We’ve talked about avoiding a potential banking shutdown with the Sneak Attack Strike Back technique in the past. The strike back technique is basically closing all of your accounts preemptively when you’re in hot water and it doesn’t look like you’re getting out.

This advice is probably timely (again) because we’ve seen sporadic reports of fitness club related shutdowns at American Express for the last couple of months, and a new pattern seems to have emerged based on those shutdowns: If you’ve ever been suspended by American Express over chargebacks after you got ripped to shredz, you’re likely going to be shutdown soon. This applies even if you’ve been unsuspended for a long time.

The takeaway? If you know what I’m talking about and you’ve been suspended at AmEx, It’s time to reevaluate your risk profile. If you don’t know what I’m talking about, just take this as another MEAB cryptic post that “don’t nobody can understand” and have a nice Tuesday!

Pictured: Ripped to shredz.

EDITORS NOTE: In 2024, I’ve introduced Guest Post SaturdaysToday’s guest post is from a new travel blogger but seasoned financial hacker, Graham, who offers great insight on application of churning techniques to other aspects of finance.

tl;dr:

  • The tricks you know from churning can be applied elsewhere in life, such as when you change jobs:
    • You can double dip on 401k matches and mega backdoor contributions
    • You can hold out for the best offer on a once-in-a-lifetime operation like rolling an old 401k to IRA
    • You can drain corporate benefits, like you’d drain an Amex coupon book before closing the card
    • You can get your annual fees (aka taxes) refunded if you get money clawed back by your employer
    • Just like you book refundable bookings as backups, you can rely on COBRA as a refundable (never charged, really) backup insurance option

Intro

In the world of churning and travel hacking, we’re used to using all sorts of tricks to get the most value for ourselves. We double or triple dip on annual benefits, we hold out for the best offers on NLL cards, we drain the coupon book benefits on a card before closing it, we take advantage of grace periods for getting annual fees refunded, and we make preventative refundable travel bookings. It turns out that the kinds of tricks we use for credit cards and travel also apply to many other aspects of life. In this post, I go through all the ways I’ve found to apply churning tricks to the process of changing jobs.

It should go without saying, but I’m just some random dude on the internet that isn’t a lawyer or accountant (and more importantly isn’t your lawyer or accountant). I’ve done my best to research and cite these tricks, and to include my own experience where I have it, but make sure to do your own research and understand the consequences of what you’re doing before blindly applying tips in this post.

401ks

Double Dipping: Two 401k Matches

Many employers offer to match the money you contribute to your 401k each year. Those matches apply to an overall per-employer limit ($69,000 for 2024) not your personal limit ($23,000 for 2024). Having two employers gives you the opportunity to get two full matches. Let’s imagine this scenario:

  • Employer 1 offers a 50% match on contributions (up to some fraction of your salary), and you’ve earned enough for up to a $7.5k match on 15k contributions
  • Employer 2 offers a 50% match on contributions (up to some fraction of your salary), and you will earn enough for up to a $5k match on 10k contributions

There are multiple ways to optimize this scenario:

  • Easier, Less Profitable Way – Limiting Contributions at Employer 1: You could limit your contributions to Employer 1’s plan to $15k, so you maximize the match without going over. Then when you join Employer 2, you can use your remaining space to contribute $8k, getting $4k of your possible $5k match. This leaves some money on the table, but nets you more than if you’d just maxed your 401k at one or the other employer.
  • Riskier, More Profitable Way – Excess Deferral + Corrective Distributions: You could contribute $15k to Employer 1’s plan and $10k to Employer 2’s plan. This would put you in a situation where you’ve achieved the maximum match, however, it also puts you $2k over your $23k personal limit and means you’ve made an Excess Deferral. The consequences of an Excess Deferral are double taxation on that money, and potentially additional penalties, which probably outweigh the value of the additional match. You can avoid the double taxation and penalties with a Corrective Distribution that removes $2k from Employer 1’s plan. The catch is that Employer 1’s plan may not be willing to provide Corrective Distributions, or Employer 1 may attempt to claw back the match. Before attempting this method, you should confirm your plan supports Corrective Distributions and you should be prepared to really pay attention when filing your taxes.

Note that there are plenty of other nuances of 401k plans that might affect your personal results, such as true ups and vesting schedules. Make sure you know both plans inside and out and have thought it through before attempting.

Double Dipping: Two Mega Backdoor Contributions

The mega backdoor roth is the lesser-known big brother of the backdoor roth, and it lets you sock away tens of thousands of dollars through your employer’s 401k plan. An even lesser known thing is that because mega backdoor contributions are not Elective Deferrals, they’re only subject to the overall per-employer limit ($69,000 for 2024), not your personal contribution limit. That means if you change employers through the year –and both plans support it– you can do the mega backdoor roth twice.

Holding Out for the Best Offer: Saving a 401k to Transfer

When leaving a company, you often have three choices for what to do with your 401k:

  1. Keep it with the current plan administrator (beware: there may be fees)
  2. Roll it into an IRA
  3. Roll it into your new 401k plan

There are many pros and cons to each that are beyond the scope of this post (eg. IRAs have fewer bankruptcy protections than 401ks), but here are two reasons you might want to hold off on rolling your old 401k into your new plan:

  • You can sometimes roll a 401k into an IRA to get relationship pricing at banks. For example, I used an old 401k to get to the next relationship pricing tier on my mortgage, saving an additional 1/8% on my mortgage rate. Note that including retirements in relationship pricing is not the norm, and Citi is one of a few banks I found that did that.
  • You can sometimes find significant bonuses to bring an IRA to brokerages. For example, Robinhood has a 3% match right now (beware they require you to keep the money there for 5 years)

One thing to be aware of if you plan to use one of these tricks is the pro rata rule. If you do backdoor roth IRA contributions, the rule can create negative tax consequences if you leave your pre-tax money in an IRA through the end of the year. My personal workaround was to roll my old 401k into an IRA to get the Citi relationship pricing, and then roll the IRA into my new 401k a month later (all within the same year).

Draining Benefits: Using up Annual Benefits

Many companies have miscellaneous benefits that reset to full at the beginning of the year, and have a use-it-or-lose-it model. Examples include commuter cards and FSAs. Many benefits will cease to be available once you leave, and others will have a limited window to submit expenses after you leave. Make sure to keep track of the deadlines for these accounts, and drain them.

Note that some benefits like FSAs are based on paycheck deductions that happen throughout the year, but the full amount may be available in your account starting on Jan 1. I don’t believe there are laws governing this, but on departure my company doesn’t claw back FSA spend that exceeded paycheck contributions. If this is the case at your company an you know you’re leaving far enough in advance during open enrollment period, you could max out your FSA contributions to take advantage of this edge case.

Fee Refunds: Tax Refunds on Clawbacks

If you get any money clawed back when changing jobs (eg. a signing bonus that didn’t fully vest), keep track of it. If you previously paid income taxes on that money, you may be able to deduct the clawback from your income. I personally was able to deduct a $14,000 clawback for the 2019 tax year and had my return accepted with no audit, but this may be a scenario where you want an accountant for CYA purposes.

Backup Bookings: COBRA for Health Insurance

Insurance from your old job usually lasts to the end of the month that you left. If you don’t start your new job by then, COBRA is a program that lets you pay to continue your old coverage. You have 60 days from when your coverage ends to request that continuation of coverage under COBRA, and the coverage “is always retroactive to the day after your employer coverage ends”. You pay the full cost if you do elect, but if you have a short gap in insurance, you can hold off on electing for COBRA until you know if you happen to need it or not. If it turns out you did need it, elect after the fact and be covered. If it turns out you didn’t need it, you’ve saved on the cost of insurance.

About the Author

I love understanding systems, and optimizing for the best outcomes within the rules as implemented (rather than as written, which is a distinction all churners should be keenly aware of). This love has led me to a career in cyber security, to churning, and also to a general obsession with optimizing all things finances. I’ve recently turned that last point into a blog where I write posts like this one (with many more in the pipeline). If you’re interested in that kind of content, there’s a subscribe box at the bottom of the blog. And if you think I’ve missed something, gotten something wrong, or should write future posts on a particular topic, please drop me a line.

– Graham

Graham’s light evening reading, prolly.

Introduction

A favorite past time for miles and points hackers is often to think about how to exploit an edge that might form when something big happens. It makes for a great thought experiment, but generally that’s all it is for a long time. Let’s illustrate with one item in particular.

This Week’s Hotness

Mainstream news crossed paths with miles and points news this week, and you’ve no doubt already heard that Capital One has inked a deal to buy Discover. I’ve got the same general thoughts and questions that a lot of you probably have, like:

  • If you’re shutdown with Capital One, would holding a Discover card or a Discover Business card get you back in?
  • Wait, Discover has a Business card?
  • Will the DoJ even let this happen? They successfully prevented JetBlue and Spirit from merging, which would have created the fifth largest airline in the US. Discover is already the fourth largest processing network, and four is bigger than five, so uhh, yeah.
  • Discover owns its own processing network like American Express, which means that if Capital One completes its purchase, it will be in effectively direct control of its interchange fees. Will that mean more rewards for us?
  • What would a hotdog with a donut bun taste like?
  • What will happen to Diner’s Club cards that run on the Discover network, and incidentally remain a great alternate way to earn points transferrable to Alaska?

These are all great questions, but they’re also all completely nebulous at best, and nearly impossible to predict at worst.

Back to the Question

Coming full circle, how do we exploit an edge with big news like this? The answer is, frankly we have no concrete idea about what to do in the early days and weeks of a major change, just like we have no idea about what a donut-hotdog might taste like before we make it. It’s still fun to think and theorize, but in the end, sitting and waiting until we have more data is actually the play.

Also, I lied, we do know how a donut hot dog would taste ahead of time.

Bonus

Yes, this all applies to AA’s ambiguous loyalty points earning changes too.

Yes, these are actually a thing.

EDITOR’S NOTE: The feedback I’ve gotten for guest post Saturday has been resoundingly positive. I’ve got a few posts left to publish, but I’m running low. If you’re interested in a guest post, please reach out!

Perhaps the most basic level of credit card churning involves getting a new credit card with a sign-up bonus every time you hit the spend requirements on the last one, putting you into a state of perpetual 10%, 25%, or even 50% return on your spend. This is great until:

  • You’ve gotten all the cards you can reasonably get
  • Your monthly spend exceeds 3 to 4 times the average sign-up bonus minimum spend

When you hit the above, sign-up bonuses are interesting but they’re a small blip on a profit or return chart. As you spend even more, the percentage of your profits that consist of sign-up bonuses gets proportionally smaller.

To illustrate, let’s assume that you signed up for the recent 200,000 Membership Rewards bonus American Express Business Platinum card with $15,000 in spend, and all of your spend after that goes on a 2.625% cash back everywhere card, and we’ll look at how much of the money you earn comes from the bonus. For simplicity, we’ll assume American Express points are worth 1.1 cents because that’s a generally available cash out price.

Monthly Spend
(USD)
AmEx Bonus
(1.1 cents per point)
Other Card’s Rebate
(2.625% back)
$15,000Bonus: $2,200 (14.6%)
Regular: $165 (1.1%)
Regular: $0 (0%)
$100,000Bonus: $2,200 (2.2%)
Regular: $165 (0.165%)
Regular: $2.231 (2.23%)
$500,000Bonus: $2,200 (0.44%)
Regular: $165 (0.03%)
Regular: $12,731 (2.57%)
$5,000,000Bonus: $2,200 (0.04%)
Regular $165 (0.003%)
Regular: $130,856 (2.62%)
Dollar (Percentage) return on various levels of spend

Put succinctly, that sign-up bonus is nice, but after you hit $5M in monthly spend, even the large American Express Business Platinum bonus makes up a very small portion of overall return on monthly spend at just 0.043%; meanwhile one of our favorite Unsung Hero cards returns 2.62%, or more than 98% of the total rebate on your spend.

The takeaway? As you advance your manufactured spend career, worry a little less about those sign-up bonuses.

Have a nice Wednesday!

Next up on Wednesday Interlude with MEAB: Does the second law of thermodynamics apply to spend?

EDITOR’S NOTE: The feedback I’ve gotten for guest post Saturday has been resoundingly positive. I’ve got a few posts left to publish, but I’m running low. If you’re interested in a guest post, please reach out!

Airlines and hotels universally have at least two main interfaces; banks also have both, FinTechs usually do, and well, you get the idea. The interfaces:

  • Mobile app
  • Desktop website

For reasons known only to Chuck Norris and Taylor Swift, many software development shops choose to use a different back-end implementation for each. Because the implementations are functionally different, things often don’t quite behave the same between the two. This is especially true around edge conditions. A few concrete examples:

  • Some Turkish award flights only ticket with the mobile app
  • Some banks only accept money order deposits via the mobile app
  • Same day change on Delta behaves differently on mobile than desktop

That’s just scratching the surface. So, for today let’s change “always be probing” to “always be probing, double style”.

Happy Monday!

Always be probing, double style.

Introduction

“The squeaky wheel gets the grease” plays a big part in the soft-skills needed to unlock huge velocity in manufactured spend, but it can also blind us. Today, I’d like to offer a corollary:

You tend to forget about the quiet wheels.

– Some lunatic who goes by MEAB. How do you even pronounce that?

The Squeaky Ones

Monday, Tuesday, and yesterday brought waves of PayPal shutdowns in the community, and just about every forum loosely related to manufactured spend is talking about it. We’re seeing shutdowns of:

  • Main accounts with big volume
  • Secondary accounts that share targets with shutdown main accounts
  • Secondary accounts that share names with shutdown main accounts
  • Newly created secondary accounts with even moderate volume

If you were affected, that sucks and I’m sorry. But on the flip side, what use is PayPal in 2024 for things other than manufactured spend anyway? I mean really, literally what use is it? Yes they own Venmo, but a PayPal shutdown doesn’t equal a Venmo shutdown.

The Not Squeaky Ones

There are plenty of users that aren’t shut down with PayPal yet, but that’s hard to see because they’re not jumping up and down in chat rooms and forums saying “I’m not shutdown, what do I do next?” because there’s no urgency. So, we end up hearing from a much larger proportion of squeaky wheels than silent ones.

We could leave it there, but a logical question then becomes:

What are the non-squeaky wheels doing, and what lessons can we learn from them about not being shutdown? There are a lot of answers to that question, and they probably hover around volume, dodging the ban hammer, the types of targets they choose, how often they use those targets, and the volume sent to those targets.

Bonus: Repercussions

One of my P2’s favorite manufactured spend jokes is to call the app that shouldn’t be named the floosie app (she calls all of its users floosies too, naturally). I know nothing about the current financial state of our collective floosie overlords, but I do know that mass PayPal shutdowns kill a popular liquidation channel for its users, and that means that they’re going to see a big drop-off in daily volume and probably daily profit in their ledger. Will it matter? I have no idea, but I’d suggest that now’s a good time to evaluate your risk profile for your floosie shenanigans.

Double Bonus: Brian M Brings us Back to Reality

Brian M, possibly the most cited contributor here, let me know that Southwest is opening its schedule for travel between October 3 and November 2 this morning. Booking early is a statistically better than average way to get the lowest fare possible on popular travel days with Southwest, though of course ymmv.

Next up: What about donut wheels?

EDITORS NOTE: In 2024, I’m going to try and have a guest post on SaturdaysToday’s guest post is from prolific miles and points burner and host of the Churn and Burn podcast, James. He’s probably tied in fourth place for the most number of shared Telegram and WhatsApp groups with me too, so you know he’s legit.

Cents per point.  It’s a fallacy that we’ve all fallen victim to.  To feel so desperately that you’re right, only to realize you’ve been led astray.  

All of us have been there: “Well, this is a $1000 restaurant purchase, so obviously, I want to put it on my Amex Gold card for 4x, right?  On paper, it makes sense.  TPG values Membership Rewards at 2 cents per point.  That’s 8% back on every restaurant purchase, right?

If you’re rolling your eyes, you should be.  Even when cashed out via Charles Schwab, it’s a $44 money maker.  Contrast that with throwing the same $1000 spend on a Chase Sapphire Reserve: it’s 3000 points earned, which when transferred to Hyatt, is arguably worth the same in value for many people.

Some of you are probably saying “Wait!  When redeemed via Aeroplan, my Membership Rewards are worth 7 cents per point if I book Lufthansa First Class!”  

There’s two problems with this line of thinking.  1. My guess is that no one currently reading this is going to pay $15,000 for a one way ticket on a seven hour Lufthansa flight.  If you are, I’d seriously consider scheduling a cat scan next week.  And 2. Not everyone wants to fly Lufthansa First Class.  Most of you are already familiar with #1 already, because TRUE cents per point is not based on the actual cash value of the ticket/hotel, but the cash value that you were willing to pay in the first place.  

Think of it this way.  There’s a Hyatt Regency in Jersey City that currently goes for an average of 15,000 Hyatt points per night or $250.  Alternatively, for 40,000 points or $931, you can book the luxurious Park Hyatt New York City.  Some of you are already doing the table math in your heads.  The Regency gives a cool 1.6 CPP valuation.  Meanwhile, the Park Hyatt is a whopping 2.3 CPP.  Easy decision, right?  Of course, not.  Because many people in the game (myself included) would never pay $931 for a night at the Park Hyatt.  Alternatively, I probably would spend $250 a night for the Regency, especially if I was getting free breakfast and Hyatt Globalist benefits on top of that.  In reality, I might be comfortable paying $450 for the Park Hyatt, which amounts to a measly 1.12 CPP value.  Yikers!

We can use the same logic on an Air France fare.  I just booked my father in law on a flight from RDU to CDG for 12,000 Virgin miles + $155 in taxes.  The actual cash price of the fare was $1668.  So, subtracting the taxes from the ticket, the CPP is 12.6 cents per point.  Some might even say that I saved my father in law over $1500.  But I didn’t, because there is no world where he would have paid $1500 for that flight.  “As cheap as humanly possible” were the words he said to me.  Myself?  I’d have ponied up an extra 36,500 points + $127 and splurged for business class.  Of course, I offered up this option to him, and he scoffed at it.  What I saw as a no brainer, he saw as unthinkable.  

The point is: all the blogs and trip reports have us using inflated fat cat valuations for our treasure troves of points. In reality, it’s the price you would pay for the experience you want that matters. Don’t fall victim to the same logic that leads people to list their Pokemon memorabilia on Ebay for the price of their mortgage because they saw an episode of Pawn Stars once where the “expert” told Chumlee that a 1st edition Charizard card was worth $300,000 at auction.

James

Yes, you earned 4,124 Membership Rewards, but would you really have tipped $1,000 if you didn’t? Don’t answer.

Introduction

An important aspect of offsetting an annual fee on premium American Express cards is creative use of credits like:

  • $400 annual Dell Credits (Business Platinum)
  • $200 annual airline incidental credits (all Platinums)
  • $10/$15/$35 monthly Uber credits (personal Golds and Platinums)

The calculus for me on the on an annual fee’s effective credit offset involves a discount factor representing what the credit is actually worth based on whether I can resell something, whether I’d actually spend that money either way, and how much work I have to put in to liquidate the credit. It also involves the credit face value, and considerations like a double or triple dip.

Let’s walk through a concrete example with the Business Platinum card, assuming we opened it in late November or early December. For a single year’s annual fee, the main credits are:

  • -$695 annual fee (no discount) = -$695
  • +$800 Dell credits (25% discount) = +$600
  • +$600 Airline incidental credit (20% discount) = +$480
  • Net: -$695+$600+$480 = $385

Ignoring things like Adobe, Indeed, and Clear credits, which are harder to game, the card’s fees are net positive.

News

Two news items came up over the last week that conspire to change this calculus:

  1. Dell, Adobe, and Indeed credits now show an end date of 12/31/2024
  2. AmEx announced a refresh of 40 products globally next year in Friday’s earnings call

Combining the two and reading the between the lines, I think it’s safe to say that the likelihood of Dell, Adobe, and Indeed going away in 2025 is at least 2/3. Updating the above math for a triple dip in December 2024 to subtract 2/3 of the Dell credits in 2025 and beyond (given that it’s likely going away) gives a net annual fee of -$695 + $200 + $400 * (1/3) + $480 = +$118. So, the value from those credits with today’s lens has fallen, though remains positive.

Predictions

Yogi Berra famously said “It’s difficult to make predictions, especially about the future.” He’s right, and I think my crystal ball is at least as opaque as average so, yeah. Nonetheless, I’m going to predict with broad strokes based on the previous news items:

  • Credits that don’t have an analog on other premium credit cards from Chase, Capital One, Bank of America, Citi, or US Bank are going to get the axe for 2025
  • Credits that are almost certainly paid for by a retailer that don’t lead to additional purchases will be refreshed away, like Saks, for 2025
  • Credits that bring new incremental revenue to a retailer will stick around, like Uber and Equinox
  • We’re going to see more monthly or quarterly credits, and fewer annual or semi-annual credits

Will the cards still be worth it? It depends on what kind of AmEx user you are: If the annual credits represent a significant source of value for premium cards, you’re in a tougher spot. If they don’t because you’re taking advantage of category bonuses, employee cards, offers, and other games, then it’s annoying but not a game changer.

Good luck!

2025’s refreshed American Express Green card monthly coupon credit.