Bootstrapping status and earning tons of points
How I'm going to earn over 1 million points in 2022 with 20x+ returns
This post is intended as a follow-on post to my intro post on points & miles (I highly suggest giving that post a read if you have not already). As always, this post is for informational purposes only and please know that there are considerations around your credit score, taxes, and other areas that I won’t cover in this post but encourage you to investigate.
Recently, when figuring out how I was going to earn my Delta Gold status this year, I had a realization that by paying $553, I could earn Platinum status (which I value at ~$3,000 more than Gold status). This realization helped me reframe how to accelerate value extraction from the points & miles game.
The net result of this realization is that I am now on track to earn over 1 million points this year by viewing the concept of “manufactured spending” from a different lens (though admittedly some these points will come from paying for wedding expenses using credit cards).
If you’re primarily interested in how to earn a lot of points without super high organic spend levels, I suggest you skip the Delta Platinum status section.
Bootstrapping Delta Platinum status:
To earn airline status with Delta in a typical year, you have to both fly a certain distance (MQMs) AND pay a certain amount out of pocket in airfare (MQDs). When I fly for work, I regularly fly coast-to-coast so I am able to rack up distance flown quickly (MQMs). However, I fly coach so my airfare paid is consistently my rate limiting variable in earning airline status (MQDs). See here for more information on various levels of Delta status and the corresponding requirements & perks.
By mid-2022, I was at ~75,000 MQMs (enough for Platinum because Delta has rolled over MQMs during COVID) but under $3,000 MQDs (the minimum for Silver with $9,000 required for Platinum). My travel expectations for the rest of the year indicated that I might make it to Gold status by end of the year but there was no way I was going to make it to Platinum status from an MQD perspective unless I activated the MQD waiver (which can waive the MQD requirements for Silver, Gold, or Platinum status with $25,000+ of spend on a branded Delta credit card).
In mid-2022, I had just over $6,000 of spend on my Delta branded credit card with $19,000 of spending left to go to trigger the waiver. That’s when it hit me, I could send $19,000 through Paypal costing a net of 3%. Thus, for $553, I could buy 19,000 Delta miles and Platinum status for the rest of 2022 and 2023.
I easily value Platinum status at $5,000 and Gold status at less than 1/2 of that, so this was a total no-brainer for me and an easy 5x+ return on my $553 “investment.” See below for a bit more on how I value the component parts of each status.
Earning tons of points:
Looking at earning Delta status through paying the interchange fees on the required spend reframed how I look at earning sign-up bonuses for credit cards. While I was previously deterred to shoot for big spending bonuses (such as the AMEX Business Platinum offer for 250k points for $30k in spend over 6 months), I am now taking a refreshed approach to accruing points and more aggressively signing up for new cards.
Below, I’ve outlined a few illustrative earning opportunities and their implied returns. The key assumptions in this model are around the fee you are paying to generate the manufactured spend (3% in this instance with the painless Venmo/Paypal approach), as well as the point value (cents per point) you are able to redeem for. In my experience, Paypal works much better than Venmo for moving large dollar volumes. Please note that these returns calculations assume that one is not taking advantage of referral bonuses which can further juice these numbers at no cost (e.g. for each AMEX sign up bonus, you can assume an extra 30,000 points). It is also worth making sure that you aren’t transferring upwards of $50k in a short period of time (Paypal might shut you down) and that Paypal does not code as a cash advance for the credit card you are trying to generate spend on.
For beginners, it should be relatively easy to get at least 2 cents per point of value while for those looking to unlock more pricey experiences ($1,000+/night hotel stays and international business/first class flights), 6+ points per dollar is a good target. In the first half of 2022, I redeemed points for over $80,000 of value with an average redemption value of over 7 cents per point.
For those willing to go the extra mile in the effort, there are ways to “manufacture spend” without paying interchange fees (or at least paying much less than 3%). Perhaps the easiest way to do this is prepay estimated taxes for which the IRS charges 1.87%.
For me, I don’t find those exercises to be very fun/rewarding and thus choose not to engage (this includes buying gift cards & liquidating them for instance). For those interested in learning more, here is a good introduction on the topic. The Miles to Memories Diamond Community have this stuff dialed in…