Posted on 07/21/2011 5:27:20 PM PDT by Gamecock
Despite the headline, the US Government is not giving out frequent flyer miles to anyone with good credit. At least, not directly.
The background: The United States government recently minted about $1 billion in gold coins. Each coin is worth a dollar, much like the well-known Sacagawea coin, and each one is printed with a different president. It was supposed to be part of a series of coins that would eventually feature every single president, but they’re only partway through the list. Unfortunately, they have been having trouble getting them into circulation, because no one really wants $1 coins all that badly.
Now here’s where it gets interesting: In an effort to get all of these coins into circulation, the Mint started something called the “Circulating $1 Coin Direct Ship Program.” Pretty much, you can order a box of 250 coins online, pay face-value with a credit card, and get them shipped for free to your home. The intention was to get coins into people’s hands so they would start spending them, but many people have discovered an unintended consequence: free frequent flyer miles.
Many credit card companies give out frequent flyer miles based on how much you spend, typically in the ballpark of 1 mile per dollar. So some clever folks started buying huge amounts of these coins on their credit cards (think tens of thousands), and when they arrived at their house, they would bring them to the bank and deposit them in order to pay off their credit card. This would get them huge amounts of frequent flyer miles, all for free.
Now, I’m obviously not the first one to write about this. The Mint, and the media, caught on to this trend when banks started reporting that people were depositing the gold coins, still in their original packaging. The Mint has since limited individuals to buying $1000 of coins every ten days. It will stop the obscenely huge rewards some people were getting (one guy earned over 2,000,000 miles, getting him lifetime platinum-elite status), but it could still get you some awesome stuff.
So, are you interested in getting in on the action? First, you need a credit card with good frequent flyer rewards. According to Money Magazine, the best card for this is Capital One’s Venture Rewards Card. The catch: you need to have “excellent credit,” meaning you can’t have “been more than 60 days late on any credit card, medical bill, or loan in the last year; have never declared bankruptcy or defaulted on a loan; and have had a loan or credit card for 3 years or more with a credit limit above $5,000.” If these describe you, you’re in luck. The card will get you 2 miles for every dollar you spend, as well as a one-time bonus of 25,000 miles once you spend $1,000 in the first 3 months (easy, if you’re using it to buy coins).
Then it’s simple. Go to the United States Mint order page and buy a bunch of coins. They’re sold in packages of 250 coins, for $250, free shipping. At the time I’m writing this, many of the coins are listed as “Sold Out,” and the rest say they can’t be shipped until 7/28 (both are probably due to the frenzy all this coverage is causing).
Then, once you get the coins, you can do two things: spend them, or bring them straight to the bank to deposit. The whole point of the program is to get them into circulation, so if you can spend them, you should. Vending machines typically accept them, as well as all stores - so cut out using your credit card on retail purchases and start using gold coins. You’ll probably make a cashier laugh when you pull out a bag of gold coins to pay, especially if you put it in a little treasure chest.
Of course, if you’re lazy or don’t really feel like making a scene at a cash register, just deposit them into your bank account. According to the Mint site, “The immediate bank deposit of $1 coins ordered through this Program does not result in their introduction into circulation and, therefore, does not comply with the intended purpose of the program.” It’s not at all illegal, but is a bit of a dick move.
But of course, be wary, and don’t blame me if anything goes wrong. Keep in mind that credit cards can be very dangerous if you don’t keep on top of things, and if you plan on getting a ton of cards to multiply the benefits of this, it could hurt your credit score. And also note that if you’re sending them straight to the bank, you’re not really supposed to do that, and the Mint may ban you from buying them (it has done so to less than 400 people, who were probably buying tens of thousands on multiple cards).
One more thing to keep in mind is that credit card companies calculate miles differently, and usually counter-intuitively. You would think that earning 3,000 miles means you can get a free round-trip ticket to somewhere 1,500 miles away. But the way Capitol One does it, 100 miles will pay for $1 of an airline ticket, meaning if you buy a $500 ticket, it will cost you 50,000 miles. A bit of a buzzkill. So before you get too excited, be sure to find out what you can actually get for your “miles.”
And the Mint is still working to stop this practice. According to the Wall Street Journal, “The Mint has added a warning to its Web site that credit-card companies could consider the purchases cash-equivalent transactions not eligible for miles, and Mint officials plan to contact credit-card issuers ‘to try to implement a solution,’ he says.” So beware, this scheme may become obsolete in the next few months, leaving you with a new credit card you don’t want.
Does he mean gold COLORED coins?
I'll fess up. I buy coins with my airline credit card. But only about $500 a month. I use them to buy lunch, get a drink form the vending machine, give them to the kids when they need a few bucks.
I am aware of a guy who was buying $20,000 a month and immediately depositing them into his checking account and then paying his credit card off.
No. These are regular dollar coins. Some have a golden color.
It's breaking the terms of sale, is it not? As part of the terms of sale you agree not to violate the intent of the program, which he admits a bank deposit does.
Didn’t George Costanza do the same thing, but with computers?
Not illegal. But perhaps more of an ethical issue.
Missed that part.
But like I said, I spend them so I don’t spend a lot of time reading the fine print.
But it’s still legal.
But it’s still legal.
Isn’t Uncle Sugar paying the usual CC charges, something like 4%, which is the profit the CC uses to finance their user rewards? Same as 1% cash back gift cards, etc. Not exactly a genius move by the government, but how many moves are?
I have been asking for some of these presidential dollar coins at my bank and they said they do not have any and do not anticipate getting any.
I have never received any info from my credit card companies about buying some on credit.
The US Mint site shows them sold out.
Change is almost worthless. When I was a kid, a dime was the same as a dollar today. A silver dollar at the time (late 50s/early 60s) was like having a $10 bill in your pocket. Dad used to come home and ask Mom “Did you cash a check today?” and she’d answer “Yes, I got a twenty.” Today we hit the ATM for $200 for about the same value.
It’s time to lop 1 or 2 zeros off our currency and get the numbers back in a human scale (before we hit Zimbabwean scale).
Why wiykd the government even care? It’s on the Credit Card Companies’ dime.
My wife brought one of these home not too long ago. It was in brand new condition when we got it, and you could tell that the intent was to make it look "gold." However, after only a few days, it was all tarnished, brassy and crappy looking. It looked like we had it for ten years.
As far as raw materials go, I'm guessing that one of those chocolate coins with the "gold" tinfoil wrapper is worth a lot more.
They could stop minting them and turn them in to quarters nickles and dimes.
The Mint pays the shipping and processing charge.
But they are going to do that no matter who buys them for what.
Actually I just assume the “journalist” is a dim wit. I have seen dozens of these president coins. none are gold, or gold plated, or gold toned or gold anything at all.
And btw, 2,000,000,000,000,000 frequent flyer miles still will not get you anywhere you actually want to go at a time you actually want to get there.
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