Barclaycard gutting Arrival+ travel benefits November 1

I’m not sure how old this news is since I rarely log into my credit card accounts on my desktop, but when I logged into my Barclaycard account the other day I was greeted by a foreboding message:

Never a message you want to see from your primary credit card, and sure enough, a quick comparison of the old (current) and new Cardholder Guide to Benefits reveals the damage is near-total. Here’s are some of the most important changes.

Trip Delay

Most travel hackers prefer the more generous trip delay insurance provided by the Chase Sapphire family of cards, but since I don’t have one of those (I use a legacy Ink Plus to make my Ultimate Rewards points transferrable), I put most of my travel charges on my Arrival+ card, which currently offers a benefit of up to $300 for delays of 6 hours or more.

I can’t say that I “rely” on Barclay’s trip delay coverage since I’ve never actually used it (my only experience was using the Sapphire Preferred trip delay coverage), but the ability to earn some points, and possibly trigger a hotel promotion, on someone else’s dime at least partly makes up for the inconvenience of a long flight delay.

On November 1, the benefit disappears (it’s possible trips purchased before November 1 will still be covered, but I wouldn’t rely on that possibility).

Purchase Protection Benefits

I don’t know what else to call the suite of current benefits, which include “Extended Warranty,” “Price Protection,” “Purchase Assurance” (goods stolen or damaged within 90 days of purchase), and “Satisfaction Guarantee” (the ability to return items that the retailer refuses to refund).

These benefits all disappear November 1, and are replaced with “Cellular Telephone Protection.” Besides the obvious requirement you charge your monthly bill to the credit card in order to qualify, there are a number of additional requirements that I think would make my phone ineligible, particularly the exclusion of “Eligible Cellular Wireless Telephone(s) purchased from anyone other than a cellular service provider’s retail or internet store that has the ability to initiate activation with the cellular service provider.”

Since I bought my iPhone directly from Apple, which is not a cellular service provider, the question of whether my phone would be covered depends on precisely what work the word “or” is doing. In other words, is a phone eligible if it is purchased from a cellular service provider’s retail store or a cellular service provider’s internet store (the obvious grammatical reading), or is it eligible as long as it is purchased from a cellular service provider’s retail store, or from any internet store that has the ability to initiate activation with the cellular service provider?

Phones purchased directly from Apple would be excluded under the first reading but covered under the second.

The maximum benefit is $800 per claim and $1,000 per 12-month period, after a $50 deductible per claim, and you can make a maximum of 2 claims per 12-month period.

Unchanged Benefits

The card will continue to offer “Baggage Delay,” “Trip Cancellation and Interruption,” and “Travel Accident Insurance” (this is not medical insurance — it’s basically an accidental death and dismemberment policy that only applies during your trip), although there may be some changes to the coverage terms and amounts. The rental car collision damage waiver benefit also remains, and is still secondary to your primary auto insurance policy.

Conclusion

Obviously the loss of the trip delay benefit is the worst of these changes, and if you’re the kind of person who relies on trip delay reimbursement, you’re going to need to find another card. Besides the Sapphire family of cards, there are several more cards from Chase (United Explorer and Club, Marriott Bonvoy Bold and Boundless), US Bank (Altitude Reserve), that offer a trip delay benefit and that you might already carry for one reason or another. Additionally, American Express is reported to be adding a trip delay benefit to certain cards beginning January 1, 2020.

I don’t think it is reasonable for most people to pay an annual fee on a credit card they wouldn’t otherwise carry exclusively for the trip delay benefit, but if you’re already paying for it, you had better be using it!

Chase's missed opportunity to do the right thing

I mentioned in Friday’s post that the airport transfer I ordered through the Chase Ultimate Rewards portal to pick us up at the Sofia airport never arrived, and that we ended up taking the (cheap, convenient) subway instead. I wrote, “I have a request in with Ultimate Rewards to refund the points, so hopefully this mistake will end up being free, but overall it was a silly experience and waste of time.”

Oddly, that’s not how it worked out.

Chase wanted the transfer company’s permission to refund me

On my first call with Chase, on Thursday, October 10, I was placed on hold several times as the representative tried to contact the transfer company, but wasn’t ultimately able to. She told me they would contact the company and be in touch by phone or e-mail once they’d resolved the issue.

I received the first e-mail followup on Saturday, from the e-mail address “VNA-INTL.chasetravel@customercare.expedia.com,” which is obviously the e-mail address for the person at Expedia that handles Ultimate Rewards reservations:

“Thank you for contacting Chase Travel about Refund Request for your Budapest Express - Transfers on travel in dates Sep 08,2019 and travel out dates Sep 28,2019 .

“We have made multiple attempts but are still in the process of making contact with [Budapest Express - Transfers] for your Refund Request. Please expect an email update from us within 24 hour.

“Thank you for choosing Chase Travel.

“Sincerely,
”Arnold Fajardo
”Travel Consultant Supervisor
”Chase Travel”

Ignoring Arnold’s grammar, this is a very strange e-mail for multiple reasons: the dates of my trip were not September 8-September 28, they were September 27-October 9. The name of the transfer company is given as “Budapest Express - Transfers,” when the pickup was at the Sofia airport in Bulgaria, and the company in my original reservation was “P-Airbus,” which is obviously a nonsense, but it’s a different nonsense than “Budapest Express - Transfers.”

The transfer company didn’t give it

The next e-mail, from the same Expedia e-mail address, tried to break the news to me gently:

“Thank you for contacting Chase Travel about your cancellation request for your reservation at Budapest Express - Transfers.

“We have advocated your case with Budapest Express - Transfers and due to their policy in relation to your reason for cancelling your reservation, they have unfortunately denied your request.

“We apologize that their response was not more favorable.

“We apologize for the delay in answering your e–mail. We are currently experiencing an extremely high volume of e–mail requests preventing us from responding within our normal standards.

“Thank you for choosing Chase Travel.

“Sincerely,
”Alvin Elona
”Travel Consultant Supervisor
”Chase Travel”

Again, obviously I did not cancel my reservation for any reason. They simply never showed up.

I’m not mad about the points, I’m confused about the missed opportunity

Obviously, in the grand scheme of things, 2,000 Ultimate Rewards points aren’t that big a deal to me, and they certainly aren’t that big a deal to Chase. But in its own way, that makes the situation more, not less, confusing. I understand Chase doesn’t have any way to exercise control over the service providers Expedia uses. But when you’re putting your customers, with whom you have a direct relationship, completely in the hands of your partners, the obvious way to resolve partner disputes is to err on the side of caution. Instead, Chase decided to very mildly annoy me in order to save $25 because they’re not willing to stand up to their partner.

Like I say, I’m not mad, I’m just confused.

I would have been better protected using a credit card

The final piece of this microdrama is that if I had simply booked an airport transfer with a credit card, and they didn’t show up, my credit card company would have cheerfully reversed the charge within minutes. By putting customers through this absurd three-step dance, where Chase contacts Expedia, Expedia contacts their in-country partner, and then it’s up to the partner whether or not to grant a refund, Chase may save 25 bucks here and there, but also sends a loud and clear message not to trust them with third-party reservations.

It’s not going to bankrupt them, and it’s not going to bankrupt me, but that doesn’t make it a good business decision.

How bad would a Hyatt devaluation need to be?

I’ve been following with interest the changes Hyatt has made to certain types of award reservations. To roughly summarize the changes:

  • points can now be redeemed for “premium” suite award nights;

  • Points + Cash can now be redeemed for standard and premium suites;

  • qualifying paid stays can now be upgraded to premium suites with points;

  • the cash co-pay on Points + Cash stays is now 50% of the “standard” room rate for the room type you’re booking instead of a fixed amount based on hotel category;

  • a new 40,000-point redemption tier will be introduced to cover certain newly-acquired luxury properties.

I’m frankly not sure if it was part of this update or not, but I also noticed recently that award nights at Hyatt Ziva and Zilara all-inclusive properties can now be booked online (you used to have to call to book).

Hyatt is a competitive program for travel hackers

If you earn miles and points mostly or exclusively through manufactured spend this shouldn’t come as surprise, but to break it down simply:

  • a Category 1 Hyatt property costs 5,000 points per night, or $3,333 in spend on a Chase Freedom Unlimited or $1,000 on a Chase Ink Cash or Ink Plus at office supply stores;

  • a Category 4 Hyatt property costs 15,000 points per night, or $10,000 in spend on a Freedom Unlimited or $3,000 in spend on Ink Cash or Plus;

  • a top-tier Category 7 property costs 30,000 points per night, or $20,000 on Freedom Unlimited or $6,000 on Ink Cash or Plus.

We can break down Hilton’s award chart in the same way:

  • a bottom-tier Hilton property costs 5,000 points per night, or $833 in grocery store or gas station spend on an American Express Ascend card;

  • a mid-tier Hilton property costs 50,000 points per night, or $8,333 in bonused spend;

  • and a top-tier Hilton property costs 95,000 points, or $15,833 in bonused spend.

(Note that since grocery store spend costs about 50% more than in-person unbonused spend, the out-of-pocket costs for the same spot on the Hilton award chart end up being somewhat more expensive than Hyatt).

This is what I mean by a “competitive” program: Hyatt properties won’t always be cheaper than Hilton properties in a specific city or on particular dates, but having access to both programs gives you a better chance of paying as little as possible for the trips you want to take than relying solely on one program or the other and being stuck paying cash when it fails you.

Likewise, having credit cards that are useful for unbonused spend, office supply store spend, and grocery store spend means you’re able to take advantage of more promotions and opportunities, instead of relying on a single merchant or bonus category.

That brings me to today’s topic.

How bad would a Hyatt devaluation need to be to make the program uncompetitive?

I think it’s useful to think through questions like this ahead of time, so you don’t fall into the trap of motivated reasoning once a devaluation actually happens (something credit card affiliate bloggers are especially vulnerable to, but a risk for anyone).

You can imagine multiple forms a Hyatt devaluation might take:

  • Hyatt could change or end their transfer relationship with Chase. This is the least likely situation in the short term since Chase loudly promotes its uniform transfer ratio, but there’s no natural law that says Hyatt will remain a Chase partner forever, or that Chase will never revamp the Ultimate Rewards program.

  • Hyatt could introduce higher award categories and steadily shift properties upwards. Hyatt told Pizza in Motion that they have “no plans for any Hyatt-branded hotels or resorts to move to a new Category 8,” but all that wording requires is that the Park Hyatt sign come down and be replaced with a Small Luxury Hotels of the World or Joie de Vivre sign. No Hyatt branding? No problem.

  • Hyatt could restrict award space or introduce dynamic pricing. This is in many ways the most likely or even inevitable form a devaluation will take, since Hilton has had dynamic pricing for years and Marriott will launch it in 2019. 30,000-point properties might limit their availability to a few low-season weeks per year, while mid-tier properties might cost a few thousand points less for part of the year and tens of thousands of points more when people actually want to visit.

A change to the relationship with Chase would be the most catastrophic from a travel hacker’s point of view. Changing the transfer ratio or perhaps capping annual points transfers would make Hyatt a truly niche program, still worthwhile under specific conditions but uncompetitive with Hilton or even Radisson Rewards, which has US Bank co-branded credit cards that still earn 5 points per dollar on unbonused spend and a much larger footprint than Hyatt.

Meanwhile, category inflation isn’t the end of the world as long as the Chase relationship remains the same, although eventually you might see your favorite properties inflated out of eligibility for annual credit card free night certificates (currently good at Category 1-4 properties).

Conclusion

There should be no question in your mind that something will eventually give in the World of Hyatt program, and this post isn’t about predicting whether or not it will happen — it definitely will. There has to be enough money to go around between Chase, Hyatt, and Hyatt’s owner-operators, and a fixed credit card earning ratio and fixed award chart are simply incompatible with that. I don’t know which piece will buckle first under the pressure, but the transmission mechanism between Chase Ultimate Rewards, World of Hyatt, and award availability and price will change because it has to change.

The point of this post is to encourage you to think in advance about what kinds of changes would make you walk away from the program, or at least radically reduce your dependence on it. How bad would the transfer ratio have to become? How hard would it have to be to find award availability? How low would your typical redemption value have to fall?

If you don’t think about it in advance, then when the devaluations do start to roll in and you’re bombarded with affiliate bloggers explaining how “it’s not really that bad,” you’re not going to be ready to tell if they’re right or not.

Using Chase Ink Business Unlimited to rejigger your Ultimate Rewards card portfolio

Chase has been fiddling with both their personal and business credit card lineup for a few years now, introducing both the personal Freedom Unlimited credit card, which earns 1.5 fixed-value Ultimate Rewards points on all purchases, and the small business Ink Business Preferred, which earns 3 flexible Ultimate Rewards points on "travel, shipping purchases, Internet, cable and phone services, and on advertising purchases made with social media sites and search engines."

The recent launch of an Ink small business version of the Freedom Unlimited means there's potentially an opportunity to use an Ink Business Unlimited card to rejigger your current lineup of Ultimate Rewards-earning credit cards.

Signup bonuses

I don't chase signup bonuses, but I know a lot of my readers do, so if you're eligible for an Ink Business Unlimited credit card, you might want to sign up for one just for its 50,000-point signup bonus after spending $3,000 within 3 months. Ultimate Rewards points are probably the most valuable single currency out there right now, so it's always worth at least considering applying for a signup bonus when a new Ultimate Rewards product is launched, as long as you're eligible.

Product changes

However, not everyone is eligible for new Chase credit cards due to the "5/24 rule," but it should still be possible to get an Ink Business Unlimited card by requesting a product change from an existing Ink credit card.

Personally, I like the ability to earn plentiful Ultimate Rewards points buying Visa prepaid debit cards at Staples and (during promotions) Office Depot and OfficeMax, but if you have several Ink Bold, Ink Plus, or Ink Cash cards you're not maxing out at office supply stores, you might consider requesting a product change from one of those products to an Ink Business Unlimited.

Why? Because the 1.5 Ultimate Rewards points per dollar earned is unlimited, so you only need one of either the Freedom Unlimited or Ink Business Unlimited credit cards. If you're not using the bonus categories on an existing Ink card (even a no-annual-fee Ink Cash card), then switching to an Ink Business Unlimited might free up a personal Freedom Unlimited to be product changed to a valuable Freedom card offering 5 Ultimate Rewards points per dollar at quarterly rotating merchants, or even a Sapphire Preferred or Sapphire Reserve card if you're interested in the travel protection, bonus earning, or redemption uplift of those cards and aren't eligible to apply for them directly (due to 5/24 or simply having already earned the signup bonus too recently).

Referral bonuses

While not necessarily a reason to sign up in its own right, it's also true that Ink Plus and Ink Bold cardmembers can currently only refer friends and fellow business owners to the Ink Business Preferred, while I assume Ink Business Unlimited customers will eventually be able to generate links to Ink Business Unlimited applications (if they can't already).

So if you like earning referral bonuses but don't think the Ink Business Preferred is worth referring people to, you might want a card that can generate links to the no-annual-fee Ink Business Unlimited instead.

Conclusion

Many, if not most, long-time travel hackers are so far above Chase's 5/24 restriction that applying for new Chase credit cards isn't an option. But that's no excuse to ignore the launch of new credit cards, since additional cards open up new opportunities for product changes, and under almost no circumstances should you close a Chase credit card, given the difficulty you might have in opening additional ones in the future.

How I talked myself around on Chase ending pooled Ultimate Rewards points

When the travel hacking blogosphere erupted in recent weeks with "rumors" that Chase might, maybe, eventually end the ability to combine points between fixed-value Ultimate Rewards accounts and flexible Ultimate Rewards accounts, I met the rumors with a yawn, for two reasons:

  • such a change would smash the value of their credit card portfolio and cause many heavy spenders to move their purchases to more valuable rewards programs, which you'd think Chase would want to avoid, or at least avoid admitting to their shareholders;
  • and as a travel hacker, there's no use whining about how great things used to be, how terrible they are now, and how much worse they're going to be in the future.

The second point is still true, but over the weekend I had the chance to chat with a couple fellow travel hackers while up in Boston and managed to talk myself around to Chase's logic in ending points pooling, should they ever choose to do so.

Chase Freedom, Freedom Unlimited, and Ink Cash are bad cashback cards

I love my Freedoms, with which I max out the bonus categories 3-4 quarters each year, and I love my Freedom Unlimited, which gets a lot of my unbonused spend, but we need to clearly understand that they are lousy cashback cards.

The golden standard for a cashback credit card is 2% cashback on all purchases, with no annual fee. There are several such cards; the two I happen to carry are the Citi Double Cash and Fidelity Rewards cards, but there are others.

Note, however, that 2% cashback credit cards with no annual fee are invariably somewhat cumbersome: the Double Cash pays out 1% on purchases and 1% on payments. Fidelity Rewards have to be redeemed into Fidelity accounts, and you have to meet payout minimums and deal with their somewhat primitive rewards site. Both cards charge foreign transaction fees, as well.

In other words, 2% is the ceiling on the value banks are willing to offer their customers in cashback on purchases made with a no-annual-fee card, and even then, they do so only under duress and in the expectation they'll earn at least some of that value back in interest charges and ancillary fees.

Freedom, Freedom Unlimited, and Ink Cash cards fall far short of that ceiling. Instead of offering 2% cashback, Freedom and Ink Cash cards earn just 1% cashback. Instead of 2% cashback, Freedom Unlimited cards earn just 1.5% cashback. The gimmick — and let's be clear: it's a gimmick — is that Freedom and Ink Cash cards earn bonus points in certain categories, with the idea that a person who carries the card to make bonused purchases will also reach for it when making unbonused purchases, giving up a whole 1% cashback on those unbonused transactions.

With the launch of the Freedom Unlimited offer for 3% cashback the first year, we see something similar: if you can convince someone to use their Freedom Unlimited for all purchases the first year, when it's a good deal, then maybe they'll keep using it in later years, earning just 1.5% cashback and leaving 0.5% cashback for Chase to pocket.

Chase Sapphire Preferred, Ink Plus/Bold, and Ink Preferred cards are replacement-level travel cards

All three of Chase's "premium" travel credit cards are middle-of-the-pack offerings for business travelers and other heavy spenders. If you don't manufacture spend, then deciding between the flexible travel rewards cards offered by Chase, American Express, and Citi is just an exercise in optimizing between imperfect airline and hotel chain combinations.

This gives us access to what I think of as one of the most valuable insights of the economics profession: revealed preferences.

Since the Sapphire Preferred and premium Ink cards earn just one flexible Ultimate Rewards point per dollar on unbonused purchases, but the Freedom Unlimited pays 1.5 Ultimate Rewards points per dollar on unbonused purchases, we know for a fact that Chase values flexible points at least 33% higher than fixed-value points.

That is to say, if Chase has determined that a dollar of unbonused spend is worth, at a maximum, 1.5 cents in rewards, then a dollar spent with the premium cards earns 1 cent in cashback plus 0.5 cents in flexibility (adjusted for the hefty annual fees you have to pay whether you get any value from the cards or not).

This makes pooled points a problem for Chase

If fixed-value Ultimate Rewards points can be freely converted into flexible Ultimate Rewards points, then a dollar spent with the Freedom Unlimited costs Chase not the 1.5 cents they're willing to pay out on unbonused spend, but 2.25 cents: 1.5 cents in cashback plus 0.75 cents in flexibility.

It literally makes no sense that for a single $95 annual fee, someone can earn 2 flexible Ultimate Rewards points using a Sapphire Preferred for their travel and dining purchases and 1.5 flexible Ultimate Rewards points on all other purchases using a Freedom Unlimited. Even if the $95 annual fee covers the cost of making the Sapphire Preferred points flexible, it can't also cover the cost of making the Freedom Unlimited points flexible.

Points that are easy to earn are easy to redeem

Everybody knows my maxim that the least valuable point is the one you don't redeem. But for banks, it's just the opposite: when you redeem a point, they actually have to cut a check, whether it's to the airline or hotel you book a paid reservation with, or the partner you transfer your points to.

That means folks who redeem points confident that they'll be able to easily earn many more are much more expensive to a bank than the folks who, in making sure they only redeem points when they're able to get the "maximum possible value," never redeem their points at all.

So if Chase knows what they're doing, as I suspect they do, they've noticed that folks who are transferring in big balances from Freedom and Freedom Unlimited cards to flexible Ultimate Rewards accounts, and especially super-premium Sapphire Reserve accounts, are much more likely to also redeem their points for expensive partner transfers and paid reservations.

While they may be content with the rates they pay their travel partners, and even the redemption rate on paid travel bookings, Chase may not be content with the speed with which folks build up and redeem their balances. Restricting points pooling thus has the added benefit of slowing down redemption rates and leaving more points orphaned, perhaps permanently, or redeemed for cash.

Conclusion

If this change ever comes down in any form, whether it's restricting household pooling, restricting pooling between personal and business cards (forcing some folks to hold 2 premium cards), or eliminating pooling altogether, there won't be anything you can do about it, besides adapting and shifting your spending to more lucrative opportunities.

But in the meantime, you should certainly be combining all your Ultimate Rewards points into your most valuable account on every statement close.

Not because of any potential devaluation or restriction, but because it's common sense.

If you qualify, Chase Freedom Unlimited might be the deal of the decade

Last week, I saw via Frequent Miler that Chase was offering a new bonus for new Freedom Unlimited customers: 3 fixed-value Ultimate Rewards points per dollar spent on all purchases for the first year. It's not for everyone, but for those eligible this has the potential to be one of the greatest deals since Office Depot stopped selling Vanilla Reload cards.

Most churners won't be eligible

The biggest obstacle for folks who chase signup bonuses is that they likely aren't eligible to open new Chase cards if they've opened 5 or more personal credit cards in the last 24 months (the so-called "5/24 rule").

Even if you are eligible for new Chase cards, the terms of the offer state, "This product is not available to either (i) current cardmembers of this credit card, or (ii) previous cardmembers of this credit card who received a new cardmember bonus for this credit card within the last 24 months."

Under those terms existing Freedom Unlimited cardholders should be eligible for the bonus if they product-changed to the Freedom Unlimited (for example from a Slate, Sapphire Preferred, or Sapphire Reserve card) and therefore didn't receive a new cardmember bonus, but they'd first have to request another product change for their existing Freedom Unlimited, e.g. to a regular Chase Freedom.

This might be a trap

For all my shutdown datapoint needs, I rely on Vinh at Miles per Day, who frequently shares readers' experiences getting the axe. Even if you're eligible for new Chase cards, and eligible for the Freedom Unlimited, just applying for the Freedom Unlimited might be enough to put eyes on your Chase relationship and get all your credit card and bank accounts with Chase closed.

That would suck.

Make no mistake: this is one of the greatest deals of all time

I wanted to get all that out of the way because I know commenters like to snipe whenever I leave caveats like that out. But for those who are eligible for this signup bonus, this is an incredible opportunity:

  • Unlimited 3% cash back on unbonused spend is as good as it gets. If you just redeemed your Ultimate Rewards points for cash, this is would be a phenomenal cashback opportunity, handily beating the BankAmericard Travel Rewards 2.625% cash back, which is only available to folks who qualify for Platinum Honors status with them.
  • Points are awarded monthly, so even if shut down you can lose at most a single month's earnings.
  • If you already have a flexible Ultimate Rewards-earning card, then you can redeem those 3 Ultimate Rewards points for 3.75 (4.5 with the Sapphire Reserve) cents towards paid airfare, or transfer them to Southwest, Hyatt, or United.
  • After the first year you can product change the Freedom Unlimited to a Freedom card and take advantage of that card's valuable quarterly rotating categories.

Conclusion

People sometimes ask me how I think a deal or opportunity is going to play out, and I often find myself giving versions of the same answer:

  • A deal can be shut down immediately, wasting your time and energy getting reimbursed.
  • A deal can be cut off prematurely, pay out less than expected, or end up disappointing in some other way.
  • A deal can pay off exactly as planned, leaving you laughing all the way to the bank (or the beach).

The essential thing to understand is that every deal has all three possibilities built into it from the start. There are no deals so certain of success that they don't contain the possibility of failure or disappointment, and there are no deals so certain of failure they're not worth trying (as long as the stakes of failure are low enough).

For example, a few years ago the shopping portal for Marriott Rewards briefly showed a payout of 120 points per dollar spent with an online merchant. I bought a few thousand dollars of merchandise assuming that the portal would not pay out — I assumed the deal would fail! But since the merchant had a generous return policy, the stakes of failure were low enough to be worth taking the chance of success.

On the flip side, after years of steadily paying off for thousands of travel hackers around the country, Wells Fargo suddenly started sending threatening letters to, and then actually closing the accounts of, folks who manufactured bonus spend on their 5% cash back credit cards. People who, with all the experience and wisdom of the community, were certain of success, nonetheless had the deal pulled out from under their feet!

Success is not a function of picking deals guaranteed of success and avoiding deals certain of failure. Success comes from distributing your time, energy, and of course money across deals, weighted by both their chance of success and their potential payoff.

Don't sleep on the next couple weeks of manufactured spend

There are a couple current and upcoming manufactured spend opportunities I want to make sure readers are aware of.

Office Depot/OfficeMax Visa gift card promotion through March 17

This promotion comes around every few months and is always a good opportunity to load up on Ultimate Rewards points for folks who have a Chase Ink Plus, Ink Bold, or Ink Cash small business card. The current iteration of the promotion is $10 off $300 or more in Visa gift cards.

If you buy two $200 Visa gift cards with $6.95 activation fees, you'll end up paying $3.90 in activation fees after the $10 discount is applied, or 0.2 cents per Ultimate Rewards point if you pay with a card earning 5 Ultimate Rewards points per dollar spent at office supply stores.

This is worth doing basically regardless of your liquidation method. Even paying Plastiq (you can find my personal referral link on the Support the Site! page) $4.88 per card in liquidation fees brings your cost per Ultimate Rewards point up to just 0.68 cents each — a good deal!

Grocery store gas points on Visa gift card purchases between March 16 and March 22

Slightly overlapping with the Office Depot promotion, via Miles to Memories I saw that Giant, Stop & Shop, and Martin's stores will offer 2 gas points per dollar spent on Visa gift cards between March 16 and March 22.

These stores usually don't offer any gas points on prepaid debit card purchases, so it's potentially lucrative to time your grocery store manufactured spend to periods when these promotions are in effect, if you drive and especially if you have a way of storing extra discounted fuel.

I don't drive but have mused in the past about options for distributing fuel points to folks who do (there are some more great suggestions in the comments to that post).

Table stakes for a decent Marriott credit card reboot

I've been traveling all week, but followed with interest the announcement that Marriott will be rebooting their credit card lineup, with "mass consumer," "premium," and "super premium" credit cards offered by Chase and American Express. Having no interest in speculating about what the cards will actually look like, but wanting to say something about it, here's my take on what to look for in the credit card reboot.

The problem with Marriott credit cards

I haven't carried a Marriott credit card for years, because despite Marriott's broad global footprint, the cards stink:

  • The earning rate of 1 Marriott Rewards point per dollar translates into an imputed redemption value of $900 for top-tier properties, which cost 45,000 points per night. That's absurd compared to any other hotel rewards program besides IHG Rewards Club.
  • The annual free night certificates offered by the Marriott Rewards Premier credit card are limited to Category 1-5 properties. Marriott has experienced enormous category creep in the last several years, so there simply aren't any Category 5 properties available in the medium and large cities I typically visit. Even IHG Rewards Club credit cards offer free night certificates you can use at all IHG properties worldwide.
  • While not impossible, it's outlandishly expensive to manufacture mid- and top-tier status through the Marriott Rewards Premier credit card, requiring as it does $105,000 in spend (in addition to the 15 free elite qualifying nights) to earn mid-tier Gold status.

I'm not in the prediction business, so I don't expect Chase and Marriott to implement my suggestions, but here's the absolute minimum I would look for to even begin to be interested in one of the rebooted credit cards.

An earning rate of 1.5 points per dollar

The fundamental problem with the Marriott Rewards co-branded credit cards has always been the same: their redemption rates top out at 45,000 Marriott Rewards points, which is higher than Hyatt (30,000) or Starwood (35,000), but the earning rate on their co-branded credit cards is the same (one point per dollar). Hilton properties top out at 95,000 points per night, but their credit cards earn a minimum of 3 points per dollar (and offer bonus points in easily-manufactured categories).

The problem was made even more ridiculous when Starpoints became transferrable to Marriott Rewards at a 1:3 ratio, so the same top-tier hotel award night required $15,000 in spend on a Starwood Preferred Guest American Express, but $45,000 in spend on a Marriott Rewards co-branded credit card.

Besides that, anyone can earn 1.5 Marriott Rewards point per dollar with a Chase Freedom Unlimited credit card paired with a $95 Sapphire Preferred, Ink Plus, Ink Bold, or Ink Preferred credit card. Why would they pay anything at all for a Marriott Rewards co-branded credit card that earns less than that?

If a premium or "super-premium" Marriott Rewards co-branded credit card earned 1.5 or 2 points per dollar on unbonused spend, or on easily-manufactured bonused spend, it would begin to look competitive with other cards and combinations of cards already on the market.

Anniversary free nights redeemable at any Marriott property

If a Marriott Rewards co-branded card wants to be taken seriously, it has to get rid of the category limit on anniversary free nights. A natural compromise would be to limit the free night certificate to weekend nights as the Citi Hilton Honors cards do, but in any case the category limitation of Marriott Rewards free night certificates is a pure liability for them at this point.

Gold or Platinum status after a reasonable amount of spend

Any decent co-branded credit card would have to offer at least mid-tier Marriott Rewards Gold status after spending a lot, but not too much, money on the card. Hilton offers top-tier Diamond status for spending $40,000 on its premium co-branded credit cards, and mid-tier Gold status just for carrying them. I understand that Marriott wants to preserve its most valuable elite status for its most valuable customers, but that's not our problem. If it wants people to carry its co-branded credit card, it has to make it worth our while.

Conclusion

To be clear, these aren't three separate suggestions for things Marriott could do to improve their co-branded card lineup. Marriott, Chase, and American Express would have to do all three of these things before I'd consider applying for one of their credit cards.

Who wants to pay an annual fee for a card with inferior earning, an inferior anniversary bonus, and a nominal elite status?

Foreign airline co-branded credit cards, #8: Conclusions

Reviewing the 7 foreign airline co-branded credit cards issued by US banks that I covered in this series, the cards can be handily arranged into 3 groups:

  • Cards worth getting and keeping for manufactured spend;
  • Cards worth getting for the signup bonus and cancelling;
  • Cards that are probably not worth getting.

Manufactured spend powerhouses

When looking at a card's value for manufacturing spend, it's essential to look at both the earning and redemption rates the card offers. For example, a Marriott Rewards point is more valuable than a Hilton Honors point, but not 6 times more valuable — that makes a dollar spent in a bonus category with the Hilton Honors Surpass American Express more valuable than the same dollar spent with a Marriott Rewards credit card that earns just 1 point per dollar.

Similarly, the two co-branded credit cards in this series that are valuable for ongoing spend are the US Bank AeroMexico Visa cards and the Barclaycard Asiana Visa Signature card. The former earns 3.2 AeroMexico kilometers per dollar spent at gas stations and grocery stores, which can be redeemed on SkyTeam carriers (with fuel surcharges) and the latter earns 2 Asiana miles per dollar spent in the same categories, which can be redeemed on Star Alliance carriers and their non-alliance partners.

It's especially worth noting that the recent increases in Delta redemption rates on SkyTeam partners make it even more likely that redeeming other SkyTeam partner miles, even ones that pass along fuel surcharges, will be more valuable than earning and redeeming Delta SkyMiles.

Valuable signup bonuses

Three of the cards I covered in this series have signup bonuses you might find valuable, depending on your situation:

  • The British Airways Visa Signature card earns 100,000 total bonus Avios after spending $20,000 on the card within one year. Those Avios can be extremely valuable if redeemed on US flights without fuel surcharges or on certain off-peak sweet spots.
  • The Miles & More World Elite MasterCard offers 50,000 bonus miles after spending $5,000 within 90 days, which can be extremely valuable for domestic first class redemptions, including to Hawaii.
  • The "Black" Virgin Atlantic World Elite MasterCard offers 75,000 Flying Club miles after spending $12,000 within 6 months and adding two authorized users. If nothing else, those miles can be moved to Hilton Honors points at a 1:1.5 ratio, earning you 9.4 Honors points per dollar on unbonused spend.

Cards that are worthless, or at least worth less

Finally, the LANPASS Visa Signature Card and SKYPASS Visa Signature Card, both from US Bank, offer minimal signup bonuses and weak earning rates, so even in the case of SKYPASS, where points can be valuable on certain routes, their co-branded credit card is unlikely to be the most efficient way to earn them. However, it's worth being aware of the cards and their potential redemption opportunities in case the signup bonuses on either card are temporarily or permanently increased.

Foreign airline co-branded credit cards issued by American banks, #4: British Airways by Chase

Continuing last week's series on the co-branded credit cards of foreign airlines issued by American banks, today's edition is the British Airways credit card issued by Chase.

British Airways by Chase

Chase issues one co-branded credit card that earns British Airways Executive Club Avios:

  • the British Airways Visa Signature card has a $95 annual fee (not waived the first year) and a tiered signup bonus: 50,000 Avios after spending $3,000 within 3 months, 25,000 additional Avios after spending $10,000 total within your first year and 25,000 additional Avios after spending $20,000 total with your first year. It earns one Avios per dollar spent everywhere except on British Airways purchases, where it earns 3 Avios per dollar. The card also earns a "Travel Together" ticket each calendar year you make $30,000 in purchases.

Travel Together Tickets

The Travel Together Ticket allows you to book two award tickets by paying the Avios cost of one ticket and the taxes and fees for both tickets. The only restrictions other than that are that travel must originate in and return to the United States, it must be exclusively on mainline British Airways flights, and there has to be award availability for both passengers. Other than that, you can fly anywhere British Airways flies.

Importantly, the Travel Together Ticket is earned on a calendar year basis, so it's possible to earn 2 Travel Together Tickets while paying a single annual fee (assuming you plan to cancel the card after the first year) by signing up for the card far enough into the year (for example, April) and putting $30,000 in purchases on the card in the first calendar year, then $30,000 more in the second calendar year. If you squint at this just right it seems like you're earning 2 Avios per dollar, since you can double the value of your Avios by redeeming them on a Travel Together Ticket.

Curiously, the terms and conditions of the offer include this language: "Once your Travel Together Ticket is issued, credits to your British Air credit card account will not cause forfeiture of your Travel Together Ticket" [emphasis mine].

The Travel Together Ticket has rightly earned a bad reputation due to British Airways' high taxes and fees ($250 in carrier surcharges in economy, $956 in business or first on a simple roundtrip between New York and London), and for simple, cheap trips you may find the Travel Together Ticket price and the cash price are nearly identical. Two paid economy New York-London roundtrip in May cost $1,130, while a Travel Together Ticket redemption would cost 26,000 Avios and $815, or just about 1.21 cents per Avios.

On the other hand, a business class Travel Together Ticket redemption between Seattle and London in August (the earliest I was able to find award space) would cost 150,000 Avios and $2,514, while two paid tickets would cost $8,093, giving you roughly 3.7 cents per Avios. If you earned 130,000 of those Avios by spending $30,000 on Chase's credit card, that's a $4,810, or 16%, rebate on your spend (this isn't the usual way I calculate these values — this is for illustration purposes only).

Ultimately, the value of the Travel Together Ticket comes down to your preferences and your alternatives. If you plan a special trip just because you've earned a Travel Together Ticket, then the ticket won't save you money, but instead will cost you many hundreds or thousands of dollars.

Meanwhile if you are already planning a trip, especially in a premium cabin, that requires travel on British Airways anyway, then the carrier surcharges and UK Air Passenger Duty are simply a fact of life. The only question then is whether fares are high enough and award availability good enough to justify redeeming Avios. If an Avios redemption is a good deal without a Travel Together Ticket, then it's certain to be an even better deal with one.

Earning British Airways Avios

Due to the tiered signup bonus, the Chase British Airways credit card has the equivalent of 4 different earning rates during the first year:

  • 17.67 Avios per dollar for the first $3,000 you spend;
  • 4.5 Avios per dollar for the next $7,000 you spend;
  • 2.8 Avios per dollar for the next $10,000 you spend;
  • and 1 Avios for each dollar spent above $20,000 (and in all subsequent years).

Redeeming British Airways Avios

British Airways has a distance-based award chart, so award flights can price out radically higher or radically lower than awards booked with zone-based loyalty programs. This creates a few popular sweet spots:

  • short-haul redemptions on partner airlines like American Airlines and Alaska Airlines in the United States;
  • short-haul oneworld partner redemptions, like on LAN within South America or on partner airlines within Southeast Asia;
  • long-haul redemptions at the upper end of a distance band. Aer Lingus awards between Boston and Ireland were a popular choice until Boston was artificially moved 8 miles west. Off-peak awards on Aer Lingus can still offer good value, however.

A less well-known sweet spot is British Airways' "two or more oneworld airlines" award chart, which offers awards based on the total distance traveled instead of calculating the Avios required for each segment. That award chart is particularly valuable for premium cabin redemptions, since business class and first class awards cost 2 and 3 times the cost of economy, respectively, instead of the 3 and 4 times charged on the standard Executive Club award chart.

For example, the 5,488-mile flight between Los Angeles and Tokyo would cost 25,000 Avios each way if booked in economy on American Airlines. Meanwhile, the roundtrip flight, at 10,976 miles, would cost 90,000 Avios on the two-or-more chart. However, the roundtrip distance band goes all the way up to 14,000 miles, which means for no additional Avios you can add up to 3,024 additional flights miles on another oneworld carrier. For example, flying on JAL to Seoul would use 1,566 of those miles. In economy you'd still be better off booking the award separately, since the two 783-mile segments would cost just 15,000 Avios roundtrip.

However, in business class the same itinerary (Los Angeles to Tokyo, Tokyo to Seoul, and back again) would cost 195,000 Avios on the standard award chart, while costing just 180,000 Avios on the two-or-more chart. Basically, for roundtrips at the top of a distance band on the two-or-more chart, premium cabin, multiple-segment redemptions are often cheaper than on the standard Avios redemption chart.

Is it worth it?

This card is great for anyone who regularly transfers Ultimate Rewards points to British Airways in order to book expensive, short-haul flights, or longer flights with relatively low fuel surcharges. For that person, this card offers the equivalent of 120,000 Ultimate Rewards points for $20,000 in spend. Even in the final stage of the signup bonus earning the equivalent of 2.8 Ultimate Rewards per dollar of unbonused spend is a good value compared to other unbonused opportunities.

Whether or not it's worth hitting the $30,000 threshold once or twice in order to trigger the Travel Together Ticket in your first two years is a much more individual judgment. Are you planning a trip on British Airways? Do you anticipate that there will be award availability on the entire itinerary for two travelers? Are you planning to book a premium cabin? Are paid flights expensive enough to justify redeeming Avios? If the answer to all those questions is yes, then the Travel Together Ticket provides a straightforward opportunity to save money. If not, then you're more likely to find the Ticket expiring before you come up with a worthwhile way to redeem it.