I had a student in one of my classes explain this to me at one point. Every semester when it came time to pay his tuition bill, he would simply max out all of his credit cards paying the bill. The university system would let you pay as much as you wanted, and if you had a balance a week after tuition was due they would send you a check for the balance. While it was primarily in place for students receiving scholarship money, he used it to rack up huge rewards on his credit card.
By the time he was a junior (when I had met him) it had gotten him good enough credit he had over a $15,000 limit, so 3 times a year he would pay that to the school, they would pull out their $15 credit card fee, and then deposit it straight into bank account, which he would use to pay off the credit card.
But, I have spent the last 3 months buying the longest, cheapest round trip fares that I've been able to find, also called "mileage runs". American Airlines has had a "Double Elite Qualifying Mile" promotion, which means that I can reach Executive Platinum with American while flying only 50,000 miles instead of the usual 100k miles. This fall, I've done weekend trips to Madrid, Frankfurt, Florida, visited family in the Mid-West, and this upcoming weekend, a I'm finishing with a round trip to Barcelona. I'm flying out from San Francisco on Friday morning, spending 2 days in Barcelona and I'll be back home by Monday.
All told, I've spent $2200 on flights, and a bit more for hotels + food. What I get in return is being able to upgrade to first class for free on any domestic flight on American, 8 upgrades on international flights (worth $300-400 each if I sell them), and enough earned miles to buy two tickets worth $1100 to visit family in Central America this spring.
I have a hunch, though that after flying first class all next year on American, I'm going to have a really hard time flying coach again. I'm afraid this might be a bit addictive.
A friend of mine, (mcargian on hn) hosts a podcast about this stuff at http://upgrd.com. He turned me on to it.
i did a SIN run (what flyertalkers call the flight from anywhere to Singapore) from Seattle one weekend, and i got a lot done. A buddy and I flew SEA-SFO-LAX-NRT-SIN, and we got a LOT of work done. We got upgraded, worked on our laptops, spent 6 hours eating chili crabs in Singapore and listening to a drag cover band, and then flew back. It took all weekend, cost about $800 and pushed us both up to 1K status on United for the year, which was well worth more than $800...
Singapore is the most bang for the buck in terms of miles/$ and so people often use it as a way to get to the next level of status... for me the opportunity to focus on some projects i hadn't completed and get 1K status (including the upgrades which are easily worth thousands if you had to unload them on the upgrade grey market), plus hang out with a friend and have such an unusual experience, was worth it.
But you actually have to sit in the plane and go to Madrid and Frankfurt to pull this off, right? $2200 is nothing, but days and days of time in an airplane isn't worth it.
I have a netbook with my full dev environment and 15 hours worth of battery life. I actually get a lot of good work done on the plane. And, I get a lot of uninterrupted time to code in my hotel.
Its also part of the way I'm wired. I grew up as a nomad of sorts, and I've been really stationary for the last 3 years, so getting to travel scratches an huge itch for me and it clears my mind so I can get into flow and code.
I wonder if I could find someone willing to fly on fake papers to take the actual trips to Spain and Germany. Airline security blows; they'd use their own papers in (say) Spain.
I have two more trips to Europe this month for exactly this reason. (Well, I actually flew 70,000 miles on American legitimately this year. Seemed like a waste to not go for 100,000.)
Last time I was checking in at Chicago, I had a conversation with the check-in agent and I mentioned my mileage run plans. She told me, "that's excellent". So unlike the Mint, the airlines, or AA anyway, don't seem to mind this. It fills up their otherwise empty planes over the Atlantic :)
I have a hunch, though that after flying first class all next year on American, I'm going to have a really hard time flying coach again. I'm afraid this might be a bit addictive.
This is a nice benefit, but it is not the best. Domestic first class is not that great. The seat is a bit bigger, and you get a $10 meal for free. The best part is the coffee cups your coffee is served in. AA just bought new ones, and they are very pretty.
Also, you don't lose the ability to upgrade next year. You will be in F for the next 3 years. Exec Plat drops to Plat even if you don't fly at all, and Plat drops to Gold even if you don't fly at all. You will have to use stickers to upgrade, though, it is no longer free. Back when I was Gold, I had pretty good luck getting upgrades, and as a Plat, I have only missed one. You get the ability to book exit rows either way, and on the MD-80, the exit rows have more leg room than the first class seats.
So you are set for a while.
worth $300-400 each if I sell them
AA is pretty good at shutting this down. I would not recommend it. If you're not going to use them, share them with your friends (or fellow mileage-runners on HN) instead.
(Search the Flyertalk forums for stories of people losing 1MM+ frequent flyer miles for selling their SWUs.)
Still, they're in the minor leagues compared to the civil engineer who racked up 1.25 million frequent flyer miles ten years ago by purchasing over 12,000 pudding cups:
That was also a plan hatched, and retold, within the confines of FlyerTalk.
A lot of people recognize the opportunity but only a few are really bold enough to carry things through to the full extreme. Most say, "ha ha, I bet you could pay for your whole vacation if you did this enough" but aren't "crazy enough" to follow through on that notion.
My guess is that the credit card merchant fees cover the cost of the miles. So it's the US Government (i.e. all of us) getting screwed here, not the credit card company or the airline.
Obviously you do not understand what seignorage is, how it works, and the difference between getting coins from the US Treasury vs. Federal Reserve Notes from the Federal Reserve. Why don't you read up on the subject so you can understand what I am talking about.
~10 years ago, you could buy inflation protected bonds on a credit card for no additional fee. I bought $10k worth on a card that gave miles and then redeemed them to pay it off.
I met a guy who would register for dozens of free credit cards offers that included air miles on sign up just to get the air miles. He was retired and used this technique to fly around the world. He always canceled the credit cards a few months later. Funny thing is apparently when he called to cancel, they would often offer him more air miles if he chose to keep the card. It those cases he would take the air miles and cancel a month later.
This is probably a good strategy if you are older. But its definitely bad for your credit rating, so might not be a great idea if you are younger or otherwise trying to maintain a good credit score.
Thanks to the utterly bizarre credit scoring system, the part that could really hurt you is closing the cards. Keep them open and it may well improve your score (certainly your debt to credit ratio would get a boost)
Not really. FICO dings you for having more than 2 installment loans, or more than 4 revolving accounts. Plus you get dinged for having more than 2 "outside" inquiries in a year. More points disappear from your FICO for having a balance, or for having revolving accounts that have been opened in the previous year. Having a dozen accounts opened in a year (if even possible) triggers a high abuse potential and can even get existing accounts closed in a pre-emptive strike.
Not really. FICO dings you for having more than 2 installment loans, or more than 4 revolving accounts. Plus you get dinged for having more than 2 "outside" inquiries in a year. More points disappear from your FICO for having a balance, or for having revolving accounts that have been opened in the previous year. Having a dozen accounts opened in a year (if even possible) triggers a high abuse potential and can even get existing accounts closed in a pre-emptive strike.
i'm surprised flyertalk, and specifically the 'mileage run' forum, on which most of these obnoxiously good deals appear, isn't more popular with this crowd as there's an obvious overlap in terms of personality types. There are plenty of HN types with the proper skillset and aptitude to find travel deals, who would enjoy the occasional hacking of the travel-industrial-complex.
I guess having sufficient understanding of the subtleties of the fare rules and booking systems really only comes from reading a lot and traveling enough to have a vested interest in learning and there are a lot of deskbound hackers.
however in the past few years, i went to NYC from SEA for USD $1.26, Romania for $200, Toronto for $0.00 in first class (with my family of five) and a few others i can't remember all due to the joys of reading that site every day...
You have to wonder how much of an increase the mint will see in this behavior now that its in the WSJ. I'm pretty tempted to sign up for a virgin america credit card right now just to do it.
According to the FlyerTalk thread (which is over 400 pages!! apparently, this has been going on since sometime last year...), credit card companies are becoming wise to this trick and are starting to treat purchases of the coins as cash advances (thus subject to fees and no rewards). I'm sure the WSJ front page article will only speed this along...
It's interesting to watch as people systematically exploit all pricing discontinuities and loopholes. Of course, this is what also gets us spam.
I wonder if at some point all pricing ends up having to be flat because of arbitrageurs operating in this manner.
(I feel slightly bad - I rarely deal with frequent flier miles even when I do fly, and I've canceled a credit card that offered frequent flier miles because they mailed me such an unbelievable amount of shit.)
I can't bring myself to do these kinds of corporate exploits. It just makes me feel like I'm spending my life learning about a bunch of bullshit arbitrary rules rather than something I care about or something that helps the world.
So I end up paying full price for first class, lol. What a chump.
By the time he was a junior (when I had met him) it had gotten him good enough credit he had over a $15,000 limit, so 3 times a year he would pay that to the school, they would pull out their $15 credit card fee, and then deposit it straight into bank account, which he would use to pay off the credit card.