As I was browsing the forums, I came across an interesting post from someone who wanted a way to cash out his miles earned on the Barclaycard Arrival Plus World Elite MasterCard without actually booking travel.
The reason being, he no longer plans to travel due to a baby.
If you racked up a good amount of points on your Barclaycard (or another travel rewards credit card) and find yourself no longer needing the travel points, take a look at the clever tricks you can use to still take advantage of your miles.
Although he has the ability to rack up 50,000 miles per month, Martin (made-up name) is undergoing a major lifestyle change that meant he didn’t foresee any major travel plans soon -- he has a baby on the way.
He originally decided to apply for the Arrival Plus card with the intention of getting free travel, but now he just wants to cash out those miles, probably to use towards the upcoming baby expenses.
But, there’s a bit of a hurdle. See, the Arrival Plus card has three different ways to redeem miles:
- Travel statement credits starting at 2,500 miles for $25 (1 cent of value costs 1 mile).
- Cash back statement credits starting at 2,500 miles for $12.50 (1 cent of value costs 2 miles).
- Gift card starting at 5,000 for $25 (1 cent of value costs 2 miles).
So, if Martin wanted a free flight that would normally cost $500, he’d book the flight himself with the Arrival Plus card.
Since the flight falls under the “travel” category, he can use 50,000 miles to get a $500 travel statement credit, effectively eliminating the cost of that flight with miles.
The issue here is that Martin doesn’t have travel plans, but it simply isn’t worthwhile to redeem his miles for cash back or gift cards because he’ll lose half the value of his miles. (Unfortunately, Martin didn't say exactly how many miles he had, but I'm certain it's A LOT.)
So, what can Martin do with all those points that he has accumulated? Here are three solutions for his situation:
1. Buy airline gift cards
The great thing about gift cards is that you can sell them. Martin can purchase airline gift cards and sell them for a slight discount -- about 10 percent for instance, so that he still gets 90 percent of of the value of his miles.
Early this year, I wrote a post on how to check a merchant’s category when it comes to credit card purchases. One major takeaway was: it doesn’t matter what you buy at the merchant, as long as the merchant is categorized correctly.
So, a gift card purchased from a travel-categorized merchant will be considered a “travel” purchase. Therefore, it is still eligible for the full-value redemption of miles.
Three of the four major U.S. airlines sell gift cards that are considered travel purchases (with links to the pages where you can buy them):
- American Airlines ($1,500 maximum per gift card)
- Delta Airlines ($1,000 maximum per gift card)
- Southwest Airlines ($1,000 maximum per gift card)
2. Buy an expensive, fully-refundable airline ticket
Another way to get the full value of Martin’s miles is to buy a refundable airline ticket, redeem the miles and then cancel the ticket for a full refund.
To use his large stash of miles, Martin can buy a pricey, first-class international airline ticket -- or even multiple tickets -- to redeem more of his miles at once. If you’re confused, don’t worry.
Here’s an example of how he can use this trick:
- Assuming Martin has a $0 balance, he buys a refundable airline ticket worth $5,000.
- He waits a few days for the charge to post to his Arrival Plus account. His card balance is now $5,000.
- He redeems 500,000 miles to redeem a $5,000 travel statement credit. His card balance is back to $0.
- Martin cancels the airline ticket for a full refund. His card balance is now -$5,000 (that’s right, a negative balance).
- He can leave that negative balance and continue to make regular purchases on the card. After some time, if a negative balance remains, Barclaycard will send a check in the mail to return the account balance back to $0.
The biggest obstacle to this trick is finding refundable airfare, which is not common for the typical flights that we’d fly on a regular basis.
Refundable tickets tend to cost more and they may only be limited to the more premium cabin classes. After a little research, I’ve found out how you can find refundable airfare at the four largest U.S. airlines:
- American Airlines: Purchase tickets with the fare type of “Refund” (filter it with refined search)
- Delta Airlines: Upgrade to "Refundable Business Class"
- Southwest Airlines: "Business Select" and "Anytime" fares are fully refundable within one year of issuance
- United: Purchase tickets with the fare type of “Unrestricted Fare” (filter it with advanced search)
3. Purchase travel for friends and family
Of the ways that Martin can cash out his miles, this one is probably the easiest way.
Essentially, he can just offer to pay for travel purchases for family and friends. Then, he can have them reimburse him at a slight discount.
For the Arrival Plus card, “travel” counts as airlines, hotels, motels, car rentals, cruises, tourist attractions, trains, buses, taxis, limos, ferries and more. So, there are plenty of purchases that he could pay for and get reimbursed.
In the end, Martin does have ways to work around the seemingly restrictive redemption options of the Barclaycard Arrival Plus World Elite MasterCard.
Based on his rate of earning miles, he can get back about $6,000 per year through his miles -- that’s if he takes steps to convert those miles into cash with the methods explained above.
Going forward, I’d suggest that he use the Citi Double Cash Card card, which essentially is a 2% cash back credit card, because he won't have to go through all these hurdles to get the most out of his credit card rewards.
Can you come up with any other creative ways for Martin to cash out his miles? If so, let us know in the comments below.