On a recent check-in at a Hyatt hotel, the clerk noticed I was staying on points. Well, I always stay on points at chain hotels so that's nothing new. But his comment struck me when he said, "Thank you for using your hard earned points".
I almost said something but stopped myself. What was the point, other than giving me an outlet to gleefully proclaim "if you only knew!"
If you're one of my few readers you may remember my ten part series on how I travel and stay for free or nearly free. It starts here:
In a nutshell, I travel on points, mostly airline and hotel points I "earned" through credit card sign up bonuses and through manufactured spending. Things I explained in the ten part series.
It is not terribly difficult for me to amass large amounts of points and miles. Enough to take about 8 week long domestic trips per year and 3-4 international trips of 3 weeks or longer. That's a lot of travel for most people.
I realize I am gaming the system, but should I feel guilty for it? Well, let's look at how points work for hotels, airlines, and banks.
Banks want you to spend money on their credit cards. They need to offer a lucrative opportunity for the customer to do so. They offer perks, like cash back, miles, or hotel points to entice spend. They also offer large initial bonuses to get you to apply for their card to begin with.
They hope to get their money back and earn a profit by the fees they charge the merchant, and the fees they charge the consumer such as late fees on payments, and inflated interest rates on unpaid balances.
Hotels and airlines sell points in huge blocks to these banks for these credit card purposes. The points are normally used towards unsold inventory at these companies. Rather than have empty seats or empty rooms, the points they sell help reach 100% capacity. Airlines and hotels make a lot of money off the selling of these points. Although they make less profit off rooms and airline seats sold on points rather than revenue, it is still a significant source of incremental profit to their company
So, I am certainly not taking advantage of the hotels or the airlines, when I use points. Because I would not be traveling to these places and staying in these hotels if it were not for points. So they are making incremental profit off from me. I have no reason to feel guilty towards using my points for airline seats or hotel stays, nor should I feel guilty how they were "earned".
But what about the bank? Am I taking advantage of the bank by gaming the system? Well, I have to say I have a hard time feeling sorry for the banks. I can list all the number of bank scandals that have happened during my lifetime where they have been fleecing the consumer. The banks are into this to make money off the backs of the people. Often they take advantage of the poorest people in the country. That's because they are the ones less likely to make timely payments and pay in full at the end of the month, so they are paying the large fees and interest rates the banks charge.
The banks make no profit off of me as a customer. Because I always pay my bill in full by the end of the month. I pay no fees and I pay no interest charges. The only money they make from my purchases are the transaction fees they charge the merchant. That's typically in the 2 to 2 1/2% range. I expect they probably break even on me as that is probably close to what they pay for the points that I get from each transaction. In some cases, they might even lose money on me.
So, it is difficult for me to feel guilty for gaming a system when I'm doing it within the bank rules. I'm not doing anything illegally and never would. I play by the bank rules and it's up to them whether or not they want to issue the points or not. They can terminate the contract with me anytime that they want, and they have before
So yeah, my points are not all that hard earned, and it allows me to travel the world with the first class experience for free. But I am able to do it guilt free.
What do you think? Is manufactured spending wrong?
I think it is great that you have figured out a way to travel the world for the last 10 years by using a system that banks created. Good for you. 😊
The system is put in place for certain Individuals that will take the time to do as you have done. Most people either are ignorant of the system or choose to not take the time to do so. Hats off to you.