Flying Lawyer

I am a Flying Lawyer, not a Lying Lawyer. I said: You need to know how to do it. Here we are:

As we all know, there is a branded LH Credit Card. This Credit Card offers a so called transfer service (or: "Überweisungsservice" in German) You can (depending on your limit) transfer money into every German account. It is some kind of cash in advance, the costs are 1,25 percent of the amount tranfered.

Every Euro transfered gives you a mile.

You can transfer 20k Euro a month, giving you 20k miles for 1,25 percent of 20.000 Euro, resulting in costs of 250 Euro for the transfer (or the miles).

Mr. Flying Lawyer has a CC, Mrs. Flying lawyer's business has an account. No problem for the transfer....

If you calculate the benefit of the cash in advance and put the cash in an account giving you 4,8% interest a year (= 0,4% a month) the actual costs are even lower and are no more than 0,85% or 170 Euro per 20.000 miles.

Until 12.08 there was no limit. They now introduced this limit of 20k a month - obviously some of us were too good customers.

Flying Lawyer

CheapElite would have said "Do a search". All of it is very well documented on FT.

The LH promo thread is a source of wisdom.
http://www.flyertalk.com/forum/miles...romotions.html

The Überweisungs-Sercive thread is here:
http://www.flyertalk.com/forum/miles...3375-euro.html

Several of the T-Mobile Promos are here:
http://www.flyertalk.com/forum/miles...les-promo.html

And for several others you have to read in between the lines. We are making the most out of these promos, putting everything as a big advert on TV might spoil the fun....

Guava

I forgot to mention that as ANA Diamond, our friend A_Lee, can also get free upgrade to ANA's very well received Economy Plus cabin:

https://www.ana.co.jp/int/service/co...premium_e.html

This is normally available for paying full-fare passengers only but as a benefit of ANA top tier member, it's given out to them for free on the day of departure. https://www.ana.co.jp/amc_e/plabro/d_3_hd.html

If A_Lee or anyone else is stuck in discounted Y for the foreseable future, this benefit of free upgrade to Economy Plus with 20% more space than normal economy is certainly an important perk.

Although this perk is not available on JAL yet, it may be due to the fact JAL only very recently introdued Economy Plus cabin a few months ago. Give them time, I think it is quite likely they will match this benefit of ANA. The Japanese carriers have a tendency to copy each other a lot.

RAPC

I can also see a couple of problems with this for us in the UK. Firstly on our credit cards (including the existing LH card) I don't believe you don't get miles on balance transfers or cash advances like you have detailed. (Can someone just confirm that though to make sure I'm not going mad)

Secondly, you have a good occupation and clearly have good financial means. Most people, even on FT, won't have your kind of finanical backing though to do half of the things you describe. It might be worth considering that, as many of your comments are very applicable to someone of your standing, but not to the majority in the FT community.

Flying Lawyer

Regarding the first issue, I believe that LH will use similar concepts they use in Germany for the UK. There is no reason to deviate from a global marketing concept.

Regarding the second issue: I agree, you need to have some funds. However, we are in a FTL community and getting F/C tickets from DC was never a social security offer. If you trust the LH forum, the "Überweisungsservice" thing is/was/has been used even by students. You need the amount once - and you move it around in circles....

But I agree: Better the devil you know. DC is well known to us. However, I moved (in the air) from M&M to DC for the better benefit. Maybe you will get the impression one day, that M&M is a great program on the ground. I would really appreciate if M&M became a great loyalty program in the UK - it would increase my earings during my working week in London.

Oxon Flyer

A quick look through the T&Cs of all my (UK-based) credit cards reveals each has a clause to the effect "<rewards> will not be awarded on cash transactions, cash advances, balance transfers, interest charges, and administration penalty fees or credit card cheques"

Guava

I will be examining this statement and come back with an assessment whether the claim of ZERO cost holds up under scruitny. Forgive me for being skeptical, there is a saying: "There is no free lunch."


In other words, those are one-time bonus and they are fairly small, merely 35K or so. This kind of one-time bonus is insignficant as they generally preclude you from getting it again next year or after. Non-recurring items in the frequent flyer world should be excluded as they are in the business world.


First of all, I am very sorry about your losses. Many people have lost tons of money and more in the past year. Hopefully, 2009 will be better. That said, this kind of transaction to earn miles is never free and in fact carries great risks. You engaged in those without completely understanding the risks and cost at your own peril. I recall having this discussion with you in the LH forum last year specifically re: these mutual funds buy&sale and I recall cautioning you against those almost a year ago before the markets crashed. To put it simply, what you are doing is no different than those who try to earn BA miles through Travelex by speculating on FX rates. They too speculate on buy & sale of foreign currencies in hope to earn miles. This is stupid beyond belief. Foreign Currency speculation is one of the most volatile and unpredictable asset class out there, not to mention companies like Travelex charges a hefty amount of fees which are sometimes opaque as in large spreads. Your mutual funds likely have similar management expense ratio fees which are calculated into the price, thus, invisible. Nonetheless, these costs are usually disclosed in the prospectus and can vary from 0.5% to 5% annually or more.

In any case, this kind of investment related mileage earning was in abundance at the early part of this decade in North America and is not Lufthansa specific. The sad truth is, most North American FTers have long realized earning miles through investment is bad business 99% of time, either through lower yields, loss on investment or both. In many respect, Europe lags behind in this understanding but also in the use of many financial products such as ETF. The bottom line is this is not a viable or sustainble way to earn miles in the long-run. The fact you have lost money is the best proof on itself.

I can't stress this hard enough: Don't make an investment decision based on how many miles you can earn or speculate!


Yawn...big deal, there are plenty of similar deals out there from many FFPs. Neither this or any of the other subscription offers present any substantial and repetable mileage earning opportunity, in Germany or elsewhere.


In summary, the only thing that I need to examine more carefully is the claim re: T-Mobile and I'll make a point of reporting back this weekend once I have a chance to read it up in the LH forum. Everything else, whether it's magazine/newspapers or god forbids, Investment speculation , none of those are sustainable, meaningful or sound way of earning miles.

Flying Lawyer

Four remarks. As long as I pay 1 or 1,25 cent a mile, and 210 k miles buy me two first class tickets into Singapore, it is good deal for me, notwithstanding anything you said before. Earning possibilities with bmi are very limited and this progam is generous only in premium classes in the air.

The T-Mobile deal is easy: You sign for 24 months and you get a kick-back from your dealer in the amount of the costs for the rate plan

The Telekom deal is easy: You sign for a year and next year the same deal comes back again.

Newspaper suscriptions: At least the concept is pretty new of DC. All the subscriptions mentioned are short term subscriptions, three months. This allows sustainable earning.

The Comdirect deal was easy: I do not invest based on miles (do you believe I am nuts?). I remember your well meant however smart-alec comments well. Based on my profession and my Firm, I am only allowed to invest in mutual funds (incl. ETFs). I am considered to be an "insider" for all listed companies. Rest assured: I fully understand the concept and the costs of an Pioneer, Fidelity or whatever mananaged fund. My office is in Canary Wharf, I am still there and it is istill there. My losses were limited and smaller than the index losses - certainly a better development than ETFs. What you call "speculation" is either a sound short term investment (what is wrong about a bond fund with no premium?) or a long term investment in a managed stocks fund. Your Forex comparism does not hold an ounce of water: Premiums and costs will swallow every benefit. From what I read in your statements, you appear to be sitting in the US having no idea how mutual funds are dealt with in Germany and you must believe, everybody except you is a dummy. Sorry for being very direct but the financial crisis had its origin in the US not in Europe.

A final remark: I take from your comments, that you are really looking for every bad aspect in M&M you can find. I am happy with it (on the ground) and amaszingly most people using it in an educated way in the big LH world are somehow happy with it. And I am confident, most FQTs in the UK will be happy with it, too. And I hope these hints were good for some fellow FTlers on the board - you may refrain from using them.

A_Lee

Wow, thanks so much Guava for another great reply. I've got my work cut out for me now in looking into these programs and trying to decide if it's worthwhile to add another FFP to my collection now or wait another year. I'm just one trip away from Diamond+ on OZ which will get me OZ F lounge access for almost 4 years, so will definitely do that. Off-hand it sound like ANA is probably a bit better for me but getting OW status, along with OW F lounge access is also a very tempting advantage of JAL. If ANA or JAL offered lifetime top-tier status as OZ does I think it would be a no-brainer to join one or both of them now. But getting OZ lifetime top-tier in just a few more years is very tempting and I'm torn between putting my miles into that during my peak earning years and getting into yet another FFP.

Guava

That's why I said we are all ears. I never suggested you were lying, hence I thought about you having "alternate channels" and I was right, you do. Thanks for sharing. ^

I see, that's a very good deal indeed, for German residents. See, as our UK colleagues pointed out, this doesn't work in the UK. Let me add this, it doesn't work in the USA either where there is a co-brand Lufthansa credit card.

Comments:

The current way of buying LH miles at effectively €0.0085 per miile is indeed a great deal as it is. I envy you for having such opportunity still. That said, this deal is obviously not sustainble in the long-run sadly. Frequent flyer program is still relatively young in the German market. LH M&M was founded in the early 1990's whereas in many parts of the world, FFP is close to 30 years old already. Not only that, LH M&M only began an explosive growth in the last decade or so where many of the financial institutions and partners of LH M&M have only begun to familiarize themselves with this mileage business. In the not so distant past, this kind of juicy deals were once plentiful on the North American continent. You can for example, doing cost free balance transfers or cash advances that earn miles. The effective cost of those miles was below zero, in fact, they are cash generating monsters (free loan => free interest), in addition to miles. There were also convenience checks that give free cash or free miles. When I said free, they were absolutely free as in perfect arbitrage opportunities and better than what you have in Germany. And yes, they weren't LH specific nor should you think of this as a German / Lufthansa specific phenomenon.

So how "long" is the long-run? I'll give it no more than 2 years, probably less. As you can see, such practice is now disallowed in the U.S., UK and pretty much elsewhere, including Canada, and most of Asia. The German market that still allows earning of miles on cash advances is a dying phenonmenon. Plus, cash advances in the U.S. market for example, typically carries a much higher cost around 3% of the transaction and they don't earn miles anymore.

There are two primary dangers with this practice:

1) It will likely go away fairly soon because that's the trend in the rest of the world where this was once a common practice. It's unwise to assume this will continue for very long time as witnesses by the recent changes even in Germany. My guess that it didn't completely go away in 2008 is because banks needs cash during this credit crunch but as soon as Deutsche Bank (I am a shareholder) and others recover enough, they will be looking for ways to eliminate those mileage earning practices through cash advances. Even if you can continue to earn miles, watch for the transaction cost to go way up, definitely more than 1.2%.

2) The 2nd part of the plan depends on high earning savings account. How realistic is it in this environment where the ECB may continue to lower rates? Your 4.8% savings rate is a fairly high assumption and probably not sustainable in this environment. Naturally, in your calculation, you omitted the tax liability in your calculation, which is a minor point, just point out for information purposes.

I say enjoy while you still can. But however great this deal may be, it is completely unusable by non-German members of LH M&M because financial instituions in the UK/US markets are more savy about frequent flyer business than in Germany and have since disallowed such practice.

RAPC

First of all, I just want to say this all makes for an interesting discussion from my end.

I would disagree though that DC is generous only in premium classes in the air. As someone who usually pays to fly in Y and flies in J/F mainly thanks to the burning of miles, I think you can do very nicely from flying in Y as long as you make educated choices with your choice of carrier. However I do understand that this isn't the case for Y fares for many *A partners.

The other point I would counter with is that the Diamond Club earnings are more than proportionate when you consider the cheap cost of redemption. No matter how generous M&M may be, I would suspect that I would need to spend a lot more to redeem for flights. I would certainly need to fly a lot more to maintain *G status.

As I have said in another thread, I am interested to see how the future of Diamond Club and bmi plays out. Until we know more, I wouldn't discount sticking with M&M if we are merged into that, but only when we know how LH will be viewing the UK market.

Flying Lawyer

I used 4.8 because it is easy to be divided by 12. Current rates in Germany after the latest interest drop are in the range of 3.8. Tax. Assuming my CC is a company card and the costs are tax deductable, I have a tax benefit of close to 50%. My wife pays 25% tax for the savings account. But seriously: This ends up in bean counting....

Flying Lawyer

I fully agree to this. Earning / Spending ratio is great and this was my reason to shift my earnings to DC. And you will certainly need to fly more to maintain *G in one year (you can have a break in the other year). M&M is great in domestic C (1875 miles) and intra Europe C (2500 miles). Maybe it is not even more expensive to maintain *G (see the LX C/C offers) - however, it is more flying.

The other questions is, how long the thresholds in DC would have been valid. In M&M we earnd 1000 miles for the cheapest L ant T tickets - until this was enhanced away in August 2004. FQT programms are not made for eternity, they are a profit centre. I never understood the economical idea behind the low thresholds in DC and the 55k+ club, however, I enjoyed the latter.

RAPC

Very good point. As long as the LX C specials remain, then this is a good route that I hadn't thought of in the context of M&M.

oliver2002

If I may deflect () back to the flying earnings:

This december I did some crazy flying around in paid Z/D and the M&M number was left in the booking more by mistake than design (I usually keep my SEN number in a booking to get the occasional op-up or irrop leverage and this time forgot to change it back at the gate) so all my flying posted to M&M instead of DC. Since I'm almost at the beginning of my DC qualifying year the 55k 2x bonus may be ignored here but I earned the same if not more in M&M due to the fact some promos are out there:

I usually redeem miles to buy my wife and baby C/F TATL awards so that they can accompany me to combine business trips to Europe with the family holiday(s). I don't get paid home leave travel. If you are based in the US, Asia (till about the subcontinent or SEA) or Europe and plan to redeem in these markets, M&M is a very good programme.

Non flying miles: well, there were/are/will be many offers out there until someone brags about it publicly