Looking for Vanilla in Scottsdale

Since we had 4.5 days in Scottsdale, we decided to trek around a bit and visit a few places that we don't have in New York.

The first place was Menchie's, a frozen yogurt concept popular on the West Coast. While my mother was more of a Red Mango fan, she loved the self-serve concept as well as the kid friendly design and color scheme.

My parents, however, didn't love the actual yogurt itself though. While their variety of flavors were really unique and diverse (i.e., cotton candy, pop-arazzi popcorn, toasted marshmallow, etc.), we found the flavor to be too strong and preferred a more muted frozen yogurt with just a hint of flavor. On the other hand, I'm more equal opportunity and love all frozen dessert flavors.

But the real treat was the other place we went to while in Scottsdale -- CVS. Why was the pharmacy chain such a popular spot for my parents, especially when there are so many in New York City?

Photo from "Million Mile Secrets"

Well, unlike the ones in Manhattan, these CVS stores sold the elusive Vanilla Reload cards and accepted credit cards as payment. I've eluded to these Vanilla Reload cards before (here and here), but the basic idea is that you buy these prepaid reload cards using a points earning credit card (loading up to $500 per Vanilla card) and pay the $3.95 fee. You will earn 504 points from this initial transaction.

Then we use the Vanilla to reload another card called Bluebird by American Express. The Bluebird isn't just a regular card, but rather it's an online checking account for people who don't want to (or can't) have regular accounts with traditional banks. Just log in online and have Amex send paper checks in the mail to whomever you want. Essentially, we are now able to use a (points earning) credit card to pay for things you normally had to use paper checks for.

Now that my father's Bluebird account was loaded, he can use it to send checks to our apartment landlord, make insurance payments, pay friends we owe money to, or better yet, pay down our credit card balances! So aside from the nominal $3.95/card fee, we can just rack up 504 points without actually spending $504 because we can immediately pay off the credit card used to buy the Vanilla Reload card in the first place. Looking at it another way, we bought 504 points for $3.95 or about 0.8 cents/point. When you can redeem your points at 2-4 cents/pt (or $10-20 of value per Vanilla card), you can see why this Vanilla/Bluebird transaction is so compelling.

And when your father has a special Citi Thank You Preferred card (no longer offered) that earns you 5 Citi Thank You points per $1 spent at drugstores, you understand why my father went overboard when we were in Scottsdale with these readily available Vanilla Reload cards at CVS. Those 2,520 Citi Thank You points per Vanilla Reload card are worth at least $25.20 in cash, but can be worth up to $31.50 of airline travel if transferred first to my mother's Citi Thank You Premier card. Said another way, each $500 Vanilla Reload card we bought was like earning $27.55 of "profit."

So how many cards did we buy during those 5 days in Scottsdale? According to my father, not enough...

Fair warning though, putting all your CVS spending on the same credit card will likely elicit suspicion from your credit card company. As such, it makes a lot of sense to spread out your transactions across a variety of different credit card issuers (Amex, Chase, Citi, Barclays, Bank of America, etc). The last thing you want is to have your bank shut you down for unusual behavior.

Citi Thank You & Free Car Rental

As I mentioned yesterday, we're spending the next 10 or so days in Colorado. However, unlike New York City, the Denver public transportation system is not quite as efficient. So we've rented a car to use for our trip here.

While late summer in Colorado is definitely not peak season, it still ends up being a little over $300 for the 10 days (which comes out to $30/day for the non-Asians). Now while I hope that $300 won't break my family's bank account, I'm sure anyone would like to save $300 to use on other fun things while they're on vacation.


Citi Thank You Points
That's where the Citi Thank You Points come in. Like Chase's Ultimate Rewards and American Express' Membership Rewards, Citi has their own internal point system called Thank You Points.

But unlike Chase & Amex, you cannot use TY points to transfer to airlines or hotels. You can only redeem them for merchandise, retailer gift cards or use them to book travel (flights/hotels) through their captive travel agency. Most of the time, you can only get a maximum of 1.0 cent per point of redemption value (ie, a $100 Best Buy gift card will cost 10,000 TY points).

Flight Redemption
However, if you (or a friend) have a Citi Premier Card ($125 annual fee waived 1st year) then you can redeem Citi TY points for flights at 1.25 cents per point. So if you have a friend with the Premier Card, you're best option is to transfer your TY points to their account and have them book flights for you. From the airline's perspective, it's as if you booked using cash, so you'll earn mileage and elite status credit.

Given we fly within the US as often as we do internationally, we like using our Citi TY points for domestic coach flights. This approach saves us cash, such as when when we booked our flights to Memphis this October for 50,568 TY Points, saving us $672 for 2 economy tickets (at the time of booking, TY point flight redemption rates were 1.33 cents/pt). For long haul international flights in business/first class, however, we're much better off using airline miles (United, American, US Airways, etc) because we'd need A LOT of TY Points to redeem for such an expensive ($2,000+) ticket.

Rental Car Redemption
But sometimes, my parents aren't trying to always "maximize redemption value" and would like to just save some cash for things they'd need anyway. For example, a rental car in Denver.

When renting a car using TY Points, you log into your account and then use their search engine (like you would Expedia or Travelocity) by inputting the dates and location you're looking for. Then the website will show you the options available at various $ and point prices.

Now, these prices may be different from what you'd find on Expedia or actual rental car websites, so be sure to look at all your options to make sure you're not getting a bad deal through Citi Travel.

But if you're confident you're getting a fair price, when you find a car type and price you like, you just click through to make the reservation. You will have the option to pay in 100% cash, 100% points or a combination of both if you don't have enough points.

The reason we like using Citi TY points here is because these points are not as versatile since you cannot transfer them to airline or hotel partners. We could have also used Chase UR and Amex MR points to redeem for a car rental as well at 1 cent/pt, but why use more valuable transferable points when you can use the more restrictive Citi points for the same redemption?

Some Warnings
Unlike booking directly with Avis, Hertz, Dollar, etc, these Citi Travel bookings do have penalties for cancellation. Our booking had a 1 day penalty (paid to rental car company) if we cancelled within 2 days of pickup time and a $15 modification/cancellation fee (paid to Citi) for any changes at any time.

Normally, my father would book directly and then use Autoslash.com to automatically check to see if prices dropped and rebook if necessary. This time, we were stuck, unless rebooking would save him more than the fees to make the change.

But if you're OK with fixing your rental car plans, then Citi Thank You is a great way to save cash using points that aren't as flexible or versatile.

But Why Do We Even Have Citi Thank You Points?
The fact that these points are less flexible and can't do anything that Chase UR or Amex MR can do raises a good question. Why do my parents even collect Citi Thank You points?

Well, in February, my father applied for a special Citi Thank You Preferred credit card that earned him 5x points per $1 spent at grocery stores, gas stations and drugstores (GGD) for the first 12 months of use. At 1-1.33 cents/pt, that's a 5.0-6.7% rebate on all our GGD spend.

Given I eat a lot, my family's grocery spend is pretty significant, even though we try to save money by going to Trader Joe's instead of Whole Paycheck Foods. While we don't drive often in NYC, we do frequent drugstores quite often for diapers and other supplies, including the elusive Vanilla Reload cards and Visa Gift Cards to use for our Bluebird Amex. Through our regular grocery and drugstore spending as well as opportunistic manufactured spending, we've been amassing quite a lot of Thank You points at a 5x clip every month.

When the 12 month promotional period ends, though, we'll probably stop cold turkey and go back to using our boring Starwood Amex (1x on everything) or Chase United Select card (2x at groceries).

Note:  Unfortunately, the 5x promotional offer on this credit card is no longer officially offered online. However, several people report being able to get the offer when physically going into Citibank branches. See The Miles Professor's write up here.

Travel Credit Cards - Meeting Minimum Spend Requirements

Chapter 1 - Three Types of Travel Credit Cards
Chapter 2 - Credit Card Churn Example
Chapter 3 - Credit Score FAQ
Chapter 4 - Tracking Your Points/Miles
Chapter 5 - Meeting Minimum Spend Requirements
Chapter 6 - Maximizing Regular Spend

In talking to my other baby friends, I often hear, "I really want to use travel credit cards to take my parents traveling like you do, but they just don't spend that much every month!"

Well, while not everyone can make the math work with their income levels and personal budgets, many "regular" people can if they have a few tricks up their infant sleeves. You don't have to be a millionaire to hit your minimum spending requirements.

My parents are pretty strict with their spending. Most of their monthly budget is focused on things they need (rent, groceries, cell phone bills, diapers, cable/internet, metrocards, etc.). They'll buy me an occasional new outfit when I outgrow my clothes, but you won't be finding me in a fancy $900 Bugaboo stroller anytime soon. But then how did they spend $11,801 in 3 months to hit their minimum spending requirements for their 7 new credit cards?

Recall, my parents applied for the following credit cards in January/February while they were in Thailand.

• Amex Platinum x 2 - $3,000 each, $6,000 total
• Chase Hyatt Visa - $1,000
• Citi Thank You Preferred Mastercard - $300
• Citi American Airlines Business Mastercard - $1,500
• Barclay US Airways Mastercard - $1 
• Citi American Airlines Amex - $3,000

Well, I tried to convince my father to let me walk my readers through every dollar he spent, but he was a bit ashamed of how much he was spending on Imodium AD, so he was a bit cagey about disclosing too many specifics. He did, however, green light sharing some of the tricks he's been using.

But before we start, my father's #1 rule is "Do not spend more than you would normally."

Sometimes the miles/points thing can get...well obsessive. When given a new credit card, some people become driven to spend, spend, spend. The banks and credit card companies LOVE these customers. We can sometimes overlook the fact that we could have probably bought a first class plane ticket with the amount of cash we overspent our annual budget by. At MOST, every point you earn is worth between 2-8 cents on average. But even at the high end of the range, would you throw away $1 just to earn 8 cents of a very restrictive currency?

But with that cardinal rule in mind, here's how my parents have been able to hit their minimum requirements and get those sweet credit card sign-up bonuses.

1. Stop Using Cash. Living in New York City, my parents can go a few weeks without spending any cash at all. Just about every store, restaurant and taxi takes credit cards. From the $1.69 bottle of Vitamin Water at the 7-11 to the $6 cross-town cab ride to the $3.95 bacon, egg & cheese breakfast sandwich at the local deli, you can charge it. Cash is always king, but when you're not getting a discount for using it, plastic is your best friend. Besides, you know you hate getting $0.92 cents back in change for a $1 bottle of chocolate milk (+ $0.08 sales tax).

But even if you're not living in the greatest city in the world, I'm sure you can charge most of your expenses (with the exception of rent and taxes). Between $4/gallon gas and weekly grocery bills, I'm sure there's quite a bit of regular spending you can shift to credit cards.

One trick my father likes to use is to pay for the restaurant bill at group dinners and have everyone pay him cash. But he always makes 110% sure that he's not getting shortchanged by his friend Crime, because paying for the missing $5 will negate any points you earn. Why is his friend nicknamed Crime? Because Crime doesn't pay.

2. Amazon Payments. [UPDATE: As of October 2014, this method is no longer available.] The massive e-retailer is so focused on helping you spend money on their website, that they offer their own online P2P payments system (like Paypal) that will allow you to transfer money to your friends/family using your Amazon account, linked bank account or... your credit card. And unlike Paypal, there are no fees!

I won't spend too much time explaining how to use Amazon Payments ("AP"), because there are so many better weblogs out there who do a great job (like this Extra Pack of Peanuts post). But basically, each person with an AP account can send $1,000 every calendar month to anyone else who has an AP account.

But since Amazon has to eat the credit card transaction fees, they frown on people who just use AP to rack up miles/points. My father could, however, hypothetically loan money to his friend Handy Manny, who is also hypothetically sending money to his girlfriend, Doc McStuffins, for his share of the rent. And if Doc McStuffins were to pay back my mother for Wiggles concert tickets, then we'd theoretically be all even at the end of the month, wouldn't we? But note that my mother never pays my father via AP. That's on purpose.

3. Prepay Your Bills. Sometimes you dread getting those emails in your inbox telling you your monthly statement is ready for you to view, because it means they actually want you to pay them. Maybe you don't have all of them, but I'm sure you have a few: cell phone ($200/mo), cable & internet ($140/mo), electric ($50/mo), car insurance ($90/mo), etc.

But since your parents are going to HAVE to pay these bills anyway for the foreseeable future, they could prepay them before the due date.  Assuming they're not living paycheck to paycheck, they might even be able to pay for a month in advance on their credit card, and they'd have a few hundred dollars towards the minimum spend right there.

4. Charitable Donations. Sometimes, you or your parents are in a position to help those in need with your wallet instead of your time. Maybe it's an organization that helps women escape sex trafficking in NYC. Maybe a soup kitchen in the Lower East Side. Maybe you're just trying to support your child's private school's fundraiser. For whatever reason/cause, you should be proud to acknowledge you have excess and to share with others who could use it more than you. Timing these charitable donations (that you were planning to make anyway) to coincide with your new credit card minimum spending requirement timefames is just good planning.

Sometimes, however, your heart is bigger than your wallet. Maybe you're not in a position to donate (in the traditional sense) but there is a way to help others by giving them a loan instead of a gift. You can join a website called Kiva.org where you make micro loans (starting at $25) and get paid back over time (12-24 months). You don't earn any interest, but you do get to feel good for helping a woman in rural Peru to buy fertilizer for her family farm or a father in Kenya to buy a water tank for his small business.

If you're not sure how Kiva works, you can try it for free by clicking here. You'll get a free $25 to loan out to the Kiva borrower of your choice and see how it gets repaid every month. You won't get the $25 when it's repaid, but you'll hopefully be encouraged by seeing first hand how Kiva works.

5. Prepaid Gift Cards.  This "trick" can be a little dangerous if you're not careful about keeping track. My parents suggest only using this one if they're running out of time to reach their minimum spend, because it has the potential to lose you money. There's generally 3 types of giftcard situations.

First, can you buy a prepaid Visa, Mastercard or American Express card from your local grocery store or drugstore and put up to $500 dollars on it using your new travel credit card. You have to pay an extra $5-7 fee for activating the gift card, but now your that much closer to hitting your minimum spend and have a card that you can use whenever you want in the future and where ever they accept Visa/MC/Amex.

However, now you have a $500 gift card burning a hole in your pocket. Some people will be highly tempted to spend it quickly (and excessively) just to get their $500's worth as soon as possible (like how travelers buy garbage souvenirs at international airports to get rid of their Argentine pesos). Others will spend some of the gift card, but then lose track of it somehow and waste the remaining value completely. Even if you leave only $5 left on a $500 gift card (that you paid $506 for), you're losing $11 worth of value to get those 506 hotel points (which are only worth ~$10 if you assume 2 cents/pt).

The second type of gift card is a retailer/restaurant gift card. You can buy these at any number of office supply stores, grocery stores, drugstores and gas stations. They're good for other stores like Amazon, BestBuy, Chili's, Target, Cracker Barrel, Starbucks, Old Navy, Kohl's, etc.

Fortunately, there's no additional activation fee, so a $50 Bed Bath & Beyond gift card only costs $50. Now you've "spent" $50 on your new travel credit card and bought yourself more time to spend it at a store you're very likely to buy things from without paying any extra fees. The bad news is that the gift card can only be used at that particular retailer. But if you know a thing or two, you'd know that BB&B owns Buy Buy Baby, so my parents can use this one gift card at either store (I, of course, clearly prefer the latter). Same thing with buying a Gap gift card and using it at either Banana Republic or Old Navy or my favorite, Baby Gap.

The third type is the reloadable cards. These are cards (similar to the first type) that you can buy and activate for a fee. They're used to add money to your balance on one of a variety of accounts (Bluebird, Paypal, GreenDot, REloadIt). Sometimes, you can get your money back by cashing out the card at a bank or using it to pay your bills online - even your rent or credit card bills. However, this strategy is more complicated and often manipulated for "manufactured spend" by the super aggressive. I'm not a big fan of this strategy as it can often attract the attention of your bank, your credit card company or possibly even the FBI. But if you want to read about it further, you should click here on the Frequent Miler Blog.

Conclusion
So let's start adding up the various techniques using a hypothetical NYC family with an adorable little 18 month old girl who loves swings and chocolate ice cream.

1. Regular Spend = Groceries ($150/wk) + Restaurants ($100/wk) + Commute ($25/wk) = $1,110 / month
2. Amazon Payments = $1000 / month x 2 people = $2,000 / month
3. Prepaid Bills = Cell Phone ($150) + Cable/Internet ($125) + Car Insurance ($90) = $365 / month
4. Charitable Donations = $0-500 / month
5. Retailer Gift Cards = $200 / month

That's $3,675-4,175 per month of "regular" spending which would be $11,000-12,500 of spending over 3 months (of which half comes via our dear friends in Seattle).

But remember, you NEED to pay off your monthly balance in full at the end of every month. If you don't, the 20-30% interest charges will negate all the miles/points you've earned and put you in a hole that may cripple your future financial well-being.