Opinion: Award Chart Disappearances

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Every so often we get news of a devaluation, merger/acquisition, or some other major event that causes major shifts in the world of loyalty programs. The most recent one was that of United eliminating their award chart as of November 15, 2019, and American signaling their impending drop of their award chart as well.

Personally, this was never a matter of “if,” but a matter of “when.” When Delta made the move, I knew the others would follow suit – why? Because US legacy carriers don’t innovate, they imitate. They don’t look to their competitors and think “what can we do to stand out, to be unique?” Instead they continue to devalue and offer sub par products claiming that it is in response to customer demands for increased flexibility and the like.

In a discussion with a friend the other day, he pointed out improvements made by American with their Flagship Lounge upgrades, United with their Polaris product and lounges, and Delta with the Delta One Suite. First off, let me say, that I appreciate ANY improvement that an airline makes, but take a step back from these and remove the US airline branding and just think about the product. Polaris and Flagship lounges are good, but there are far better business class lounges offered by other airlines. United’s “upgraded” Polaris product merely brings it in-line with market offerings. The Delta One Suite is the closest to a true product innovation, but only from the standpoint of the door (but remember, it was JetBlue that was the first to offer this option). The soft product on Delta, in my opinion, doesn’t compete with what is offered globally by many other airlines.

So, What Now?

At the very least let’s take these actions from the airlines as stark reminders that the airlines control the loyalty programs which means they control or have influence over:

  • mileage/point earn rates
  • redemption rates
  • redemption availability
  • redemption rules
  • routing rules
  • transfer partners

…and the biggest thing to keep in mind: POINTS AND MILES ARE NOT INVESTMENTS! They inherently devalue, so please don’t horde them, but USE them.

That being said, if you are looking to book, now is the time to do it. I expect to see bookings increase as people look to dump their miles before the devaluations take effect. The good news here is it doesn’t appear that these devaluations will affect partner bookings, but that doesn’t mean that they won’t make that change in the future.

Other Questions/Thoughts Related to Devaluation

I hold co-branded cards from all three of the legacy US airlines, but never spend on them. Why do I hold them? Well – obviously the perks. Having free checked bags is nice, a bump in the boarding order is always a bonus and in the case of the United – the additional availability of Saver space. This is a perk that I have used many times over the years, but the problem now is that without knowing how much a “Saver” ticket costs, we don’t have a clear idea of the value. American directly devalued their cards when they lost the 10% annual mileage rebate, but this United perk could still remain with a very hazy valuation.

For any airline using a dynamic pricing model for award flights, the associated credit card sign-up bonuses also lose value and clarity. Right now, I know exactly what I can get with 50,000 MilagePlus points, thus making the decision on whether to get the card and spend the required amount a fairly easy decision.

This devaluation also impacts both Marriott and Chase. One of my favorite transfer partners of Chase has historically been United, but their reliability as a transfer partner goes way down in my book without an award chart. Does this makes Chase points worthless? Hardly, but it does add an additional wrinkle and certainly lowers the value slightly. Much like Chase, Marriott has United as a transfer partner (and even offers a 10% bonus on transferred miles). The same situation applies here where the points and the bonus are difficult to accurately compare to other potential transfer opportunities.

Profitability of Loyalty Programs

Loyalty programs generate a large amount of revenue for the airlines and is one of the most profitable areas for them, so it should come as no surprise that they work to reconfigure programs to make them more confusing, opaque, and profitable. In a fun exercise, I went through the 2018 10Ks of American, Delta, and United to look at the revenue from their loyalty programs as well as their PRASM (Passenger Revenue per Available Seat Mile) and CASM (Cost per Available Seat Mile). PRASM and CASM give a glimpse into the profitability of flying passengers around the world.

As you can see there is a hefty amount of revenue from the loyalty programs and I would expect Delta’s to increase in the coming years with the newly renewed deal with American Express. The more interesting figures in this table are PRASM and CASM. None of the legacy airlines are actually profitably transporting passengers. Any profitability that they are recording is coming from freight, loyalty programs, or other minor items. Does this mean that the airlines fail at their supposed core competency – transporting passengers? The short answer is that I don’t know. What I do know is that the airlines are heavily reliant upon their loyalty programs and co-brand relationships and going forward we should never be surprised when the airline use various levers to manipulate those programs to become more profitable and less passenger friendly.

The reason that this blog and our community exists is to help individuals navigate the confusing world of points/miles and efficiently and effectively earn and burn their accrued points. If you take away nothing else from this article, leave with this: Points aren’t collectors items and don’t appreciate in value. Earn your points, use your points, and most importantly enjoy your points. You have earned it!

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March Catch-Up

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Some quick highlights (and lowlights) from the month of March…

New Routes – yes, maybe, and probably not.

Southwest started flying to Hawaii in early March and really kicked things off with a bang offering $49 fares.  This has been a long time coming and is good for consumers adding lower cost competition on these routes.  Hawaiian Airlines is the one that will most likely suffer the most as Southwest also began flying intra-island routes.  Time will tell how this affects Hawaiian air travel, but overall, this should be seen as a positive.

JetBlue has been dropping hints about expansion (specifically to Europe) and with their east coast base, this actually does make some sense and they do have the infrastructure to pull this off.  There is a company-wide meeting on April 10th to discuss the vision and strategy of the company, so perhaps some details will be released at that time.  

I have a personal soft spot in my heart for Mongolia, and upon hearing that MIAT Mongolian had filed with the USDOT to begin service to the US I was equally excited and confused.  They have filed to fly to Los Angeles and Washington as Fifth Freedom routes with intermediary points in either China, Japan, or South Korea.  In my opinion, we are more likely to see 1,000 new orders for A380s this year than these routes become a reality.  It is nice to dream though.

Interesting Acquisitions

American Express announced that it will be acquiring LoungeBuddy, an often cited lounge review site that also offers the ability to research airport lounges and even purchase day passes. While I am not entirely certain what this means I have a few predictions and thoughts. First, LoungeBuddy does partner with lounges that are outside of Amex’s current (and quite robust) lounge network. This partnership could expand the already large network even further. Second, more so than any other card issuer, I feel American Express looks to curate a strong travel lifestyle association around its cards and this acquisition only continues to reinforce that. Lastly, I am curious to see what (if any) impacts this has on other premium cards in the market. As if one bit of Amex lounge news wasn’t enough – they also announced another extension with Lufthansa lounges in Frankfurt and Munich through Oct. 31, 2019. So now the question is- how will Chase and Citi respond? WILL Chase or Citi respond?

HotelTonight is a nifty app that can be used for last minute bookings with a network of over 25,000 hotels. While that isn’t exactly a massive number (considering there are over 50,000 hotels in the US alone), their recent acquisition by Airbnb is a potential game changer. In recent years Airbnb has been listing more hotel rooms and resorts and with the the bed-and-breakfast/boutique hotel focus of HotelTonight, it would appear Airbnb is willing to invest quite a bit into that area of their business, pivoting slightly from apartment/home/private room rentals for which is more traditionally known.

OneWorld Member Quick Hits

For the past 4-5 years Qatar Airways has hinted at a possible exit from OneWorld and it appears that within the next month or so they will come to a final decision on the matter. I’m really not sure if this is more posturing or if it is for real. A departure would certainly hurt airlines like American and British Airways that rely on Doha as a major node in their partner route network. However, with the isolation facing Qatar from neighboring nations, I would think they would want to solidify another alliance partnership or agreement, or work to get the embargoes lifted before alienating themselves further.

In more uplifting Qatar Airways news, the US will see additional cities getting Qsuite service between now and early June. Boston and JFK got the Qsuites on April 1, with Houston, Philadelphia, and another JFK route getting them in the beginning of June, and Dallas receiving Qsuite service starting in July. This is arguably the best business class seat flying right now, so it is great to see this continued increase in availability to and from the US.

Qatar isn’t alone in the suite space, and British Airways announced that it is joining the party with their Club Suite product. It is being rolled out first on their new A350-1000 which will be available this summer for bookings between London and Madrid before moving in the fall to the London-Toronto and London-Dubai routes. By the end of the year the expectation is to have four of these planes flying and two reconfigured 777s. This product looks gorgeous and is definitely on my list. British Airways current business class product doesn’t hold up well against most of the competition, so this is a fantastic upgrade and I look forward to the wider rollout.

As of March 20th, you can earn and redeem AA miles on China Southern. On its own this is a win for flyers – another airline with whom to use and earn AA miles. The strengthening of the China Southern and AA relationship should cause concern over the Cathay Pacific-OneWorld relationship. With the two airlines being physically so close, it is odd to have them both in the alliance. At this point nothing is changing with Cathay, but it is worth monitoring this situation for future developments.

End of Korean Air Stopovers

Had this happened a couple of years ago the sting would have been far worse, but since the removal of Korean Air as a transfer partner of Chase, the number of people potentially impacted is probably far fewer. That being said, this still is bad news. Beginning July 1, 2020 free stopovers in Korea will no longer be allowed on reward flights. This is a huge benefit as you can book the stopover on both the inbound and outbound of your round-trip flight. The silver lining here is that there is still over a year to take advantage of this great benefit!

Cheaper United Flights and Dynamic Award Pricing

Delta’s dynamic award pricing has been met with criticism and has cost Delta a lot of long time loyal followers. United appears to be moving in the same direction, which has me worried. The current upside is that there are a number of short-haul domestic flights pricing at 5-6k points and even some international premium cabin flights coming in below the “chart” rate. What is to be seen is whether they begin to jiggle the handle on inventory and if there is any rhyme or reason to their pricing. I am hopeful they use this dynamic pricing to lower costs on less popular flights or for severely undersold legs, but only time will tell!

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Apple Card – A New Player in the Credit Card Space

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Available this summer, the Apple Card is a co-branded Mastercard issued by Goldman Sachs. This is somewhat of a major move for Apple as the slowing of device sales creates the need for additional diversified income streams.

What Apple Card Offers

Apple Card promises no fees, low interest rates, and a simple rewards structure that delivers the cardholder’s cash back when a purchase posts. The card is tied to the user’s Apple Wallet and doesn’t have a card number or CVV2 code. Apple also promises that Goldman Sachs will not be selling customer information to third party vendors as a nod to the increased privacy and security focus of the card.

The rewards structure is extremely simple and users will see the cash back once a transaction posts. The card offers 3% cash back on purchases made from Apple, 2% cash back on purchase made using Apple Pay, and 1% cash back on purchases using the physical card. While the physical card looks quite impressive, the rewards structure is geared towards using the card through the app. The physical card is intended for use only with vendors that don’t accept Apple Pay.

Interestingly (to me at least), Apple is promising no late fees, no over limit fees, no annual fees, no FX fees, and interest rates that are “among the lowest in the industry.” When pressed on the interest rate Apple responded that the rates are variable and “the lowest rate you might expect today would be 13.24%, all the way up to 24.24%. But these rates are subject to change by this summer’s launch.”

What’s Missing?

There are a few things missing that a “normal” credit card would offer. The first is a sign up bonus and Apple has no intention of offering one. Second, the ability to add authorized users will not be present when the card is launched and it is unclear if that functionality will be added in the future. Last, and most important, this card will only be available to those with iPhones that support Apple Pay. Due to the need for Apple’s proprietary Security Element it is unlikely that we will see this card available on non-iOS devices.

My Personal Take

Apple loves fanfare and has a rabid following and because of that, this card got a lot of press this week. Take a step back though, and look at what the card offers in terms of rewards, sign up bonus (or lack thereof), interest rate, etc. If Citi or Chase issued this exact card, would the reception be the same? Would you be excited? I wouldn’t be and this card doesn’t seem to provide much to me. We know that we can do far better than 3% cashback on Apple devices by using gift cards (easy 4x-5x) AND you can sometimes stack with portals for a nice double dip. On top of that, transferable rewards offer outsized value when compared to simple cash back.

I will say that I do appreciate the security and privacy moves that the virtual card offers and can’t say that I have any complaints about the lack of fees. The interest rates on the other hand are in no way groundbreaking and are in-line with essentially every major credit card on the market.

There are two questions I have regarding this product: Will Apple be able to keep their no-fee promise – and if so, at what point do they start closing accounts for consistent abuse of late payments and over limit activity? The second question is what sort of credit score will be necessary for approval on this card? Credit scoring is a solid indicator of behavior, but for a card that offers noncompetitive rewards will high credit score individuals accept noncompetitive interest rates as well?

What are your thoughts on this new product? Do you think other cards will follow with fee reductions? Do you plan on getting this card? Let us know in the comments or on the Credit Card 101 Facebook group!

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Brexit and Travel

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We are only a handful of days away from Brexit and at this point the British Parliament still has yet to approve a deal. So, what does this mean? The short answer is we don’t really know. What we do know is that one of three things will happen on March 29th – 1) Parliament agrees to a deal with the EU, 2) The UK requests an extension, or 3) The UK crashes out with what is known as a “Hard Brexit.” While many articles could be written on each of these scenarios, we are going to focus on some of the travel related aspects and how your trip(s) may be affected.

Businesses and certain government entities are preparing for the unknown. Airline caterer Gate Gourmet is stockpiling meals in the UK to avoid an potential disruption while Heathrow is making sure they have enough of the various EU-sourced goods that allow them to properly do their jobs, such as gloves and scanners.

British Airways stated that customers should expect to see no disruptions of service and that they will continue to service all of their destinations regardless of whether a deal is reached. easyJet created a new company, easyJet Europe and physically moved planes to the continent as the uncertainty grows. Going back to BA, they are in an interesting spot, as their parent company IAG has stakes in a number of European airlines – Iberia, Aer Lingus, Norwegian, and Vueling. With IAG’s headquarters located squarely in the UK – they are currently decidedly British. IAG is currently working to ensure that it is seen as a European company post-Brexit in a no-deal scenario to protect its European routes.

The part that most readers will care about is the future state of air travel to and from the UK. The best case scenario (in my opinion) is that everything stays the same. In a no-deal scenario would certainly lead to higher fares and immigration issues. On top of those unwanted affects, there is the potential for as many as 5 million tickets to be canceled due to flight caps that could be imposed in the face of no-deal.

Citizens of the United States will need to obtain travel authorization to enter the EU beginning in 2021 and a no-deal scenario would certainly place British citizens in the same boat. While the financial burden would amount to under $10 USD for a 3 year authorization, this process and cost is a far cry from the free movement to which British citizens are currently familiar.

I am no expert on any of these matters, but from where I sit it appears that the uncertainty isn’t receding and anxiety is only growing. Perhaps one of you smarter readers can figure something out for Europe??

…so, if you want to read the 585 page agreement as it currently stands, please go right ahead!

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2019 State of the Wallet Address

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I tend to do a lot of my personal financial reviews at the beginning of the year – preparing my taxes, checking my retirement investments, managing recurring bills (cable, cell phone, etc.), and looking at my open credit cards. While I’m sure you all want to hear about my home office deduction, my 1099-INTs, and the like…I’ll just keep this focused on the credit cards. 

I broke down my analysis into three sections:

  1. Open Cards I am Keeping
  2. Open Cards I am Closing/Converting
  3. Cards I am Considering

There are so many fantastic products available to us these days and with every company competing for market share there is a lot of overlap among products.  Each reader has his/her preferred airlines, hotels, and lifestyle needs and for me there are a few important items to note. First, I live in a secondary market (Richmond, Va), so our airport has no lounges, and I have no airline loyalty.  Because of this, co-branded airlines cards don’t have as much value as they would for someone consistently flying American Airlines out of Charlotte, for example. Second, I value transferable points above all else and look to maximize value in that way as opposed to maximizing cash back.  Third, diversification is important, as to allow for more options when it comes time to book award travel.

Open Cards I am Keeping

American Express Gold – In its revamped form, this is a recent addition to my wallet.  With its 4x dining and 4x grocery (up to $25k) per year, it makes the short list.  To add icing on the cake, the airline ($100) and dining credits ($120) take quite a bite out of the $250 annual fee. While the card also offers 3x on airfare and 1x on everything else, this card doesn’t see action in those areas

American Express Platinum – I recently wrote an article on why this card is so valuable to me.  It simply comes down to the fact that while I don’t do a lot of purchasing on the card (aside from airfare at 5x), the benefits offered by American Express make the $550 annual fee seem insignificant.

American Express Blue Business Plus – With no annual fee and 2x on all purchases up to $50k per year, there is nothing not to love about this card

American Express Bonvoy Brilliant – This is the odd one out on my “keep” list.  The earn rates aren’t competitive, it has a high fee (albeit with some decent perks), and I think the name is stupid, but this card performs two very important duties for me.  First, I do enjoy SPG Marriott Bonvoy points as they offer access to unique transfer partners with an amazing array of award chart sweet spots.  The second thing this card provides is a nice path to Platinum Elite status.  By spending $75k the cardholder obtains that status for the remainder of the year and for the next calendar year.  While I don’t stay in hotels as often as most, it is nice to have that in my back pocket. This card may be jettisoned if Marriott continues to water down the statuses and have inconsistent delivery of benefits from their hotels.

Chase Ink Plus – As long as Chase continues to keep this card “active” it’ll have a home in my wallet.  Offering 5x on phone, cable, internet, and office supply stores up to $50k per year, it is easy to justify the $95 fee

Chase Ink Cash – Ink Cash matches the Ink Plus in categories and while it does have a lower cap at $25k per year, there is no fee, making this card a no-brainer.

Chase Ink Preferred – Offering 3x on up to $150k annually on travel, shipping, phone/cable/internet, and online advertising provides a great way to pull in major Ultimate Rewards hauls each year.  It also offers the most comprehensive cell phone protection of any major credit card.

Chase Freedom – Rotating quarterly 5x categories capped at $1500 per quarter, the ability to pool points between accounts, and no annual fee make this an easy keeper

Balance Transfer Cards – I hold a slew of other no-fee cards as well that have very high limits that I don’t intend to close.  These cards routinely send me access checks which can allow me quickly to invest in something or create cash if needed.  Additionally, the high limits and 0 balance currently on these cards helps keep my overall credit utilization in check, leading to a more stable high credit score.

Open Cards I am Closing/Converting

American Express Everyday – While I have no specific plans to close this card (as it has no annual fee), it only offers 2x on grocery up to $6k per year and a 20% bonus on all points if 30 or more purchases are made in a calendar month.  My plan with this card is to potentially convert to another Amex product or wait to see if something new comes out that is worthy of an Amex slot.

American Express Hilton Ascend – This card made the long march from a Citi Hilton Honors to an Amex Hilton Surpass to now its current form.  I can see where some would get value from this card, but for me it is just taking up room and has an annual fee (that I have been able to get waived for the past 2 years).  It its current state it doesn’t add much value to me, but I am still contemplating what my hotel moves will be for the latter half of 2019 into 2020

Chase Sapphire Preferred – For some it is probably shocking to see this card in this section of my list but compared to the other items on this list and my spend patterns, this card is eclipsed in each of it’s spend categories by another card with only 2x dining and travel.

Citi Premier/Prestige – I am lumping these two together as I will only be closing one, but at this stage I don’t know which.  Why am I keeping one?  Although Citi has some odd rules about combining ThankYou points, keeping open a card that allows access to transfer partners is important.  The Citi Premier has an annual fee of $95 and for that price point, some solid earn rates with 3x travel and 2x dining and entertainment.  The Citi Prestige is a premium card with a $495 fee with some very solid earn rates (5x airfare, 5x dining, 3x hotels and cruises), but the big winner on this card is the coveted 4th night free benefit.  With Citi limiting this benefit to two uses per year, it does put a damper on what was a 4th night bonanza, but the $250 travel credit is still very much alive.  At this point I am leaning towards keeping the Citi Prestige and dumping Premier.

Cards I am Considering

Citi Rewards+ – If you haven’t heard of this card, listen up!  This is hands down the best points card for a person that makes a lot of small purchases.  It earns 2x gas and grocery (capped at $6k per year), but the kicker is that all purchases are rounded up to the nearest 10 points.  That $4 coffee = 10 points, the $1 soda = 10 points, the $0.01 Amazon reload = 10 points. You COULD say that this card earns 1000x on certain purchases!  Regardless, this is a great card and since I haven’t opened OR closed Premier or Prestige in the past 24 months, I AM eligible for the bonus. 

Chase Ink Unlimited – I have every other Ink card under the sun, so what’s one more?  The reality here is that when I’ve maxed out my Amex Blue Business Plus, am not working on a sign-up bonus, and am not purchasing in a category with a bonus this card (and Freedom Unlimited) offer the best value at 1.5x on everything.  What is even better?  This is a no fee card and the points can be pooled with my other Chase accounts.

American Express Hilton Aspire – I have the Ascend card and it isn’t do anything for me now.  If I move away from Marriott, the EASIEST place to go is Hilton, as the Aspire card has a slew of great benefits and credits and provides Hilton Diamond status just for holding the card.  While it is a less generous program, many of the changes to Marriott are lowering the value of the program, so if I can grab status for no spend, that is a better bargain in my opinion.

Chase World of Hyatt – Much like the Aspire if I move to Hilton, this is card to grab if I move to Hyatt.  Hyatt’s top-level status – Globalist is the best of the top tier statuses out there, but Hyatt doesn’t have as many properties, so sometimes you have to go out of your way to stay in their properties.  The spend required to hit that top tier status is at least $125k, depending on your current Hyatt status.  Earn rates on this card aren’t fantastic, but along the way to gaining status there are multiple free night certificates to be picked up.  For a fee of only $95 per year, it may be the way I go.

Conclusion

There you have it…I have bared my um…wallet?…to you all and I’m curious as to what you all think.  On what points do you agree?  Where do you think I’m a total idiot (let’s keep it specific to credit card and points to save on time)?  What would you do differently? 

I’ll be revisiting this later this year when I have a better idea as to what I’m going to do with hotel loyalty.

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February Catch-Up

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Some quick highlights (and lowlights) from the month of February…

American Airlines Credit Cards to Lose 10% Points Rebate

One of my favorite benefits of holding AA credit cards (Barclays or Citi) is that they offered a 10% rebate on redeemed miles up to 10k per year.  This more than offset the $89, 95, or $99 fee and I am extremely sad to see this go.  The silver lining here is that some new perks are coming to the cards on May 1 including additional statement credits, companion tickets, and a new program called “Flight Cents,” all of which we be detailed in an upcoming post.

TWA Hotel Now Taking Reservations

JFK’s iconic Eero Saarinen designed TWA Terminal has been turned into what has to be the most AvGeek hotel in the world and it looks stunning.  Not only is it conveniently located to JFK (it used to be a terminal!), but offers chic accommodations that harken back to the golden age of jet travel.  Rates are starting at $249 per night and rooms for May 15th and onward, when the hotel officially opens.

9 Airlines Added to TSA PreCheck Program

TSA added nine new airlines to the PreCheck program: Air India, Asiana Airlines, China Airlines, Eastern Airlines, Elite Airways, EVA Air, Japan Airlines, TAP Air Portugal, and Volaris.  This brings the grand total to 65 airlines. Click here to see all 65 participating airlines.

Airbus Announces End of A380 Production

Airbus formally announced the end of A380 production earlier this month. First flying in 2005, production will end in 2021 with roughly 250 airplanes having been built, far fewer than the originally anticipated 1,000+. While this move hardly comes as a surprise, it is still sad to see this iconic plane end production. With the introduction of lighter and more fuel efficient wide-bodies such as the Boeing 787 and Airbus A350, the need for jumbo jets has decreased and smaller markets have been opened up leading to a pull-back from the hub and spoke system. While the A380s and 747s will be in the skies for years to come, their numbers are dwindling. Don’t worry too much though, as many great opportunities still exist to fly these fantastic planes.

AirAsia to Open Fast-Food Restaurant Serving Airline Food

This is a bit of a weird one, but AirAsia CEO Tony Fernandes announced on Larry King Now that the airline plans to open up a fast food restaurant called Santan. The restaurant will be serving the same food that is available from their on-board menu. While not every meal I have had on an airplane has been bad, there are very few items which I have actively desired while on the ground. That being said, I haven’t ever flown the Malaysia-based AirAsia, so can’t speak directly to their food. This could just be a marketing stunt, but I am certainly intrigued.

Ebates to Allow the Earning of American Express Membership Rewards

Is “game-changer” too strong a statement to use here? Ebates, which is a popular cash-back site is now offering new users the one-time choice to earn cash-back or Membership Rewards. With this change, the Ebates Visa credit card offers a minimum 3x on online purchases made through Ebates, which makes this card arguably the best card for online purchases for which one can apply. A full write up on this change will be forthcoming in a separate post.

Simon Mall Increases Daily Gift Card Purchase Limit to $25K

It is rare that a company makes FRIENDLY changes to the world of manufactured spending, but in the case of Simon Mall, they have done just that. The prior limit had been $10k per person per day and while this bump in purchase limit probably doesn’t change the behavior of most people, it is nice to see a positive change. This could be a sign of more friendly changes from Simon Mall.

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2018 With My American Express Platinum Card

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Unless you are brand new to the points game, you know that the Platinum Card from American Express (in any of its varieties) arguably offers some of the best benefits of any card on the market.  What scares off most people is the high annual fee of $550 (with up to 3 authorized users for $175 per year) – but should that fee scare you off?

There are a lot of articles that extol the virtues of the benefits, but to what end does the average cardholder use them – and at what volume must they be used to “break even” on the fees?   Like most, there are some benefits on which I rely heavily and others which I never touch.  I tracked my usage in 2018 to see what sort of value I was getting from this card.  My results are below:

Fees and Users

I have the personal version of the American Express Platinum Card and added both of my parents as authorized users, so my fees  come to $725 ($550+175) annually.  As authorized users my parents have all the benefits that I as the primary account holder do with the exception of the airline, Uber, and Saks Fifth Avenue credits.  For this usage review I have included the activity of all cardholders.

Annual Credits

The personal Platinum Card offers a $200 airline credit, a $200 Uber credit, and $100 Saks Fifth Avenue credit ($50 in 2018 as it started in the latter half of last year).  I took full advantage of these credits in 2018 netting me a value of: $450

Lounge Access

My favorite benefit of the Platinum Card is the most comprehensive lounge access offered by any credit card on the market and while 2018 was not a banner year for travel for me or for my parents we made great use of the lounges while traversing the globe.  I’ve listed out the number of visits, calculated to include the primary card member, authorized users, and guests.

Centurion Lounge Visits:               23

Delta Lounge Visits:                        15

Priority Pass Lounge Visits:           26

Escape Lounge Visits:                        3

TOTAL:                                                67

Coming up with a “value” for lounge access can be tricky.  Some lounges offer high end craft cocktails, cuisine designed by famous chefs, and spa services, while others offer sub-par wifi, make your own instant noodles, and hard plastic seating.  I’ve always felt that the value is conservatively $20 per visit, which considers what even a basic small meal or snacks and drinks would cost at the airport.  Using that figure, the annual value from the lounge visits comes to: $1,340

Statuses

One of the more unique perks offered by the Platinum Card is status with both Marriott and Hilton hotel chains and with Avis, Hertz, and National car rental chains.

I didn’t spend many nights in chain hotels last year, but in each of the two nights I spent at Hilton properties, I received free breakfast as a Hilton Gold member.  I value each breakfast at about $15.  While Marriott Golds do not receive complimentary breakfast, I did receive a suite upgrade for 2 nights (which also included club lounge access).  Based on the going rates at the property, the upgrade was worth $107 for each night for a total of $214.

When it comes to rental cars, each of the statuses provided offer similar benefits – accelerated earning of rewards, a one class bump when you rent a car, and some form of streamlined check in process.  Sadly, I utilized the Avis status as my car got hit and I needed a rental for two weeks.  In this case, I actually paid for the rental (which was fully reimbursed by the other driver’s insurance) with my Chase Ink Preferred as it earns 3x on rental cars and offers very good rental car insurance, but was able to take advantage of the bump to a full size vehicle at no additional cost.  The price difference was about $10 per day for a total value of $140.

The total value from provided statuses: $384

Amex Offers

American Express provides targeted discounts and points earning bonuses on all of their cards which can add significant value for any account holder.  While 2018 saw Amex tighten up their offer redemption rules and only allow offers to be used once per individual across all accounts, the value is still one of the easiest harness.  In 2018 on my Platinum Card alone, Amex Offer discounts saved me: $944.85

While the Platinum Card earns 5x on airfare purchases, it only earns 1x on all other spend.  However, with Amex Offers there are opportunities to boost earnings through specific vendors.  For me, the most lucrative of these additional points multipliers were for Best Buy and Amazon.  The additional points I earned through the Amex Offers amounted to: 41,426

Other

While there are many other benefits offered the only other one I used this year was the free ShopRunner membership.  For those that don’t know ShopRunner is a subscription service that allows for free 2-day shipping at many online retailers; think of it as Amazon Prime for a bunch of different retailers.  I made five purchases at vendors that partnered with ShopRunner and received free 2-day shipping which in total amounted to savings of: $73.18

Final Tally

Annual Credits:                 $450.00

Lounge Access:                 1,340.00

Statuses:                               384.00

Amex Offers:                        944.85

Other:                                       73.18

Total:                                $3,192.03

On top of nearly $3,200 I also received the additional 41,426 Membership Rewards points above the base earn of 5x on airfare and 1x on everything else.

What Else Could I Have Used?

With so many benefits it can be easy to lose track of what all is available on the card.  This year I did not take advantage of the Global Entry credit as I am enrolled through 2019.  I did not use any of the insurance items for travel, baggage, car rental, purchase protection, warranty extension, or return protection, nor did I use the roadside assistance.  I didn’t take advantage of the concierge service or any of the offerings through the Fine Hotels & Resorts program, the Hotel Collection, or the Global Dining Collection.  As I type out all of benefits that I didn’t use I begin to feel as though I left so much on the table.

Conclusion

The Platinum Card offers outsized value for its $550 annual fee and that large number shouldn’t scare off new applicants.  While this card is rarely the first card I pull out when making a purchase, it is a staple in my wallet and last years $3,192.03 is absolutely the reason why.  If you’re thinking about applying, the normal sign-up bonus on the personal card is 60,000 Membership Reward points, while the business card is typically 75,000, while occasionally targeted offers are sent out for 100,000 points.

In the interest of full disclosure, we will earn a referral bonus for anyone that is approved from our affiliate.  These are publicly available offers and all claims made in this post as of the posting date can be found in the offer language for the card.  We only provide the best publicly available offers and thank you for your continued support.

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January Catch-Up

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At the beginning of each month we will be writing a “catch-up” article highlighting important or noteworthy events from the prior month. While this certainly won’t be a recap of everything that happened across all airlines, hotels, banks, and credit cards, the hope is that we will be able to touch on the things about which you should be aware as well as others that may have slipped through the cracks in the prior month.

In no particular order…

1) American Express and Chase Issuing 1099s for Referral Bonuses

Starting on January 30, some American Express and Chase customers that had received referral bonuses for having friends/family sign up with their links in exchange for receiving points have reported receiving 1099s from the banks.

This is problematic as the banks have effectively applied a valuation to the points given. This reddit thread shows several examples and breaks down the valuations.

What can you do about it? First and foremost, consult your CPA or a tax professional. For some individuals it may have no impact, while for others that have a lot of referrals it could add thousands of dollars of income.

2) Bank of America Adds 24-Month Language to Certain Credit Cards

Similar to restrictions places on bonuses by Citi and Chase, Bank of America joins in by adding restrictions to four of their cards. Below are the cards and the specific terms.

Alaska Airlines Visa Signature : “This card will not be available to you if you currently have or have had the card in the preceding 24 month period.”

Bank of America Premium Rewards: “This Premium Rewards card will not be available to you if you currently have or have had a Premium Rewards card in the preceding 24 month period.”

Cash Rewards: “This Cash Rewards card will not be available to you if you currently have a Cash Rewards card unless you have had that Cash Rewards card for at least 24 months.”

Travel Rewards: “This Travel Rewards card will not be available to you if you currently have a Travel Rewards card unless you have had that Travel Rewards card for at least 24 months.”

3) Herb Kelleher, Founder of Southwest Airlines Passes Away at 87

An innovator in the air travel space, Herb Kelleher passed away on January 3, 2019. Southwest published this notice honoring their founder and his accomplishments.

4) American Express Restricting Centurion Lounge Access

Beginning March 22, Centurion Lounges will become pre-departure lounges only. From their website:

NOTE: FOR PLATINUM CARD MEMBERS ONLY The Centurion Lounge is a day of departure lounge. We will not admit arriving Platinum Card Members with boarding passes for flights that have just landed. We will admit Platinum Card Members with layovers or connecting flights who produce proof of connecting flight.


 We will not admit Platinum Card Members more than 3 hours before the departure time on the Platinum Card Member’s same-day, confirmed boarding pass. This does not apply to Platinum Card Members with a connecting flight.

 
 We will admit children under 2 years of age free of charge, provided an accompanying parent or guardian is able to produce a “lap infant” boarding pass or proof of age. “

I think this is a reasonable move for American Express to make and will help to control overcrowding while not affecting most lounge users. These changes were inevitable as the number Platinum Card holders has increased and the lounges are some of the best in the United States.

5) Citi Prestige Begins to Rollout New Features

As of January 4, the Citi Prestige earns 5x on dining and airfare and 3x on cruising. While these changes have been viewed as positive, more changes are coming.

  • May 1: Cell Phone protection will be added
  • August 31: The 2x entertainment category will be dropped
  • September 1: The highly coveted “Fourth Night Free” benefit will be capped to two uses per year
  • September 1: The annual fee will increase to $495
  • September 1: Fixed-value redemptions of ThankYou points using the Citi Prestige drops from 1.25 cents to only 1 cent per point.

This is quite a mixed bag of changes and the strategy for maximizing the card’s value becomes slightly different as well. I will be looking closely at my usage of the card in its new state and will be making a determination before my annual fee comes due (mid year) as to whether or not I’ll be keeping this card. The fourth night free benefit has been majorly devalued, but still offers extremely high potential value compared to the annual fee.

6) Citi Offers New Fee-Free Rewards+ Credit Card

Highlights of this new card include:

  • 15,000 points sign-up bonus
  • Rounds up purchases to the nearest 10 ThankYou points
  • Earns 2x ThankYou points at gas stations and supermarkets, on the first $6,000 per year (similar to the Amex Everyday card)
  • Provides 10% rebate on the first 100,000 ThankYou points redeemed each year

Be aware that the language regarding the bonus covers the Premier AND Prestige card: Bonus ThankYou® Points are not available if you received a new cardmember bonus for Citi Rewards+℠, Citi ThankYou® Preferred, Citi ThankYou® Premier/Citi Premier℠ or Citi Prestige®, or if you have closed any of these cards, in the past 24 months.

7) Marriott Overhauls Co-Brand Credit Cards

This visual shows the current and new cards for both American Express and Chase.

While there are a lot of changes as a result of the acquisition of SPG by Marriott and the rebranding to “Bonvoy,” the most immediate for bonus seekers will be the fact that both the SPG Amex and the Marriott Premier Plus Business cards will stop accepting new applicants on February 12. So if you have been considering grabbing those while they still exist, act fast!

In the interest of full disclosure, we will earn a referral bonus for anyone that is approved from our links.  These are publicly available offers and all claims made in this post as of the posting date can be found in the offer language for the card.  We only provide the best publicly available offers and thank you for your continued support.

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Plastiq.com Overview

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In the various forums, groups, blogs, and articles out there revolving around the world of points and miles, Plastiq is often mentioned as one of the tools that can allow an individual to pay a bill with a credit card.  In this post, I’m going to go over the basics of Plastiq, some considerations, and some additional tips on earning extra points through using this service.

plastiq1

What is Plastiq?

Plastiq is a company founded by two college students who in their words “believed that making a payment as important as tuition should be as simple as buying a coffee.”  The website launched in 2015 and since then millions of users have been making monthly payments covering everything from rent, utilities, mortgages, and phone bills to paying for a variety of additional services like contracting and landscaping, as well as the purchasing of goods.

This is done through simply creating an account with Plastiq and entering various credit cards and the billing information of institutions that need to be paid.  Bills can be scheduled in advance or paid immediately.  The overall process is quite simple and while Plastiq often offers promotional deals, the standard fee applied is 2.5%.  Plastiq will charge your credit card and then cut a check (or send an ACH payment) on your behalf.

Why use Plastiq?

For anyone that is hooked into the points game there is this pain felt anytime something is paid for and points are not earned.  One of the most common areas for this (and most individuals’ single largest monthly expenditure) is the home mortgage.  By being able to pay these kinds of bills with a credit card, no longer are these valuable points being left on the table.

What limitations exist?

Just because Plastiq enables the ability to pay virtually any bill doesn’t mean that it is a free-for-all without restrictions.  Currently Plastiq notes that the following payments are not allowed:

  • Payments to friends/family (note that payments for legitimate services from a business run by a friend/family member are fine)
  • Deposits into retirement accounts or other savings plans
  • Payments to be sent outside of the US or Canada
  • Credit card statements

Another item to note is that on occasion Plastiq will require verification of a legitimate recipient.  This issue came up for me when I entered the name of an individual for payment.  This individual has a construction business that is just his name and he had done work on my roof.  I received an e-mail from Plastiq asking for an invoice and I provided the invoice and resolved the issue in under 24 hours.  I have had tenants pay me via Plastiq and they provided a copy of a lease and they too had the issue resolved in under 24 hours.

Plastiq allows Visa, Mastercard, American Express, and Discover to be used on the site, but while Mastercard and Discover can be used for any type of payment, Visa and American Express have the following restrictions:

Visa: can be used for any payee with the sole exception of mortgages

American Express: can be used on the following payee types (from Plastiq’s website) – “Government, Utilities, Education, Residential Rent and Club Fees and Memberships”

Fees and Spend Coding

The overall fee is 2.5% for credit cards and 1% for debit cards.  While I wouldn’t recommend using a debit card on Plastiq, do note that the fee is lower.  Visa, Mastercard, and Amex gift cards CAN be used to pay bills and are treated as credit cards and charged the 2.5% fee.  Occasionally Plastiq offers discounts for specific card types or bill types or for scheduling payments in advance.  Taking advantage of these promotions can add up to a decent amount of savings.

A lot of people ask how these payments code on credit cards (are there category bonus opportunities) and currently I see the payments coding on my cards as “Utilities.”  Up until earlier this month the Citi AT&T Access More was coding as 3x, but that seems to have fallen off.  At this point, it COULD be reinstated, but I’d personally bet against that.

Plastiq also offers a referral bonus program where users can refer others and earn $1,000 fee-free dollars for themselves and $500 fee-free dollars for the new user.

Maximizing Value

Folks that are newer to the points and miles game might look at a 2.5% fee and view that as a losing proposition up against a card only earning 1 or 2x on the transaction.  Like most things in this world, “it depends.”  If you are using a straight cash back card, then yes, you are absolutely losing money.  In this instance, avoid using Plastiq.

However, for cards that earn airline or transferable points, even a 1x earn rate can be lucrative if you are able to redeem those points for greater than $0.025 each.  Many premium cabin redemptions using Ultimate Rewards, Membership Rewards, SPG, or Thank You points can easily top $0.10 per point.  Another consideration is using Plastiq to hit the spend necessary to trigger the sign-up bonus.  This is a great way to knock out an extra thousand dollars that would otherwise be inaccessible to hitting the credit card.

Lastly, my favorite way to utilize Plastiq is to pay bills by liquidating gift cards.  I purchase gift cards using my Chase Ink Plus and Chase Ink Cash at office supply stores in order to earn 5x points and thus am effectively earning 5x on the payment of a mortgage.

Hypothetical Annual Earning 

Looking at monthly expenses that can’t typically be paid by credit card, we can get a sense of the value that Plastiq can add.

 Expense Monthly Amount
Mortgage/Rent $1,500
Utilities $250
Car Payment $400

This comes to a monthly total of $2,150, which on an annual basis can give you the following based on these respective earn rates:

1x : 25,800

2x : 51,600

3x : 77,400

5x : 129,000

At 2.5% in fees on $2,150 per month, the annual total in fees is $645.  The ability to purchase 5x gift cards at break-even or even negative cost can greatly bulk up that earning power and with close to 130K in points just from paying bills is enough for a first class ticket anywhere in the world.

Bottom Line

Plastiq is a great option to pay bills on a wide range of services and also offers a very reasonable fee for the service.  This can allow for a boost to the monthly points accrual, creating significant value provided solid redemptions are made.  One thing to remember is that while Plastiq does offer reasonable fees, there are some specialized payment services that do beat them.  For example, I had been paying my power bill via Plastiq until I realized that my power company charges a flat $1.65 to pay direct on their website (up to $1000 per payment).  As always, do your homework and know that Plastiq is a great additional tool to have in your points earning arsenal.

In the interest of full disclosure, we will earn a referral bonus for anyone that is approved from the link above.  These are publicly available offers and all claims made in this post as of the posting date can be found in the offer language for the card.  We only provide the best publicly available offers and thank you for your continued support.

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Act Fast: 35K SPG Business Amex Sign-Up Bonus until 3/28

One of my favorite credit cards, the SPG Business credit card from American Express is offering an extremely generous sign-up bonus of 35,000 points if you apply through March 28, 2018.

The required spend is $7,000 within three months, so including the bonus, you’d be sitting on (at a minimum) 42,000 points.

SPG.png

Why should you get this card?

  • SPG points are some of the most valuable transferable points available. They partner with over 30 airlines and offer a 25% transfer bonus when transferring 20,000 points.
  • We know that Marriott has acquired SPG. We know that American Express will continue to issue business cards.  We don’t know however, how the SPG and Marriott programs will be combined.  We also don’t know when this specific card will stop being issued.  In my opinion, get it sooner rather than later.
  • It will NOT count against Chase 5/24 rule as this is a business card (although you don’t need to have a business to get the card).
  • You get multiple perks:
    1. Sheraton Club Lounge access any time you stay at a Sheraton property (regardless of if you pay using this card). While the lounges vary in quality – they always offer a hot breakfast, heavy hors d’oeuvres, and complementary beverages.  Overseas they can offer some exquisite spreads and sometimes have free alcohol.
    2. Two elite qualifying stays and five elite qualifying nights towards status each year
    3. Unlimited Boingo WiFi
    4. Complimentary in-room premium internet access
  • The $95 fee is waived for the first year.
  • On the low end, the bonus of 35,000 points is worth ~$800

While this is a great bonus offer, the value of SPG points makes this card my go to for all my non-bonused spend.  You might as well get it while the bonus is hot and make it part of your suite of credit cards.  Last year I was able to redeem 40,000 SPG points for 50,000 Alaska MileagePlan miles which I then used to book a Cathay Pacific business class flight from JFK – HKG – MLE with a 10 day stopover in Hong Kong.  This flight priced out at $5,623.34 giving me a per point value on my SPG points of ~$0.14.  It is redemptions such as this that make the Amex SPG Business card one of my favorite credit cards currently available.

To apply, click here: Apply for the Starwood Preferred Guest® Business Credit Card

 

In the interest of full disclosure, we will earn a referral bonus for anyone that is approved from the link above.  These are publicly available offers and all claims made in this post as of the posting date can be found in the offer language for the card.  We only provide the best publicly available offers and thank you for your continued support.