EDITORS NOTE: In 2024, I’m going to try and have a guest post on Saturdays. Today’s guest post is from the strong analytical mind of MattD (maybe the D stands for doppelgänger? Probably not).
Alaska plans to introduce their new award chart in March. Since joining OneWorld this was expected to happen as Alaska tries to become a global airline without any routes leaving the Americas.
Still, I have been keen on earning Alaska miles when an opportunity or safe way presents itself. I looked back on previous Alaska award bookings and all but one were flights to Asia. I will show below why I’m still earning Alaska miles and for this example, I chose Bangkok, Thailand as my comparison point.
Below in Table 1, we will examine the old price of routes along with the new pricing with percentage increase. At first glance, the numbers look gnarly and all hope should be abandoned.
Table 1: Old Alaska Award Chart vs New with Percent Difference for a Business Class Flight to Bangkok
Airline
Old Price
New Price
SEA/YVR
LAX
DFW
ORD
JFK
Cathay
50,000
85,000 (+70%)
85,000 (+70%)
85,000 (+70%)
85,000 (+70%)
Hainan
50,000
85,000 (+70%)
JAL
60,000
85,000 (42%)
85,000 (42%)
85,000 (42%)
85,000 (42%)
85,000 (42%)
Emirates
105,000
130,000 (24%)
130,000 (24%)
130,000 (24%)
130,000 (24%)
85,000 (-19%)
Singapore
100,000
85,000 (-15%)
85,000 (-15%)
13,0000 (30%)
13,0000 (30%)
13,0000 (30%)
Removed Finnair because there’s no reason to fly out of the way unless there’s a bar onboard to post a picture of.)
40,000 was used as the old standard credit card sign-up bonus and 65,000 was used as the new standard credit card sign-up bonus, which is a 62.5% increase in miles earned.
Obviously, the Cathay sweet spot is dead and will rest in its forever home with 100,000 Emirates First Class.
Alaska awards are only getting more expensive if the miles are earned from flying/organic credit card spend. But, the inflation in Alaska credit card bonuses since 2020 means most of these routes increased less than 10%. In fact many have become cheaper if you’ve earned your miles from well-timed sign up bonuses. Table 2 shows the old and new award chart looking at how many sign up bonuses it would take to buy a business class ticket to Bangkok.
Table 2: Alaska Sign Up Bonuses Needed for a Business Class Ticket
Airline
Old Price
New Price
SEA/YVR
LAX
DFW
ORD
JFK
Cathay
1.25
1.31
1.31
1.31
1.31
Hainan
1.25
1.31
JAL
1.50
1.31
1.31
1.31
1.31
1.31
Emirates
2.63
2.00
2.00
2.00
2.00
1.31
Singapore
2.50
1.31
1.31
2.00
2.00
2.00
Color coded to show which award increased vs decreased measured in sign up bonuses
While the new award chart has closed some sweet spots, new ones have opened up, like flying a beach towel in business class can now be had for 50,000 miles or 80% of a sign up bonus.
This won’t last forever as Alaska will keep devaluing enhancing their program faster than the credit card bonus increases. In the meantime though I will keep earning and burning Alaska miles.
EDITORS NOTE: In 2024, I’m going to try and have a guest post on Saturdays. Today’s guest post is from Johnathan, who has gone from zero to heavy hitter over the course of a year. He’s humble and soft spoken, but carries a large manufactured spending stick.
My journey into the world of rewards began last March, kicking off what I’d call my ‘hobby/work’. The challenge? Juggling several American Express Platinum cards, each with its own lofty spending threshold to hit for maxing out rewards. It was my mentor’s encouragement that nudged me to take the plunge. At first glance, the spending requirements seemed crazy, almost impossible. But having a mentor by my side was a game-changer in navigating this financial labyrinth.
As a newbie, churning felt like being pushed off a plane in the middle of a Chinese metropolis without any friends, trying to learn how to live. It quickly turned into the most unusual hobby I’ve ever taken on, packed with moments that had me thinking, “This can’t possibly work,” defying all logic.
A year in, I’ve learned that success in churning isn’t just about the number of transactions; it’s the people you meet along the way that make the difference. It’s the conversations, the stories shared, and the personal connections that really matter. And, boy, does it save time! When I was just starting, the thought of buying money orders made me anxious, and I’d be driving all over town. But by bringing a personal touch to each interaction and really getting to know the people I met, I could easily handle 15-20 money orders while engaging in genuine conversations. That changed everything, saving me an invaluable amount of time.
I owe so much to my mentor for their guidance and support. Going it alone on this journey is something I can’t even imagine. Having someone in your corner to discuss all the churning escapades is a godsend. They’re the ones you can call up to vent about every hiccup—the roadblocks, claw backs, sketchy gift cards, dealing with Incomm’s customer service—you name it. And if you’re pushing the limits, you can bet things will go sideways. Like Matt says, “If you haven’t been shut down, you’re not pushing hard enough.” I had my first shutdown this year with the GM card. How on earth does a company that produces Buicks cut you off?
What’s more, having a churning confidant is priceless. Trying to explain this world to anyone else is like an alcoholic attempting to explain to a casual drinker the reasons behind their long-term drinking. You’re met with confusion and questions like, “I don’t get it, why don’t you just stop?” or “Why put yourself through all this effort?” But it’s the collective experiences and all the comical mishaps that have happened along the way that make it so enjoyable.
EDITORS NOTE: In 2024, I’m going to try and have a guest post on Saturdays. Today’s guest post is from the always helpful and funny SideShowBob233, who can apparently be reached at SideShowBob233.com.
The Amex financial review team (henceforth referred to as the FR team because I am lazy but you knew that already because of the private investigator you hired to follow me) is one of the most feared teams at everyone’s favorite points and miles cash cows, probably more than the RAT team since the FR can actually shut you down (I’m not clear if the RAT team gets involved in shutdowns although it’s possible they do for blatant abuse such as obviously paying Amex with Amex).
Generally, to get noticed by the FR team (and their Top Notch Never WrongTM algorithms – note I trademarked that because how gullible are you anyway) the easiest way is to spend a lot of money (more than you usually spend) and not pay right away. The TNNW algorithm flags you as a bust-out risk and sends your name, phone, card portfolio, and stool sample to the FR team for the preferential – bordering on gentle – possibly even lover-like treatment only they can provide (sue me Marvel).
Once the FR team gets involved, they will generally suspend all your cards (block new charges on them) and call you, causing you to need to change your underwear – please tell me you wear it – actually don’t tell me I don’t want to know). They sometimes will want bank statements, sometimes tax transcripts, occasionally a urine sample but in most cases despite scaring the life out of you the result is not the worst case (shutdown or card closure). Generally, the worst-case outcome is limits on your cards – barring any major lies on your part like a declared income of $1M and you are making minimum wage working at McDonald’s AND eating their food 3 times a day while wearing the Grimace costume and ONLY the Grimace costume.
This is generally common knowledge SideShowBob233 you say (once again you say the 233 out loud as only you can, which is different than how everyone else says it because face it, you’re weird) so why are you wasting our time with this besides shamelessly stealing quotes from Deadpool?
The reason is there is a different kind of FR which has been showing up more frequently of late and I want to warn you about it. Also because sometimes I tuck my knees into my chest and lean forward, that’s just how I roll.
This new type of FR can be triggered the same way as I boringly detailed above (this is your cue to go back and re-read and actually pay attention this time) but sometimes it can be triggered by a returned payment or possibly by linking a new payment account to Amex. In this new type of FR they are concerned about the ownership of the account(s) you are paying them with. This is a variation on the fear you can’t pay them as payments from an account you don’t own could be fraudulent and eventually returned. They will ask you for proof of ownership of the accounts you’ve been paying them with. If you cannot provide the requested proof, they will close your cards (they want actual PDF statements from the bank). If you can provide the documentation but your name is not on the accounts there are several outcomes – one is they will ask you for a third party authorization form filled out by the account owner, sometimes they will let you add a new account in your name and pay from it then provide a statement, but sometimes you get a jerk and (s)he says no to all of that and you have to provide a statement on an account (from the past) with that name on it.
So you’re all saying to yourselves thanks SideShowBob233 (this time you skipped saying the 233 out loud because my laziness is contagious) you’ve scared me a little, but what can I do? The answer is always have at least one account in the cardholder’s name linked to at least one card. Ideally every cardholder should be paid from an account they are an authorized signer on to avoid any issues. Is there a guarantee they will find you? No, nothing in life is guaranteed except death, taxes, and rakes. But why mess around with the potential to get the FR team involved.
Finally, I know you’re thinking “I’m not lazy like you SideShowBob233 so I am going to use my photoshop skills and give Amex a fake bank statement and go on my way” but let me overcome my innate laziness and explain why that is a terrible idea. First, that is basically financial fraud, and unless you’re a billionaire you can go to jail doing things like that. Churning has a lot of gray lines and I’d like to stay on the safer side of that one.
Second, there are systems like ChexSystems and EWS (see my other post) that track ownership (ever wonder why some banks can instantly verify account ownership?) and if Amex sees a document saying SideShowMel is an owner but pulls a Chex report or EWS and sees the account is actually owned by SideShowBob233, they are not stupid and will not take kindly to being lied to (plus they will obviously know it’s a lie and won’t accept that doctored statement/artwork as proof). And to be honest when they are asking you for proof they generally already know the answer in most cases – but it’s possible Chex/EWS is wrong so they are asking you to verify, but don’t FAFO with the FR team.
As a final sendoff here’s an animation of me setting up all my family members to make sure they pay their cards from accounts in their name to avoid this risk in the future:
As a final, final sendoff, here’s me on vacation because you didn’t really want to keep your breakfast down anyway:
EDITORS NOTE: In 2024, I’m going to try and have a guest post on Saturdays, and today marks the first ever Saturday post at MEAB 🎉. Today’s post is from John at Miles Mastery. John produces great travel hacking reference content and a weekly news roundup, and we’re lucky to have him for the first ever Saturday post!
The start of the new year always brings in new opportunities to spend those hard earned churned points that you’ve been accumulating! However, before you jump in guns blazing and transfer all your points for a unicorn 20 cpp redemption, let’s talk about one of the worst things that can happen to churners besides a shutdown: phantom availability.
What Is Phantom Availability?
It’s basically the award travel equivalent of getting catfished.
In all seriousness, it’s when an airline program shows a certain flight award available to be booked but that award in reality does not exist. This is commonly seen when booking partner awards through an airline program. A notorious example of this is when trying to book ANA awards through Air Canada Aeroplan.
How Do I Avoid Phantom Availability?
Glad you asked. It’s quite simple actually. You just need to cross reference with different airline partners to verify that the award is available to other partners as well. Usually if at least 2 partners can see the exact flight you want, there’s a high chance that the program is showing real award space.
You cannot use the award airline’s own program to verify space because there is no guarantee that partner airlines will have access to the same availability. So if you’re trying to book United Polaris via Air Canada Aeroplan, you cannot go to United’s website to verify this award space.
So let’s get into the best ways to verify award availability for each alliance.
Star Alliance
United is usually not the best way to book Star Alliance awards but it ironically is one of the best ways to verify partner award space. The other two good airline programs to use are Air Canada Aeroplan and Avianca Lifemiles. You can use a combination of the 3 to check if coveted awards like ANA business class, Eva business class, or Lufthansa first class awards are real.
BONUS TIP: Air Canada has a strange partnership with Singapore Airlines where Aeroplan will sometimes have more access to Singapore Airlines award space than Singapore Airlines’ own program. There may be instances where Singapore Airlines award flights don’t show up on United and show up as waitlisted on Singapore’s website but are actually bookable with no waitlist via Aeroplan. However, this is definitely the exception and not the norm.
OneWorld
British Airways and Cathay Pacific are the two best ways of verifying OneWorld partner award space. While Alaska Airlines and American Airlines are two of the best programs to book OneWorld award flights they unfortunately also often show phantom availability and shouldn’t be trusted without additional verification.
SkyTeam
Delta is the best program to verify SkyTeam award space. Air France Flying Blue and Virgin Atlantic Flying Club are good programs to use as well but they often don’t show all of the partner space. Delta is the most reliable in showing the partner availability online.
In general, you can always call the program you’re trying to book through and ask the agent to see if they can find the award space you’re looking at. If they do, you can then transfer over your points to complete the booking since almost all programs except for a few (ahem looking at you Singapore Airlines and Chase), will have the points immediately transferred.
EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s author, the always helpful and funny SideShowBob233, for writing this post while I’m on vacation. I’ll see you on January 1!
It seems like these days everyone hates on Uber, from drivers who Uber screws out of wages, to people who are sexually assaulted by Uber, drivers who failed their background check but are somehow working with Uber anyway, to people like me, who find themselves shadow-banned from Uber for an unknown reason and have their loaded gift card balances locked in Uber-purgatory™ while Uber support tells you there’s nothing wrong with your account and you should continue using it.
Since I’m a selfish type of guy (hands off my rake!) I’m going to focus on the last one of those reasons to hate Uber. Sometime in October I found myself unable to place orders on Uber. Thinking it was a glitch, I reached out to their support. Uber support is very responsive, kind of like a car with an almost dead battery. You turn the key, it makes lots noises, but in the end you’re still screwed.
I went back and forth with Uber support as they “investigated” (if you can call ignoring my support ticket while they approved serial killers as drivers as investigating) and told me it was escalated to a higher team. What I thought (and was proved right) is that the “higher team” is a description of the team. They literally smoke weed all day and do nothing else. So my case is still sitting with that team while they drive around in the Magic Mystery Machine eating Scooby snacks and I am still unable to use my Uber account (likely forever).
I’m still not clear WTF caused my ban, but there are several possibilities. One, I added a bunch of promo codes to Postmates (also owned by Uber) about a week before my ban. However, by itself I don’t think that was the issue – but rather it was coupled with a cancelled order a few weeks earlier. I ordered food on Uber eats, and about 2 minutes before it was due to be delivered, I was notified the order was cancelled by Uber support. I reached out to their support to ask about it, and they told me I cancelled it. I explained I absolutely did not cancel it and they said they’d give me a credit for the order (I actually just wanted the damn food not a credit, but I settled for a credit). I think this put me on a suspected abuser list (when my best guess is their terrible customer service cancelled my order by mistake trying to cancel a different order) and then when I added some promo codes that sealed my fate. But I’m just guessing, because their support is so bad they can’t even tell me if I’m banned. Uber gonna Uber.
While I know people normally want to be like me (as shown here):
In this case you actually don’t want to be like me, here are some tips to avoid my rake fate:
Do not use the same Uber account on multiple devices
Do not add more than one new credit card to your account every 3 days (72 rolling hours)
Do not go nuts adding promo codes (this usually will only lead to a promo code ban)
Do not have your order accidentally cancelled by Uber support (let me know if you figure out how to do this)
Do not complain after Uber cancels your order and leaves you hungry
Do not pass go, do not collect $200 (now I’m just seeing if you’re still here – shouldn’t you be out probing or something?)
I’ll end my rant here, but let me just say I will dance on their grave when Uber goes bankrupt, leaving us with memories of the Amex Uber credits and leaving Amex with a different coupon they will need to come up with.
– SideShowBob233
Pictured: What SideShowBob233 is missing by not having Uber Eats.
EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s author, my good friend Nathan, for writing this post while I’m on vacation. I’ll see you on January 1!
Spend any decent amount of time purchasing physical VISA/MasterCard prepaid or 3rd party gift cards and you’re bound to come across at least one that has been compromised. Purchasing a tampered gift card (GC) and dealing with the fallout is a seeming right of passage into the physical world of manufactured spend.
For the same reason GCs are useful to manufactured spenders in that they are available in high denominations and easy to liquidate, they are particularly attractive to scammers as they provide the added benefit of anonymity because all that is needed for redemption are the card details itself.
The process of compromising a GC will generally involve the scammer obtaining unactivated cards, bringing the cards to a location where they can record and/or remove essential card details, then placing the cards back on the shelves at retailers. A fraudster’s window of opportunity starts the moment after the GCs are loaded but before you or the recipient has the ability to use the funds or report the card as compromised to the card issuer.
Depending on the extent of the tampering, it may physically impossible for you to redeem / use the card since the magnetic stripe itself was tampered or the pertinent information was defaced. Other times, they will record the information and although you still have the ability to access the funds, they are hoping that they can drain the funds before you do.
Retailers and card issuers usually add hurdles to replace compromised cards and recover stolen funds. The best thing you can do is catch anomalies in the pre-activation phase, as sorting it out after can be a huge headache.
Common Card Features / Attack Vectors
Activation Barcode
Card Number / Redemption Code
PIN (for some brands, synonymous with the redemption code)
Pre-Activation Inspection
Familiarize yourself carefully with the GC you are purchasing, it’s packaging, and card features. Try to find a safe source for cards (ie. freshly stocked cards or shrink wrapped bundles behind the gift card case).
If possible, open and inspect the packaging and/or card before activating. In general:
Inspect the area over and surrounding the activation barcode carefully. Make sure the activation barcode is the original, nothing foreign is covering it, and if it was covered with a reveal tab or security sticker, it was not previously uncovered and re-applied.
Check the card number and PIN to make sure they were not tampered with. Tampering includes details being scratched off altogether or security stickers removed and re-applied.
Warped packaging could suggest that the package was opened and resealed.
Most manufacturers use a type of one time use glue. Glue that is too sticky or too hard is usually a giveaway that the package has been tampered with.
If the activation barcode is separate from the card number itself (common with popular brands such as Apple and Best Buy), there will often be an identification number on both pieces, make sure these numbers match to indicate the card wasn’t swapped.
If the brand utilizes sequence numbers, a card out of sequence could indicate that cards were planted.
When scaling, examining each card carefully can slow you down. If you determine one card from a batch is fine, the rest of the cards from that batch are more likely to be safe.
Generally the register will show the last 4 of the serial number of the GC that will be activated. Make sure this matches with the serial number printed on the packaging as they are scanned in.
Activation Issues
If you discover you have a compromised GC after purchasing, act immediately. If you have access to the card details and/or the mag stripe hasn’t been tampered with, make it a priority to spend or use the funds as soon as you can. If you don’t have a quick liquidation plan in mind, contact the card issuer or the retailer as soon as possible. Usually the retailer will defer to the card issuer, but depending on the retailer and manager, they may be able to help you replace the card.
If a GC was purchased with a swapped barcode, you can use a barcode scanner (in a pinch there’s a free online version at https://online-barcode-reader.inliteresearch.com) to help determine which card the funds were routed to.
If you had activation issues and multiple cards were involved, make sure you leave the store with the correct cards as they can easily be confused.
– Nathan
Not all scam gift cards are easy to spot, watch out for this one before it bites you in the, err, foot.
EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s author, the consummate churner TeddyH, for writing this post while I’m on vacation. I’ll see you on January 1!
2024 is rapidly approaching, and while that may be disappointing news for some of you who have been getting fat from all the Q4 offers, for many of you it may mean some good news: a new Player may be turning 18.
Of course, it’s not all sunshine and rainbows: churning while new to credit is like trying to take public transit in Lubbock, TX (aptly called the Citibus!)
I moved to the U.S. when I was 12 with no other family members, so when I turned 18, I had to start my credit from scratch. When I first got my SSN, I was declined for even the most basic credit cards. But while I was trying to figure out what cards I could get approved for, I ended up discovering churning. With the right moves, even I was eligible for high sign-up bonus (SUB) offers from elite credit cards after just a couple of months of credit history.
In this post, I will try to break down a guide to churn while new to credit based on my personal datapoints (DPs) as an immigrant as well as my other players.
1. First Day: Preparations
While it is possible to get into this game without a Social Security number, your options will be VERY limited. If you cannot get an SSN, try for an ITIN, which can be obtained by gambling.
2. First Month: Your First Card
While many people believe that the Chase Freedom Rise or the Discover It are great first cards to begin with, I invite you to think bigger: the personal Amex charge cards. Here are some almost concerning DPs:
P1 getting approved for an Amex Personal Gold with 2 months of credit history – no FICO score!
P2 getting approved for an Amex Personal Platinum WITHOUT a Social Security Number – will talk more about this later
P3 getting approved for an Amex Personal Gold on a 3-day-old SSN with nothing but an Amex AU
At this point, I don’t even think Amex bothers checking for a pulse when approving credit lines for their charge card products. Amex will, however, expect to see a valid credit report when they perform a hard pull, so your new player must have something on their credit file. An Authorized User card, especially an Amex AU, is a great solution without sacrificing their 5/24 slot.
If you are first-generation and don’t have someone who can add you as an AU, go for the Discover It rather than the Freedom Rise. My rationale as to why:
10% rotating categories up to $1,500 and a $100 SUB is better than even the most 7-ft-man-with-an-affiliate-link-inflated valuation of Ultimate Reward points
Your oldest account remains safe even in the case of a Chase shutdown as your Discover is likely to have less than $500 in shenanigans per month
You can request a credit line increase every single day, online, with no harm. This will help with later Chase apps as banks like to beat other banks’ credit lines.
If you start with a Discover, wait until your second statement cuts before trying Amex to ensure Discover posts to your credit report. Then move to step 3/4.
3. 3 Months In: Patience is Key
By now you’ve probably finished your Amex Gold SUB and your hands might be itchy for some more apps. But there is a crucial Amex velocity limit you should be aware of when you are new to credit: 1 card before 6 months of credit history.
AmEx will grant you one credit line before you have a FICO score, but won’t approve you for any more without proof of income until you actually receive a FICO score (6 months of history).
This 4506-C form to prove your income through your tax returns is a huge PITA and you probably don’t have good enough income to show them if you are new to credit (as you’ll need a tax return to show for it) so I would wait until you are 7 months in for your second AmEx.
4. 4-6 Months In: Stepping into Chase Territory
Many points-and-miles bloggers point out how conservative Chase is at approving cards to those with a thinner credit file. While this is true, there is one simple trick that the Chinese churning community found that breezes past the Chase applications. Before I tell you though, I need to wait for SideshowBob233 to walk into the rake I placed.
Okay, now that he is unconscious for a bit, let me quickly tell you the simple trick: open a Chase deposit account and deposit $10,000 to $30,000 into it. It only takes 2-3 business days for the credit card side of their systems to catch on to the fact that you have a large deposit account, which in turn allows you to breeze through the application process. DPs are showing that your initial credit line on the Freedom products will usually be under $3k, so I wouldn’t try for a Sapphire here. I personally put $30k in an account and got a $3k line for the Chase Freedom Unlimited with 5 months of credit history (still without FICO!). If I were to do it all over again I would have waited a month and jumped to the Chase Sapphire Preferred, as 6 months of history will give you a FICO score.
You can withdraw the funds immediately after card approval, and close the account shortly after, or within 12 months if you also hit the bank bonus with it. Whatever you do, listen to Sideshow and don’t pull shenanigans while you have a deposit account with them. I have just been maxing out my credit line at CVS without cycling, and then paying it down quickly.
5. 8-9 Months: “I’m not a businessman, I’m a business, man”
By now you should have a FICO score and be past the Amex pre-FICO velocity limit. From here you can start applying for AmEx business cards. If they ask for income verification or deny you, don’t worry, just apply again next week. While you may think that this non-stop application and denial may seem concerning to AmEx, people who cancel applications because of Pop Up Jail do the same thing so they are used to this. Eventually, you will see an approval, either instant or through a simple identity verification. In my case, they wanted my social security card and they approved me even though my card said “valid with work authorization only,” in typical Amex fashion.
Tip: If you are having trouble getting approved for the business cards, try applying for the Biz Checking (and get the SUB!). That helps the Amex Biz applications sail through as well.
After approval, you can immediately get started on the employee offers. You’ll need those to keep you occupied since you’ll still be quite limited on card approvals until you are 12+ months in.
12 Months+: Fourteen Million, Six Hundred and Five Possibilities
Okay, maybe Dr. Strange was exaggerating when he said that, especially if you’re planning to stay under 5/24. If you still kept your Chase account, there are DPs of Chase Sapphire Reserve approvals with a 12-month history, as well as various data points for INKs and cards from other issuers as well. If you are curious about your chances, check out the myFICO forums for various approval DPs and even better, the US Credit Card Forum in Chinese, as many there start with a fresh credit file. I like to Google Search the card name along with “uscardforum” and translate the results. Know that at the end of the day, you can just eat the hard pull and your confidence will pay off with a thick and stable credit file in years to come.
So there you have it. A one-year, five-step guide for a new player to the game. Good luck!
EDITOR’S NOTE: I’m on an annual blogging vacation for the last two weeks of the year. To make sure you still have content, some of the smartest members of the community have stepped up with guest posts in my absence. Special thanks to today’s author, the always helpful and funny SideShowBob233, for writing this post while I’m on vacation. I’ll see you on January 1!
Check kiting is an old fraud practice that is no longer as useful as it once was because balances can be verified in real time by some services. So, yours truly was sure surprised a couple of years ago when I called my hub bank to find out why my bank account was locked, and they told me it was closed because of “ACH kiting”. I asked what that was and the nice, friendly lady who was shutting down my account explained that it was the practice (similar to check kiting) of moving money out before it has cleared for the purposes of fraud. As I had not done this, and none of my ACH transfers had actually failed or been recalled, I asked why they were accusing me of this. She gave me a non-answer along the lines of “we heard this from a different bank but will not disclose who” and it suddenly made sense (can you picture the light bulb going off above my head, causing my flaming red hair to catch fire, set off the sprinklers, and pissing off my whole family?)
I had been using my hub bank as – surprise! – a hub, meaning I was transferring funds from a target account (back in the days when Walmart had bill payment in their app) to my hub bank and then sending them on their merry way back to wherever they were needed. While this was a terrible idea (see my EWS commentary on why using personal accounts for ACH is terrible) when one of my banks was shut down, they apparently called my hub and told them I was ACH kiting. Strange considering none of my ACH transfers ever failed, but they clearly didn’t understand why I was doing it and decided it was fraudulent. I can see why they might have felt this way given my practice of pulling funds a day or two after they arrived. At the same time I’d run probably $2M through their account by that point, so you’d think if I was going to pull my scam I’d likely have done it already, but compliance folks have to make themselves look useful somehow I guess.
In the good old US of A, ACH is handled over network connections with cups and string (see below), and those strings sometimes break (ask PaymentUS about this). Now most countries that also provide free healthcare (some with death panels – looking at you Afghanistan – some without) have instant ACH, but you wouldn’t want your money right away when you can get it in three business days would you? So we will love our cups and strings and enjoy our 3 day fund clearing, but know that our bank infrastructure is the best in the world, if by best you mean worst.
Since those fateful and fun days of yore I’ve learned a lot and I let funds sit for 3 full business days before moving them on their journey, unless I’m using a bank account where they understand money won’t sit in their account forever and they tolerate this (you can rake taek this however you want). That and moving all your funds only between business accounts except when absolutely necessary are keys to avoiding my fate.
