How you can hack credit cards for cheaper travel


#1

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#2

Do I get 5000 points for “first post”?

I used to collect aeroplan points for travel on Air Canada … until they expired my accrued points after an unusual year of neither flying nor making a point-earning purchase. In protest I stopped flying Air Canada altogether, choosing WestJet for my domestic travel and other carriers internationally.


#3

from the title i thought this was going to be a how to about using I2P and the new silk road to obtain cards for cheaper travel! :slight_smile:


#4

Just like some people pay a little more to get organic or free-range food, I don’t mind not getting every last possible “free” benefit from credit cards and loyalty cards. My personal information is worth a little more than whatever benefit I don’t get.

My one and only credit card pays me back 1% of all purchases I make. It’s the only pay-back/benefit I get. I’m not crazy about this benefit, because I know that the merchants are paying it and so I’m paying for it in the end, but it’s the least/smallest add-on I could get.


#5

If people are interested in travel discounts, depending on your local store, AAA can be a good buy. Where I used to live before had a great place. I went to Disney through them and to a Club Med. Both were all inclusive vacation packages. The Disney one in particular ended up being a very good deal with the hotels, admission to the parks, and the food all included. Fortunately my kid was not all that interested in trinkets and we ended up spending very little extra money. On top of that, signing up for all the restaurants (mostly at Epcot) in advance got us a lady on the phone who planned the entire trip for us around our meal package - making sure that we were at the French restaurant and finishing up one hour before the big choir production, just in time to hop into line for that special event, etc.

I recently got a package in the mail and it looks like AAA is reducing their rates way down.

I no longer use them as I have similar services through USAA and the store in my area is not so great, but for these kinds of package vacation deals, they are worth checking out.


#6

Not really. Since merchants can’t charge you more, your rewards are subsidized by the poor suckers who pay cash, use debit cards, or use regular credit cards.


#7

I also use the Capital One credit card and debit card linked to their bank account for purchases and ATM cash withdrawals while in México. Many pesos in this case.

However last trip I noticed that the USD charges seemed higher than the exchange rate for that day. After checking bank rates and spreads I saw that they were inflating the exchange rate about 1% in their favor. Cap 1 blamed one of the banks in the chain of banks and processors; could not get anyone at the banks or Visa to speak with me honestly and coherently about the issue. In the end Cap 1 refunded the difference, but no party took responsibility for the charge or the false advertising.

Cap 1 is probably still the best option for converting dollars to pesos, though I have never calculated the effective rate of other cards. Just be aware that it is not truly “no fee” but contains a fee hidden in the exchange rate.


#8

Since BoingBoing took delight in taking the piss out of Buzzfeed’s linkbaity headlines, can we expect BoingBoimg to stop referring to tricks as “hacks”? Credit card tricks and credit card hacks are very different things.


#9

After the class action lawsuits a few years ago, none of the banks are building fees into the forex rates they charge any more. I HAVE run side-by-side tests with different fee-free cards (making identical ATM withdrawals in quick succession from the same ATM using three different ATM cards, or splitting a hotel bill four ways on four credit cards). While my dataset is small, none of my cards jumps out as charging any hidden fees.

There are several possible explanations for what you experienced.

The two most likely:

  1. For credit card point-of-sale purchases (as opposed to cash advances or ATM withdrawals on an ATM card) the exchange rate used is generally from the day (or the day before) the final transaction “posts” to your account, which is often a few days after the transaction itself. I’ve had the experience of two transactions made on the same day coming in at drastically different exchange rates on the same credit card (significantly more than 1% difference), but that was because one transaction posted a couple days before the other, and exchange rates swung a bit in the interim.

  2. There is no single exchange rate for a given day. While the entities that do the actual exchange (be they the card issuing bank or Visa/Mastercard) sometimes pick a single rate for a given day (Visa says on their website that they process all transactions in a given day using a single rate that they pick the day before), they can effectively pick any rate within the bounds of trading on the applicable day. And it’s not uncommon for a currency like the Mexican Peso to swing a full 1% in value against the USD during the course of a day.


#10

Hello micah,

Thanks for responding in detail.

My dataset is also small - six transactions posting March 10-11, 2014, calculating from the ATM receipts (Capital One 360 debit), credit card receipts (Capital One Visa credit), and resultant credit card charges.

Capital One first claimed that the ATM itself charged a higher exchange rate (absurd since the ATM only understands pesos), and afterwards that HSBC set the exchange rate. Finally they stated the specific exchange rate applied “to the ATM transaction”. That rate was almost exactly 1% above the worst exchange, including spread, during the two day period. (Yes, I can be a harmlessly obsessive information nerd.) The effective exchange applied to Capital One credit card charges calculates almost exactly to .5% above the worst exchange. Circumstantial evidence only.

Capital One refused to answer whether the apparent extra 1% was charged by Capital One, MasterCard, HSBC, or “the ATM”. They just stated the “ATM exchange rate”, issued a refund of 1%, and closed the case.

So we have multiple theories as to whether this hidden 1% fee is real, who charges it if it is, and what causes it to appear to exist if it is not. Without disclosure from the multiple Corporations involved, we may never know. I think I have to put this to rest and just pay the 1% tariff, real or not, to our corporatocracy.


#11

My friend and I have spent years obsessing over this stuff (you’re not alone in your information nerddom) and collecting datapoints on flyertalk and elsewhere, and I don’t think anybody outside of a handful of people very deep within the banks and card networks really knows exactly where or how a given forex rate gets used. At one point my friend (who was a VP at Barclays at the time) took one of their top credit card execs out to lunch to try to learn more, and the exec had no clue how forex worked. Certainly the front line customer service reps at CapOne don’t know.

It’s not quite as opaque a process as it was before the mid-2000s class action lawsuits. The card issuers now fully disclose the fees that they actually collect for themselves both in their offering materials and on your statement, which is an enormous improvement (15 years ago some banks just tacked on 3% and didn’t disclose it anywhere). And as I linked before, Visa now has some info on their website about how they calculate exchange rates, but that only applies to transactions where Visa does the actual exchange, and it seems many card issuers opt out of that service (some big issuers, like CapOne, seem to use Visa for some transactions and use some other exchange rate for other transactions, based on the divergent rates I’ve seen).

Regarding the ATM itself being responsible for the forex rate, there could be some truth to it. First, there’s a practice called Dynamic Currency Conversion where some point-of-sale terminals and ATMs will recognize a foreign card and offer to convert the transaction into local currency (so if you’re shopping in a store in Mexico, the clerk might offer to ring you up in USD instead of MXN). Those rates are typically grossly inflated, so that’s probably not what happened to you. Second, because a big bank like CapOne might not use the same forex method for every transaction (they might use Visa for some, have direct forex relationships with some other banks, and might even do some internal offsetting of transactions to avoid actual conversion transactions), they might end up using different rates as well.


#12

What could possibly be better than free stuff?

Cold, hard cash. When I used to travel (only put in about 3.3333 years of it), I quickly worked out that oustside of basically vacation travel, the best way to use your Marriott points (I had the Uber Marriott card) was on their Platinum gift checks, which you got at a significant discount.

It was 135k points for $1000 USD worth of them. My company travel policy at the time had me using my personal card, and being reimbursed. The gift checks never showed up on the receipt, so it ended up being $1000 of tax free income, accumulated several times yearly. That kind of extra income buys almost three times as many TV’s for your points as you get from the catalogs.

Yeah, they did away with that, but not before I padded my salary with it a couple years running. If you really can’t imagine spending those points any other way, you can use a similar trick with various hotel chains (probably not airlines, though).


#13

So what you’re saying is: the price are higher. So how am I not paying for that?

Oh, and in Canada at least, it’s illegal to for CC merchant contracts to forbid discounts for cash payment.


#14

The word hack has been used purely as vernacular for decades. The “definition” will be ever shifting around.


#15

“Hack” is now a stand-in for every other verb in the English language.


#16

Say cash costs the merchant 0, debit cards 0.25 cents, regular credit cards maybe 1.75%, and premium credit cards 3.5%. So, over all, they boost their prices 2% to pay for it.

So, the cash users are paying an extra 2% but get no benefits. The regular CC users an extra 0.25%, but see very limited benefits.

And both are subsidizing the premium credit card users, who if the merchant was allowed to charge costs, would be paying an extra 3.5% for all their purchases.

Note, if there were no premium credit cards, then merchant might have added 1% instead (especially now debit cards are popular).

So everyone subsidizes the gifts that premium credit card holders get.


#17

Yep, and (before the “but the premium cardholders don’t pay the premium price”) that extra cost gets distributed throughout society - and you DO pay for it. Don’t get me started about loyalty cards…

Just like how products that are heavily advertised (some soaps, toiled paper, foods, clothes) cost a lot more so their prices are higher - to pay for the ads and for the highly-paid MBAs who dream them up. Likewise for stores which are located in very expensive sites.

(I’ve never understood the point/wisdom of taking accounting advice from companies that are located in the most-expensive-per-square-foot locations in the world.)

Go for the house brands or no-name, support your local co-op.


#18

Life hacks with your credit card, friend.

And please, you’re not a prosecuting atty.


#19

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