DAY 8 - Earning Miles From Flying: Five Things to Note

The last few posts I made were about earning miles from credit cards specifically, which is how I earn almost all of my miles. However, those of you who fly frequently for business or the occasional paid ticket for vacation should know the basics of earning miles from flying.

There are five main points I want you to take away from this blog post that answer these questions:

• When do you earn miles from flying?
• How many miles do you earn from flying?
• What choices do you need to make when deciding where to credit your miles?

Note #1: You only earn miles on paid tickets.

If you pay for a plane ticket, you earn miles. If you redeem an award, you do not earn miles. This is why most of my earning comes from credit cards because I do not regularly pay for flights.

If your work schedules your travel, you should attach your frequent flyer number to your reservation, and earn the miles flown.

An exception is when award tickets are booked with rewards from cards such as Barclay's Arrival+, Citi ThankYou Rewards Card, or CapitalOne Venture for example. If you redeem an award through your credit card like this, you do earn miles. The reason is that these cards earn points on a fixed value, where you can book a seat on any airline at any time. The airline will see your ticket as a paid ticket, because your card issuer paid cash for the seat when you redeemed your points.

Note #2: Sometimes, the miles you earn are based on the price of your ticket.

Low-cost airlines tend to follow the format of rewarding you based on how much your ticket cost. This is called "revenue-based earning" versus "miles-based earning." This includes Southwest, JetBlue and Virgin America. As an example, Southwest gives you 6 points per dollar you spent.

However, both Delta and United have jumped into this revenue format just this year. With these airlines, you earn miles based on your ticket price, and what your status is with the airline. See Delta's chart below:

Note #3: Sometimes miles are earned based on the distance flown.

Most of are used to airlines that credit us for the distance that we fly. American, Alaska, and others still do this. They also give you a percentage bonus based on your current status and also what cabin you flew: first/business/economy.

You can use Great Circle Mapper to see the distance you flew on a particular route.

Back in the day, rules were laxer, flights were cheaper, and the perks of status were greater. Many people flew the most lengthy route possible without worrying about the destination, just to earn miles and status. This is called mileage running. The point would be to maximize the distance flown based on the price of the ticket. A few of these mileage runs in a year could get you all the way to the highest status level, with only a couple thousand out of pocket. Some people still find joy in this. I'm not one of those people, but to each his own. I'd rather fill my vacation days with real vacations and not sitting on an airplane.

Note #4: Try to credit your miles from flying to a single airline if you can.

The key mistake the average person makes with earning miles from flying is to credit the miles to the airline they are flying automatically.
 
They end up with 10,000 Alaska miles here, 8,000 American miles there, and so on. These orphan miles are usually useless because you need more miles for a redemption. This is especially true for international flights. People credit their European trip to Air France because they flew AF, instead of crediting their miles to Delta--where they already have an existing frequent flyer account.
 
Instead of crediting to airlines you’ll never fly again that have terrible loyalty programs, credit all your miles to their American partner. You can always credit miles flown on one airline to any other airline in its alliance and sometimes to non-alliance partners too. Alaska, for example is not in an alliance, but you can credit American, Fiji Airways, Emirates, and others to them.

These are the big three alliances:


 
To credit miles to an airline simply type in your frequent flyer number with that airline when prompted to provide a frequent flyer number. Usually all of an airline’s partners are part of a dropdown menu at some point near the ticket purchase screen.

Note #5: Not all airline partners within an alliance credit miles in the same way.

If you have a paid flight to Tokyo, you would not want to credit your miles to Japan Airways. You’d want to credit to one of its OneWorld partners with a better program like American or British Airways.

Here is a sample for earning on a Japan Airways flight....

If your flight is in economy fare class K (this information is on your ticket and receipt) you would get 70% of the miles flown if you credit to your American account:



But you would only get 50% of the miles flown if you credited to British Airways (assuming you travel after June 1, 2015):





But if your ticket were in business fare class I, you’d get only 80% of the miles flown by crediting to American and 125% (!!!) by crediting to British.


I’ll talk about airline and hotel status in another post. It is an important consideration in the where-to-credit-miles question for frequent flyers of paid flights, but not for people who fly fewer than 25,000 miles on paid tickets per year.

Like I've said before, credit cards are the quickest and easiest way to earn big mile balances. However, you shouldn’t ignore miles you can earn from paid flights. Make sure that you credit those paid tickets to a frequent flyer program that would benefit you!


Peace, love and an extra pack of peanuts,

LC

DAY 7 - What is Manufactured Spend?

If you've ever browsed Flyer Talk, or chatted with a true frequent flyer guru, you may have heard of the term "manufactured spend."

What is it?

It is essentially the process of purchasing something that is a cash equivalent, such as a gift card, prepaid debit card, or money order with a miles/points earning card, and then using said cash equivalent to liquidate the funds and pay off the credit card.



It is an ongoing and ever-changing game, and definitely involves some risks. The methods I use now are not the same as they were when I first started.

One of the most well known past methods was detailed in the New York Times a long time ago where a man purchased $1 Sacagawea coins from the US Mint. The Mint was trying to encourage people to get these coins into circulation, so they offered them for sale on their website and you could buy them by credit card by paying S&H fees. Guy bought over a million bucks worth and just paid off his credit cards by taking his dollar coins to the bank. Ended up getting million miler status with an airline, which comes with perks and first class upgrades for life.

Obviously, banks and retailers have cracked down on this practice, making it harder and harder to do, but it can be done. Most people tend to have a "don't ask, don't tell" policy on current ways to do it, because they don't want other people to catch on to their methods, and then spoil it.

These are the most common methods, more than enough for you to get started and get your feet wet, so you can start to experiment to find more methods that might work for you. However, before we dive into it, you must remember the first and only cardinal rule of manufacturing spending.

NEVER FLOAT MORE MONEY THAN YOU CAN AFFORD TO PAY BACK IF YOUR METHOD BECOMES UNUSABLE.

There are people out there who manufacture tens and even hundreds of thousands of dollars a month. I am not one of those people. I very rarely do it unless I'm trying to meet a minimum spend that I wouldn't otherwise clear.

So, with that said, here we go!

Vanilla Reloads

 

These were the drug of choice for many, because you could buy them at a place where you'd get 2-5 times points per purchase. These days have drastically diminished since Office Depot stopped carrying them and many stores (CVS) have hard-coded their cash registers to NOT accept a credit card for the purchase. But the opportunities are still there at other stores and with other cards for those who are willing to look hard enough.

They cost $3.95 to purchase and can be loaded with up to $500 at a time.

I will discuss how we liquidated them, further down.

Visa/MasterCard Gift Cards

The Vanilla days are now being lost to the gift card. We are seeing that Vanilla gift cards are increasingly more difficult to find at stores that give you bonus points on spending. However, you can find plenty of gift cards at retailers all around you. They come with PIN functionality, that allows them to be liquidated by other methods besides purchasing stuff with them. You can set the PIN for pretty much any card, and it can be used like a debit card.

They come with a purchase/activation fee ranging from $3.95 - 6.95 so you are getting the best value per point earned when you have a low activation fee, and are buying a high dollar amount, especially at a store that gives you more than 1x back on purchase. Generally, I don't recommend buying gift cards for less than $500.

Again, how do we liquidate them?

Bluebird from American Express

Bluebird is a prepaid AmEx card that can be loaded using Visa/MasterCard PIN based debit cards. I believe that Bluebird is now hard-coded to not accept Vanilla Reload cards anymore. Shame.

This can be done at any Wal-Mart with no fee and a daily limit of $1,000 and monthly max load of $5,000. Loading the card online costs $2 per load with lower limits and negates the points earned, therefore should not be done.

Bluebird in turn functions as a typical checking account with the ability to use free online bill pay to send payments to anyone at no cost including paying off credit cards, making mortgage or rent payments, etc. I think there is also the possibility of getting a checkbook with it too.

Money Orders

Money orders can be purchased at Wal-Mart Money Centers for a minimal cost of $0.70 per MO and can be purchased for up to $1,000 each via a PIN enabled debit card such as the Visa gift cards. You can use money orders to pay bills that could otherwise not be paid via a credit card and earn miles/points in the process. For example, buying a money order in the amount of your rent, and handing that to your landlord instead of a check from your personal bank account. Or, taking the money order and depositing it to your credit card for payment instead.

Cash Back at the Store

This can be another potential way to liquidate the money on a Visa or MasterCard debit/gift card. It's hit and miss and depends on a variety of factors including the bank issuing the card, and the store you are using it at. You simply go to the store and purchase something, run the card as debit and enter your PIN, then select the amount of cash back you want. I find this method too tedious and with the other methods available it seems unnecessary to me, but it can be beneficial to some.

Now for some other methods:

American Express Prepaid REDcard for Target

The vast majority of my personal manufactured spend relies on the Prepaid REDcard (also lovingly called Redbird, due to its similarity to WalMart's Bluebird). It can be loaded for free at any Target store using a credit card, and it can be used for spend anywhere AmEx is accepted.  At Target, it offers 5% back on purchases, much like their Target debit and credit cards, and free shipping for online orders. It functions like a Bluebird where it has online banking capability and is like a pseudo checking account. FrequentMiler posts an AWESOME everything you need to know info-piece HERE.

You can load via a credit card up to $5,000 per month. Fee free!

Kiva

Kiva is a charity that provides micro loans to entrepreneurs in developing countries where their banking systems aren't as established and it's hard to get money to start businesses. Let me make it known, that I think this is not a good deal for points on its own. Unless you support the mission, you shouldn't be doing it for the points.

The idea is that the amount you give to Kiva and loan out will be returned to you (without interest) then you can withdraw that money again if you’d like. Payments to Kiva must be made via PayPal. You can make the payment with a credit card, and there are no fees at least on your end. Withdrawals of repaid loans are also via PayPal and can then be withdrawn to a bank account, again with no fees for you.

Loan terms are usually four months, but you can choose your duration. You essentially own miles at the cost of floating your money for a few months.

IN CONCLUSION...

This is a beginners’ series, so I want to make you aware of some ways that others (myself included) are using to put more of their spending on their credit cards that you might not have thought of on your own.

This is not an exhaustive explanation of any of these methods. All of them are complicated and carry lots of risk. Investigate them 100%. Start with Googling everything before deciding whether you want to do any of the things mentioned here.

You can earn millions of points without manufacturing any spend, and you can fly to exotic destinations in First Class without it too. But if you want to be creative, and take the time and effort, you can get even more bang for your buck than you expected.


Peace, love, and an extra pack of peanuts,
LC

DAY 6 - How to Meet Minimum Spends on Cards

Sorry I haven't been updating this all week! I'm posting several a day to catch up. Had a friend in town, and also my boss in the office, so I was a busy girl.

So..... you went and applied for a credit card that gets you travel rewards? Awesome.

After you got approved, you wondered:

How do I meet thousands of dollars in spend in just 90 days?

Most of us who earn, burn and churn, are really quite thrifty people and very on top of their game financially. So to someone new, the thought of spending thousands of dollars in a few months seems daunting, right?

In this post, I am going to give you plenty of ideas of how to meet the minimum spending requirements on a card.

I will begin with small, every day expenses, then move on to expenses you may not have thought of. Also, there are some large expenses that you could also tack on that would charge you a small fee. If you're looking to meet minimum spend and you're in a bind, the surcharge might be worth it, to ensure that you bank 50,000 points!

Regular expenses should almost always be charged to your card.

 

• Insurance: you got a car, homeowners, renters, medical insurance, etc. If you pay your car insurance monthly, consider purchasing your premium for the full six months, provided you can pay off your CC bill when it comes due.
• Cable / Internet / Cell Phone bills: most companies allow you to pay online each month, or set up auto-payments to your credit card. Some even allow you to pre-pay extra months in advance. Again, only if you can pay it off when the bill is due.
• Restaurants and Bars: pay all your going out bills with a card. Most cards I recommend have 2-5x points on dining anyways, so you should be maximizing this! Also, when you're out with friends, you could pick up the tab and have them pay you cash or Venmo on the spot.
• Groceries: same as above.
• Netflix / Hulu / HBO Go
• Gas
• Gym Membership
• Oil Change / New Tires / Any other car repairs: these often run several hundred dollars. Easy way to meet minimum spend.
• Uber / Lyft / Sidecar!
• Toll Roads: SunPass, FasTrak, I-Pass, etc. usually has an option to auto load your transponder when your balance gets below a certain threshold
• Business travel!: if you already travel on business, if at all possible, ask to be able to charge your expenses to your card, then save receipts and file for reimbursement.

Prepay expenses that you already know you will use.

 

• Upcoming wedding expenses? Prepay!
• Gift cards are an easy way to prepay for predictable expenses. If you already know by budgeting that you average about $50 a week at the grocery store, why not buy your same amount in Safeway cards to use the next month?
• Amazon gift cards are easy to purchase online and can be used as an online bank account that you withdraw from when you want to make purchases in your shopping cart.
• Remember: only buy what you know you will pay off when the statement comes due!!!

 

Get gift purchases out of the way in advance!

 

• Christmas gifts
• Birthday gifts
• Graduation
• Wedding season!
• Charitable contributions - consider making it now, instead of at the end of the year.
• Religious contributions - do you tithe? Why not do it by card instead of check? 

 

Other random expenses too...

 

• Do you have an FSA or HSA account? More than likely, yours came with a debit card that you can use to pay for your medical expenses. However, you may be able to pay by credit card and submit for reimbursement. Great if you already know you will have something come up like braces, or a surgery.
• Vision: perhaps pay for contacts or glasses by card, then submit for reimbursement
• If you're receiving a payment from your insurance company, like for a claim, you may be able to charge your expense to your card, then use the check from insurance to pay yourself back.

When you have to pay a convenience fee...

 

In general, paying fees to be able to use a credit card is not going to be worth the miles you earn on a regular basis. However, it may be useful if you can't seem to meet the minimum spend, or to achieve a certain status level with a card.

Let's say you got the Chase Sapphire which earns you 40,000 bonus points after $4000 minimum spend. If I were to have to pay 3% on $4000, that is $120. But I would gladly pay $120 to not miss out on 40k points.

ALWAYS check the math to see if this makes sense for you.

• Mortgage or Credit Card: Charge Smart allows you to pay these bills for a fee of 2.4% You can use Visa, MC or Discover, but not AmEx
• Rent: same here
• Student loan: Charge Smart also, or if you're lucky, your own loan provider may allow it by their site with a fee.
• Property taxes: same
• US Taxes: the IRS has a list of tax payment service providers on their website
• State and local taxes

Or if you need to pay someone, use PayPal or Venmo.

It's easy to pay a trusted friend or significant other who would then give you the money back, and you use it to pay your card.Venmo's limit is $1,200 and they charge 3%. PayPal also charges 3%, I believe.

Be aware that both these vendors will likely close your account if you transfer same amount back and forth. Transfers in a one-way direction with payback directly to you by check, won't arouse as much suspicion as if you sent someone $1000, and then they paid you right back with the same amount. Your mileage may vary. But you are warned.

The bottom line is this: don't let minimum spend keep you from getting a large bonus. If you are a good budgeter, this should be pretty easy to track. If you can't meet more than one minimum spend at a time, don't worry! Start small, with one card at a time, if it's easier. It's all about minimizing what you pay out of pocket to travel. The above suggestions will allow you to meet most of the spend necessary within a three month period.

What if the above tips and tricks aren't enough?

There's a little trick out there called "manufactured spending." How do you appear to spend money, without actually spending any money? We will talk about it in my next post :)


Did I leave out any tricks that you've tried? Let me know in the comments!


Peace, love and an extra pack of peanuts,
LC