Quick hit: changes to US Bank Flexpoint transfers

In the last few years US Bank has made a number of negative tweaks to the Flexperks Travel Rewards Visa Signature card. They restricted the once-generous "grocery" bonus category to a more restrictive definition of "grocery stores." They limited the number of points that could be transferred in or out of a Flexperks account to 20,000 per year (although see here for a possible workaround). And starting January 1, 2018, Flexpoints will be worth a fixed 1.5 cents each for flight redemptions, rather than being redeemable in $200 "bands" as they have been to date.

There is another change I have not seen discussed elsewhere, which was quietly implemented relatively recently.

Online Flexpoint transfers now require the recipient's credit card number

The Flexperks rewards interface is run by a third-party fulfillment center, and internally they assign accounts a 12-digit account number. As recently as January 7, I used that Flexpoints account number to transfer points between accounts. It seems that as late as March either the Flexpoints account number or the Flexperks credit card number could be used to transfer points.

At some point since then, they've changed the "Transfer Points" form (found under the "Manage Points" heading) to request the "credit card account number where the FlexPoints will be transferred."

And sure enough, attempting to transfer points to a Flexpoints number online now returns an error, while using a credit card number results in success.

Conclusion

The cynic in me naturally suspects that US Bank implemented this change in order to slow down the rate of Flexpoint redemptions, figuring that fewer people are willing to share their credit card number than were willing to share a single-use account designator. The fewer points are shared, the less efficient redemptions become and the more points will tend to go unredeemed.

On the other hand, while US Bank may internally treat Flexpoint redemptions as a cost center, I have to wonder what their ultimate goal is with these steady, piecemeal attacks on the program's value. It may be that each one of these changes individually shaves off another few hundred of the bank's most expensive customers, but it also leaves the rest of their cardholders rightly feeling like the remaining value of the program is being nickle-and-dimed away. I'll keep the card for now, but even so they've left a bad taste in my mouth, which seems suboptimal for a medium-sized regional bank trying to grow its credit card portfolio.

Reported Flexperks changes and two kinds of breakage

As I first saw reported at Doctor of Credit, people are saying that Flexpoints earned with the US Bank Flexperks Travel Rewards credit cards will be redeemable for 1.5 cents each beginning on January 1, 2018. They're currently worth as much as 2 cents each for paid airline tickets at the top of their redemption bands, and as little as 1.33 cents at the bottom of a redemption band.

I don't have any insight into whether these reports are true, not having seen any communications from US Bank about any upcoming changes. However, since I seem to have a reputation as the biggest booster of Flexpoints in the travel hacking community, I certainly have been thinking about it.

People are anxious to make definitive declarations about whether the change would be an improvement or a devaluation. That judgment comes down to the intersection of two kinds of breakage.

Breakage as unredeemed value

This is the form of breakage that most immediately leaps to mind when you hear about a change like this. If you are able to consistently redeem your Flexpoints for flights at or close to the top of US Bank's redemption bands, then the value you would receive on redemptions after January first will drop by 25%. The further your actual redemptions are from that ideal redemption, the less the effect the change in redemption value will affect you: you can easily imagine someone who typically books $300 flights or $450 flights with Flexpoints and won't suffer at all from reducing their "maximum" value from 2 cents to 1.5 cents: they'll redeem the same number of points for their typical flight.

More than that, the current system of redemption bands creates an anxiety over unredeemed value. The difference between the $600 maximum value of 30,000 Flexpoints and the actual value you receive creates a disincentive to redeem points at all. Earning points and not redeeming them because of anxiety over getting a "good" redemption value means you might find yourself redeeming other potentially more valuable miles, or even cash, in order to "save" your Flexpoints for a more valuable redemption. You can be disciplined and always "redeem points and miles first," as I do, but that doesn't eliminate the fear of missing out that can be genuinely frustrating.

In other words, a fixed value for redemptions up and down the price scale has the advantage of consistency, even if it removes the ability to swing for the redemption fences.

Breakage as unredeemed points

A different kind of breakage is stranded or unredeemed points. If you're a Flexperks aficionado you may be familiar with ending a statement cycle with 19,000, 39,000, or 99,000 Flexpoints. In the first case your points are worth $190 in cash, in the second case they're worth up to $400 in flights plus $190 in cash, and in the last case they're worth up to $1,600 in flights and $190 in cash. In other words, "odd lot" Flexpoint balances are worth 1 cent each, 1.51 cents each, or 1.81 cents each, not the 2 cents each that you are hoping for.

The more difficult it is to redeem points (e.g. requiring a minimum of 20,000 points), the more points are likely to be stranded in your account at any one time. Stranded and unredeemable points balances are worth nothing (or one cent each, which is close enough). They're not even worth the 1.5 cents each posited under the new redemption regime!

Conclusion

The important thing to understand is not that the changes being reported are "good" or "bad."

In many ways they tug in different directions: the breakage of unredeemed value will be eliminated, but the amount of value locked in will be lower than the value many, if not most, Flexperks cardholders are currently receiving.

On the other hand, if the changes also inaugurate an elimination of minimum redemption amounts, the number of Flexpoints stranded will be reduced by creating more flexibility in award construction, with one-way flights and flights in different classes of service such that you're able to spend down as much of your Flexpoints balance as possible with each redemption. Fewer stranded Flexpoints is an unalloyed good, just as lower maximum redemption value is, for most customers in most circumstances, a devaluation.

That leaves one question which only the individual cardholder can answer: will you get more value from your formerly-stranded, newly-redeemable rump Flexpoint balances, or less value from knocking down the maximum value of points you planned to redeem for flights at the top of the current redemption bands?

Neither I nor any other blogger, thought leader, or guru can answer that question for you.

Pro tip: Flexpoints can only be redeemed online for most international travel 7 days in advance

Here's a new one for me. A long-time reader reached out to me, as the biggest fan of US Bank Flexperks Travel Rewards in the blogosphere, to ask whether I'd had any experience booking close-in tickets using Flexpoints. He was trying to book a ticket to the Caribbean in exactly one week, and wrote that "the website will not show me anything prior to [one week out]."

I wasn't sitting at my computer so couldn't see exactly what he was seeing, but replied that while Flexpoints could not be redeemed for same day travel (and indeed, neither can Ultimate Rewards points), they certainly can be redeemed for travel within a week.

It turns out, we were both right: Flexpoints can be redeemed for next-day domestic travel but can only be redeemed online for travel 7 or more days in advance to international destinations excluding Canada. Next-day flights to Canada are fine (I couldn't find any other exceptions, but if you know of another country that's an exception, let me and other readers know in the comments).

While researching this post I also came across another curious restriction:

"Travel itineraries booked online require at least one USA or Canadian airport. To book a travel itinerary that does not include a USA or Canadian airport, you may contact a Travel Rewards Agent at 1-866-814-1293."

My reader was ultimately able to call and book his close-in Caribbean flight, but was charged an additional $25 phone booking fee for each ticket, which he couldn't convince the representative to waive. It's not clear to me how much discretion agents have to waive those fees — I did have a $30 change fee waived in the past.

Out of curiosity, I also checked the Ultimate Rewards booking portal and they have no trouble booking next-day international flights online. Between the $25 per ticket booking fee, and the superior travel insurance offered by the Chase Sapphire Reserve, that may be a better option than US Bank Flexpoints when booking close-in paid international travel, depending on where the fare falls in a Flexpoint redemption band (and what other uses you have planned for your Ultimate Rewards points).

Rewards programs, ranked by reliability

One fun thing about writing a blog is that reader feedback gives you a chance to see how different ideas interact and collide. Last Friday when I wrote "While I'm willing to take unlimited risk in my investment portfolio, I'm willing to take virtually no risk in my travel hacking portfolio," reader Danny commented:

"This seems like an interesting sentiment. I'd be far more concerned with keeping my investments sound than my points balance."

Then on Monday I wrote with respect to my findings on Hilton all-inclusive award pricing that:

"If points costs will fall to match low revenue rates, it is easier to justify earning large quantities of Hilton points knowing that you'll almost always get close to, or above, their imputed redemption value."

I've been thinking about these two ideas, risk and reliability, and how they interact in my travel hacking practice.

Devaluations are the big, unknown risk

For several years, the US Bank Club Carlson credit card offered the last night free on all award stays. Now, this benefit was never quite as good as it was cracked up to be since Club Carlson properties, even or perhaps especially high-end Club Carlson properties, are dumps (true story: months after the Radisson Blu Warwick Hotel Philadelphia finished their renovations to not be a dump any longer they left the program).

Many people, expecting that benefit to continue indefinitely, earned hundreds of thousands, or millions, of Club Carlson Gold Points (trust me — many of them are readers of this blog).

Then the last-night-free benefit ended, and those points could only be redeemed at still-crappy Club Carlson properties. The same spend that earned those millions of points could have been used to earn 2% cash back, unbonused Ultimate Rewards or Membership Rewards points, or another rewards currency.

That's the kind of risk that I do my best to avoid in my travel hacking practice, by earning the rewards I redeem and redeeming the rewards I earn.

Reliability is the certainty of being able to redeem rewards for the trips you want to take

Reliability is something slightly different than risk. A reliable program offers consistent redemption values, whether or not that value is high or low, attractive or repulsive.

For example, according to Hotel Hustle, the IHG Rewards Club offers quite remarkable consistency, with a median value of 0.58 cents per point, with 75% of award searches above 0.44 cents per point and 75% of awards below 0.68 cents per point. That doesn't make it attractive to manufacture IHG Rewards points, but it gives you a clear view of the value of any points you might earn in one of their periodic sweepstakes or promotions.

My top ten loyalty programs, by reliability

Whether a particular rewards currency is "worth earning" depends on both your cost of acquisition and your particular travel plans, so this is not a list of the top ten most valuable loyalty programs. It's only a list of the top ten rewards programs sorted by my view of their reliability.

1. Cash. Cash has the great benefit of maintaining its dollar redemption value no matter what happens. It is, in that way, the most reliable rewards currency. Into this category also falls the fixed-value redemption of currencies like Ultimate Rewards, Membership Rewards, BankAmericard Travel Rewards, and other rewards programs with fixed values, like Delta SkyMiles Pay with Points redemptions. Their reliability is unimpeachable.
2. IHG Rewards anniversary free night certificates. In the several years I've been travel hacking, I've never seen an IHG property that I would be willing to transfer points, buy points, or manufacture points in order to book. But they really do have a Chase IHG Rewards credit card that gives you an annual award night at any IHG Rewards property in the world! I've never seen a report of the certificate not being honored for any reason, except the chain's preposterously loose rules on award availability. As far as I can tell the thing is completely reliable. Compare that to Marriott's anniversary night certificates, which have become almost unredeemable as properties continually migrate up out of Category 4.
3. Flexible Ultimate Rewards. Chase Ultimate Rewards points held in a Sapphire Preferred, Sapphire Reserve, Ink Bold, or Ink Plus account are more valuable than cash but slightly less reliable, since their value depends in part on the value of transferred points. One component of the value of a flexible Ultimate Rewards point is the value of one United Mileage Plus mile, but the value of a United Mileage Plus mile is highly volatile, so that portion of the value of an Ultimate Rewards point is also volatile. Nonetheless, Chase strongly supports the 1:1 transfer ratio of Ultimate Rewards points to their partners, so the reliability of the program overall is raised by the relative constancy of programs like World of Hyatt and Southwest Rapid Rewards.
4. US Bank Flexpoints. Long-time readers know I love the US Bank Flexperks Travel Rewards Visa because of its generous bonused earning categories, but the process of redeeming Flexpoints introduces some unreliability into the system. Flights will sometimes be shown with odd fare differences which push them into a higher redemption band, for example. Nonetheless, the ability to redeem Flexpoints for between 1.33 and 2 cents per Flexpoint makes them one of the most reliable currencies around.
5. Flexible Membership Rewards. Here the problem of transfer partner volatility is magnified by the eclectic range of partners Membership Rewards has. For example, in 2015 the transfer ratio to British Airways Avios dropped 20%, from 1000:1000 to 1000:800. Then in 2016 British Airways created a special exception to their distance-based award chart in order to charge between 33% (off-peak) and 60% (peak) more for business class flights between Boston and Dublin on Aer Lingus. Today, you may need to transfer 75,000 Membership Rewards points to Avios to pay for a flight that would have cost 37,500 Membership Rewards points before the two devaluations. This doesn't mean that Membership Rewards points themselves have radically decreased in value (how often do you fly between Boston and Dublin?), but the example illustrates the way in which their reliance on transfer partners for value introduces a lot of volatility into the value of their rewards currency, since they don't control their partners' award redemption rates.
6. Southwest Rapid Rewards. Unlike a true fixed-value currency, Southwest Rapid Rewards points have fixed values only within each fare bucket: Wanna Get Away (between 1.4 and 1.6 cents), Anytime (about 1.1 cents), and Business Select (about 0.9 cents). That means that while you know you'll get one of those three values, which one you get depends on availability, reducing in my view the overall reliability of the program. Southwest enthusiasts avoid this problem by carefully watching the schedule and snapping up Wanna Get Away fares as soon as they become available, increasing the overall reliability of the program for them, at least for flights booked far enough in advance.
7. World of Hyatt. According to the Hotel Hustle database of search results, the lowest value redemption at Hyatt properties is 0.91 cents per point (the median is 1.78 cents). If my Chase accounts were abruptly closed and I had to speculative transfer my entire Ultimate Rewards balance, I would choose World of Hyatt in a heartbeat. Hyatt doesn't have properties everywhere in the world, which makes it hard to rely on as a first-string hotel rewards program, but if there's a Hyatt in your destination you're exceedingly likely to get a good redemption value.
8. Starwood Preferred Guest. Starwood has three different sources of value: their points can be redeemed for hotel stays at Starwood and Marriott, they can be transferred to airlines partners (either directly or through a Marriott Hotel + Air package), or they can be redeemed for revenue flights. That makes it almost impossible to get a bad value for your Starpoints, although it also causes the much more serious and common problem of hoarding Starpoints and being unwilling to redeem them for anything but the perfect redemption!
9. Hilton Honors. As I've been discussing lately, the biggest effect of the recent changes to Hilton Honors is that they've apparently deliberately increased the reliability of the program. While there will always be sub-par redemptions in any non-fixed-value loyalty program, Hilton appears to have increased the number of properties where points redemptions make sense compared to paying cash rates.
10. Legacy airline programs. I got into travel hacking at the very tail end of the period when, with flexibility and planning, it was still possible to fairly reliably book low-level domestic award tickets. Those days are over. Virtually all of my domestic travel today, in both economy and first class, are revenue tickets, not because revenue tickets have become cheaper but because award tickets have become completely unreliable as a means of booking domestic travel. International travel, especially on partners, hasn't seen quite as bad a gutting, and flexibility and planning still go a long way to booking flights overseas. Having access to legacy airline currencies through Ultimate Rewards, Membership Rewards, and Starpoints is still a reasonable tactic in case you happen to find award availability, but I don't think it can be the cornerstone of a strategy any longer.

Conclusion

There you have it, my completely subjective top ten ranking of rewards programs by reliability. This is certainly not the only ranking possible: those whose travel regularly brings them to expensive cities with Starwood properties will find they're able to get consistent value from Starwood Preferred Guest, and those who live in cities with many international partner airlines will likely get more consistent value from legacy airline programs than I do. But today, a combination of cash back, Ultimate Rewards or Membership Rewards, and one or two strong hotel programs seems most likely to help you pay as little as possible for the trips you want to take.

Booking Southwest flights with Flexpoints and Ultimate Rewards

I previously wrote up my experience booking a Hyatt all-inclusive resort in Jamaica. That left the question of how to get there. While I'm not ready to be seduced by Southwest, I waited to pull the trigger a bit too long and the price difference between the nonstop Southwest flight and one-stop options on real airlines shrank enough to convince me to give them a shot, despite my reservations.

Chase Ultimate Rewards points and US Bank Flexpoints can be used to book Southwest flights

Southwest famously doesn't participate in the public Global Distribution System that real airlines use, which is why their fares don't show up on ITA Matrix, Google Flights, and online travel agencies (Google Flights will show you Southwest routes, but not fares).

But the Chase Ultimate Rewards travel center and US Bank Flexperks Travel Rewards travel contractor can book Southwest fares over the phone.

Redeeming Chase Ultimate Rewards points for travel on Southwest

To make an Ultimate Rewards redemption on Southwest call 866-951-6592.

Like all Ultimate Rewards travel redemptions, points are worth 1.25 cents each for travel on Southwest, and you can use any number of Ultimate Rewards points against the purchase price and pay the remainder in cash. After transferring points to Hyatt to pay for our stay in Jamaica, I didn't have quite enough Ultimate Rewards points left to pay for my partner's ticket, so I redeemed my entire Ultimate Rewards balance and paid the remaining amount with my Chase Ink Plus card, which should earn 2 Ultimate Rewards points per dollar if the purchase codes correctly as a Travel Center reservation.

Theoretically I could have redeemed my Ultimate Rewards balance for a cheaper Southwest fare, then cancelled that flight and used the value towards the ticket I really wanted while paying the difference with the card of my choice. Since this was my partner's ticket and as far as I know she doesn't even have a Rapid Rewards account, I decided to keep it simple and just book the tickets I really wanted.

After feeding the Ultimate Rewards agent the dates and flights I wanted, she came back with a price about $90 cheaper than the fare available online. I had heard of this happening before, so told her to go ahead and make the reservation. After giving her all of my partner's information and my credit card information, and waiting on hold for a while, she came back and told me that flight was not available.

After going back and forth a few times, it turned out what she really meant was that that fare wasn't available, which didn't surprise me, and she was ultimately able to book the fare I had found online.

The call took a total of 45 minutes.

Redeeming US Bank Flexpoints for travel on Southwest

To redeem Flexpoints for travel on Southwest call 888-229-8864. The "Rewards Center" US Bank uses is not open 24 hours a day, but has pretty reasonable hours, something like 7 am to 11 pm, Monday through Saturday (I didn't catch their Sunday hours, but they were closed at 10:50 pm Eastern on Sunday).

After taking down my trip details, the agent explained that in order to book international travel on Southwest he had to call them, get a fare quote, put the reservation on hold, and then return to confirm the fare and itinerary with me. He asked me if there was a particular fare I was expecting, which seemed like a common sense precaution to make sure we were looking at the same flights and dates. It was unclear to me whether the same procedure is required for domestic travel on Southwest.

While the Southwest Anytime fare I booked for my partner was still available for about $900, a Business Select fare was also available for $950. Since I was redeeming Flexpoints, I knew that either itinerary would cost 50,000 Flexpoints and I told the agent to look for the Business Select fare. He was happy to do so and, after putting me on hold for 25 minutes or so, returned with the same fare I had found online.

Since Southwest flights can't be booked online, he also waived the $25 phone booking fee.

The call took a total of 44 minutes. If it seems strange that the call took almost as long as my call with Chase did even though the agent was able to accurately find the correct fare on his first try, the reason is the two lengthy holds he placed me on while calling Southwest.

Adding your Rapid Rewards number

Neither agent asked for a Rapid Rewards number to add to the reservations, and I didn't ask since I was getting pretty bored of waiting on the phone. However, both agents provided the Southwest confirmation number, which made it easy to pull up the reservations on Southwest.com. The Flexperks Rewards Center also provided an "agency" confirmation number they use internally — be sure you get the Southwest confirmation number as well.

Strangely, I was unable to add my Rapid Rewards number to my reservation while logged into Southwest.com. After logging out, however, I was able to pull up my reservation and manually add my Rapid Rewards number, and the reservation immediately appeared in my account.

Grocery store spend and the possibilities of loyalty-agnostic travel

I'm a big proponent of the US Bank Flexperks Travel Rewards card, since I think it provides the straightest path for most people to pay as little as possible for their airline tickets. With the recent return of PIN-enabled prepaid debit cards to many grocery stores, that view has been confirmed and even strengthened.

But it's also true that another favorite card of mine, the American Express Hilton HHonors Surpass card, also earns bonus points at grocery stores. And of course unbonused spend can earn between 2% and 2.625% cash back, and at lower cost than grocery store manufactured spend.

So I thought it would be useful to revisit some break-even points, or what I call imputed redemption values, for spend on a variety of cards, to help readers think through the best way to book their flights and hotel stays.

Three opportunities, three costs

The simplest way of approaching the tradeoffs between bonused grocery store spend and unbonused spend is to look at the cost per point. Using only the most widely available methods of manufacturing spend, you'd arrive at these simple calculations:

• US Bank Flexperks Travel Rewards, 2 Flexpoints per dollar spent at grocery stores: 0.62 cents per Flexpoint;
• Hilton HHonors Surpass American Express, 6 HHonors points per dollar spent at grocery stores: 0.21 cents per HHonors point;
• 2% cash back credit card at unbonused merchants: 0.43 cents per cent in cash back.

That final line allows us to have an anchor for the kind of value we should expect to get from Flexpoints and HHonors points that would make them competitive with unbonused cash back. For example, if you redeem Flexpoints for cash back you'll never come out ahead compared to a 2% cash back card, since you're paying 44% more for each Flexpoint, which are, like pennies, worth just a penny each.

The flip side of that calculus is that all Flexpoint airfare redemptions above 1.44 cents each are cheaper than paying cash for the same trip. For example, a $288 plane ticket would cost 20,000 Flexpoints, and $124 in out-of-pocket grocery store fees, while the same $288 plane ticket paid for with cash earned on unbonused spend with a 2% cash back credit card would cost $123 in fees. That means for all airline tickets between $289 and $399 (or any other price point that falls between a multiple of 10,000, 0.0144, and 0.2), the Flexpoint redemption is cheaper than the cash ticket.

Now let's do the same math with Hilton HHonors points earned at grocery stores with a Surpass card. Due to the difference in total price per point, compared to a 2% cash back card, Hilton HHonors points have to be redeemed not at 0.33 cents each, but rather at 0.49 cents each. For example, a 5,000 HHonors-point stay would cost $10.50 in fees, while $10.50 in fees would earn $24.42 in cash back — 0.49 cents per point. This is a purely mechanical calculation: a 95,000-point HHonors redemption would cost $199.50 in fees, while $199.50 in fees would earn $463.95 in cash back — 0.49 cents per point. That produces the simple maxim that stays which offer more than 0.49 cents per HHonors point are cheaper if paid for with HHonors points than with cash.

Flexpoints can also be used for hotel stays

There's one additional wrinkle worth mentioning here: Flexpoints can provide value on hotel stays that are too cheap for HHonors redemptions. I'll be the first to admit that this doesn't happen very often, but it's something to keep an eye out for: when Flexperks redemptions fall in the 1.44 to 1.5 cent per point band on hotel redemptions, they still entail a lower out-of-pocket cost than manufacturing the needed cash with unbonused spend on a 2% cash back card.

For example, a $144 stay (including taxes) would cost 10,000 Flexpoints ($62 in fees), and paying in cash earned with a 2% cash back card would require $62 in fees. Of course, it might be cheaper yet depending on the HHonors point rate available, if any.

This makes Flexpoints one of my favorite currencies to earn speculatively: if good flight opportunities present themselves, they can be redeemed for valuable flights; if middling hotel opportunities present themselves, they can be redeemed for middling hotels; and if no opportunities present themselves, they can be redeemed for cash.

While it's easy to posit a general principle that Flexpoints should be spent where they're most valuable — on paid airline redemptions — it's also true that they're more valuable redeemed for hotel stays than for cash, so if you find yourself in the situation of having to choose between spending precious cash or spending down a constantly growing balance of Flexpoints, you'll probably thank yourself later if you save the cash today.

Overdiversifying, underdiversifying, and practicing what I preach

I recently had the pleasure of redeeming 30,000 American AAdvantage miles for a $290, one-way domestic plane ticket, which gave me an excellent opportunity to reflect on some travel hacking wisdom I never get tired of preaching: the least valuable point is the one you don't redeem.

The real risk of underdiversifying is paying cash

The point of travel hacking should be to pay as little as possible for the trips you want to take. I'm absolutely indifferent to whether you want to travel domestically or internationally, by plane, train, or automobile, with your family or alone, in first class or in steerage. I just want to help you spend as little money as possible to do it.

Diversifying your points balances is a way of achieving that. With no rewards currencies at all, you'd pay the retail cost for all your travel, minus any savings achieved by booking through online portals, paying with discounted gift cards, taking advantage of best rate guarantees, and the other techniques we have available.

With a single rewards currency, you can start to save money when you're able to find award space with that loyalty program. If you only collect Hilton HHonors points, you're in good shape as long as you're visiting a city with a Hilton property, and that property has award space. You'll still pay cash for your airfare, but hotels can often be the biggest expense on a trip, so the savings there can quickly add up.

With multiple rewards currencies, you can start to bring down your costs considerably. If you earn Ultimate Rewards points with an Ink Plus card, then you'll be able to save money by redeeming Hyatt Gold Passport points when you visit a city served by Hyatt, and by redeeming United, British Airways, Flying Blue, and Southwest points when those airlines and their partners make award space available. Even better, when award space isn't available, you can still get a 20% discount on revenue flights by redeeming Ultimate Rewards points at 1.25 cents each.

I won't belabor the point: having more rewards currencies reduces the chance that you'll have to pay retail for your travel. As long as those rewards currencies are acquired cheaply enough, that means each redemption saves you money on your travel, which, again, is the point of the game.

The real risk of overdiversifying is unredeemed balances

Many travel hackers and bloggers believe that "earning and burning," or keeping points balances as low as possible by redeeming award currencies roughly as quickly as they're earned, is the best approach. The reason normally given for this is that regular devaluations decrease the value of earned miles and points, so your balances will never be worth as much in the future as they are in the present.

Meanwhile, I spend no time thinking about devaluations, and don't think you should either. Your travel hacking practice should be giving you big enough savings on each redemption that even substantial devaluations won't affect the calculus of redeeming miles versus spending cash.

But the logic of diversifying your points balances really can be taken too far!

Above I said that when you don't have the right currency to pay for the trip you want to take as cheaply as possible, you run the risk of having to pay cash and not save any money at all. One way to react to that possibility is to accumulate high balances in as many programs as possible, to ensure that you always have enough of the right currency for the job.

The problem with that approach is that it exposes you to the real risk of overdiversifying: unredeemed balances. From hundreds of interactions with readers and friends in the community, I have come to believe that accumulating large, unredeemed balances is the single biggest mistake made by even experienced travel hackers.

There's no mystery to how it happens: a new credit card is launched, or refreshed, or suddenly has a much higher-than-usual signup bonus. Once the credit card affiliate bloggers get their links, you see two or three weeks of blanket coverage online. Sometimes the coverage even runs over into the mainstream media. Even those who are disgusted by the orgy of profiteering start talking about the orgy of profiteering, bringing the offer in front of even more eyeballs.

And then, like clockwork, people start asking: "I have all these Wyndham/Membership Rewards/Amtrak/Choice/Trump Shuttle points. What do I do with them?"

The answer, unfortunately, is usually "nothing."

Pay as little as possible for the trips you want to take

Without travel hacking, most of us couldn't afford to spend a week in the Maldives. But even without travel hacking, many of us could afford to fly home for Thanksgiving.

Paying $150 for a $600 plane ticket you'd otherwise pay cash for is a savings of $450.

Spending $2,500 for a trip someone else paid $15,000 for is an expense of $2,500.

I've heard that the Maldives are lovely, and I'm sure I'd enjoy visiting. But speculatively accumulating huge balances at random as signup bonuses change and cards are launched or discontinued, instead of targeting programs that save you money on the trips you want to take is a way of spending money, not saving it!

Again, this says nothing about the merits, or lack thereof, of the Maldives, of your favorite Park Hyatt, or of Emirates First Class. I'm sure they're lovely. But being talked into taking someone else's idea of the perfect trip is an expensive mistake — travel hacking just makes it less expensive.

Conclusion: my fantastic AAdvantage redemption

All of that brings me to my 30,000-mile, $290 one-way American Airlines ticket. If you believe that the goal of travel hacking is to get the highest dollar value from each redeemed mile, this is a preposterous redemption — less than a penny per point!

But I had a different problem: an unredeemed American Airlines balance. I'd earned the miles cheaply, through Barclaycard US Airways anniversary miles, a negative-interest-rate loan I took out, and some experiments I'd been running through the American Airlines shopping portal, so I was certainly saving money on the ticket compared to paying cash.

But even more importantly, I judged ridiculous the idea of paying $200 (the cash value of the 20,000 US Bank Flexpoints I'd need to redeem) or $232 (the cash value of the 23,200 Ultimate Rewards points I'd need to redeem) when I had more than enough AAdvantage miles sitting in my account unredeemed. I didn't have a plan for the miles because I had earned them more or less accidentally: I had overdiversified into AAdvantage miles, and was sitting on a balance of miles that were, unredeemed, worthless to me.

The point of travel hacking is to pay as little as possible for the trips you want to take. I wanted to take a $290 flight and $5.60 in taxes and fees was as little as I could pay for it. Mission: accomplished.

Pro tip: booking premium cabins with US Bank Flexpoints

As fans of US Bank Flexperks Travel Rewards know, and people who recently applied for a personal or business card during the recent Summer Olympics promotion will soon find out, the third-party travel provider US Bank uses no longer allows multi-city itineraries to be booked online through their travel portal, although such tickets can still be booked over the phone at no additional charge.

Booking premium-cabin tickets is possible to do online, although you need to be extremely careful while doing so, and under most circumstances I think you'll be better off booking such tickets over the phone as well.

Here's how I found that out while making a first class reservation over the weekend.

US Bank allows you to search for "business class" flights

When conducting a search for flights through US Bank's travel provider, you can no longer search for multi-city itineraries, but if you select "Advanced Search" you can search for "Business Class:"

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Check your search results carefully for class of service

Here's the first search result for a "Business Class" flight between Washington and Lexington, KY:

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There's something that should be immediately suspicious about this search result, but which I missed the first time: there are 9 seats available. What Delta Connection flight has a First Class cabin with 9 or more seats?

The answer is revealed when you expand the flight details:

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This flight books into the "W" Comfort+ fare class, not into the correct "P" First Class fare bucket.

The key takeaway here is that this is your one and only chance to see what cabin you're booking into: on none of the subsequent checkout screens is the class of service listed.

"Business Class" search results are all over the place

At first I thought this was a Delta-specific situation, in which you can book Comfort+ but not First Class seats online.

But no! Here's a flight correctly pricing out in Business class between JFK and LAX:

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Basically it seems like a combination of sloppy programming on the part of the travel agency and the exploding number of fare classes and cabin configurations by the airlines. On 3-cabin aircraft you can book into the Business cabin, and on 2-cabin aircraft you might be booked into First class or Comfort+ depending on what fare classes are available and on how the online search engine is feeling that day.

You can change flights within 24 hours for $30 (or free)

After realizing I had mistakenly booked a flight in Comfort+, instead of First Class, I called US Bank's travel agency, QualityRewardTravel, at 1-866-814-1293. After waiting on hold for 5 or 10 minutes, I explained the situation and gave my Agency Record Locator to the phone agent. She told me that within 24 hours of booking, flights could be changed or cancelled for a fee of $30.

I told her I was calling because their website had made a mistake, and that I wasn't going to pay to fix it.

After asking her supervisor, she made a "one-time" exception and changed the flight into First Class for free, noting that the flight cost the same number of points as my original reservation.

Make multi-city and premium-cabin reservations over the phone

Multi-city Flexperks reservations already have to be made over the phone, but I would suggest that any premium cabin flight involving a connection should also be booked over the phone, since the flight search results do not show the class of service available on each leg. It seems likely that they show itineraries where business or first class seats are available on only some of the flights. Alaska Airlines is notorious for doing this in their search results, although they at least alert you when you select a mixed-cabin itinerary.

Of course, when the cabin you want simply doesn't appear in the online search results, you'll also need to call to book.

Conclusion

One of the great things about US Bank Flexpoints is that they allow you to take advantage of price compression, when nonstop, more convenient, or premium cabin itineraries cost the same number of Flexpoints as inconvenient or economy class flights. However, US Bank's travel agency doesn't make it as easy as it should be to take advantage of that key feature of the program.

Some bonus categories I never think about

I belong to the noisy-but-unpopular school that believes everyday spending should properly be a rounding error in the typical travel hacker's overall miles and points strategy. That's because more miles can be earned in an afternoon of light manufactured spending than will be earned in a month or year of trying to earn as many points as possible on actual purchases.

The flip side of that is a blind spot when it comes to the bonused categories of spend on cards that I already carry, either for purposes of manufactured spend or recurring annual bonuses. In the interests of keeping my blind spots few and far between, I decided to take a closer look at a few of those categories.

Hotels

With increasingly limited access to gas station manufactured spend, you may find that you're not able to manufacture $50,000 in spend in a Chase Ink Plus's double point category of "gas stations and hotel accommodations when purchased directly with the hotel."

Since Ultimate Rewards points are worth 1.25 cents each when redeemed for paid airfare, or more when transferred to Hyatt Gold Passport, Southwest Rapid Rewards, and (usually) United MileagePlus, you're strictly better off paying for your hotel stays with a Chase Ink Plus than with the 2% cash back card you use for your other everyday purchases. One possible exception is if you are having trouble finding eligible expenses to redeem your Barclaycard Arrival Plus, Capital One Venture, or BankAmericard Travel Rewards miles against, although you can always consider refundable reservations in that case.

I'm fond of paying the revenue component of my Hyatt stays with Hyatt gift cards purchased at a discount using cashback rewards, but if you pay for Hyatt stays directly, the 3 Hyatt Gold Passport points earned per dollar with the Chase Hyatt credit card are superior to the 2 Ultimate Rewards points earned by both the Chase Ink Plus and Chase Sapphire Preferred — assuming you plan to transfer your Ultimate Rewards points to Hyatt Gold Passport at any point in the future.

The math is somewhat less favorable when paying for Hilton stays with the American Express Hilton HHonors Surpass card, which earns 12 HHonors points per dollar spent at Hilton properties. According to the Wandering Aramean visualization tool, 12 HHonors points are worth a median 5.376 cents, while 2 Ultimate Rewards points, transferred to Hyatt Gold Passport, are worth a median 3.724 cents. That's an edge, but it's an edge that's highly dependent on your actual redemption pattern.

Finally, the Chase Marriott Rewards Premier credit card is by and large not worth holding for either its recurring benefit (one free category 1-5 night each account anniversary) nor for manufactured spending (one elite night credit for each $3,000 spent). But if you do have it for one reason, the other, or both, you are still unlikely to get more value from the 5 Marriott Rewards points earned per dollar spent at Marriott properties than you would from 2 Ultimate Rewards points earned on the same spend — unless, of course, you are already planning to transfer Ultimate Rewards points to Marriott for some reason, like booking a 7-night Hotel + Air package.

Restaurants

As I've written before, most of the time one or more rotating cashback bonus card is offering 5% cash back at restaurants, so the idea of needing a particular card "dedicated" to restaurant spend is misleading: you should use your most lucrative card, which will, at least 6 months of this year, be a Discover it or Chase Freedom card. But that leaves the other half of the year, which makes it a legitimate question whether there are better cards than a straight 2% cashback card for use at restaurants.

Using the same median Hilton HHonors point value as above, the 6 HHonors points earned per dollar with the Hilton HHonors Surpass American Express at restaurants slightly edges out a 2% cash back card, earning the equivalent 2.688 cents per dollar spent, while the Chase Hyatt credit card earns 2 Hyatt Gold Passport points per dollar spent, or a median 3.724 cents per dollar.

This matters because the Chase Sapphire Preferred, often promoted by affiliate bloggers for its high affiliate payout and earning rate on travel and dining, earns 2 Ultimate Rewards points per dollar. In other words, for just $75, rather than $95, you can earn 2 Hyatt Gold Passport points at restaurants with a card that also offers a free night at Category 1-4 Hyatt properties worldwide. That's a fact that's helpful to keep in mind the next time someone tells you the Chase Sapphire Preferred is the best card to carry for restaurant spend.

Airline tickets

Finally, I very rarely find myself booking air travel directly through an airline (preferring to use miles, Ultimate Rewards points, or Flexpoints earned with a US Bank Flexperks Travel Rewards card), but if you do book air travel directly, or need to pay the taxes and fees attached to award tickets, you can do better than a 2% cashback card with cards you may already carry.

If you periodically sign up for a "spare" US Bank Flexperks Travel Rewards card, for example during the current Olympics promotion, you can use that extra card to pay for airfare, earning 2 Flexpoints per dollar spent, and transfer the resulting bonus Flexpoints to your primary account for future redemptions.

If you use an American Express Premier Rewards Gold card to manufacture grocery store spend on an ongoing basis, you may as well use it to pay for airfare, earning 3 Membership Rewards points for your airline tickets as well, which can be transferred to potentially lucrative travel partners like Delta SkyMiles. The same goes for a Citi Prestige card you may carry to raise the value of your existing Citi ThankYou points.

And the Chase Hyatt credit card earns 2 Hyatt Gold Passport points per dollar spent on airfare, giving it an edge over a straight 2% cashback card, depending as always on your actual planned redemptions.

Conclusion

I don't think it's useful, let alone necessary, for a travel hacker to stress over every possible bonus point at every possible merchant. But for the kind of purchases that you know you make frequently, it's at least worth considering finding additional value by keeping in mind the bonus categories offered by cards that you already use to manufacture spend, or hold for their recurring annual benefits.

As I indicated above, I don't usually pay for airline tickets or hotel stays with credit cards. But digging into my existing cards' bonus categories, I realized I could replicate the majority of the Chase Sapphire Preferred's "travel and dining" bonus categories with cards I already had: the Chase Ink Plus and Chase Hyatt credit cards. Between the two, they cover hotels, airlines, restaurants, and rental cars.

Obviously that leaves out things like cruises, travel agency bookings, local transportation, and so on. But they do include the bulk of reimbursable business travel, so if you do spend a large amount in those categories each year, you may find yourself coming out ahead by examining the bonus categories on your existing card card portfolio.

When deals don't stack

One of the most popular approaches to travel hacking is finding deals that "stack:" when you can apply multiple techniques to a single transaction, you can bring your out of pocket expenses even lower than you would applying any one of them individually.

Some deals stack

Since stacking deals can amplify total savings, deals that stack tend to get a lot of attention. For a simple example, you might click through a cash back portal to Hotels.com, apply a Hotels.com coupon, and pay for your stay with an Arrival Plus card. The cash back portal and coupon lower the amount you're charged, and then your final out-of-pocket cost is reduced further by redeeming against the transaction Arrival Plus miles you've manufactured as cheaply as possible.

Stacked deals can get much, much more complicated that that: Frequent Miler has painstakingly shown how portal cashback, coupons, credit cards, and even the tax code can be stacked to earn a Southwest Companion Pass with as little out-of-pocket expense as possible.

Most deals don't stack

What's usually glossed over by credit card salesmen is that most deals don't stack, which is important to both understand and take into account when developing a travel hacking strategy.

To take an example from last Thursday's post, the 4th-night-free benefit of the Citi Prestige card gives a roughly 25% discount off paid stays of exactly 4 nights. Ideally, you'd like to stack that with something like the Barclaycard Arrival Plus or BankAmericard Travel Rewards credit card, to redeem cheap points against your final bill. But because the stay has to be paid for with the Citi Prestige, your discount is limited to 25% — less than you'd save simply paying for a 4-night stay with one of those credit cards.

Another example is the American Express Delta Platinum and Reserve credit cards, which offer an annual companion ticket in economy (Platinum) or first class (Reserve). Such tickets offer a discount of almost 50% off 2 domestic tickets (though only the primary ticket earns redeemable and Medallion Qualifying miles). But manufacturing spend at grocery stores with a US Bank Flexperks Travel Rewards card offers a discount of, for example, between 53.2% and 68.9% on paid airfare! Buy two tickets with Flexpoints and not only are you unconstrained by fare class, but both tickets will earn miles and be upgrade-eligible, as well.

That doesn't mean the Delta American Express cards are bad cards (I personally have a Delta Platinum small business card). It does mean you need to think critically about the value of the companion ticket, perhaps using it to book travel for friends or relatives who will reimburse you (maybe) rather than using it for your own travel.

Conclusion

The question, "can I stack this deal?" should be one of the first ones you ask whenever you see a pitch for a new credit card or discount on purchased points, but also as you proceed through your everyday routine. If the answer is yes, you can amplify your savings by applying as many angles as possible to each transaction.

If the answer is no, that doesn't render a deal instantly worthless. But it is an invitation to examine the deal more closely, to ask whether and how you'll incorporate it into your overall travel hacking strategy. It may turn out to be superior to your other techniques, and it's those other strategies that should yield to the new, cheaper method of paying for your travel.

But if it offers a smaller discount (like the Prestige 4th-night-free), less-flexible booking options (like the Delta companion tickets), or interferes with your other goals, like elite status requalification, then you should take seriously the possibility that you will get less value, or have greater out-of-pocket expense, then you would pursuing a different strategy that incorporates more, better, and stackable deals.