Quick update: my impromptu January application cycle

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[update 1/11/14: I never got around to calling Chase about my British Airways application, but today I saw that it had been added to my online accounts with a $2,000 credit line.]

Yesterday I announced that in honor of the 5% cash back "old" Blue Cash card still being available, I was moving my next round of applications up from the beginning of February. That meant scrounging around for the best, currently-available, signup bonuses. Unfortunately, the Alaska Airlines offer I wrote about in my "perfect storm" post is no longer available. Here's what I ended up applying for:

  1. American Express "old" Blue Cash. No signup bonus, no minimum spend requirement, no annual fee. 5% cash back at drug stores after spending $6,500 each year. Result: immediate online approval, $1,000 credit limit.
  2. Citi Platinum Select / AAdvantage World MasterCard. 50,000 miles after spending $3,000 within the first 3 months. Result: approval after calling the "status check" number, (888) 201-4523, $3,000 credit limit.
  3. Barclaycard US Airways MasterCard. 35,000 miles after first purchase. Result: immediate online approval, $1,000 credit limit.
  4. Chase British Airways Visa Signature. 100,000 miles after spending $20,000 within 12 months. Result: application pending. I called into the application status line today, (800)-436-7927, but have still been unable to get a decision or shuffle my credit limits around to secure approval. I'll wait and call back on Monday.

As you can see, because this application cycle was impromptu, I didn't have a chance to massage my credit by making sure all my credit card statements closed with a low or zero balance. My day-to-day high utilization rate negatively impacts my score between application cycles, making me look less credit-worthy (even though I always pay off my balances in full).

However, this doesn't bother me. I intend to only use the US Airways card once, to secure the signup bonus, and spend just $3,000 on the American Airlines card, so those low credit limits aren't a problem.

The $1,000 credit limit on the Blue Cash card, on the other hand, would be an issue except for the fact that American Express makes it easy to shuffle your credit limits between cards, so I'll be able to move all but a small part of my $10,000 Hilton HHonors American Express credit limit over to my new Blue Cash card (this is only possible within personal and business cards, not between them). That'll give me more than enough room to manufacture spend on my new 5% cash back card.

All in all, I'm pleased with the results of this application cycle, and hopefully I'll get approval for my British Airways application in the next day or two, possibly after moving part of my credit limit over from my Chase Sapphire Preferred card.

5% cash back is back (for now)

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I wrote early last month about my search for a new "workhorse" card to replace my Citi ThankYou Preferred card which, during my first 12 billing cycles, earned 5 ThankYou points per dollar spent at grocery stores, gas stations, and drug stores. With just a week left in that promotional period, imagine my excitement in seeing this FlyerTalk thread.

By opening this link in a new browser, "private browsing" session or "incognito" window, it's still possible to apply for what people are calling the "old" Blue Cash card. This "old" card has a totally different earning structure than the "new" Blue Cash Everyday and Blue Cash Preferred:

  • On your first $6,500 in purchases made with the card: 1% cash back at gas stations, grocery stores, and drug stores, and 0.5% everywhere else;
  • after spending $6,500: 5% cash back at gas stations, grocery stores, and drug stores, and 1% cash back everywhere else.

In other words this card is roughly comparable to the Citi ThankYou Preferred offer that's expiring for me, and I plan on applying for this card later today (after I decide on some additional cards for this impromptu application cycle).

Here are a few things to keep in mind:

  • Your net annual earning rate will be slightly less than 5% because of the lower earning rate on your first $6,500 in spend;
  • but unlike ThankYou points, which must be redeemed for mortgage checks, student loan rebate checks, or travel through the ThankYou booking tool in order to get a full 1 cent per point in value, Blue Cash "reward dollars" can be redeemed directly for cash;
  • 5% cash back is only awarded on gas purchases of up to $400;
  • and in my experience American Express does not code 7-11 store locations as gas stations and does not award gas station bonus points for purchases there.

Here on the blog I tend not to make explicit recommendations, since every reader's travel goals and application timelines are different.

In this case I'm inclined to make an exception and say that if you are able to take advantage of these bonus categories, you should strongly consider applying for this card right now. This offer will not last forever, and you will regret not carrying this card when you start reading about how much cash back other members of the community are earning.

Reminder: Alaska's Baggage Service Guarantee

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I've written before that I think most hotel "best rate guarantee" policies are a hoax: as great as they sound in theory, in practice the hotel has every incentive to respond as slowly as possible, almost always ensuring (in my experience) that the better rate is no longer available. When it is, they'll comb through the rate details to find minor differences in room type or cancellation policy.

I say that just as preface to the fact that today I had the chance to take advantage of Alaska Airline's Baggage Service Guarantee, and it was a really great customer service experience. Flying into Boston's Logan airport this evening just ahead of the winter storm crashing down on the East Coast, I headed to baggage claim and waited for 10 or 15 minutes with no sign of our bags.

Remembering that upon arrival in Lihui back on December 23rd the flight attendant had announced that our bags were guaranteed to be on the baggage carousel within 20 minutes of arrival, I checked the Alaska Airlines iPhone app to see what our official time of arrival was. We had been recorded as arriving at 6:11 pm, and since 6:31 had just ticked by, I walked over to the Delta baggage services office (which also handles Alaska Airlines baggage issues at Logan), and asked the woman behind the counter if she handled Baggage Service Guarantee cases. She said yes, checked the flight's arrival time, and handed me 2 vouchers, each good for a $25 Alaska discount code or 2,500 Mileage Plan miles (I took the miles, natch).

Now, because of the inclement weather, I wouldn't have been at all surprised if the baggage services attendant had refused to give me the vouchers, since the terms and conditions state:

Alaska Airlines reserves the right to suspend the Baggage Service Guarantee in the event of airport baggage system malfunction, severe weather, or other conditions out of the airlines' control that prohibit timely baggage delivery.

So I thought it was terrific that she didn't make a fuss about handing them over. When I returned with them in hand my travel partner told me, "now I understand: travel hacking is just knowing stuff other people don't know."

One last note on these vouchers: I was able to redeem both my own and my partner's voucher for miles into my Mileage Plan account, so you aren't restricted to one voucher per person, per qualifying event.

netSpend: easy come, easy go, easy $5,000 in manufactured spend

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Today's post comes thanks to reader Tim, who convinced me to finally look into netSpend and shared with me his findings based on numerous conversations with their Customer Service department. While netSpend is no secret, I thought it would benefit all my readers to know what to expect if they decide to take advantage of it.

I had never bothered previously since, frankly, I didn't need to: I had MyVanilla Debit cards which could more than handle the volume of manufactured spend I was generating, and I knew netSpend had a bad reputation for account closures.

With my recent MVD shutdowns in hand, and the upcoming expiration of my 5% Citi ThankYou Preferred card offer, I decided to put netSpend through its paces.

Signing up for netSpend

The best way to sign up for netSpend is through a referral link, which gives both you and your referrer $20 after making your first deposit into the account (of $40 or more). There's a "conga" line set up for this purpose on Flyertalk.

Adding Money to the Account

Once you receive your permanent card in the mail, you can add money to the account using Vanilla Reload Network reload cards, subject to the following limits:

  • $2,000 per rolling 24-hour period;
  • $3,500 per rolling 168-hour (7-day) period;
  • $5,000 per rolling 30-day period.

The point is, the time of day you load the Vanilla Reload Network reload cards to your account matters. If you load $2,000 at 5 PM on Monday, you can load another $1,500 at 5:01 PM on Tuesday, and another $2,000 at 5:01 PM the following Monday.

Withdrawing Money from the Account

Here's the best part of this card, and what hasn't been widely reported elsewhere: netSpend is set up to allow free ACH pulls out of the account, using the same routing and account information on the direct deposit form you can access from your online account. That means that there are no additional costs to manufacturing $5,000 in spend per month using this account, after you've bought your reload cards. That makes it in some ways superior to Bluebird, the mainspring of manufactured spend for those with access to CVS or Walmart store locations.

Getting Shut Down

Unfortunately, netSpend aggressively shuts down the accounts of customers who aren't generating the extortionate fees they charge for transactions made with the card. That means that there is only one safe way to use netSpend: immediately empty your account after loading it, and never leave money in the account. This does guarantee that you'll be shut down, but it also minimizes the amount of money netSpend will have to mail you by check (generally up to 20 days later).

Doing it Again

Interestingly, there's another almost identical product offered by netSpend, the PayPal Prepaid MasterCard. The PayPal Prepaid MasterCard is essentially the same as the "premium" netSpend account: it has a $5 monthly fee, no fees for purchases, and comes with a linked 5% APY savings account (5% APY paid on balances up to $5,000). It also has the same $2,000/$3,500/$5,000 load limits.

But there's a wrinkle: if you have both a netSpend account and PayPal Prepaid MasterCard, your load limits are shared between the two cards. That means there's no reason to have an active netSpend and PayPal Prepaid MasterCard at the same time: you can start with one, get shut down, then open the other.

Finally, while reader Tim reported that his netSpend and PayPal Prepaid MasterCard accounts were shut down simultaneously, that wasn't my experience: I haven't loaded or unloaded anything to my PayPal Prepaid MasterCard account, and it's still open, while my netSpend account was shut down a few days after finishing my first month's $5,000 in loads. That means I'll be able to put another $5,000 through the PayPal Prepaid account once my netSpend load transactions roll off my 30-day load history.

I'd love to hear from my readers: have you used netSpend? Have you already been shut down? If not, what's your strategy for avoiding unwanted attention to your account?

The time I got 3 cents per Skymile and saved Christmas

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That was exciting.

I've mentioned my upcoming flight in Alaska Airlines First Class to Hawaii to celebrate Christmas with my family (and earn Delta Platinum Medallion status). Well, Sunday's the big travel day, which means that my travel partner is flying tonight from her home base in the midwest out to New England so we could be on the same flights to Kauai. That was important to me because if there are any weather or mechanical delays along the way, I wanted to be able to troubleshoot the issues with her rather than leaving her stranded to negotiate rebookings, hotels, meal vouchers, and the rest of the hassles of winter travel on her own.

Unfortunately, when we booked the ticket a few months ago, it seemed like United's price and schedule worked best to get her out here. I say it "seemed" like it, because I failed to take into account the "United premium" of delays, missed connections, terrible customer service, and the overall disaster of an airline they represent.

With a delayed flight into Cleveland, there was no way my partner would make it into New England tonight. If she was rebooked onto a flight tomorrow, then we'd lose the Saturday buffer in case of additional weather problems. The only way she would get into New England tonight was on Delta:

That flight costs $1,219.60! Using Skymiles, on the other hand, I was able to book the outbound leg at the "Peak" (previously "high") level, and the inbound at the "Saver" (previously "low") level, for a total of 42,500 Skymiles and $10 in taxes and fees. That's a nominal value of 2.85 cents per Skymile.

Now, it's fair to point out that I wouldn't have actually paid $1,220 to rebook her onto Delta. Rather, I would have let United handle it, rebooking her onto flights tomorrow and causing me a huge amount of stress waiting to see whether she makes it in time.

That's the distinction I was driving at in this post back in April. While it's not fair to say that I used my miles to "save" $1,210, since I wouldn't have paid that much for this Delta ticket, it is fair to say that the 42,500 Skymiles I used, which cost me perhaps $243 to manufacture (earning 1.4 Skymiles per dollar, spending 0.8 cents per dollar), bought me something that's worth at least several times that much (including a ticket, my peace of mind, and a buffer day in between traveling), and in that sense I really did get an outsized return on my upfront investment.

Two Alternatives

There were two additional alternatives that were conceivable in this situation. First, I could have bought my partner the paid Delta ticket using my Barclaycard Arrival World MasterCard, and redeemed Arrival miles against the purchase. To earn 122,000 Arrival miles, I'd need to spend about $61,000 on the card, which would cost me perhaps $488. That would be slightly more expensive than the Skymiles option, but it would leave me with the 42,500 Skymiles, which is about a third of the new cost of a transatlantic BusinessElite ticket.

Alternatively, and I might have tried this if I were flying with my partner, I could have asked United to rebook me on the Delta flight tonight, instead of paying for a hotel in Madison or Cleveland. Airlines are sometimes willing to do this, although it will depend largely on the agent you're dealing with and how hard you're willing to push. Besides the fact that I didn't want to put my partner on the spot to negotiate her rebooking, the real obstacle to this approach is the agonizing slowness of United customer service agents. If she waited in line to speak to the customer service representative, she would have missed not only the United flight to Cleveland, but probably the Delta flight to Detroit as well. I'd rather go online, book a ticket, and have her walk over to her new gate.

Plus, this way I scored huge brownie points, just in time for the holidays.

Rebate your manufactured spend (brand new hack)

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As always, before I get started with today's news I have to get a few things out of the way.

First of all, the hack that I'm discussing today involves PayPal. I know everybody hates PayPal. Heck, I hate PayPal too. But they've also been very good to me. If you feel like ranting about PayPal, the comments, as always, are open.

Second, as always I want to give credit for this hack where credit is due. That's a pretty short list this time. I originally got the idea from a comment left here on the blog by Phil. If you read this, thanks Phil! Over the course of the day or two I spent researching this, I was only able to find one veiled reference (I think) left on a Frequent Miler post over the summer. So, thanks to DFW, too, I guess.

Finally, I haven't tried this personally. I'll be applying for new cards at the end of January or beginning of February, and will of course post an update then. In the meantime, I would love to hear about readers' experiences if they're able to make this work – or, especially, if not.

The PayPal Business Debit MasterCard

As my readers know, one of my favorite tools for manufactured spend is the PayPal Business Debit MasterCard. It has two amazing functions:

This is an amazing combination of features. But unfortunately as it stands, you have to choose which benefit to take advantage of: access to debit features like money orders, Walmart Bill Pay, and prepaid card loads (Bluebird and Gobank), or 1% cash back.

Your New .83% Cash Back Debit Card

When you don't have enough funds in your PayPal account to cover a Debit MasterCard transaction, instead of having your transaction rejected, PayPal gives you the option of pulling the funds from a backup funding source. You can choose any bank account linked to your PayPal account, or you can use a PayPal Extras MasterCard.

The PayPal Extras MasterCard earns "points" which can be redeemed for cash into your PayPal account: you can redeem 6,000 points for $50 in cash, or 0.83 cents per point. You can only earn 50,000 points per year (8 $50 redemptions, plus some change).

According to Phil's comment, these backup funding transactions earn points on the Extras MasterCard.

Since I don't have an Extras MasterCard yet, I can't confirm the limits on these backup funding transactions or whether they earn points. The standard limit on backup funding transactions is $1,000 per day, but I don't know if the same limit applies when the backup funding source is a PayPal Extras MasterCard.

It Gets Better

As I mentioned, the backup funding source is only used when you don't have enough money in your PayPal account to cover a debit card transaction. That means that rather than loading your PayPal account with a PayPal My Cash card and then emptying the balance with your Debit MasterCard, you will want to use your Debit MasterCard when your account balance does not cover the transaction.

Amazingly your PayPal Extras MasterCard is managed from within your PayPal account and you can use your PayPal balance to pay off your Extras MasterCard. That means you can load a PayPal My Cash card to your account and move the money directly into your Extras MasterCard to pay off the balance you incurred using your Debit MasterCard.

What it Means

Let's take a look at a simple pass through this hack.

  • Assume a PayPal balance of $0.70;
  • Use your PayPal Business Debit MasterCard to purchase a $1,000 money order from Walmart;
  • After using the $0.70 in your account (and covering the money order purchase fee), your PayPal Extras MasterCard will be charged $1,000;
  • Buy 2 $500 PayPal My Cash cards at CVS for $7.90 and load them to your PayPal account;
  • Move the money from your PayPal account to your Extras MasterCard;
  • Redeem 1,000 points for $8.33 (when you have 6,000 points).

You'll have spent $8.60 for the money order fee and My Cash cards, and earned $8.33 worth of Extras points – and manufactured $1,007.90 in spend at CVS.

What do you think?

Does it work? Are you going to try it? Should I have kept my mouth shut? Inquiring minds want to know! See you in the comments.

Resolution of my MVD/FDIC complaint

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Before I get to today's post, I want to invite all my readers to come back tomorrow when I'll be talking about a new hack that I've been exploring – because I need your help. Normally I only post about a new technique once I've had a chance to explore all the nuances and share my findings, but this one is a little bit different and I think it'll benefit from as much reader feedback as possible. And yes, it is going to upset some people that I'm writing about it publicly, so if nothing else you should come back to check out the fireworks in comments.

With that out of the way, on to today's news. When I got back from Wisconsin last night I found a letter from The Bancorp Bank in response to my FDIC complaint about my second frozen MyVanilla Debit Card account (the one with all the money in it). Then this morning I received another letter from the Federal Deposit Insurance Corporation, Bancorp's main federal regulator. I thought I'd share the details of those responses with my readers.

Bancorp's Response

There were several interesting sections in the Bancorp letter. First, the explanation of the initial account blockage on November 21:

Your account was blocked on November 21, 2013 due to activity that was considered suspicious. The account received several loads which mimic a fraudulent transaction pattern that InComm, the program manager, sees on a day-to-day basis during phone scams.

Presumably the phone scams they're talking about are when you're asked to buy a reload card and send in the PIN number in order to receive a prize.

Next, there was an explanation for the runaround I was given:

All of the requested information was received and on December 2, 2013 the card was reopened. We appreciate you sending in the requested information in such a timely matter [sic]. The turnaround time to review submitted documents is anywhere from 24-72 hours. In this case the documents you submitted were sent to the wrong folder which resulted in a delay in reopening the account. The documents were reviewed on December 2, 2013 and the account was reopened.

Then some commentary on their federal banking supervision:

Please understand that our ultimate goal is to protect the security of your account. We are obligated by federal banking regulations to follow a process known as the Customer Identification Program (CIP). The CIP regulations make it mandatory for a bank to take the proper steps to confirm the identity of its customers. The CIP process is necessarily stricter with accounts that are opened via the internet. While we must always comply with all banking regulations, we make every attempt to do so with as little impact to you as possible. We appreciate your patience and understanding while we assisted you with your concern.

Finally a little customer service boilerplate:

This issue has since been discussed with the customer service department to ensure the review requests and escalations are being sent to the correct individuals. We apologize for any inconvenience you experienced. We truly regret the delay that was caused by the mishandling of your request.

In other words, they seem to be saying there were two separate issues:

  • Possibility of me being a phone scammer, getting Vanilla Reload PINs from unsuspecting victims and quickly loading and unloading the value;
  • And federal banking regulations which require them to conduct identity verification for accounts opened over the internet.

That being the case, it's still impossible to say what "directly" led to my account being frozen.

The FDIC's Response

Besides including a copy of Bancorp's response, the FDIC also expanded a little on the regulations Bancorp was claiming to be following:

The USA Patriot Act rules require each financial institution to adopt a Customer Identification Program (CIP) to ensure the bank has a reasonable belief that it knows each customer's identity. That is why financial institutions engage in more rigorous customer identification procedures when opening new accounts, especially for accounts opened over the Internet. The FDIC and other regulatory agencies encourage banks to use the basic principles set forth in the rule (31 C.F.R Chapter X), which includes obtaining customer information, such as a name, date of birth, address, and for U.S. residents, a tax payer identification number. In addition, banks must verify the identity of customers, through the review of documents or through non-documentary methods, such as information obtained from consumer reporting agencies or checking references. The bank's CIP must also provide customers with adequate notice that the bank is requesting information to verify their identity.

So there you go. I don't think it will necessarily help keep anyone from being shut down, but it's good to know that if you file a complaint with the FDIC, they will listen and respond in a more or less timely manner. Your tax dollars at work!