PDA

View Full Version : Who pays for these miles?


Eboy
4th Apr 2003, 09:23
Here's the deal. I have a United Airlines VISA credit card with which I get one frequent flyer mile for one dollar purchased. I can go online to the US Treasury Department and buy, with the card, a US Savings bond paying about 4% interest, which I can sell later. The Treasury Department's purchase limit is $60,000 per year. For each dollar spent, I get a mile. If I pay the monthly credit card promptly, there is no interest charge. There is a $60 annual fee for the card, which seems small relative to the value of the miles.

I could buy $60,000 of bonds per year, get 60,000 miles (a couple of domestic round-trips), sell the bonds after one year and get my $60,000 back with interest, and start the cycle over again the next year.

I tried it with just a small amount of money and it works. It is like free money. Who is paying for these miles? United? VISA? The Treasury Department?

Momo
4th Apr 2003, 13:36
Sounds like a good one. Before we celebrate the creation of the miles printing machine, what is the minimum holding period?

Over here, most credit card companies also have "double miles" periods each year, which should allow even more.

Momo

Pax Vobiscum
4th Apr 2003, 18:16
Visa make money by charging a fee to their merchants. So when you pay for a $100 meal with your card, the restaurant get something like $96-$98 at the end of the month (they probably have to pay an annual fee as well). In this case it looks like the US Treasury is paying for the miles - how does that make you feel as a taxpayer? :D

Cash withdrawals on a credit card (which is pretty close to what you're describing) usually incur an explicit charge for the cardholder (2.5% or so) - I'm assuming that hasn't happened to you.

If I'm correct, United miles seem to cost about 2-3 cents. Can anyone tell us what the approx. value of an air-mile is? What would be the equivalent fare in $ for say 10,000 air-miles (I realise the answer is going to be highly variable depending on the exact circumstances)?

Ozzy
4th Apr 2003, 22:51
about the $60,000 in bonds makes mucho miles, sorta sounds like the old Steve Martin joke on how to make $2 million..."First, get $1 million and then...." :)

Ozzy