MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
By popular demand we’ll have at least a few guest posts during the break. If you’d like to write one, please reach out, I’d like to find guest posts for the whole break!
Echo Chambers
The internet is full of echo chambers in which opposing viewpoints mostly don’t exist because of something like: selection bias, moderation, “the algorithm”, or another reason. Because I know you need some examples, there are a few you may already be familiar with:
A recent FlyerTalk post titled “Any Success Stories of Living Off [Manufactured Spend]?” is a perfect illustration of how we can get stuck in echo chambers without realizing it. The thread itself is rather short, and if you read it in its entirety you’d think that maybe a couple of people lived off of manufactured spend in the past but it’s probably not happening much anymore and might also have weird tax consequences. Everyone in the insulated forum is reinforcing what they already believe, and it makes sense because it’s aligns with their world views.
On the other hand though, I personally know at least a couple of dozen people that live off of manufactured spend, and I’m sure there are plenty more that I don’t know of. Also, I’m not a tax guy and I’m definitely not your tax guy, but it’s not hard to account for and to pay taxes on your manufactured spend based earnings. Based on my personal experience, the FlyerTalk thread is naive at best and gate keeping at worst, and it illustrates a lesson that can take you a long way in churning and manufactured spend:
Sometimes the prevailing discussion in your echo chamber is wrong, and you can use that to your advantage.
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
By popular demand we’ll have at least a few guest posts during the break. If you’d like to write one, please reach out, I’d like to find guest posts for the whole break!
Introduction
We’ve talked several times about the Pepper Rewards gift card selling platform, which seems to have been explicitly designed to transfer money from Venture Capitalist bank accounts to our wallets at lighting speed. In the most recent MEAB post on the subject, I included a toy model based prediction that there’s a 50/50 chance that the company fails by the end of 2024. I’m now updating the timeline for the 50/50 failure scenario to be March 23, we’ll see why later.
Recent Changes
First, let’s discuss how Pepper has changed in the last month:
Bonus offers are now targeted to specific accounts
Many of the best offers are now limited to one per account per day
New accounts get low bonus offers until they spend five-ish figures
Account limits are either $5,500, $7,000, or $10,500 spend per rolling 24 hours
Most of the rebates are now floated for 14 days
Pepper has effectively stopped responding to most support requests
Pepper is moving merchant accounts from Stripe to PayArc
The first two bullets seem to be Pepper’s attempt at preventing a few whales from taking all of the best deals’ capacity through botting. The third and fourth bullets seem to attempt to separate gift card resellers from regular users and to separate resellers into tiers. The last two bullets are almost certainly about saving money and lowering reserve capital requirements.
Recent Deals
As degenerate churners are well aware, Pepper has pushed the resale market for high value gift cards down to decades-long lows by offering almost daily:
17-20% discounts on Kohls gift cards
12-16% discounts on Amazon gift cards
12-16% discounts on Walmart and Sam’s Club gift cards
15-18% discounts on Nike gift cards
Let’s get something out of the way about these deals: There’s no world in which Amazon or Walmart are giving gift card sellers a discount in the double digit percentages on millions of dollars of inventory. There’s also no world in which Pepper isn’t paying merchant processing fees of at minimum 2.7%, but more realistically 3%+ on each of these transactions too. Pepper is losing on each of these bulk gift card transactions, period.
Pepper’s Vision
Pepper has started a new funding round a month or two later than I expected based on the toy model, but still within the general time frame. Fortunately for us, their pitch deck and story is on YouTube so it’s easy to see what they’re telling investors. My favorite bits from the video:
“Pepper earns a 6% commission on every transaction”
Pepper somehow will know your favorite color and shoe size with AI, and this isn’t MEAB snark
Their Chief Revenue Officer was a DoorDash sales executive
Pepper believes that their total addressable market is $6 trillion (almost 23% of the US GDP, seems legit)
There’s definitely a fair amount of slippery language in the video, but I want to call out the most slippery statement, that “Pepper earns a 6% commission on every transaction”. Look, I actually believe they earn an average of 6% commission on every transaction, but the slippery language is undoubtedly that their 6% is a gross commission on the face value of gift cards, not a profit margin. (I think Pepper is lucky if their current profit margin is -6%; it’s definitely not +6%.)
Side note: I think that 6% number is realistically the discount that they earn on face value for the aggregate of all the gift cards that they sell, making it a really interesting number for any future models.
The Pepper Future
Alright, we’ve buried the lede. Based on my toy model I expected a 50/50 failure by the end of 2024, but I’ve revised that to 50/50 by March 20. Why that date? It’s silly, but there’s a metric that’s more accurate than any toy model in my mind: Almost all high-growth, high-spend VC backed companies start raising their next round of funding 3-4 months before they run out of the cash from their last round; it’s almost universal for companies like this.
Given the above and that Pepper posted their investor presentation on December 8, three months is March 8, and four months is April 8, the expectation value for running out of money is March 23. If they haven’t run out of money by then, it’s probably for one or both of two reasons:
They’ve raised more cash successfully
They’ve restructured their expenses, including employee and boost costs
I’m sure Youtube is the way to most investors hearts though, right?
My Action
I still use Pepper, and I have pending rebates well into the thousands of dollars floated with them too. My goal is to scale that back gradually as March approaches to limit my exposure in case of a Pepper failure. If this was a public company, you can be completely sure I’d be buying out of the money puts. I also expect that I’ll end up losing some money when they eventually fail, but I can more-or-less control how much and take profits in the mean time.
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
By popular demand we’ll have at least a few guest posts during the break. If you’d like to write one, please reach out, I’d like to find guest posts for the whole break!
Do this now: Register for 5x categories on quarterly cards:
– Chase Freedom and Freedom Flex: Grocery, fitness, gyms, hair, nails, spas, and Norwegian Cruises (welcome to the world of sponsored 5x categories friends) – Discover IT: Restaurants, home improvement, and some streaming – Citi Dividend: Amazon and some streaming – US Bank Cash+: I choose utilities and electronics stores
I try and knock these out on the first day or two of the quarter so I don’t have to think about them after.
– 250,000 Shop Your Way Rewards points with $1,000+ – 200,000 Shop Your Way Rewards points with $750+ – $70 statement credit with $1,000+ – $50 statement credit with $750+
As usual, these stack with other offers. (Thanks to birt, Adam, Lindsay, and Tyler)
Giftcards.com has 10% off of its own gift cards through December21. These cards can be used to buy other, third-party fee-free gift cards on the site with promo code EPICGIFT. These probably won’t track on shopping portals when you buy them, but when you use them on another purchase that’ll probably track. There are several credit cards that earn 3x on giftcards.com.
– Will this work with HiltonGiftCards.com? Yes – Will this work buying gift cards at a hotel? Yes – Will this work at Hilton restaurant? Usually, watch for a 15% extra hold for tip – Will this work for a regular hotel to pay your bill? Yes, depending on the front desk’s skillset – Who is John Galt? I dunno; or if I do, I don’t want to talk about it here, why do you ask?
Also, orange-you glad I didn’t say banana? (That’s called a “long con” friends, at least on internet time scales.)
– Will this work with HiltonGiftCards.com? Probably – Will this work buying gift cards at a hotel? Yes – Will this work at Hilton restaurant? Probably, stick to resorts to be sure – Will this work for a regular hotel to pay your bill? Yes – Is AmEx going to raise the annual fee? Probably not in 2025, but yes – Is Dell going away in 2H2025? We can only pray – What’s America’s favorite fruit? Banana – Did anyone make it this far? Yes
If you’ve got a bunch of business Platinums, just make sure that you get an email for each card. Sometimes the site enrolls the wrong card, or reenrolls a card that you didn’t select.
Conventional wisdom in the hobby says “never buy miles except to top-off your account for a redemption.” The wisdom is showing its age when transferable points are cashed out easily into interest bearing accounts, and points costs have dipped below 1.3 cents. For example, yesterday I was looking at an ANA First Class redemption that was 114,000 LifeMiles. I could have paid about $$1,447 to buy those miles directly rather than transferring miles in. Obviously, there’s more to come on this topic in the future.
– New million-miler tiers at four (Platinum Pro) and five (Executive Platinum) million miles – Systemwide Upgrades will last through the end of the elite year after March 1, 2025 – Redeem miles for inflight food, probably at a terrible rate – New Loyalty Point awards, all low value
You still can’t earn million-miler tiers with Loyalty Points, only with flown miles.
Giant, Giant Foods, Martins, and Stop & Shop stores have 8x-10x points on Lululemon and Barnes & Noble gift cards, depending on chain through Thursday, December 19.
$50 breakfast at a Hilton Garden Inn in Lubbock (prolly, I can’t be bothered to fact check).
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
By popular demand, we’ll have at least a couple of guest posts during the break. If you’d like to write one, please reach out!
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
– Earn 3x on foreign currency transactions and foreign USD transactions – Earn 3x on dining – Have a “Global Companion” pass for award tickets – Have free WiFi vouchers and reduced award ticketing fees
Two of the three main Incomm gift card sites have new promos (the third one’s promo is still in effect):
– VanillaGift.com: No purchase fees on $150+ with promo code VGHOLIDAY24 – TheGiftCardShop.com: No purchase fees on $200+ with promo code HOLIDAY24
Ok fine, the third one is MasterCardGiftCard.com with promo code NOFEES24. I don’t like repeating a deal, but I guess I can’t leave you hanging.
American Express has a targeting offer for 75,000 Membership Rewards after $6,00 spend in four months on Blue Business Plus no annual fee card, available via your dashboard if targeted.
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
Make sure to put a reminder in your phone to go verify the other airline co-branded card in Barclays’ systems after you receive the Frontier card. (Thanks to FM)
– Business Gold: 200,000 Membership Rewards after $20,000 spend in three months – Business Platinum: 250,000 Membership Rewards after $15,000 spend in three months
It’s ok for P1 to use P2’s referral and vice-versa, and if you don’t have one of those, ask around for a heightened referral offer and make a new churning friend; it’s a great way to network too.
A PSA and warning: American Express links that were put together artificially by combining multiple offer components in an unintended way keep finding their way onto public blogs, which is ok, but they’re not labeled or explained as manufactured artificial links. My suggestion: Always know the provenance of no-lifetime language links that you’re using. DDG has appropriately labeled this recently, but not all bloggers are doing so. What’s the link? This time it’s a 100,000 Membership Rewards personal Gold link with a $6,000 spend in six months requirement, but others have surfaced over the last couple of months for Business Golds and Business Platinums too.
How risky are these links? It’s been over 6 years since there were reports of adverse action for using unintended links, so the risk is probably low, but I don’t like when you’re not told that you’re taking a risk with a manufactured link, even if it’s low. One day of course American Express may decide that it doesn’t like people making links themselves in ways never intended to work. Since no one asked my opinion: The risk isn’t worth it at 100,000 points, but if it were 80*270,000 points we’d be having a serious conversation.
Spirit Airlines has a status match to either Silver or Gold that lasts 90 days, and a there’s a fast-track challenge to hold it for longer (I imagine the challenge won’t make sense for any of you unless your name starts with an “S” and ends with a “hay”). Status doesn’t let you pick a big front seat for free, but it does waive plenty of other fees.
Breakage from failed reading comprehension illustrated.
MEABNOTE: I’ll be going on a blogging vacation at the end of the year and there won’t be any daily posts between December 18 and December 31. After that, we’ll ring in the new year on January 1, 2025 with the 2024 version of Travel Hacking as Told by GIFs though, so no need to be up in arms, but I guess it’s ok if you’re up in legs.
Hyatt now lets you apply Suite Upgrade Certificates to a reservation yourself online. In the past, Hyatt’s long had a quirk that when (a) standard suites are available at a property, but (b) standard rooms weren’t available with points, you couldn’t book using points and a suite upgrade certificate without working directly with the property and some luck. That’s now fixed with the new change.
Side note: The Citi AA Business card will often bypass Citi bans regardless of this news.
You can currently buy Hilton Honors Points at 0.5 cents per point, up to 160,000 points. At the low end (e.x., Lubbock, TX), Hilton points are worth about 0.5 cents so this is a wash, but at high end properties it’s not hard to get 1.5-4.0 cents per point, and 8.0 cents per point isn’t unheard of at the Maldives.
I wouldn’t buy speculatively but if you know that you’ll be staying at a high end property in the next year, there’s plenty of outsized value to be had.
Happy Monday friends!
A different kind of churner’s triple for those banned at Citi, but 30 years ago.
