Wednesday, July 9, 2014

Business Class Flights with Bank Points

I don't know about my parents, but I've been really excited for our upcoming trip to Europe since February when we booked it using United frequent flyer miles just before the Great Devaluation.

For 100,000 miles each, my mother and I are flying in business class on Lufthansa to Rome, Italy and back from Athens, Greece. Our "out of pocket" cash costs are just $163 per person.

United Miles & Chase Ultimate Rewards
Two round-trip business class tickets on Lufthansa during peak summer season cost us 100,000 United miles + $163 cash each ticket (post-devaluation, they cost 140,000 miles now). A normal cash fare priced out at $4,326 per person, so each United award implied a 4.1 cent / mile redemption. Again, remember that United miles can be used to redeem on other Star Alliance airline partners, such as Lufthansa.

However, at the time of our February redemption, my father's United account only had about 30,000 miles. So he transferred 170,000 Chase Ultimate Reward points to his United account, and the miles showed up instantly.

He was able to do this transfer, because he had a Chase Sapphire Preferred credit card at the time. He also had a Chase Ink Bold credit card which would have worked as well. These premium Chase cards ($95 annual fee, but waived the first year) allow you to transfer UR points to United Airlines or Hyatt Hotels among other travel partners.

So the past few months of earning 2x UR points from our regular dining and travel spend meant we were essentially getting a 8.2% rebate from using our Chase Sapphire Preferred card. And the 5x bonus for using our Ink Bold card for our cell phone bills, cable/internet and office supply stores was earning us 20.5% rebates. Pretty impressive return for just paying your monthly bills, huh?

Citi Thank You Points
Of course, my mother and I wouldn't go to Europe without my dear father. And he wouldn't be too happy sitting back in coach while my mother and I flew upfront.

So he booked his own business class tickets on the exact same flights as ours. But instead of using United miles, he used his huge stash of Citi Thank You Points instead. A few reasons we booked his ticket separately like this:

1. We didn't have enough United miles to book 3 seats in business class (100,000 miles per person).
2. United didn't have 3 available award seats on the same flights.
3. Tickets bought with Citi Thank You Points are considered cash tickets.

His business class ticket cost 346,101 Citi Thank You Points, which was a fixed 1.25 cents/point redemption. But unlike my mother and me, my father would also earn his normal United miles and elite status credit for his premium cabin ticket -- flying 9,483 miles.

Since he has United Gold status, he would earn an additional 50% bonus on all his flights. Plus another 50% Premium cabin bonus for his Z fare class tickets on the return. So he would actually earn 16,721 United miles. Assuming those are only worth 2 cents/mile (vs. the 4.1 cents/mile rate we were just able to redeem at), that's another $334 of value. A free flight AND more frequent flyer miles! For redeeming bank points! Pretty sweet.

Now, 346,101 is still a lot of TY points, but since we had 12 months of a special 5x promotion on my father's Thank You Preferred Mastercard, we took advantage and racked up a ton of TY points in 2013 through manufactured spending techniques such as Vanilla Reloads and Amex Bluebird.

Now, this particular 5x promotion is no longer available anymore, but here's how my family took advantage of it when it was active. If it sounds a bit complicated, it's because it is to many people.

My father needed access to 4 different cards:

1. Citi Thank You Preferred
2. Vanilla Reloads
3. American Express Bluebird
4. Citi Thank You Premier

As mentioned in an earlier January post here, our Preferred card only gave us a super low 6,000 TY Point sign up bonus. But the devil is in the details. It also had a 5x bonus on all gas, grocery and drugstore spend for the first year. The wonderful thing for 2013 was that the drugstore CVS sold Vanilla Reload cards which could be used for Manufactured Spend if paired with the Amex Bluebird card. You can google this technique yourself, but basically, each $500 Vanilla Reload card purchase earned my father 2,500 Thank You Points (worth $25.00).

Then the $500 would be loaded onto the Bluebird card. Then the Bluebird card would pay off the $500 charge on the original Preferred card. So we didn't really "spend" anything in the end, but took advantage of the system to achieve our family goal of subsidized travel. Even after factoring in the $3.95 fee for each Vanilla Reload card, the scheme still generated $21.05 of profit per card.

Then since my mother also had the Thank You Premier card, we could redeem the points for 20% fewer points than normal. So instead of redeeming for 100 points for $1 of flight value, we could redeem just 80 points for that same $1 of value. Said another way, our Thank You points were now worth 1.25 cents/point instead of 1.00 cent/point. So the $25.00 of value each $500 Vanilla Reload card we purchased became $31.25 of value.

Now, $31.25 isn't a lot of money towards a flight to Europe, but when you do more than 1 Vanilla Reload card at a time (as we did during our Phoenix trip last year), you can start to see how scale-able this process can be. Each card shown below is worth $500 and earned us $31.25 worth in Thank You points.

Towards the last several months of our 12 month promotional period, we were "spending" about $15,000-18,000 a month, generating anywhere from 75,000-90,000 TY points each period. In case you're not Asian and need a calculator, that's about $938-1,125 in points each month. After a few months, my father had enough to book his tickets on our same Lufthansa flights.

No comments:

Post a Comment