Category: Scaling

One of the hardest transitions between casual churning and becoming a heavy hitter is the switch from earning miles and points to earning cash back.

The transition should happen when you’ve earned all the miles and points you can spend cover your travel for the next 12-18 months, because:

  • Miles and points devalue by 30-50% in the span of years
  • The programs with the best redemptions change over time
  • Points don’t earn interest
  • The value of an unredeemed point is zero
  • Most of us don’t travel as much as we think we will (even if we travel a lot)

When you earn more points and miles than you can burn in a short time, the risk that excess points eventually become worth much less than when you earned them grows bigger than James’ Giant Peach from the famous historical documentary that I think is called “A kid finds a big fruit and someone wrote about it”.

Why do we fail to transition to cash back, even when we know analytically that it’s not the best option? The common answers I hear and that I’ve thought are:

  • Points and miles are fun, pennies aren’t
  • I’m motivated by travel, my job covers my cash needs
  • What if me and six of my closest friends need to fly Lufthansa F on last minute notice to Frankfurt and I don’t already have the miles banked, and my 800,000 Membership Rewards won’t post for another week?

They’re all valid reasons, but seeing them written can help prevent you from falling into the same trap. Trust me, you don’t want to be down 100,000 Hawaiian miles that expired a few years ago because you didn’t ever have an actual use for them and weren’t active in the program; $1,000 would have been a lot better. #askmehowiknow

Happy Wednesday!

Nerds gonna nerd.

Introduction

Alaska and Hawaiian may merge. If that happens, Hawaiian miles will transform into Alaska MileagePlan miles in a way that “preserve[s] the value of HawaiianMiles at a one-to-one ratio“. This has a bunch of people excited because:

  • Alaska MileagePlan miles are hard to earn
  • HawaiianMiles are easy to earn via American Express Membership Rewards

Alaska MileagePlan miles are valuable partially because Alaska is smaller than the big four major US airlines, and partially because again, they’re hard to earn. HawaiianMiles aren’t worth much relative to most major airline currencies, but if the merger completes then HawaiianMiles will balloon in value overnight.

The Play

Of course, gamers gonna game, and the opportunity to turn low value, easy to earn miles into more valuable miles is an obvious and attractive play. In fact, I’ll be running this play; I too like turning low value things into high value things just as much as the next churner.

The Scale

How big should you go? There are risks to going too big, namely:

On the first point, what’s the expectation value for a time to devaluation? I’d guess it falls between 18 months and 24 months based on past history. How bad is a devaluation? Usually, an average 30% increase in redemption cost is a reasonable upper limit.

The Answer

That brings a simple math formula to calculate how many miles to transfer: the number of miles I expect to redeem in the next 18 months, plus the number of miles to redeem in the following 18 months devalued by 30%, minus the number of miles I expect to earn in other ways.

The numbers for me, which are based completely on how many MileagePlan miles I earned and burned used over the last 18 months:

  • 0-18 month range:
    • 900,000 miles to burn
    • 800,000 miles to earn
  • 19-36 month range:
    • 900,000 miles to burn * 130% for a devaluation
    • 800,000 miles to earn

Running the math:

miles = (900,000 – 800,000 + 900,000 * 130% – 800,000 = 470,000 miles

And if I do it before the 20% Membership Rewards transfer bonus to Hawaiian ends on Sunday night:

miles = 470,000 / 1.20 = ~392,000 miles

So, 392,000 Membership Rewards transferred will cover me (probably) for the next 36 months. Very mindful, very demure, very cutesy. But, what about travel past 36 months from now, you ask? I guarantee my situation, the US airline situation, airline transfer partners, airline alliances, and my travel needs will be different in 36 months, and speculation beyond that timeframe is at best a guessing game, especially since an unredeemed point is worth zero.

Happy transfers friends!

Alaska’s new 2026 alliance announcement.

In sales, computing, and likely a dozen other disciplines, there are two commonly accepted types of scale:

  • Vertical, which means making a single thing do more
  • Horizontal, which means using more things to do more

A simple example for a rideshare business owner is: do you buy a school bus or more cars to move more people, and nearly as important, does your business earn 10x on a Sapphire Reserve?

In manufactured spend, scaling is possible in both ways:

  • Vertical MS: Open more cards, visit more grocery stores, run bigger charges
  • Horizontal MS: Using more accounts, usually with more players

There’s a third type of scale for manufactured spenders too, which is often a great way to make fintechs go further, and that’s what we’re going to call diagonal scale because reasons. Examples of diagonal scale:

  • Multiple players, each with multiple phones
  • Multiple players, each with 99 employee cards
  • Multiple players, each with multiple virtual assistants
  • Multiple players, each with multiple FinTech accounts
  • Multiple players, each of whom calls the CEO simultaneously, collectively known as a basket of Jimmys

For scale, always go diagonal, and remember, a bunch of diagonals = a plaid, and a plaid = a FinTech (we’ve gone full circle friends; now, we just need another square geometry joke or two. Oh wait, we definitely don’t need that.)

Manufactured spenders going plaid.

EDITORS NOTE: In 2024, I’ve introduced Guest Post Saturdays. Today’s guest post is from the witty, inspiring, and definitely-not-a-giga-chad irieriley.

If you’re like me, you likely didn’t set out in this hobby thinking you’d end up where you did. I was a backpacker when I started back in 2016, dreaming of free economy flights and upgrading from hostels to Hyatt Houses.

I did not think it would lead to hours spent probing fintechs, the rise and fall of the world’s greatest bodybuilding supplement company, and using developer tools to identify offer codes and account masking patterns.

Of course, there’s a lot of steps and shifts in perspective between seeing a TPG ad on TSA bins at LaGuardia and not giving a second thought to 99x Amex AU offers.

MEAB‘s wisdom posts contain a lot of thought provoking questions, but my all time favorite post is this one – concerning perception of dollar value, scaling your spending, and how things change as you go deeper down the rabbit hole. 

To build on Matt’s original premise, I’d posit that the same perception shift occurs with redemption. For the sake of discussion, let’s look at the value of 150k Amex MRs – a sign-up bonus that anyone with a pulse can earn with a personal Platinum card.

  • Non redeemer: What are transferable points? I’m just a giga-Chad cashing out my points for Home Depot gift cards.
  • Beginning redeemer: Wow, $6k of spend in 3 months is a lot. But 150k points transferred to Delta Skymiles must be enough to get to the moon  roundtrip to Europe in business class apparently, a one way basic economy award to Lubbock.
  • Intermediate redeemer: Look at those fools wasting their points on gift cards and transfers to domestic carriers – I got 30cpp by transferring to ANA and booking last minute one way J flights to Japan. 
  • Advanced redeemer: Things have come full circle – I have so many points that I will never be able to redeem them all for travel. I’ll book my travel a year out, and I’ll cash out the rest. 150k MRs = $1,650 with a Schwab Plat or ~$1,950 depending on my bargaining skills.

Pictured: A local business owner/giga-Chad on his way to Home Depot to convert the spoils of $7m of Amex spending into a patio furniture set.

Depending on your situation, each viewpoint can make sense. However, I’d imagine most MEAB readers fall into the final segment. 

And in a community that is largely a perfectly aligned Venn diagram with other optimizer communities like FIRE, cash is king, especially when you hit the inflection point where your ability to earn wildly outpaces your ability to burn. 

I was talking to my P2 (and fellow Waldorf Pedregal enthusiast) about how poorly I had strategized earning and redeeming early on, and she provided some much needed perspective on the whole thing when actually looking back at those first redemptions.

Some of our first cards and subsequent redemptions:

  • Citi AA Platinum pre-derAAilment – SUB used to fly AA Y to Europe, where we attended music festivals and yacht cruised as backpackers
  • Chase Southwest chasing Companion Pass – used to book Y flights to the Caribbean, where we got engaged
  • Capital One Venture – I hit the SUB on the engagement ring, and used the cashback to erase the insane VS surcharges on our first J redemption for our honeymoon

Pictured: Mr. and Mrs. irieriley in 2017 enjoying the spoils of their very first award redemption

While the strategy was akin to SideShowBob233 stepping on a rake over and over again, those first few forays into earning and burning provided more to enrich P2 and I’s lives than another $2,000 into VTI ever will. 

I think it’s ok to occasionally zoom out of doing finger math to avoid looking like a kiter or mourning your Paypal burner to remember why you started this hobby in the first place, and it’s very unlikely that you started because you wanted what sometimes feels like a second job. Instead, you wanted a way to take a trip for free, or some extra cash for bills. 

Pictured: MSers determining whether they’re clear to pull back into their hub account

If there’s anything the last 4 years have taught us, it’s that life is short. This is a friendly reminder that points can be used for something besides booking T-355 Qsuites, cashing out or selling – they’re also a tool for engineering unique experiences for you, your friends, and your family. 

Personally, I’m blowing the Chase Sapphire Reserve grocery cash out equivalent of $1,700 of URs to spend 3 nights at a Hyatt SLH 20 miles from my home. A year ago, that would have really pained me. It still does, a bit. But hey, the Hamptons in summer is otherwise too rich for my blood – may as well enjoy it before this particular hotel joins Hilton and becomes 95k 120k 150k HH/nt. And we’re definitely not going because P2 wants to be in the background of Summer House.

And yes, even for those who don’t travel and are firmly #teamcashback. Don’t forget to use your proceeds to treat yourself or a loved one every once in a while. Even if it’s just a boba during a money order run. 

– irieriley

Pictured: In keeping with the Simpsons motif, a fitting desk decoration for a MSer deep in the weeds of earning looking for some perspective

As we’ve discussed in the past, the holidays present a rare opportunity for manufactured spend because:

  • It’s normal to buy lots of gift cards during the holidays
  • Opening new credit lines is passé, perhaps even normal
  • Some cashiers are care-free when you’re wearing a turkey or Santa hat
  • Stores are busy, so cashiers have more to worry about than a gift card at self check out

The holidays also typically mean plenty of gift cards go on sale at relatively steep discounts, hot merchandise commands a huge resale value, and plenty of stock everywhere.

If you’re playing the third party or gift card resale game, you’ll need buyers, naturally. The best rates will come from sourcing buyers directly, but there’s also plenty of value in letting a specialized broker take a cut of your spoils, also known as the Homer garbage man philosophy: “can’t someone else do it?“

So, let’s talk about some generally well respected goods and gift card buyers, in randomized order. Note: I’m not endorsing any of these buyers, but generally speaking I’ve had a good experience with all of them. Please do your own research and make sure you’re comfortable before engaging. Sometimes things go wrong. My general advice applies: Never float more than you can stand to lose if everything goes pear-shaped.

Gift Card Buyers (Gift Card Arbitrage)

Goods Buyers (Retail Arbitrage)

Some of these will also offer opportunities for cashing out Visa and Mastercard gift cards. Keep those eyes open, and good luck!

An example of a smartphone resale deal going pear shaped, leaked from internal Android patent documentation.

Introduction

Manufactured spend typically does strange things to your perception of dollar values. Let’s illustrate through some made-up internal monologues with corresponding made up numbers that you may encounter along your journey to mastery:

[Newbie]: $3,000 over three months for a sign-up bonus? *Overwhelmed* That’s a lot!

[Intermediate]: $15,000 for a Business Platinum over three months? Shouldn’t be an issue

[Advanced]: $50,000 for a Capital One Business card sign-up bonus? I can do that this week

[Whale]: $100,000 a day, every day for a month? 🤏

Basically as you advance, bigger numbers don’t look so big; a $35,000 ACH into your bank account looks like just another boring Wednesday.

The Deep Freeze

Of course it’s all fun and games when profits go up and point balances explode, but something tends to happen to people that operate somewhere in the advanced – whale spectrum:

  • Shutdowns
  • Account freezes
  • KYC calls

When one of these events happens, you may find your $35,000 ACH held for up to six months, and your perception of the dollar amount will probably come crashing back to reality, like Virgin Orbit’s LauncherOne mission.

The Takeaway

Alright, let’s get to the concrete, actionable content for the day:

Make sure you’ve got a plan in place for if and when your exploits come to a screeching halt, and don’t ever put yourself into a position where a freeze of accounts at a particular bank or issuer will ruin you financially. Some common insurance policies for big spenders: Untapped HELOCs, margin loans at brokerages, balance transfer checks, manufactured float, and cash reserves.

Happy Wednesday!

Elizabeth Holmes says “🤏”, and she turned out ok, right?

  1. The Citi Shop Your Way Rewards Mastercard, an original MEAB Unsung Hero, now allows for points redemption to Visa e-gift cards at the same redemption rate as other gift cards, making this the new best points cash-out option and making the card even more valuable.
  2. Lowe’s has an in-store promotion for a $15 Lowe’s gift card with the purchase of a $200 Mastercard gift card. The Mastercards are Pathward and have an activation fee of $5.95 to $7.95 depending on the variety, and the resale rates on the Lowe’s card are between 82% and 84% making this a profitable deal without considering credit card rewards.

    There’s a limit of two per $15 Lowe’s cards per email address, but someone told me it’s possible to get more than one email address. I know, sounds weird right?
  3. Fake Points Travel Blogger notes that the Bilt credit card company (Bilt Technologies, Inc) is suing another company also named Bilt (technically BILT, Inc) over trademark infringement for a mobile app that’s existed longer than credit card company, and that lawsuit spawned a counter-suit. Also revealed in court filings is that since its inception, the credit card Bilt has made a total of $41.4 million in revenue through January of this year.

    The action item on this one? Start thinking up new names for the Bilt rewards program and share them around your circles. I can’t wait to hear what you come up with.
  4. Reader Kevin was the first to let me know that there’s good (?) news to go along with yesterday’s bad news that Walmart has $3.74 load fees BlueBird cards: You can now load BlueBird cards at Family Dollar fee-free, just like with Serve cards.
  5. You’d better sit down for this, because I think you’re going to be blown away, err, wait. The opposite actually:

    Staples will be selling fee free $200 Visa gift cards in-store starting Sunday and running through the following Saturday, limit eight per transaction. As usual, try for multiple transactions back-to-back to minimize the time spent in a 12,000 square foot store manned by two employees, one of whom is in the back room watching TikTok.
  6. American Express’s Delta co-brand cards have increased sign up bonuses:

    – Personal Gold: 75,000 SkyMiles after $2,000 spend in six months
    – Personal Platinum: 75,000 SkyMiles and 10,000 MQM after $5,000 spend in six months
    – Personal Reserve: 100,000 SkyMiles and 10,000 MQM after $5,000 spend in six months

    AmEx used their random number generator with these offers so if you don’t see them, switch browsers, go incognito, connect to a VPN, try mobile, yell at Richard Kerr between lawsuits, or something similar until you do see them. (Thanks to rep-swe)

Have a nice weekend!

The real surprise isn’t Staples, it’s what’s at the bottom of the slide.

  1. The Citi Shop Your Way Rewards Mastercard, an original Unsung Hero, is sending targeted spending offers for the new year. Mine:

    – 10% back in statement credits on $700-$800 in spend at restaurants, grocery, or gas

    This offer is good once a month for January, February, and March, so $240 over three months for the math challenged. Check for the subject: “[Name], activate your limited-time offer now for sweet rewards!”
  2. Reddit and Doctor of Credit are going nuts about some supposedly new Dell rules about order limits and myriad theories about what they mean. There’s quite a bit of alleged truthy information and mis-information floating in both places, so let’s talk about the rules as I understand without speculation. (These rules have been around since at least January 2022):

    – Any more than five orders in the last six months will get you tagged as a reseller
    – The time limits are rolling
    – If you order five items in a single order, that still counts as a single order
    – Cancelled digital orders do count against the limit, physical goods orders don’t
    – Just because you’re tagged as a reseller doesn’t mean your orders will be cancelled, but there’s a much higher likelihood of cancel if so

    Maybe it’s not as well known as I thought, but you can have multiple Dell accounts to side-skirt these limits, and the order limitations are on a per-account basis as long as you’re not flagged as a reseller. If you get flagged as a reseller, then all accounts at your address have the combined order limit, and possibly further restrictions like the inability to order digital goods. You can get the reseller flag cleared, but it’s extremely ymmv even if you talk to the right department and person, and you’ve got to get it cleared on all accounts at your address to boot.
  3. Chase’s Pay-yourself-back categories are now set for Q1, 2023:

    – Sapphire Reserve: Grocery, gas, and annual fee at 1.25 cents per point
    – Sapphire Preferred: 1 cent per point for nearly all categories
    – Ink Business Preferred: Internet, cable, cell phones, and shipping at 1.25 cents per point
    – Ink Cash and Ink Unlimited: Internet, cable, cell phones, and shipping at 1.10 cents per point

    Most of these cards get an extra 0.25 cents per point at select charities too. (Currently I can’t find an official list of the select charities on Chase’s website, though there are random lists on the internet which are likely correct.)

Happy 2023!

The official motto of Reddit’s Dell rules threat on January 1, 2023.