Cost Per Mile/Point Math
 

I've been vexed by the cost risk of buying points outside of meeting spend targets for bonus offers - meaning, what is the optimum strategy to buy miles/points on an ongoing basis to accumulate miles/points.

I used my friendly Excel spreadsheet to run 5 different scenarios with the following assumptions:

Option A - continue buying higher cost/lower denom gift cards at OD and convert to VRs then flush through BB

Option B - Use Amex SPG card to load a Target Amex (1pt/$), then flush through Costco ATMs

Option C - Use the Capital One Venture card (2pt/$) to load a Target Amex, then flush through Costco ATMs

Option D - Use the Travelocity Amex (1pt/$) to load a Target Amex, then flush through Costco ATM

Option E - A hypothetical situation where I could buy money orders or gift checks by credit card for the standard fee (thus no need to flush them as they are deposit instruments)

Here are the results in either cost/point or net profit

Option A - cost per point - 0.00853

Option B - cost per point - 0.0114 (assumes the 1.2 post transfer value)

Option C - $28 profit per $5000 loading cycle

Option D - $125 profit per $20000 loading cycle (you need to redeem blocks of 20,000 points)

Option E - cost per point - 0.0164

So based on my observation, the most optimal way to manufacture spend is continuing the OD/GC+CVS/VR routine and sucking up the higher fees for the lowest cost per point.

Any other thoughts, or can anyone poke some holes in my theories or calculations? I left out the MVD option with a cash advance drain as the end result is pretty much the same as buying money orders or gift checks from the cost/benefit perspective.

How are you figuring out those costs? The correct calculation is total cost cents/total miles earned. I think you made a mistake with that somewhere.

Total cost over total points earned is how I figured the cost/point - the total cost was the sum of gift card fees, VR fees, Target load fees, ATM withdraw fees, etc, all where appropriate for each scenario.

The question is whether CVS will allow you to use multiple GCs to buy one bean.

I came to the same conclusion, but it's tempered by the pain in the patootie action of sliding 5 gift cards to buy 2 VRs. I have different cards than you, but have done the same sort of calculations with my potential methods.

One question: you aren't worried about running a SPG Amex thru at Target and then draining at ATM? I've avoided using my Amex cards for this because I had a fear that Amex would frown upon it.

For the Target scenario, how many times are you looking at using with the ATM? Do you have more than 1 TGT card? Does your total include AMEX fee charges?

How many steps are you willing to take to generate the points? Like step 1 you buy GC's through a portal for extra points. Step 2 you buy product from merchant + GC's + portal for more points. Step 3 after buying said product are you going to sell?

I go through about 2 or 3 steps each time to generate spend/points

Yes they will - I even trained myself to always remove the sticky gunk from the back of the VGC before going into the CVS so I wouldn't risk the GC's getting stuck in their machine.

I never thought of that - I guess that is something I should consider considering Amex has my SSN for my SPG card, BB and would have it for my Target Amex and could monitor all of my behavior.

In my spreadsheet I took the total value loaded to the Target card and divided by the max daily ATM limit, then multiplied by 4.25 ($3 Amx + 1.25 Costco)....I guess I could go into a store that allows large cash outs on purchases and buy a 5c piece of chocolate and do multiple cash backs to drain the card as another option....or maybe not...on second thought I remember this card cannot be used for purchase-by-pin, so forget that option.

I do the same EXACT thing. In fact the absolute worst part of the calamitous change to $200 gift cards is rubbing that gummy stuff off of 5 gift cards before going into CVS. My thumbs are tired!

I see it as a ritual, like having all my bills facing the same direction.

Just need shots with that ritual and then I'll feel better, but I like where you're going with this :p

I think we have a drinking game here ;)

Since you didn't mention, from the sounds of it, you can get a slightly lower cost if you get a second TGT card, this would allow you an extra free ATM per month.

:D

Here's some interesting math:

Just booked JFK-SCL-JFK on LA in May for $927 in C class. Would normally cost 100,000 AAdvantage miles, so equivalent cost is $0.00927.

Pretty good, I'd say. Cheaper than a number of methods, almost as cheap as New OD + VR + BB.

And will earn about 13,000 AAdvantage miles, about 10,000 hard.

Nice fare, I would pay for that ticket as well. Just slightly higher than the OD method and so much easier, actually probably more profitable with your 10,000 miles your earning.