another 26,500 Ultimate Rewards points if I didn’t have to) and was able to successfully complete the reservation.

Then, as if icing on the cake, MaxMyPoint sent another alert at 8:32 pm that the award space was no longer available, a charming free reminder that they had done their job for me.

Conclusion

As indicated by the history of Hotel Hustle, it’s not a great idea to let your own skill and intuition atrophy every time new tools come along to replace them, because that puts you at the mercy of the toolmaker. But it’s equally foolish to ignore when tools are introduced that you can integrate into your workflow to make your life easier, and MaxMyPoint gave me the information I needed just in time to take advantage of it. Kudos to them, and I’ll be a repeat (non-paying) customer as long as they keep it up.

Quick hit: two more free options for manufacturing debit transactions

I wrote recently about some tools I use to manufacture debit card transactions in order to trigger the highest rates on rewards checking accounts (often but not exclusively marketed under the “Kasasa” brand).

Doctor of Credit then joined in the fun, noting that one of the easiest options, adding credit to your Amazon balance, has become onerous to the point of uselessness as they raised the minimum balance reload amount to $5 from the previous $1 minimum. Unless you’re a big Amazon spender, you’ll quickly end up with more money in Amazon credit than in interest.

With that in mind, I ran a few more experiments and found two more possibilities that are working for me for now. Note that individual banks and credit unions may code transactions differently so you’ll need to verify for yourself whether these meet the transaction requirements for your accounts.

Robinhood

Robinhood, the free stock- and crypto-trading app I write about occasionally, allows you to fund your cash balance using a debit card with no fee and a minimum deposit of $1. The money is immediately available in your account to withdraw or invest, as far as I can tell, and Robinhood does support fractional share ownership so you could even use this technique to drip some of your interest into the stock market, one of many ways to exercise compounding discipline.

PayPal

PayPal also allows you to add money to your balance with debit cards, again with a minimum of $1. PayPal in principle supports multiple cards per account, so you could use a single PayPal account to meet the debit requirements on more than one high-interest accounts. However, since PayPal also doesn’t have much in the way of identity verification, if you’re considering this I would personally suggest using a new PayPal account for each debit card you plan to use, so that if one account is frozen or closed it won’t necessarily impact the others you’re using.

Conclusion

Two final quick points. First, on the account I’m currently experimenting with, both Robinhood and PayPal transactions post as “signature” transactions so should count towards my qualification requirements, but that’s something that you’ll need to monitor for each of your accounts and each of your methods. No one else can do it for you and datapoints age fast in this game.

Finally, as hinted at above, with any service you’re experimenting with to manufacture transactions you need to keep in mind two parameters: how many accounts can you have, and how many cards can you link to each account? Venmo works great for my round-up savings account because it allows transactions under $1, but I can’t link additional debit cards. The Cash app and Robinhood (with their $1 minima) only allow one debit card to be linked at a time. PayPal is more flexible on the number of cards you can have linked, but many of us have horror stories about past account closures (even though mine ultimately ended with a fat settlement check).

Venti reads my blog and makes some big, immediate improvements

Back in February I wrote about Venti, a very-high-interest savings account with a gimmicky twist: the “interest” on your savings is credited to a separate “points” balance that can only be redeemed for travel through the Venti flight and hotel shopping portals.

Since I’m one of the biggest Venti deposit-holders, it’s perhaps unsurprising they stumbled over that blog post and held a few team meetings about solutions to some of the problems I identified (from an e-mail: “We understand that you’ve been quite critical of Venti in the past through your blog. However, it would be a mistake on our end not to learn from you how to improve”).

I politely disagree with them that I was “quite critical” (they should read what I say about Gary Leff) but I’m glad to see they’ve already annouced three big improvements for existing customers and a few unannounced changes for those who have not joined.

I’ll break down the three announced changes in the order they were listed in the announcement.

“Increased Points Redemption”

Here’s the first change:

“The number one request was to allow for more Points to be used per transaction. Venti is not currently supported by outside funding/venture capital (despite some assuming so). Thus, limitations are in place until we accomplish certain milestones. As of this email, any flight under $250 can be booked solely with Points. All other flights have a flat $250 off MSRP. Hotel orders under $120 remain fully bookable with Points. In the future, you can expect the redemption ratios to improve significantly as we grow and onboard more members.”

This is terrific. It means you can spend down your points balance (the part that’s locked into Venti’s reservation ecosystem) first, before having to spend any of your cash balance (the part that can be moved in and out of other banks).

Right now that only applies up to $250, but the point is, it’s the first $250 of each reservation. For airlines that price all flights as one-ways, you can book each leg as a separate ticket to spend down your point balance $250 at a time. This crystallizes the value proposition I identified in my original post: “Venti is a way to earn above-market interest on your savings if you sometimes pay cash for airfare.”

“Updated Points Disbursement Schedule”

Here’s the second announced change:

“The current model heavily favors wealthier members who often begin their Venti experience with thousands in deposit. For the average member, it takes too long to accumulate Points at a rate that unlocks free travel. Starting June 1, we're changing Points disbursement to weekly instead of Monthly. Our rewards APY will remain at 9% for all paid membership tiers for 2024. Buddy Pass holders cannot deposit funds.”

This is phrased a little confusingly but you can understand the general point: the more frequently they award points, the more likely smaller-deposit accounts will be to get redeemable quantities of points. Smaller, more frequent redemptions are more likely to keep smaller depositers invested in the program, since they won’t have to wait months or years to get enough points to redeem for a domestic flight or a single hotel night.

Since one of my primary concerns is with the viability of the company as a whole, my personal feeling is that this also gives larger depositors confidence that their weekly points disbursement reflects their running balance. If the number suddenly jumps or drops or skips a week, then it will be an early clue that all is not right in Venti-land.

“Allowing Credit Cards”

The third announced change is arguably a bigger deal than either of those:

“The greatest area of friction within our product was only allowing flights and hotels to be booked with cash savings (and Points) from your Boarding Pass. Our goal was to avoid credit card processing fees since Venti does not profit from the sale of flights. In June, we'll enable credit card payment options for all membership tiers, including Buddy Pass. You will be able to use Venti Points along with your favorite credit card at checkout for flights and hotels.”

In principle, if you pay your credit card balance in full each month, then you should be almost indifferent between paying with your Venti cash balance or a credit card. In reality, one of the things we pay for on many annual-fee credit cards is travel benefits that are triggered by paying for airline tickets (and rental cars) with that particular card. Most trips don’t have qualifying events (like missed connections or late or lost baggage), and most people who suffer qualifying events never claim the benefit, but being unable to pay for flights with credit cards meant that no Venti flights were eligible for them at all.

I believe as long as you keep good enough records to connect the Venti reservation to the credit card charge, you should now be eligible for those benefits as long as you charge at least $1 of your airfare to the credit card.

Unannounced positive changes

While I was fooling around on their website, I noticed Venti had made a few more changes I had not seen them previously announce.

The “Priority” tier, which was previously listed at $72 per year and earning 5% APY (in points) on up to $15,000 has been slimmed down: it now has no annual fee but earns 9% APY on up to $7,500 in cash deposits.

The “First Class” tier is still listed at $500 per year (remember that I signed up when the First Class price was just $9.99), but now offers 9% APY on up to $250,000 in deposits, up from $100,000.

These are both positive changes. Early adopters like me can decide next year whether to switch over to Priority and keep $7,500 in the account trundling along earning 9% APY (compounding discipline requires constantly finding new places to stash your compounded returns), while heavy hitters can stuff $250,000 into First Class accounts and earn (after the $500 annual fee) roughly 8.8% APY and cover $22,000 in paid travel per year.

The “Business Class” tier appears to never have been actually launched and isn’t available on the website for signup, so no great win or loss to report there.

How I'm thinking about money these days

Personal finance and travel hacking in the United States are almost always linked through the intermediary of credit cards, which unlike in most civilized countries are allowed to charge lightly-regulated fees which they rebate to customers in the form of cash, cash-equivalents, or alternative loyalty currencies.

These schemes are usually devised with the concept of “stickiness” in mind: you can offer almost anything to customers in the short term if it’s so hard to switch financial providers that they continue to give you business for years or decades after the initial “acquisition cost” has vanished off your balance sheet.

What travel hackers know is that nothing is as sticky as people think it is, so in fact they don’t need to change their spending habits at all in order to trigger many of the benefits financial providers think will lock in their business in perpetuity.

With all that said, here’s how I’m thinking about investment options these days, keeping in mind just how low those barriers really are in practice.

Rewards checking accounts

Rewards checking accounts typically offer above-market interest rates on balances up to a certain limit, as long as direct deposit and monthly transaction requirements are met. I usually search for the highest-earning accounts on depositaccounts.com, but here are the three I’m currently using:

• Pelican State Credit Union. 6.05% APY on up to $20,000.

• Andrews Federal Credit Union. 6% APY on up to $25,000.

• Consumers Credit Union. Up to 5% APY on up to $10,000 if you spend $1,000 on their credit card; otherwise 3% APY.

I primarily use Consumers Credit Union as a current account to manage payments and for ATM withdrawals, since it has a lower limit on the maximum interest rate but also rebates third-party ATM fees; I don’t mind if my balance falls below $10,000 on any given day, in other words.

Two other options I’ve looked at closely are the FitnessBank and Orion Federal Credit Union accounts, which offer 6% APY on up to $25,000 and $10,000, respectively. The FitnessBank requirement of linking a step-tracking device and walking an average of 10,000 steps per day feels too fidgety for me, although if you’re already tracking your steps and know you’ll easily meet the requirement then it seems like a fine option. The Orion FCU requirement for both $500 in deposits and $500 in debit card purchases would be easy to automate, but with such a low limit on the 6% APY balance it hasn’t been a priority for me to set up an account there yet.

Round-up savings

Blog subscribers knows about my long-standing affection for round-up savings accounts. Unfortunately, my 10% APY round-up savings account is no longer available to new members; in fact, the credit union that offered it no longer exists, although I was grandfathered into the old account structure during the aquisition.

I have experimented at length with this account, and as far as I can tell, I can make exactly 29 deposits per day in round-up transactions, which I plan to until the account reaches the $250,000 insurance limit or is closed for deliberate and flagrant abuse — whichever comes first.

Peer-to-peer installment lending

Peer-to-peer lending emerged in the 2000’s during the first wave of what today we’d call “distributed finance.” The idea was that instead of borrowing from the big banks you’d borrow from your fellow citizens; instead of putting your money in the anonymous stock market or a local savings account, you’d invest in individual home improvement projects or weddings or hospital bills. At the time, the two most prominent platforms were Lending Club and Prosper, joined by a few minor platforms like Fundrise and Kickfurther (and, I’m sure, many others I’ve forgotten or never heard about).

Lending Club and Fundrise have both pivoted into more straightforward banking and investment operations, but much to my surprise, Prosper is still chugging along letting you buy shares of individual promissory notes in increments as low as $25.

Unlike the high-interest accounts described above, lending through sites like Prosper comes with risk. Even worse, it comes with unknown risk. At the individual note level, there’s individual risk, but this is negligible: if you buy thousands of $25 loans, some of them will default simply because you’re exposed to the individual life histories of thousands of people, and shit happens even to healthy, employed, home-owning borrowers.

At the institutional level, Prosper’s credit-rating system might be fundamentally flawed: you might expect a 5% default rate from “AA” borrowers (Prosper’s highest rating), but the true number is 15% because some unaccounted-for variable skewed Prosper’s ratings too high.

Your borrowers may be also be exposed to an economy-wide risk, like a nationwide fall in housing prices, or a shooting war with a rival power, which eliminates the advantages of diversification: all of your borrowers might default at once if they’re drafted to go save Taiwan, whether they live in California or Oklahoma.

But these peer-to-peer platform loans have another risk, the financial solvency of the platform itself. In the case of Prosper, you are not actually lending any money to borrowers. You are buying a repayment-contingent note from Prosper, which originates and owns the actual loan to the borrower. As long as the borrower makes their payments, and Prosper pays its bills, then Prosper will transmit the borrower’s payments to the owners of those repayment-contingent notes. But if Prosper itself files for bankruptcy, the value of the loans will be assets of the bankruptcy estate, and lenders will be left with unsecured claims against that estate.

I personally used to consider this the main risk of lending through Prosper. I thought people would happily lend through them until the first economic calamity came along, then Prosper would be wiped out, the notes would be worthless, and the whole peer-to-peer lending experiment would come to an end.

That isn’t what ended up happening, and Prosper has survived and continued to both issue loans to borrowers and sell notes to investors. The website remains very primitive and it still takes me several clicks to find the simplest settings, so automating investments is essential.

I’ve found the easiest way to invest with the platform is not to use their “Auto Invest” feature, but the confusingly- and similarly-named “Recurring Order” function. The recurring order function allows you to specify loan characteristics to filter for (I chose “AA” and “A” graded loans, with yields above 10% APY) and then as those loans are added to the platform it will automatically buy them in the increment you specify (I chose the minimum, $25).

The platform seems to have a lot of loans, so the recurring order function hasn’t had any trouble finding qualifying loans for me to buy, but at some volume there presumably is a trade-off between loan quality, interest rate, and purchase size: if you are fixed on quality and rate, then you might have to buy more than $25 per loan in order to meet your demand for volume. I doubt I will ever hit that point and I don’t spend any time worrying about it.

Stocks, flows, risk, and compounding discipline

To the best of my knowledge, I coined the term “compounding discipline” to refer to the need to make sure that if you rely on your interest compounding over time, then you have to put in the work to make sure it actually is.

A $25,000 balance at Andrews FCU will earn about $120 per month at the Kasasa Cash rate of 6% APY. But a balance of $25,120 will also earn about $120 per month, because the last $120 earns only 0.5% APY. You can earn $120 per month forever, but if you want your savings to compound, then you have to exercise compounding discipline and move that $120 each month into the next vehicle you have available.

The way I’ve formalized this discipline is to split my savings into two broad categories: I invest bigger and faster in safe assets and lower and slower in risky assets; the returns generated by the safe assets pay for the investments in the risky assets. I’ve used the example of Prosper peer-to-peer lending, but I don’t think they’re better or worse or more or less risky than bitcoin or real estate or reselling on Amazon. If one of those is more attractive then you should do it instead. The point is simply to make sure you have somewhere to put the next interest payment so your assets keep compounding at the right mix of risk and return for your situation.

Conclusion

Sharp readers may have noticed I’ve left out the only savings vehicles most Americans have: their individual retirement accounts and workplace-based 401(k) and 403(b) savings accounts. I’ve also ignored the tax implications of the various investment vehicles available. The omission is deliberate: I don’t think about these at all.

If you maximize your annual contribution to your IRA and workplace retirement accounts, and select a low-cost, stock-heavy mutual fund, and make sure your dividends and capital gains are set to reinvest, then you’ll die a millionaire. There’s nothing to think about and it’s not especially interesting to talk about. Once you’ve got all the settings configured right in your payroll software (not always easy!) it shouldn’t take more than 15 minutes a year to make sure everything’s on track.

"How do we scale this?"

One of my favorite questions travel hackers ask is “how do we scale this?” The implicit answer is, usually, “we don’t.” Contrary to what economists pretend to believe, the world is in fact chock-full of arbitrage opportunities. What is true is that most of those opportunities are difficult or impossible to scale.

Here’s my personal breakdown of techniques used to increase scale, and the obstacles to doing so.

Brute force and constant returns to scale

The most obvious scaling strategy is to multiply your own effort. If you have a technique that generates a known amount of value per hour you spend on it, then you can get twice as much value by spending twice as much time, usually up to some limit. In a simple example, if it takes you an hour to manufacture $10,000 in in-person spend at one grocery store, and you have identical access to five grocery stores, then you can spend 5 hours and manufacture $50,000.

Automation and transformations

A lot of high-volume travel hackers focus on automation as a way to scale their techniques, and automation is one of the many tools I put in the broad category of “transformations.” Transformations are when the design of programs can be understood differently by the customer than by the business in order to scale techniques, either to get a higher return from the same amount of time or money, or to reduce the time or money needed to get the maximum return.

To give a classic example from my own practice, for many years the US Bank Flexperks Travel Rewards Visa offered 3 points per dollar spent on charity, worth up to 6% when redeemed through their travel portal. They also coded Kiva, the microlending website, as charity. People were thus able to earn as much as 6% in travel on loans of as little as a few months, and many of us did, transforming a modest discount on charitable giving into an extremely high-yield investment vehicle.

A more contemporary example is the rewards (often branded as “Kasasa”) checking accounts that offer some of the highest-earning, most liquid savings vehicles. They typically require 12-15 debit card transactions along with a direct deposit in order to earn their advertised rates. Meeting these requirements as they intend would seem to require, as they intend, reorienting your entire financial life around doing so. But when you’ve broken down the requirements to their individual parts, you can transform meeting them into a matter of a few minutes per month.

American Express cards have acquired a reputation of being “coupon books,” but a lot of the pain of redeeming those coupons (and getting back the value of your annual fee) can be transformed into painless routines:

• American Express Hilton Honors Surpass cards can be used to buy $50 in physical gift cards on the first day of each quarter to trigger the quarterly statement credit;

• Monthly statement credits for Resy and rideshare services or Shake Shack and Grubhub can be triggered by gift cards or subscription services.

All these are transformations: the company wants them to dominate your thoughts, but a few simple calendar reminders can guarantee you maximize the value of each credit without having to keep track of any of them individually.

Teammates, comparative advantage, and the benefits of trade

I call teammates everyone you partner with in order to take advantage of different circumstances, what economists call your “comparative advantage.” These can take all sorts of forms: some people have access to grocery store manufactured spend while other people have access to gas stations. Some people have more Chase cards than they’ll ever be able to maximize the value of, while others pile into American Express cards and are blocked from signing up for new Chase cards.

A lot of bloggers have a kind of “view from nowhere,” where every person has access to every credit card and each can follow prescribed steps from scratch, but it takes almost no experience to know that’s absurd. Every individual travel hacker’s situation is different, and it takes only a little more experience to identify which parts of the game you’re interested in pursuing most intensively. Finding other people with complementary interests is a way to scale each of your efforts by getting the most value from the parts of the game you’re most interested in.

The most obvious candidates for teammates are family members, precisely because there’s usually not any need to “divide” effort or results at all: everyone gets to go on the family trip, regardless of whether they made a “fair” contribution to paying for it at all. Some bloggers have affected to call these teammates “Player 1,” “Player 2,” and so on.

Employees

One of the most common questions people ask when they find out about the existence of travel hacking is, “that sounds great, but I don’t want to do it, can I just pay you to do it for me?”

There are people and situations that make this possible, but fewer than people wish or expect. The main problem is that almost anything you can train people to do on your behalf, they can do on their own behalf. You are the middle man, and unless you have both knowledge and money that are impossible to steal, your employee will quickly get the drift and go to work for themself.

The Verge had a humorous story about this very phenomenon in my home state of Montana, where resellers would continuously set up drop-shipping warehouses only to find their employees, having mastered the skill of packing and unpacking Amazon shipments after a few months simply set up their own tax-free reselling businesses.

Readers as force-multipliers

Another way to scale a technique is simply to share it. This has all the advantages of the techniques above.

Brute force techniques will have more people applying more brute force and yielding more benefits.

If you know how to transform a technique from difficult to hard, then more people will save more time and effort.

If you know how to trade personal or regional advantages with other people, then telling them how will result in more benefits for everyone in those situations.

And if you tell people how to hire employees to solve their problems, then more people will have their problems solved and more people will be employed.

The problem, of course, is that you don’t get a cut. What’s up to you is how big of a problem that is.

Credit cards I'm eyeing for my first round of applications in years

Longtime readers may know that I don’t chase signup bonuses in the way a lot of travel hackers do. This is not because I have anything against signup bonuses, it’s just not something I’ve found to be a good use of my own time and energy. I vastly prefer occasionally picking up cards that I intend to keep more or less forever, either because of their recurring benefits (companion tickets and free nights certificates, for example) or because I have a plan to work them into my manufactured spend strategy.

The one place where signup bonuses are truly irreplaceable is for large expenses that can be paid for with credit cards, especially in unbonused merchant categories. For example, if you have a $60,000 tuition payment you can make with multiple credit card transactions, then even with the highest-earning 3% cash back credit cards your maximum payout is just $1,800. Using the same bill to trigger multiple signup bonuses can easily earn several times that in value, or even in cash.

I anticipate some very large expenses coming up which can be paid across multiple credit cards, which gave me the impetus I needed to put together a round of applications. I settled on a combination of cards that have been missing from my manufactured spend game and cards with recurring benefits and signup bonuses that I’m confident I’ll be able to redeem quickly.

Here are the cards I’m planning on signing up for, and the order I’ll apply in. I’m well below Chase’s so-called 5/24 policy, so I shouldn’t have trouble being approved for those cards, but to stay on the safe side I’m starting with Chase and then working through banks with less convoluted eligibility rules.

Chase Freedom Flex

I have 3 classic Freedom cards and one Freedom Unlimited, but I’ve never had a Freedom Flex so I should be eligible for this signup bonus of 20,000 Ultimate Rewards points after $500 in spend.

The signup bonus is a sweetener but the real reason I want this card is so I can finally product change my 3 remaining Freedom cards to Freedom Flex cards. This is primarily a credit line management issue: I can already earn 3 Ultimate Rewards points per dollar at drug stores with my Freedom Unlimited, but to stay on Chase’s good side I don’t spend more than my credit limit on that card each month. The Freedom Flex also earns 3 points per dollar at drug stores, so having four of those cards will increase the total amount of drug store earning I’m comfortable doing each month, and give me four cards with Chase’s quarterly rotating bonus categories for a total of $6,000 per quarter in bonused spend when promising categories are available.

Chase Ink Business Preferred

For me this is a pure signup bonus play, and I’ll earn 100,000 Ultimate Rewards points after spending $8,000 on the card.

The card does earn 3 Ultimate Rewards points per dollar spent on “shipping purchases,” “advertising purchases made with social media sites and search engines,” “Internet, cable and phone services,” and “travel” but none of those categories are essential to my earning strategy right now, so unless and until the situation changes in the next year I’ll plan on cancelling the card before my next annual fee hits.

Bank of America Alaska Airlines Business

I’m a huge fan of Alaska Airlines and the Companion Fare that comes with their credit cards, but I’ve never actually held one in my own name before. This card has a 75,000 mile signup bonus after $4,000 in spend, plus a Companion Fare the first year and on anniversaries.

The card does have a potential manufactured spend angle in the gas and shipping categories, where it earns 2 Mileage Plan miles per dollar, but I think I’m unlikely to try to aggressively manufacture Alaska Airlines miles that way in the near term.

American Express Gold

I’ve never had a card in the American Express Membership Rewards ecosystem, so my plan is to use this card as my entry point. The signup bonus is for 90,000 Membership Rewards points after $6,000 in spend, and the card also earns four points per dollar spent on groceries and restaurants.

American Express has taken some action to limit abuse of those bonus categories. Venmo payments stopped triggering restaurant bonus spend some time ago, and gift card purchases at grocery stores have also been targeted. I’m fairly confident I’ll still be able to take advantage of one or both of these bonus categories, but if not I’ll simply transfer the signup bonus out and close the card in a year.

Barclay Wyndham Rewards Earner Business

This is a bit of an outlier for me, in that I don’t remember the last Wyndham property I stayed at and have no immediate plans to stay in another one any time soon. Nonetheless, I’ve allowed myself to be convinced by the chorus of cheers for this card that cheap Wyndham points are an outstanding way to book Vacasa home rentals.

This signup bonus offers 100,000 Wyndham points after $15,000 in spend on the card, and the card earns 8 Wyndham points per dollar on gas station spend.

There are a lot of nuances I’ll need to work my way through in practice, but the basic principle of these Wyndham-Vacasa rentals is that points are worth “up to” 1.85 cents each when redeemed for stays that cost exactly $250 or $500 per Vacasa bedroom. The card thus earns up to 14.8 cents per dollar spent at gas stations, when points are redeemed for their maximum value on Vacasa rentals.

More and more of my annual trips are to see larger groups of friends and family, and we often find that renting big houses and condos is the best way to spend the most quality time together. I’m not certain that Wyndham-Vacasa rentals are going to be the perfect solution to that booking puzzle, but I’m willing to give it a year or two to find out.

Conclusion

Across all five cards, I’ll have a total minimum spending requirement of $33,500, which is right in the ballpark of my upcoming credit card expense. Once triggered, I’ll have what I reckon as a conservative $4,150 in miles and points, or a 12.4% return, in addition to the miles and points earned on the spend itself.

That return is so attractive that it’s understandable why, for some people, signup bonuses and travel hacking are synonymous, and there’s no need to touch other tools. Even though that’s not how I choose to play the game year-round, I still know that a big expense you can pay with credit cards is also a big opportunity.

Quick hit: free HotelSlash membership

AutoSlash is getting into the hotel game with a new search product, appropriately called HotelSlash. After poking around on it for half an hour I didn’t see anything special about it (like Venti and a thousand similar sites, it’s just a way to pass along some of the commission paid by hotels as savings to customers), but having alternate search engines can sometimes be unexpectedly lucrative, so you may as well sign up now while it’s free using promo code “FREE4LIFE”.

They claim they’ll start charging membership fees at some point, which they say they have to do to offer prices below the “publicly” advertised ones.

The Tesla Protocol, Boeing, and the regression to the minimum viable product

One of the most striking stories I’ve heard about Tesla vehicles had nothing to do with exploding cars, drowning shipping magnates, or spontaneous highway shutdowns. It was a simple tweet from a Tesla enthusiast and Elon Musk fan praising the third vehicle they’d been sent from the factory for having the “fewest defects so far,” and deciding to keep the car.

The context is that when you order a Tesla (at least back then), it shows up at your door a few months later and you have to decide whether to accept it or not. If you don’t accept it, you go back on the list and have to wait another few months for them to send you another one, when the process is repeated.

What made the tweet so memorable is the inversion of what I grew up considering the “normal” American shopping experience, and the mirroring of typical descriptions of the Soviet shopping experience. I’m a bit too young to have experienced Soviet shopping for myself, but the potted story handed down to students today is that goods in the Soviet Union were stamped with the date they were produced. Goods made at the beginning of the month could be expected to more or less meet the product standards, since at the beginning of the month factories had all the necessary materials and workers. As those ran out over the course of the month, factories relied more and more on improvised and makeshift replacements, so by the end of the month goods hardly worked and had to be put into working order by the customers themselves.

The minimum viable product

What our financier overlords call the “minimum viable product" is the earliest stage of a product that some consumer, somewhere, is willing to buy. The original iPhone is a classic example, in that it didn’t work very well for anything, but it turned on, you could check your e-mail if you were patient, browse text on the internet if you were very patient, and even make phone calls. The fact people were willing to pay money for such a tenuously-useful product gave Apple the information they needed to invest in the product line and give us the slightly-better-functioning smartphones we enjoy today.

The early Tesla models seemed to share this pattern: they turned on, they charged, they got you to work most days, and people were willing to pay money for them, giving Tesla the information they needed to raise more money and invest in additional electric vehicle lines.

The immiseration of the consumertariat

Marxist economics describes a process under capitalism known as the “tendency of the rate of profit to fall.” This is often confused with an empirical claim that the rate of profit is falling, but this is just a misunderstanding. The rate of profit can stay steady or rise under capitalism, as long as the tendency to fall is counteracted in some way.

One standard Marxist explanation for how the tendency is counteracted is through the intensification of labor. By intensifying the labor performed by workers (longer hours, lower wages, more erratic scheduling), more surplus value (value added by workers above and beyond that required for their own maintenance and reproduction) can be extracted per worker, which can offset or more than offset the underlying tendency.

The tendency of the rate of profit to fall is experienced most viscerally by capitalists and workers, because it is their respective jobs to fight for and against the intensification of labor. But both capitalists and workers of course have another role in the economy, which is as consumers, and it is also experienced there in what I call the immiseration of the consumertariat.

The regression to the minimum viable product

Remember our story about the iPhone, where early adopters of an admittedly crappy product paved the way for the cheaper, slightly-less-crappy products that are in wide use today. But finance capital is indifferent to both product quality and popularity: instead of using early consumer interest to improve products and services over time, the consumer product or experience can just as easily be made worse, as long as the cost savings exceed the lost in revenue.

The result of this process is a tendency to regress to the minimum viable product. That minimum product is different in different industries, of course, and is highest not where consumers are pickiest but where regulation is strictest. Gasoline, for example, is a consumer product that is so strictly regulated no one thinks twice about buying it from an unfamiliar station in a location far from home, and consequently the measures taken to combat the tendency are primarily taken out against workers in the trucking and retail sides of the industry rather than against consumers themselves.

Boeing’s past decade of aviation disasters illustrates the horrifying consequence of misjudging where the minimum viable product is. The developed world had allowed itself to be convinced that aircraft were as tightly regulated as gasoline, when they turned out to be as tightly regulated as electric cars.

Workers have an obvious role to play in countering this tendency through labor militancy. A good illustration comes from right here in Washington, DC: the housekeepers union at the Washington Hilton fought to bring back a daily housekeeping policy. Note that the housekeepers do not claim to be “protecting consumers” or anything like that. They’re protecting their members’ income by ensuring that as many housekeepers are scheduled to work as necessary to clean every occupied room every day. But as a mechanical consequence of that, customers experience more frequent and more thorough cleanings.

Making housekeeping a dignified job is not and should not be free. The higher quality customer experience will come from some combination of lower profits for finance capital and shareholders and higher prices for customers.

The duty to complain

Customers also have a role to play here that I call the duty to complain. Customers have a lot of power not because they’re the source of businesses’ income, but because they can make it expensive to cut costs.

The cliche people joke about online is the self-checkout machines where all your produce can be turned into iceberg lettuce with the push of a button, but you don’t need to steal from grocery stores to fight the regression to the minimum.

There was an affiliate blogger who got a bad reputation for finding everything wrong with every plane he got on in order to get miles in compensation for his inconvenience, but for all I dislike about them, I find no fault in this behavior. By making it expensive (or at least not cost-free) to shirk routine maintenance, they were unwittingly doing their part to counter the tendency to employ as few mechanics as possible and let the state of the fleet deteriorate back to the minimum viable product.

The duty to complain should be distinguished from mere nostalgia. I’ve heard the story about the olives in the airline salad countless times, but if you like olives in your salad that much I’d suggest bringing some from home rather than complaining to your flight attendant. If your seat doesn’t recline, on the other hand, then alerting the flight attendant and having it recorded for repair is a duty: one-off maintenance is expensive, and the more of it airlines are forced to do, the less cost savings they’ll realize by cutting routine maintenance.

Conclusion

I also want to be careful to distinguish what I’m describing from the consumerist, neoliberal exhortation to “vote with your dollar.”

Most people do not have the luxury of choosing between multiple internet providers or going without internet, but the more people complain to Comcast the more expensive it is to offer unacceptable service.

Most people don’t have more than one or two airlines to choose from on most of their trips, but by insisting on the maximum compensation for delays, lost bags, and faulty equipment, they can make it as expensive as possible to badly run the airline they’re forced to fly.

And, obviously, there’s a difference between complaining and being rude. The point of complaining is to impose costs on the owners and managers of businesses for mismanagement, not to make miserable the workers doing trying to implement those policies.

Robinhood Gold versus Bank of America Preferred Rewards Platinum Honors

[To the reader: since I think a lot of people will be using affiliate links to sell this product, I’m not including any links, including my own referral links, in this post]

Robinhood, the online brokerage founded and aggressively marketed back when money was free, and which used that perch to make fee-free stock trading the new normal, recently announced a 3% cashback credit card, available only to its brokerage customers that pay for their “Gold” tier, which seems to currently cost $5.99 per month.

This is the rare product release which immediately had people in my real-world ambit asking, “have you seen this? What’s the catch?”

So I want to start by saying that there is no catch, and this is one of the best all-in-one financial products out there. Virtually everyone should sign up, once it’s widely available.

But that’s not especially interesting. What’s interesting is how it stacks up against the next-best product on the market: the Bank of America Preferred Rewards program, which has been the gold standard for cashback credit card rewards until now.

So, let’s take a look.

Robinhood Gold is a perfectly-designed all-in-one financial product

If you sign up for Robinhood Gold and get approved for their new credit card, then you earn 5% APY on your uninvested Robinhood balances and 3% cashback on all your credit card purchases.

Since Robinhood Gold is sold as a bundle, a lot of people are going to misunderstand that these are two entirely different products. The 5% APY offered on balances up to a million or so dollars of insured deposits (depending on how many FDIC partners they have any given week) is competitive, but it’s not best-in-class; Vanguard is paying 5.28% on uninvested cash in their own brokerage’s sweep account as of today.

Meanwhile, the 3% cashback offered by their new credit card, whenever it becomes available, is genuinely higher than any other product on the market.

So before we go further, let me repeat: most people are better off signing up for this bundle than they are doing anything else in the world of credit cards or banking.

Bank of America Preferred Rewards

It sounds funny to call such a bizarre program “simple,” but until the latest Robinhood announcement, the simplest, highest-earning cashback program has been Bank of America’s Preferred Rewards, which offers a 75% bonus on all the cashback earned on their own, non-co-branded credit cards. Since the highest unbonused earning on those cards is 1.5%, with Preferred Rewards those cards are usually said to earn 2.625% cashback on unbonused spend.

2.625% is lower than 3%, which means the new Robinhood product will earn higher rewards than one of the Bank of America cards on all unbonused spend.

Unlike paying for access to Robinhood Gold, qualifying for Preferred Rewards is an ordeal. I’m currently several months into the process of raising my average monthly balance until I qualify for their Platinum Preferred tier, upon which occasion I’ll transfer all the money back out until my next requalification period.

Breakeven points and resiliency

To calculate a breakeven point between Robinhood Gold and Bank of America Preferred Rewards, or any other cashback product, just divide the roughly $72 annual fee of Robinhood against the next best alternative.

A fee-free 2% cashback card, like the Citi Double Cash, is better for annual unbonused spend below $7,200: at that point the additional 1% paid by Robinhood matches the $72 cost of the membership.

Likewise, if you’re earning less than 5% APY on the funds held in your Bank of America accounts, or anywhere else, then you can consider the higher interest paid on your Robinhood balance to be “offsetting” the cost of the monthly fee.

This exercise is probably worth doing even if you don’t break even, for an unrelated reason: resiliency. I use resiliency to mean minimizing the downside when misfortune strikes. It’s much easier to shift between cards earning similar — although not identical! — rewards when one or more cards gets shut down. Shifting from a hotel card to an airline card to a cashback card is a much easier transition to make than shifting from rewards-earning credit cards to nothing.

Conclusion

For most people, under most circumstances, the Robinhood Gold proposition is airtight, for now. They should sign up, throw as much of their money as possible into their cash savings account, and use the card for all their purchases.

Whether an experienced travel hacker who has a range of similar cards earning similar value, or an experienced saver earning higher interest rates on the same balances, should do so is an exercise left for the reader.

How does Hilton price 5th-night-free awards?

I manufacture a lot of Hilton Honors points with the American Express Surpass co-branded credit card, and I redeem almost as many. The Surpass earns a free night certificate that can be used worldwide after spending $15,000 per year and Diamond status after $40,000 in spend, but I am perfectly happy earning 6 points per dollar spent at grocery stores all year.

I try to redeem points for at least 0.5 cents each, and do not have any difficulty finding opportunities to do so, although as always you have to be careful that you’re comparing redemptions against the money you would spend instead, not the cash value of the room you redeem points for.

For example, I stayed at the Conrad Hilton Midtown last weekend for 95,000 points per night (plus two of those free night certificates), which translates to something like 0.7 cents in value, but of course I wouldn’t spend $675 to spend the night in New York City, so it would be absurd to say I earned 4.2% in value on my grocery store spend.

One way to maximize the value of that spend is by using the fifth-night-free benefit on award stays whenever possible. Fourth- and fifth-night-free offers are pretty common across the industry, and Hilton’s is one of the most straightforward: to trigger the benefit, all you have to do is book a standard room for 5 or more nights entirely with points.

That’s how the benefit is triggered. Understanding how it’s calculated is trickier.

There are lots of ways to calculate the value of a night

I mention that other programs have free-night benefits for stays of a certain length because they illustrate how a simple-sounding benefit can have both opportunities and perils. Most importantly, how does the value of a fifth-night-free benefit change when the nightly rate varies over the course of the stay?

Chase IHG Rewards credit cardholders get a “true” fourth-night-free: the point cost of the specific night which happens to be fourth is zeroed out. This creates opportunities to stage your reservations so that the most expensive nights of your stay are the fourth ones and increasing the potential value of the boost to your points’ value over 33%, and the risk of “wasting” the benefit on a cheap fourth night..

The Citi Prestige card offered what they called a fourth-night-free benefit, but it was calculated as just 25% off the (apparently-inflated) prepaid cash rates offered through their travel portal. This meant the maximum value of the benefit was capped at 33%, with higher portal rates grinding down the value of the benefit from that theoretical cap.

Marriott Rewards’ version stretches the concept to the breaking point: on 5-night stays, the lowest-priced night is deemed to be the “fifth,” so on stays with varying rates you will never capture the full 25% boost boost in value; only on five-night stays where each night is priced equally do you get the maximum value from the benefit.

Hilton seems to use a “trimmed” fifth-night-free calculation

Since I have a fair amount of experience redeeming Hilton points, I’ve had the chance to observe how Hilton handles this inevitable question: how many points should you expect to save when using a fifth-night-free benefit?

First, to trigger the benefit, the same room type has to be available for the entirety of your stay. That means you need to go further than the Hilton award calendar, since you might see lower rates for one-night stay in a room type that isn’t available for all five nights.

Second, if the room type you’re booking has no change in price over your stay, then it’s as irrelevant as you’d expect: you save 20%, getting a 25% boost to the value of your points.

When the points rate varies over the course of your stay, then things get interesting. On the checkout screen, you’ll see a rate listed for each of the first four nights and “5th Night Free” listed next to the last night. But those first four rates are not necessarily the rates you’d pay if you were booking each night individually. Instead, Hilton sometimes “trims” those, slightly increasing or decreasing the price of each night.

Usually, but not always, this is done in Hilton’s favor: the first four nights will cost more as part of a five-night reservation than as four one-night reservations.

At this point, I would like to be able to pull off the napkin and reveal that I’ve reverse-engineered the precise formula Hilton uses to make these trims, but that’s not true. I spent the morning poking around the website and running experiments, and concluded that sometimes Hilton does this, sometimes it doesn’t, and when they do it’s usually against the customer’s interests.

Here’s a screenshot of the basic principle at work:

To walk through what you’re seeing there, a five-night stay starting on May 4 costs 199,000 Honors points, while the same five nights priced individually cost 248,000 points. In this case, the night of the 6th is “trimmed down” to 48,000 points, so the reservation costs 1,000 points less than it would if Hilton offered a true fifth-night-free, like IHG.

Meanwhile, a five-night stay starting on the 5th costs 196,0000 Honors points, while the same five nights would cost 253,000 points on their own. In this case, the nights of the 5th, 7th, and 8th are “trimmed up” to 49,000 points each, so the stay costs 3,000 points more than it would if the nightly rates were used. But because the night of the 9th costs so much more, the total cost of the stay is still less than the previous example.

Why does Hilton use this hybrid model?

The truth is, I’m not sure why Hilton has adopted this pricing model. And in fact, I’m not even certain that they did it deliberately. It’s perfectly believable that they price five-night reservations this way for reasons totally unrelated to the fifth-night-free benefit. Perhaps another day I’ll try searching for five-night stays in a new account without elite status to see if the pricing change is function of stay length and not trying to nickle and dime points redemptions after all.

If I did have to guess (we’ve now entered the reckless speculation portion of the post) I’d say that this was probably not actually designed to rob a few thousand points from their most loyal customers here and there, but rather to “simplify” the pricing page. The main visual effect of Hilton’s “trims” is to bring each of the four remaining nights closer together in price.

Here’s another set of examples where rates are trimmed up (against the customer):

And here are some dates and room types where rates are left as is, giving the customer the “full” 60,000-point credit for the last night:

In other words, what looks to us like a pricing decision engineered to get one over on us may have been as simple as a developer trying to think of a kludge that would make all the numbers look more or less the same.

Why it matters

While I’m sure there are folks as interested in the minutiae of pricing decisions as I am, the concrete reason this practice matters is that Hilton frequently sells points for “a bit less” than 0.5 cents if you first click through an online shopping portal to Points.com.

This isn’t usually an especially good deal, since Hilton points are also worth about 0.5 cents, and it doesn’t make any sense to buy anything for what it’s worth; keep your money.

Buying points for an immediate fifth-night-free redemption is an obvious exception. If you can buy $1.25 for a dollar, then the proposition becomes a lot more interesting, but only if you know how many points to buy.

And this is, sure enough, exactly how I got interested: I bought points for a five-night reservation, and once the points had hit my account discovered I didn’t have enough, because the Hilton website will not show you the total cost of an award stay unless you have enough points to book it (the iPhone app will if you click on “rate details”). Hilton had “trimmed up” the cost of my stay, and I had to buy a few thousand more points at a penny each to get over the top.