If you are just pulling a travel card you are not getting the MAX discount possible. Is there a better way?

When I was in college (about a billion years ago) I was introduced to a topic that has irritated me almost every day of my life since then – that is, the idea of “opportunity cost”. Like you know what this is but if you do not the basic principle is that at any given time and whatever you are doing you could, at the moment, be doing something else and thus you have forever lost the chance to do that other thing now that you are doing this thing. Simply maddening!

In other words, if you are working you are giving up having fun. If you are having fun you are giving up the chance to make money to have more fun later and on and on forever. The permutations about this are endless and that is why this idea is so frustrating.

All of this I know is amazingly interesting and fascinating, but what does any of this have to do with travel and points. Well, really, everything. Let’s start with the really simple example at the very top of this post.

If I were to go to Ruth’s Chris I could simply pull out my US Bank AMEX FlexPerks card and by paying get ~6% back for that dinner (3x points worth ~6%). Not bad but nowhere near almost a 12% discount by going to sites that sell discount gift cards and spending those instead. Oh, and let’s not forget the additional points back I got for buying the gift card to begin with. At a minimum with any of my travel cards that offer 2% or more back I am up to 14% off the meal vs. just the 6% from pulling the credit card and nothing else.

This is a super simple example. There are others, but the problem is many of them come with a cost that may or may not be worth the monetary savings up front as in this one example.

Consider buying Delta tickets. There are a great many places that sell Delta gift cards now that yield bonus points on different travel / business cards. This means that we have choices and the choice may be good or bad. Be aware that Delta allows up to 3 gift cards per ticket. Depending on the price of the ticket you may be able to pay for the entire trip with gift cards you purchased outside Delta vs. simply using a card to pay on Delta.com and get whatever bonus you could get from buying direct. So is this a wise step for max rebate? Maybe but consider a few points (no pun intended). If you pay in full with gift cards you are not going to get any kind of travel insurance that you could get by paying for at least part of the ticket with a card like the Citi Prestige card.

And you know you could take this idea on and on down the line buying gift cards at places like Cardpool to save way more at hotels than you could via savings on any type of travel card and as far as the hotel goes you are paying cash so you still get all the perks you expect as an elite as well as earning full points for your stay. Oh and again you earned points buying the gift cards to begin with (but maybe not card bonus points for booking direct at the hotel)!

All this sounds really good right? Should we not all be doing this all the time? I mean what could go wrong? Lots and this is why most of us do not do this that often. Just like my example with Delta you have to balance the savings vs. the perks of paying with a travel card. But what else? Risk of your savings turning into huge losses. Like what?

Last year there was a rash of compromised hotel gift cards (think Hyatt and others). If it takes you half of your life to get your money back (if you ever do) was it really worth it? Beyond these types of catastrophic events some gift cards expire their value after some time or charge a fee if you don’t use them and on and on. Again, a savings is only a savings once realized and if you never use it all you would have been better off doing the simple thing and just pulling your travel card.

So what to take from this? There is room for savings but make sure you “turn and burn” whatever gift cards you buy ASAP! If you are buying airline tickets and want to use gift cards, fine, but burn them all quickly. Same for hotels. Buy and burn for a stay right away (not one months from now for example). This same rule goes for any gift cards you buy no matter how reputable the source you get them from.

Have you ever purchased travel / hotel / restaurant gift cards to get max value? Do you stack savings like I have shown (and done)? Tell me in the comments below on the blog! – René