

How the Government Helped Frequent Fliers Make a Mint - shedd
http://online.wsj.com/article/SB126014168569179245.html

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skolor
I had a student in one of my classes explain this to me at one point. Every
semester when it came time to pay his tuition bill, he would simply max out
all of his credit cards paying the bill. The university system would let you
pay as much as you wanted, and if you had a balance a week after tuition was
due they would send you a check for the balance. While it was primarily in
place for students receiving scholarship money, he used it to rack up huge
rewards on his credit card.

By the time he was a junior (when I had met him) it had gotten him good enough
credit he had over a $15,000 limit, so 3 times a year he would pay that to the
school, they would pull out their $15 credit card fee, and then deposit it
straight into bank account, which he would use to pay off the credit card.

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iamelgringo
So, I haven't done the US Mint hack, yet....

But, I have spent the last 3 months buying the longest, cheapest round trip
fares that I've been able to find, also called "mileage runs". American
Airlines has had a "Double Elite Qualifying Mile" promotion, which means that
I can reach Executive Platinum with American while flying only 50,000 miles
instead of the usual 100k miles. This fall, I've done weekend trips to Madrid,
Frankfurt, Florida, visited family in the Mid-West, and this upcoming weekend,
a I'm finishing with a round trip to Barcelona. I'm flying out from San
Francisco on Friday morning, spending 2 days in Barcelona and I'll be back
home by Monday.

All told, I've spent $2200 on flights, and a bit more for hotels + food. What
I get in return is being able to upgrade to first class for free on any
domestic flight on American, 8 upgrades on international flights (worth
$300-400 each if I sell them), and enough earned miles to buy two tickets
worth $1100 to visit family in Central America this spring.

I have a hunch, though that after flying first class all next year on
American, I'm going to have a really hard time flying coach again. I'm afraid
this might be a bit addictive.

A friend of mine, (mcargian on hn) hosts a podcast about this stuff at
<http://upgrd.com>. He turned me on to it.

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tptacek
But you actually have to sit in the plane and go to Madrid and Frankfurt to
pull this off, right? $2200 is nothing, but days and days of time in an
airplane isn't worth it.

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iamelgringo
I have a netbook with my full dev environment and 15 hours worth of battery
life. I actually get a lot of good work done on the plane. And, I get a lot of
uninterrupted time to code in my hotel.

Its also part of the way I'm wired. I grew up as a nomad of sorts, and I've
been really stationary for the last 3 years, so getting to travel scratches an
huge itch for me and it clears my mind so I can get into flow and code.

~~~
tptacek
I wonder if I could find someone willing to fly on fake papers to take the
actual trips to Spain and Germany. Airline security blows; they'd use their
own papers in (say) Spain.

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gamble
Very clever hack.

Still, they're in the minor leagues compared to the civil engineer who racked
up 1.25 million frequent flyer miles ten years ago by purchasing over 12,000
pudding cups:

[http://www.time.com/time/magazine/article/0,9171,996450,00.h...](http://www.time.com/time/magazine/article/0,9171,996450,00.html)

~~~
there
adam sandler?

~~~
dhyasama
Punch-Drunk Love for those of you that don't get the reference.

<http://www.imdb.com/title/tt0272338/>

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eli
My guess is that the credit card merchant fees cover the cost of the miles. So
it's the US Government (i.e. all of us) getting screwed here, not the credit
card company or the airline.

~~~
patrickgzill
Not really, the US Govt gets the seignorage instead of the Federal Reserve
getting it.

~~~
eli
Huh? No, forget about the coins. I'm talking about the fees that credit card
companies are charging the federal government.

~~~
patrickgzill
They make much more on the seignorage than they lose to the CC companies.
Don't believe, go look up what it costs to make the coins in question.

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eli
Again... huh? The cost of producing a modern US coin has nothing to do with
its value.

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patrickgzill
Obviously you do not understand what seignorage is, how it works, and the
difference between getting coins from the US Treasury vs. Federal Reserve
Notes from the Federal Reserve. Why don't you read up on the subject so you
can understand what I am talking about.

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HockeyPlayer
~10 years ago, you could buy inflation protected bonds on a credit card for no
additional fee. I bought $10k worth on a card that gave miles and then
redeemed them to pay it off.

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BenoitEssiambre
I met a guy who would register for dozens of free credit cards offers that
included air miles on sign up just to get the air miles. He was retired and
used this technique to fly around the world. He always canceled the credit
cards a few months later. Funny thing is apparently when he called to cancel,
they would often offer him more air miles if he chose to keep the card. It
those cases he would take the air miles and cancel a month later.

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boucher
This is probably a good strategy if you are older. But its definitely bad for
your credit rating, so might not be a great idea if you are younger or
otherwise trying to maintain a good credit score.

~~~
eli
Thanks to the utterly bizarre credit scoring system, the part that could
really hurt you is _closing_ the cards. Keep them open and it may well improve
your score (certainly your debt to credit ratio would get a boost)

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dnsworks
Not really. FICO dings you for having more than 2 installment loans, or more
than 4 revolving accounts. Plus you get dinged for having more than 2
"outside" inquiries in a year. More points disappear from your FICO for having
a balance, or for having revolving accounts that have been opened in the
previous year. Having a dozen accounts opened in a year (if even possible)
triggers a high abuse potential and can even get existing accounts closed in a
pre-emptive strike.

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rubyrescue
i'm surprised flyertalk, and specifically the 'mileage run' forum, on which
most of these obnoxiously good deals appear, isn't more popular with this
crowd as there's an obvious overlap in terms of personality types. There are
plenty of HN types with the proper skillset and aptitude to find travel deals,
who would enjoy the occasional hacking of the travel-industrial-complex.

I guess having sufficient understanding of the subtleties of the fare rules
and booking systems really only comes from reading a lot and traveling enough
to have a vested interest in learning and there are a lot of deskbound
hackers.

however in the past few years, i went to NYC from SEA for USD $1.26, Romania
for $200, Toronto for $0.00 in first class (with my family of five) and a few
others i can't remember all due to the joys of reading that site every day...

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boucher
You have to wonder how much of an increase the mint will see in this behavior
now that its in the WSJ. I'm pretty tempted to sign up for a virgin america
credit card right now just to do it.

~~~
shedd
According to the FlyerTalk thread (which is over 400 pages!! apparently, this
has been going on since sometime last year...), credit card companies are
becoming wise to this trick and are starting to treat purchases of the coins
as cash advances (thus subject to fees and no rewards). I'm sure the WSJ front
page article will only speed this along...

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joshu
Ha, awesome.

It's interesting to watch as people systematically exploit all pricing
discontinuities and loopholes. Of course, this is what also gets us spam.

I wonder if at some point all pricing ends up having to be flat because of
arbitrageurs operating in this manner.

(I feel slightly bad - I rarely deal with frequent flier miles even when I do
fly, and I've canceled a credit card that offered frequent flier miles because
they mailed me such an unbelievable amount of shit.)

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forensic
I can't bring myself to do these kinds of corporate exploits. It just makes me
feel like I'm spending my life learning about a bunch of bullshit arbitrary
rules rather than something I care about or something that helps the world.

So I end up paying full price for first class, lol. What a chump.

~~~
joshu
Me too. OTOH I do like to find regular routes that are nice but cheap. SJC ->
EWR on continental used to be $700ish in business class.

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mshafrir
Here's the original thread on FlyerTalk:
[http://www.flyertalk.com/forum/milesbuzz/833911-buy-
presiden...](http://www.flyertalk.com/forum/milesbuzz/833911-buy-presidential-
dollar-coins-cc-face-value-free-shipping.html)

