Friday, November 28, 2014

US Flexperks

My father was starting to run out of good cards to sign up for. Typically, he looks for at least $400 of value when he signs up for a card. This is a pretty low hurdle given how many cards out there offer well over $500 of potential value. But when you've already applied to all the best cards, you start to lower your expectations.

So along with 4 other cards, my father applied for the US Bank FlexPerks card in March 2014 which gave him 20,000 FlexPerk points after spending $3,500 on the card. 20,000 points may not sound like much, but you have to remember that not all points were created equal. FlexPerk points can be worth up to 2 cents/pt, so this sign up bonus had potential to be $400 of value.

We quickly hit the minimum spend requirement and earned our bounty. But the challenge with this rewards program scheme was that he would have to either:

(a) buy a single airline ticket and have a separate reservation for my mother and me; or
(b) use the US Bank credit card to buy my mother and my tickets (which would be an inferior return on a large purchase).

For example, my father earns 3x United redeemable miles and 1x United elite qualifying miles when using his United Select credit card on - versus just 2x Flexpoints on his US bank card.

However, as luck would have it, my father's friend, a partner at Five Star Painting IL, needed to fly from Chicago to Orlando for a National Franchisee conference in January. A single person itinerary!

Now we had to see if using our 20,000 FlexPerk points were worth it relative to just purchasing the flight outright using cash.

I won't get into all the details of the Flexperks program as you can easily Google that yourselves. But the basic idea is that you get "up to $400" of ticket value for 20,000 points, or "up to $600" of ticket value for 30,000, etc...

That means, you have a chance to maximize your points redemption at 2.0 cents/pt IF AND ONLY IF you had a $400.00 ticket you wanted to buy or some multiple of $200.

For example, if your target ticket was $400.01, then you'd need to redeem 30k points (getting only a 1.33 cents/pt). So chances are, we'd have to shoot for something between $350-400 for a realistic redemption (1.7-2.0 cents/pt).

However, you do earn frequent flyer and elite qualification miles for these redemptions since the airline views these transactions as regular cash purchases. So the TRUE redemption value is likely even higher, depending on how you value the miles you earn. But the downside appears to be that these redemptions don't have the same consumer protections that direct purchases would (ie, 24 hour free change/cancellations).

Fortune Favors the Prepared
So when we saw there was a $380 flight itinerary for a round trip Chicago-Orlando flight on United and American for the ideal departure times, my father finally found an opportunity to redeem his 20k Flexpoints at a 1.9 cents/pt value.

Saving $380 cash was a nice benefit, though there was also a $298 fare that his business partner could have used. However, that return flight departed Orlando at 8:30PM and arrived in Chicago at 10:30PM. My father agreed that getting home 5 hours earlier to actually spend time with his family that weekend was worth the $82 premium (that would likely have been spent on a travel dinner/drinks anyway).

Sometimes you get lured into accumulating a different rewards currency that seemingly has worthwhile value. But unless you actually redeem those reward points, they're pretty much worthless.

As you LCD readers know, we've primarily been a United / Starwood / Chase / Citi family who sometimes cheats with American / Hyatt / IHG / Hilton opportunistically. But when we go to our personal 3rd tier travel loyalty points programs (Delta / Club Carlson) and bank programs (US Flexperks), you can often get stuck with a handful of "potentially valuable" points that actually are harder to use.

We lucked out in this case since we found a worthwhile redemption, but this situation reminded us that not all point currencies are worth chasing after.

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