The game we play changes weekly it seems. Some of the best options from last month are quickly dying, and other new options are filling in. I’ve been out of the country for two+ weeks, and have been happy to see debit cards which were not working before I left come back from the dead upon my return.
I’m constantly looking for more ways to earn miles. I guess you could say I love miles. I did name the blog Milenomics afterall 😉 Today I’ll go over a complex strategy I’m going to be using for the rest of the year. In doing so I’ll highlight a few key things you too should always keep in mind.
A Strong Tree, or A Whole Forest?
One thing I want to challenge you to do is to step out, and work on multiple sources for miles. Doing one thing is great, and doing it consistently can be a great way to drive your costs down. However when you stick to just one manufacturing line you end up getting to a point where earning more miles is either impossible, or becomes much more expensive.
Never forget: Miles can be earned in places you’d least expect them. Continuing to do the same thing over and over means you can miss out on ways to earn miles right in front of your face. You can’t see the forest for the tress.
Continuing the tree analogy: think of any way you earn miles as a single tree. You want to nurture all of those trees, and grow them to their potential. Whenever possible, you want to plant new trees. This is because opportunities (like trees) often get chopped down. Having a healthy forest means one or two trees lost won’t have as large an impact on your overall earning potential.
Today is the first in a two part post about ways to expand your mile earning potential in less than traditional ways. We’re not about exposing a single loophole here at Milenomics; rather we’re about finding what works the best for you, taking into consideration your travel needs, and supply and demand for miles.
Even “Useless” Cards Can Have Use.
I’m sure you have those cards which you signed up for to earn a large bonus, and have since decided are not worth keeping. Maybe it’s the Chase Sapphire Preferred or Barclay Arrivals World Mastercard. Or maybe when you were much younger you applied for a few cards and never got around to closing them.
Whatever the card I’m sure you’ve considered closing that card at some point. Don’t do it! Instead of closing cards we should be pushing for an annual fee waiver, applying for a new card and moving the credit line over or downgrading to a fee-free version of a card. These three techniques make up the 11-month itch, How to Avoid Annual Fees.
Just one of the many reasons I advocate never closing a card is that you never know when they’ll be useful in saving you money.
As an example lets take Capital One. I’m not the biggest Capital One fan in the world–but I still have a Cap1 card. I’ve saved hundreds by using their car rental portal whenever it is the cheapest. By using 11-Month itch techniques I’ve avoided an annual fee while keeping this [sometimes] useful card open.
Another example of this: there’s an offer right now for $25 back on $25 spent with Citi wallet and a Citi Mastercard. Up until this year I had nothing but Citi Amex and Visa cards. But in January, as part of my 11 month itch calls I converted one Visa to a Mastercard. That card has been safely tucked in my sock drawer for the last 7 months, but it will come out and earn me a quick $25 worth of newegg for free.
I can’t recall ever advocating closing a card outright–even if the card is “useless” in your eyes the credit line alone is worth preserving. Having more available credit makes you look more credit worthy, and reduces your Credit utilization ratio. In addition you’ll never know when an opportunity might come along to use a card.
Useless, or Use Less?
For more on this way of thinking see the prior Milenomics discussion of United miles. United miles are Worth Less, but they’re not worthless.
Today I’ll outline a similar situation, where a card which seems absolutely useless has an amazing use afterall.
The card in question is this:
The Congressional Federal Credit Union Platinum Visa.
I’ll quickly recap the card’s main benefits:
$0 Annual Fee
8.5% APR (pretty good, but we know better than to carry a balance)
That’s it.
No reward structure.
No cash back.
Nothing.
Why keep this card? Well, I’ve had it for 10+ years, and it has a healthy 5 figure credit limit. With $0 annual fee why not keep it? I’ve used it once a year for a redbox rental, just to keep the account active. the $.11 in rewards I forefit using this card for a $1.31 rental is a fair price to pay. And I always assumed there might be a day that I actually need the card.
That day has finally arrived…
My Recent Strategy Relies on This Card
I’ve started to run up against some of my own personal limits in manufacturing miles, and I need to somehow exceed that limit. I have a demand for a certain miles, specifically SPG points, but I have no good way to double or triple dip in manufacturing them. I was looking to make a quick 30,000-50,000 SPG in the next 3-4 months, and the thought of losing out on a double dip has kept me up at night. Not being able to make miles on the payment of the SPG Amex seemed like an incredible waste of my time, and travel.
It pains me to leave Miles on the table like this. I’m always looking for possible ways to decrease my costs to manufacture. I lost the ability to double dip on SPG points when Amex no longer was allowed to be paid at certain bill payment outlets.
To get around this I’ve thought about doing a Utep Two-step: Pay the SPG Amex with a Balance Transfer to a Visa/MC and then pay that off with Bill Pay.
The benefits of this are that I can make one quick payment and earn a chunk of DL or AA miles. The negatives are usually the costs; Balance transfers can be pricey. I recently received a “0% Balance Transfer” offer from Citi. This offer had a 3% fee upfront. I’m not sure how something can be advertised as 0% and a 3% BT can be tacked on upfront.
For the purpose of this double dip I don’t need the BT APR to be at 0%, the line of credit will be paid off the next day, so the 0% APR doesn’t matter as much as the origination “fee” does.
If the origination was 3% I’d be paying $0.03 in fixed costs per DL/AA mile I generate this way. Add in my time and travel, and there’s no way I’d go for something like that. In fact even at 1% BT fee I’d probably pass. What I was in search of was a 0% BT fee. Something where my only costs would be a day or two worth of interest (Maybe $3 on a $5,000 BT).
Warning:Balance Transfers start to incur interest charges immediately, not after a bill has been generated and a grace period has passed. Because of this, use extreme caution in employing Balance Transfer. Know exactly what you’re doing, and try smaller amounts before going nuts with a $10k+ BT.
With a 0% BT fee and only a day or two worth of interest I could pay off this $5,000 and incur no more than approximately $4.88 in fixed costs. And I will earn 5,000 miles for the purchase.
In researching the cards I have which are not Amex cards for a good Balance transfer deal (integral to this double dip) I just happened to look at the above CFCU Platinum card. The card’s balance transfer option is ridiculously good:
This isn’t a promotion, or a special one time deal. This is the every day, all year BT offer for this card. This was exactly the sort of Balance Transfer I needed, and it was sitting in my sock drawer for the past 10 years!
With this in hand I now needed to test the efficacy of the strategy on a small scale. First, I needed to be able to pay this card off as a bill payment. This test was completed without any issues. Secondly I needed to be able to generate a Balance transfer of a large amount. Again no problem, I spoke with the CU and my entire credit limit was available for a balance transfer.
No Risk, No Reward
In writing this post I would be remiss if I didn’t go over some of the specific risks involved in this type of churn. The biggest risk is account closure, or AA. My Congressional FCU CC could easily be shut down for too many “in and out” transactions. The purpose of a 0% BT fee is not to use it over, and over, and over and pay it off daily.
In addition Suntrust could hate on me, and shut me down again. For me the threat of another shutdown is actually what is pushing me to pursue this manufacturing line; I need the extra capacity and have been paying my Amex bills (like a sucker) without earning anything since Walmart changed their system to no longer allow Amex payments (exceptions do exist).
Is this type of strategy for you? Maybe. Keep an eye on BT offers you receive. If you get one that is low enough you might be able to leverage this type of two-step to lower your manufacturing costs.
This deal Almost All Miles Are Local
At some point in the past I’ve mentioned the fact that All miles are local; by this I mean: what works for one person in a geographical area won’t necessarily work somewhere else. The combination of stores, employees and policies need to be right for you to replicate exactly what others do. In addition, as today’s post shows you need the right combination of cards as well.
Sometimes a deal is great, and just isn’t open to you as a resident of a different state. Other times a product is open to a limited group (such as USAA, or the CFCU card I’m writing about today). That doesn’t mean you should give up hope. It just means you need to find your own best practices.
This isn’t a deal most of us could take advantage of. Having access this specific card isn’t something most of you will have. I’m posting today instead to challenge you. Take inventory of your cards, all of them, and see if your useless cards can become a card you use less than your main cards–but still use in some way.
And today’s post will further reinforce the Milenomics core philosphy: Never Close A Credit Card outright. The exception to this rule is if you have to close one card to open a new card as part of a CCC round of applications. You never know when a card will be useful in some way.
Come back tomorrow and see how the shortest distance between two points is not always a straight line 😉
-Sam