Travel

By Robert McGarvey

The good news – sort of, in a big picture view – is that airlines are flying very full.  The bad news: awards tickets are just plain rare.  And when they are to be had, the prices I see are exorbitant. Awards tix are priced dynamically on the airlines I’d fly and that translates into charging what the market will bear and, when planes are full, we are talking Kodiak bears.

Remember, as far back as 2002, Joe Brancatelli labeled frequent flier awards as akin to “an unregulated lottery” where the rules (and redemption values!) are subject to change at the whims of the owners who of course are the carriers, not us.

What rubs our noses in this reality is the eagerness airlines have in bragging to Wall Street about how profitable their awards miles business is. For them, there is more profit in selling awards miles than in flying sheetmetal from point to point.

Don’t forget that reality.

Oh, there are people who will tell me my pessimism is off base, that there are great awards deals to be had. Maybe for those willing to spend many hours hunting for a bargain that generally involves multiple parties – booking via an airline I’ve never heard of but which belongs to an alliance where a carrier I will fly belongs and, shazaam, those machinations produce an acceptable flight on an acceptable carrier. That doubtless works for some. But I am too lazy.

Show me the money. Now.

That’s why, for me, the takeaway is that today is the era of cashback.  When more money flows into my pocket I get more choice. I also can quickly and easily make my own purchase decisions. 

Which brings me to the credit card that – unexpectedly – I added to my wallet in the closing days of 2022.

Poking around the Amex site the other day – killing a few minutes looking for more ways to snare bonus miles and discounts – I stumbled upon an offer for the Amex Blue card.

The what? Count me clueless but I had never heard of it.  But at a glance it got my interest: 6% cashback on groceries.

Hold on.  In Q1 the Discover card I use offers 5% cashback on groceries which is capped at $1500 in purchases, $75 in cashback. But that only is in Q1 and I exhaust it in the first six weeks.

I also use a Venmo credit card which gives me 3% cashback on my highest spending category which I have made groceries.

We spend maybe $15,000/year on groceries.  It’s a big part of our annual budget.  So, yes, I do like cashback on grub.

There are two Blue cards from Amex – Preferred and Everyday.  

Everyday is fee-free. There’s a path to getting $250 back on purchases in the first six months.  And it offers 3% cashback on groceries, online purchases, gas stations.  There’s 1% cashback on just about every other purchase. There’s also an $84 statement credit for a Disney streaming bundle (paid at $7/month).

I chose to pay $95 for the Blue Preferred. First year fee is waived.  There’s a straightforward $250 credit earned by $3000 in purchases in the first six months.

But what hooked me is the grocery cashback is 6%, capped at $6000 in purchases annually – $360.  So I use Discover to get the $75. Then fill in with Venmo the rest of the year.  

That puts an extra $180 in my pocket a year, just for doing a little card shuffle and carrying one extra card in my wallet. That works even for a lazy guy.

Plus, Blue Preferred will put more change in my pockets. There’s 6% cashback on select streaming services (I believe the only qualifying service I have is Netflix) and 3% cashback on commuting expenses (from gasoline to subways). There’s also 1% on just about everything else although I doubt I will use the card elsewhere.

There also are plenty of usual Amex perks that I already have with the Plat card – global assist hotline, rental car insurance, return protection, purchase protection. All good but I already have them so I count the value at zero.

You’re right – after paying the annual fee I will be just a handful of shekels ahead. But, hey, it’s a game and a win is a win.

Btw, I am not alone in liking Blue Preferred.

Aren’t there other good cashback cards? You bet. Here’s a credible roundup from NerdWallet – and do note that Blue Preferred makes the list.  But there are 10 more on the list.  Look and doubtless there’s a card that will win you and put more cash in your pocket. Just don’t forget: it’s all about you. Some are best for dining, others for commuting, some for “everyday spend,” and – if you are like me and want to optimize the grocery spend there’s Blue Preferred.

My advice: get the card that works best for your spending. But get a cashback card.  Playing the awards came is so 20th century.  

Cash is king in 2023.

All hail the king.

By Robert McGarvey

Charge $695 for a credit card – and $175 for a family membership – and there has to be a regular accounting.  Is there still value in the Amex Plat card for me?

The odd bit is how fast the benefits dollars accrue.

For instance, there’s $240 – $20/monthly – that is reimbursed on a NY Times subscription.

There’s $200 in Uber credits, and I use every penny (mainly on Uber Eats in the past two years).

There’s $14.06 monthly, refunding a WalMart Plus monthly fee but, you know what, I will value that as zero because I wouldn’t actually pay for it.

There’s $179 credit on a Clear membership which my wife claims so let’s say that reimburses her card fee.

There’s a $50 credit for a Saks purchase and earlier in the year there had been another $50. Total: $100.

There’s a $200 airline fees reimbursement.

There’s $53.84 in Google credits. I am not sure what I did to get this but I won’t refuse.

There’s a $200 Amex Hotel Collection credit (plus the hotel covered $100 in miscellaneous charges on a three night stay).

There’s $20 in WalMart credits against purchases that I made.

That totals $1013 in credits just on my card.

There’s also maybe $20 monthly in cellphone protection (valued at $10 per phone), and some value also for the purchase protection on items bought with the Plat card.

Thow in maybe $250 in airport club access (mainly Delta lounges).

It really does become a no brainer.

When the math turns against the card I’ll drop it.

But right now it puts money in my pocket.

And I am comparatively lazy about maximizing value out of the 100+ Amex offers that are dangled in front of me. I’m sure there’s more savings to be had.

But I am sated with my present share.

By Robert McGarvey

Are we facing a doomsday wipe-out out of rewards and perks associated with Visa and MasterCard (but not American Express – more on that below)?

Fact: Senator Dick Durbin (D- IL) has introduced the Credit Card Competition Act of 2022.  The bill is written in the opaque language much favored by Washington DC power brokers but if you believe rewards experts like Brian Kelly of The Points Guy, this is potentially a very big deal. “This bill is an existential threat to the loyalty ecosystem,” said Kelly in a webinar last week.

Understand, however, airline miles distributed by the carriers would not be impacted. Neither would American Express, although it isn’t clear why Amex is exempted.  Fine by me however because I have gotten many more rewards from Amex than from all my other cards combined.

What would be the impact of the bill? It’s backed by big retailers (think Walmart and its ilk) who grumble about the few points they pay card issuers for processing a transaction. The Durbin bill would give retailers the right to put transactions on any rails they please – think lower cost – and that means the money flowing into the traditional issuers necessarily would decrease.

So? Well, it might in fact be a big so. There are worries for all of us with this new Durbin bill. I get Diners points (worth 2.1 cents apiece per TPG), Venmo rewards me with Bitcoin – if you call that a reward (I’m down 30.6%!), REI rewards me via Capital One, 5% cashback on purchases at Amazon ($560+ so far this year). Some hundreds of dollars – maybe thousands? – flow to me annually.   

And then there are the many and varied consumer protections card issuers have offered to lure consumers into their cards. That’s everything from airport club access to extended warranties.  

Would I be willing to surrender these perks and protection in return for meaningful price discounts? Very possibly. Personally I find the points accumulation game tedious and time consuming. But are discounts in fact on offer?

NerdWallet looked at what happened with credit cards in the UK and Australia where so called interchange rates have been capped at low amounts for some time and – as expected – credit card rewards are meager and more cards now have annual fees.  Could that come to the US? Possibly.  

Merchants, meantime, say that with lower processing fees they could lower prices paid by consumers. But there is no requirement in the legislation.

In effect I am compelled to give up something that tangibly benefits me with no obvious deal sweetener for me. Why would I support this?

This is the key question: is there any chance the Durbin bill will be enacted into law this year. Definitely not as such – there just aren’t enough days on the calendar for hearings.

But as a Congress winds down it often passes an Omnibus bill which, as the name implies, is a grabbag of miscellaneous hunks of legislation.  Horses get traded, lines get added to the bill, others get erased.  Could this Durbin bill be pasted into the Omnibus?

Yep.  

What’s the probability? Not high, say the people who monitor these doings for a living. But lameduck Congresses are always unpredictable.

There’s enough worry on the parts of card issuers that they this week unleashed a media blitz to torpedo the bill. According to Bloomberg, “The satirical ad campaign features a town called “Point Less, Kansas,” where citizens have lost all of their credit card reward points. The ads show empty airports and hotels, which have been deserted because people aren’t allowed to use points to book flights and hotels.”

The video is rather funny. But a world without points might not be fun.

There’s also a tsunami of anti Durbin op-eds flooding newspapers across America.

Know too that the Durbin bill is not an especially partisan bill. It can get support (or opposition) from both sides of the aisle. This also is a big business brawl. It’s big processors and issuers versus big retailers.

Where are us, the pubic? Nowhere to be seen. The trickiest bit right now is that knowledge of this measure among the public is slim.  

And if it’s buried in an Omnibus bill it likely could become law without anybody noticing.  

Now’s the time to write your US Senators and member of the House.  Here’s a tool to find yours.  

******

Delta Lost Hiking Poles Update. Regular readers will recall that I noted that my hiking poles went missing on an October flight from Madrid to Atlanta to Phoenix. They made it to Atlanta but they fell off the radar.

I filled out the Delta forms and, honestly, had forgotten about them.  

This morning – December 5th – they showed up at my apartment.

By Robert McGarvey

I never had liked Spanish wine.  Every so often, for many years, I eyed a great price on a Spanish rioja at a supermarket, bought it, and regretted this. The wine – no matter the label, but you probably know the supermarket staples – always seemed stubborn, astringent, the kind of wine that demands to be accompanied by food, lots of food to cover up the taste.

I remember the moment my thinking changed. I was in Villafranca del Bierzo – a stop along the Camino de Santiago – and sat down at a restaurant’s outdoor patio. The very short wine list puzzled me. Most of the wines were said to be of the mencia grape, which I had never heard of. Turns out, Bierzo is ground zero for the grape, which grows in northwestern Spain and Portugal.  If the Camino de Santiago had an “official” wine, it should be a mencia because they share the same geography.

Just one sip and I became a fan. This is a floral wine, you taste the fruit. It sips well without food but can accompany food too. Some call it the Pinot Noir of Spain, although I am unsure that’s much of compliment because post Sideways that wine has been grossly overproduced and much of today’s bottles in the US are tasteless.  

Mencia is a wine with a sure but not pugnacious taste.  By now I have had dozens of bottles, just about always in the $10 – $25 range and that’s in restaurants. 

Here is what Wine Folly says about this wine: “When you look at a glass of Mencía, you’ll notice its deep red color with subtle hues of violet towards the rim. The color tells us that Mencía has high anthocyanin (the red pigment in wine). On the palate you’ll be greeted with peppery flavors of sour cherry, red currant and pomegranate along with a bitter cherry pit flavor which comes from the wine’s tannin.”

The bad news: Mencia is not very available in the US. One place to look: Total Wine. The store near me in Phoenix presently stocks two labels. You might have similar luck where you live.

What about white wine? Two years ago if you had offered me $1000 to name any Spanish white wine – label or varietal – other than cava, I would have failed.  We all know cava, a drinkable sparkler much cheaper than champagne (but not nearly as good in most instances).

Is there anything else? In the past 14 months, I can testify that I had glasses of very pleasant whites on my Caminos but, as often is the case with Spanish wine, not much makes it over to us.  

There are exceptions however. The Washington Post’s Dave McIntyre sings the praises of Rubus Private Selection White Wine Verdejo 2021. He calls it “a racy white, with flavors of apricot, jasmine and honeysuckle, a garden in a glass.”  The wine is a private label of a US importer. If you can’t find it, a similar wine – lacking McIntyre’s stamp of approval – is Palma Real Rueda Verdejo which Total Wine sells for around $15.

Another lavishly praised Spanish white is Daterra Viticultores Manzaneda Gavela da Vila, a Galician wine – meaning Camino territory – that the New York Times’ Eric Asimov says is “a mild orange cuvée, slightly tannic, fresh and alive. It has lingering flavors of dried fruits and flowers and an intriguing texture.” This one is probably tough to locate in a local wine shop but it is available online. Prices for various bottlings run from $20 to $40.

I have a shopping hack for you however that is an easy way to get to know Spanish hooch. Head to a nearby Trader Joe’s.  The one near me in Phoenix reliably has around six Spanish reds to buy.  Occasionally there are whites too. None has cost me more than $9.99 and, for a mind blower, try the La Granja 360 tempranillo which will set you back $3.99. “A great everyday drinking wine.” says Trader Joe’s Sommelier (not affiliated with the company).

Don’t be surprised that TJ’s knows Spanish wine. Germany is the leading importer of quality Spanish wine and TJ’s ownership has deep – and very rich – German roots. We import more Spanish wine but mainly bulk wine for blending. The Germans know good Spanish wine.

Americans who want to tipple good Spanish hooch benefit from the extensive Albrecht family supply chain.

Picture Hemingway in the early 1920s in Spain without much money in his pockets.  La Granja is the kind of wine he drank by the six pack in those years – cheap, drinkable, pleasant.

It’s also prototypically Spanish wine which, I’ve come to believe, is good wine without pretention. With French wines – and even the cult California wines – there are lingering doubts that maybe I am not good enough to appreciate the wine.

There’s none of that rubbish with Spanish wine.  It’s just good wine and good value. Supermarket wine racks be damned. There are good and inexpensive Spanish wines to be had in the US.  If you look for them.

By Robert McGarvey

Regular readers know that this fall I did a 150 mile Camino route through Portugal and Spain. There are two recaps in the archives.  But a trip to the Iberian peninsula is about a lot more than sweat and hills and walking in the rain.  It’s also about the very rich culinary pleasures of Spain. That’s what I will report on here.

Good thing I did so much walking because I returned home after a month weighing no more than when I left. That’s despite eating and drinking with Falstaffian abandonment.

I am pretty sure my cardiologist does not read these columns so I will reveal this fact: in past trips to Spain I stuffed myself with Iberico ham – a marvelous meat I much prefer over prosciutto – and cheeses, typically manchego, a buttery sheep’s milk cheese.  But not this last trip. I tired of both within a few days. Not that they aren’t great, but somehow I just could eat another bite of either.  

Was I doomed to starvation?

Not hardly. What I was compelled to do was look deeper in the menus and try dishes that hitherto had escaped my mouth on prior trips to Spain.

For starters, a caution: unless you have profound reasons to think otherwise, don’t eat the paella in most Spanish restaurants. I can make better at home in Phoenix. That’s because in most Spanish restaurants it is a dish meant for tourists, not dissimilar from the stuff sold on Fisherman’s Wharf in San Francisco or any of the restaurants in Times Square.

This does not mean eat no rice. Indeed, one of my best meals was at Cool Rooms, a boutique hotel near Plaza de Santa Ana. Outside there was the raucous Spain Day celebration. Inside there was the tranquillity of El Patio de Atocha which served up Arroz seco de langostinos y zamburiñas con alioli de azafrán, dry rice with king shrimp and scallops with saffron aioli.  It was delicious and, get this, 22 Euros.  Call this a sophisticated riff on paella. The maitre d even comped a small glass of dessert wine to end the meal.

Spain also offers Michelin dining on the cheap. How cheap? For our first, celebratory meal in Santiago de Compostela – marking the completion of our 150+ mile walk – we dined at Cafe de Altamira which is a Michelin one star. No reservation was needed for lunch and on the menu is a 29 Euro menu de gustacion with an appetizer, an entree, and a dessert.  Presentation was lovely, portions small but ample, service good.

Take note: there are 211 one star Michelin restaurants in Spain, Portugal and Andorra, we’ve eaten at a handful, never with a reservation, never have had a complaint. Next time I go – note to self – I will construct an itinerary that seeks to eat at many more 1 stars.  There’s none of the stuffiness of a 3 star, nor are the prices breathtaking, but the food is inventive and good.

But not every restaurant needs a star. Another great meal was had at Hotel Chef Rivera in Padron (I also stayed the night in the attached hotel – $64 for two for a night with breakfast).  Must haves here include Gallician wine (which I prefer over the rioja which is what shows up in US wine racks), the soup of the day (typically made with local vegetables) and of course Padron peppers which are rarely available in the US.  Shishito peppers usually are substituted in the US. But the padron are far better especially when eaten in Padron – fruity, even a little sweet, slightly nutty, and plumper.  At Chef Rivera’s they were perfectly prepared, not burnt, but cooked through. Oh, and I had a steak which I never order in Spain – beef is not the local strength – but at Chef Rivera it was tender, tasty.  

Did I have disappointing meals in Spain? Not exactly. I had meals of convenience – necessitated by hunger and the availability of few options – that were blah, boring, even tasteless. I expected no better so I wasn’t disappointed. But whenever I made the effort – whenever I sought good eats – I found them in Spain. Which makes me think of one of my favorite books, Hemingway’s A Moveable Feast, a memoir about dining around Paris in the 1920s.  But I’d bet that if he were writing a similar gastronomy memoir today it would be set in Spain, “the country that I loved more than any other except my own,” he wrote.  And the food is damn good. 

by Robert McGarvey

This time of year is when we see an avalanche of articles, blogs, and Instagram stories about how to hurry up and get airline elite status.

Word of advice: don’t bother.

There’s just not enough there to justify taking a long flight to Santiago Chile and back the next day just to qualify for low level elite status.

Now, if you really want to see Santiago Chile, go for it. I’ve been, it’s a delightful place. You’ll get over 11,000 miles for the round trip. But go because it’s a great destination.

Not if you just want to get low level elite status. If that’s the only prize I wouldn’t fly from Colorado Springs to Denver which is the shortest regularly scheduled route I can find that is still operating. (The SFO to STS flight apparently is no more and I wouldn’t bother flying it either.)

The reality is that it is easy – and cheap – to get the perks of a low level elite without the bother of flying.

At the other extreme, If you are very close to high level elite status – 1K on United, Diamond on Delta, Executive Platinum on American – it might be worth your time and money to take a fast flight to nowhere just to qualify for that bigger basket of perks. No one but you can decide if the prize warrants the bother. But if I were that close to the highest level elite, I’d probably take a flight from PHX to whichever of my favorite east coast cities with a qualifying distance was cheapest. Because with high level elite status there are genuine perks such as a legitimate chance at upgrades, free Sky Club access, and much more for Diamond Delta flyers, for instance. United and American offer comparable for their highest elites.

I would not cross the street to get lower access.

At the top rung there are real benefits. Not so much at lower levels, at least not by my measure.

For instance, Delta silver brings complimentary upgrades (if available and they won’t be with planes flying full and three levels of elite getting upgraded first), priority boarding and free baggage check.

American offers its entry tier elites – here they are gold- the same illusory upgrades, priority boarding and one free checked bag.

I can match that with no status on AA. With my Barclays Aviator Red Mastercard ($99 annual fee) I get 1 mile for every dollar put on the card (2 miles for AA purchases), free bag check, priority boarding, $25 in statement credits against purchases of inflight WiFi, no foreign transaction fees, and more.

If I want – and I probably will in 2023 – I can designate AA for the $200 fee reimbursement provided for Amex Plat cardholders on an airline of their choice.

I don’t see that qualifying for entry level elite on AA gives me anything I don’t already have and my preference always has to been to fly the carrier with the best flight for me, not to fly a carrier where I am trying to build up loyalty.

The priority boarding is the real bonus, especially in an era when the overhead bins are frequently maxed out long before the last passengers have boarded. And I get that.

So I want the credit card perks. And I like the price.

Until a month ago I had a Chase United Explorer card which gave me about the same benefits of an entry level elite, plus two passes to the United Club, for under $100 annually. (I canceled that card because in Phoenix where I live there is scant reason to fly United and Chase made an error that took me hours to sort out and the bank never apologized, so I closed accounts.)

Delta offers the American Express Sky Miles gold card – $99/year – that, you guessed it, provides priority boarding, a free checked bag, and 30% back on inflight purchases.

If your ordinary flying brings you entry level elite status, by all means, take it.

But don’t break a sweat or even think about taking unnecessary flights to get entry level status. It just isn’t worth the bother.

In an age of global warming – and counting carbon – it plainly is wrong to book a mileage run flight and, beyond wrong, it is simply silly to do it to claim a low level elite status because you can get similar while spending less money and basically no time getting an airline branded credit card.

Pick a card, any card and you’ll create your own elite status.

by Robert McGarvey

Maybe it’s this year’s Zeitgeist but in 2021 when I returned from walking 150 miles of the ancient Camino de Santiago (from Leon to Santiago de Compostela in northern Spain) pretty much no one asked me how to do it themselves.

This year, when I returned from walking a similar distance on the Portuguese Camino from Porto to Santiago, suddenly a lot of people have asked me how to do it. Probably it’s because Covid fears have receded, but now it seems everyone wants to hit the Camino trails and they all want to know how.

This is my answer.

For starters: if you can walk a mile in your hometown you can walk the Camino aka The Way. That is fact. There is no timekeeper, take as many days as you want and, especially on the Camino Frances – the most popular route – there are plenty of places to sleep between, say, Leon and Santiago. No one is forced to walk a 20 mile stage daily. In fact, in our most recent Camino, one day’s stage was 5.9 miles (mainly because I discovered all accommodations were booked in the next logical stopping point which was another six miles distant). You don’t lose points for walking five miles in a day, you don’t score points for logging 20+. Your Camino is your Camino.

You also are not obliged to carry a heavy backpack as you walk. On the most popular routes – the Frances and the Portuguese from Porto – multiple companies (known as pack services) want to transport your bag for around 6 Euros per stage. You also can use a service some days, carry it yourself others which is what we did on this year’s Portuguese.

How big a pack should you bring? Go in the popular April through October timeframe and a 40 liter sack will be big enough. That’s what I used last year and this year. Next year I plan to do a third Camino – the Ingles from Ferrol to Santiago, about 100 km – and will use a 35 liter Cotopaxi bag because, honestly, the 40 liter bag felt heavy on my back this year and I decided to trim down for the next walk. I picked the Cotopaxi because it is built to be rugged and it features lots of built-in organization. As a bonus it is unquestionably carryon luggage on any airline I would fly.

How can you get away with such a small pack? Because you only bring clothes and toiletries and of course a phone charger. You don’t need a sleeping bag, a cook stove, or a larder of dried and canned food for hikers. There are plenty of cafes along the main Camino routes. I don’t even bring a water bottle (although I do buy the occasional plastic bottle of water at a mercado along the way).

But you do need fast drying underwear, socks and shirts. You will be washing them out in sinks and you want them dry before heading off early the next morning. I have acquired a whole if small Camino wardrobe to accommodate this need. Word of advice: your socks are the most critical part of your wardrobe. Do not scrimp. I wear modestly priced walking shoes but $25 Darn Tough socks.

And you are not obligated to sleep at so-called albergues, which are usually akin to barracks where 20 to maybe 100 peregrinos are sleeping. We never slept in an albergue on our 2021 walk (lingering Covid concerns made that unwise). Nor did we this year – again because of Covid but also because there were so many pilgrims this year and so many albergues remained closed availability of beds was uncertain. I used Booking.com to find rooms at small, usually family owned hotels, at rates that never exceeded $121 per night and perhaps half the time included breakfast.

Here are the rates for other nights: $82, $72, $75, $68, $56, $48, $62, $60, $90, $66, $60. That’s for two people, private room, private bath. And, as I said, about half the time a breakfast was in the deal.

About now you are probably asking, but what about the walking? As I already indicated, walk at your own pace. The two most popular Camino routes do not involve technical skills. These literally are walks in the park with some city and town sidewalks thrown in. Many peregrinos use hiking poles – some use two, personally I prefer just one but it is especially useful going down steep hills and also when crossing shallow streams.

Definitely do walks at home before heading off to Spain. Maybe six months before the start date, certainly three months before, start walking ever longer distances six days a week, seven if you can. Why so many days? No day’s walk on the Camino is likely to undo a peregrino but the day in, day out grind for two weeks, maybe a month if one is walking the full 800km Frances route does thwart many. Get used to daily walking. If you can manage five miles a day probably you are good to go for the Camino especially if you will settle for a 10 mile per day quota.

Your goal is near 20 miles per day? I suggest getting up to at least 10 miles per day at home.

And do some of that walking, especially the last week or two, wearing the pack you plan to bring. Is it comfortable? If not, adjust the straps. If it’s still uncomfortable, buy a new pack. Pack comfort is critical especially if you don’t plan to use a pack service.

A rule of thumb is that walking shoes will last for around 500 miles so put in maybe 250 miles in them at home – and bring those shoes on the Camino. Do not bring new ones. That leads to blisters. Bring shoes that already suit your feet and walking style.

But do bring blister treatment – it’s probably the most common Camino ailment. I’ve used several, most seem to work okay, but do not have a favorite to recommend. Try several at home before going to Spain.

All that’s left for you to do now is book your flight and book accommodations at least for the first couple nights. Buen Camino.

By Robert McGarvey

Probably you thought – as I did – that the 2002 ruling by the IRS that it couldn’t figure the value of airline miles and therefore it wouldn’t tax them settled matters with a clear principle: Miles do not incur tax consequences.

My certainty vanished as I read the fine print associated with a 20,000 Membership Rewards points offer from American Express.  Deep in the document I read this: “The receipt of Membership Rewards® points through this offer may be considered taxable income to you and may be reported to the IRS on Form 1099. You are responsible for any federal or state taxes resulting from this offer.”

Now do we have your attention? It certainly got mine

I started by reading exactly what the IRS ruled: “Consistent with prior practice, the IRS will not assert that any taxpayer has understated his federal tax liability by reason of the receipt or personal use of frequent flyer miles or other in-kind promotional benefits attributable to the taxpayer’s business or official travel.”  

There’s a twist in that statement: “attributable to the taxpayer’s business or official travel.”  Are miles earned in personal travel taxable?

Presently they aren’t.  In most cases. That’s because, to quote a CPA firm: “The IRS has stated that they will not tax miles that are earned through travel with an airline or by using a credit or debit card because those miles are deemed nontaxable rebates.” That’s as true for personal travel as business travel.

But there’s another twist: “This relief does not apply to travel or other promotional benefits that are converted to cash, to compensation that is paid in the form of travel or other promotional benefits….”

Another CPA firm notes this: “When you receive an offer that promises to give you 30,000 miles for opening a new checking account, pause. Realize that this may cost you tax before you jump at this tempting offer.

“Since you don’t have to spend any of your own money to earn the frequent flyer miles, they are considered a gift, not a reward.”

A third CPA firm elaborates: “in Shankar v. Commissioner, the U.S. Tax Court sided with the IRS, finding that airline miles awarded in conjunction with opening a bank account were indeed taxable. Part of the evidence of taxability was the fact that the bank had issued Forms 1099 MISC to customers who’d redeemed the rewards points to purchase airline tickets.”

Which means that, yes, potentially the Amex 20,000 point bounty could be taxed. It seems clearly to be a gift for signing up for pay over time.

But why is Amex issuing a 1099 – which is required when amounts are $600 and more.  

20,000 Amex miles is a sizable clump – that’s why I was eyeing this pay over time offer even though I have no intention of actually paying over time. I just wanted the miles – so, yes, I value Amex miles. But, personally, I see no way that haul can be valued at $600. My calculation is $200. Even using The Points Guy’s generous calculations, it’d only be worth $400.

NerdWallet adds that if Amex miles are used to shop at Amazon the value dips to 0.7 cents which amounts to $140 for 20,000 miles.

There is no way to put a $600 value on 20,000 membership rewards points.

But the IRS does not prohibit issuing 1099s for amounts below $600. So Amex is well within its rights to issue a 1099. But why?

The value of the Amex points is uncertain and, besides, by some estimates, 90% of airline miles are never used. Other estimates say 40% of miles aren’t used.  Either way, lots of miles and points never get put to use and their value has to be put at zero.

My calculation is that – valued at $200 – my federal and state tax consequences of a 20,000 mile gift for signing up would amount to maybe $100.  Of course that is no big deal.

It is however opening a Pandora’s box. What else might be taxed?

So, for now, it has halted my signing up for pay over time. At least I won’t miss having that option.

But one thing is certain: I will always read the fine print with points and rewards offers.

by Robert McGarvey

Out with some old and in with what new?

When the $95 annual fee showed up on my Chase United Explorer card I immediately picked up the phone, called Chase, and cancelled the card. I could not remember the last time I flew United which is a non player at Sky Harbor in Phoenix where I live. American and Southwest dominate so it was easy to kiss the United card goodbye.

It was still easier because – after an annoying snafu at Chase where the big bank failed in customer service – I have closed a Chase checking account and a savings account and the United card was the next logical casualty. (I plan to keep a Chase issued Amazon card that returns 5% on Amazon and Whole Foods purchases. It’s free too. Scorching earth is fun but I don’t want to incinerate my own crops.)

Then I saw a tasty Delta offer in my postal mailbox – 80,000 miles after spending $4000 in the first six months. The card is Amex gold, $250 annual fee.

I was just about to apply when sanity prevailed. In my life I remember flying Delta only three trips, each time a “free” ticket bought with Amex miles. Delta also is a trivial player at PHX. The offer got binned.

And I decided my best move right now is to maximize the benefits of the cards already in my wallet. Sure, I am mulling getting a Southwest card – the Southwest Rapid Rewards Premier Credit Card at $99 is tempting. There’s a 50,000 point bonus too. But, although I flew SWA lots years ago, I remember flying SWA only once in the past five years. Why do I want to pay for a slice of plastic to sit unused in my wallet?

Especially when I already have plenty of useful credit cards and my goal is to get more out of them.

Eight, that is how many credit cards I have. Most I make very little use of. I want to change that.

I am keeping the AAdvantage Aviator card. $99 annual fee. Living in Phoenix it just makes sense to be able to get perks such as priority boarding on one of the leading carriers. The card also delivers 1 AAdvantage mile for every dollars (2 per dollar on AA purchases).The card otherwise has scant attractions but it’s in my wallet and will remain for now and I am planning to use it more to build up my AA miles stash.

Diners Club also is in my wallet – $95 per year. It’s also often very useful as I discovered in my recent trip to Portugal and Spain where a lot of establishments do not take Amex. But they take Diners because it is a Mastercard in fancy clothes. Besides, Diners offers many perks – I have a stash of rewards points and it also offers another way to access airport lounges, not that they are appealing these days. It also offers primary collision damage waiver coverage for vehicle rentals and lots more perks. It’s good value.

The Venmo Visa card is a newer addition to my wallet and this no fee card offers cashback rewards tiered at 3% down to 1%. Your largest spending category wins 3% – for me that’s groceries. The next biggest category gets 2%. Everything else gets 1% cashback. I take mine in crypto and, don’t laugh, my account is down 30%. Hey, at least I have a crypto play and in many respects the loss is costing me nothing anyway.

New in my wallet is an REI card via Capital One. It’s a rewards card – 5% on REI purchases, 1.5% on everything else. But when in Europe recently I used the card a lot because it has no foreign transaction fees. The card is fee free (although it needs an REI membership which is a onetime fee of $30 – and members usually get 10% back on eligible REI purchases so it pays for itself very quickly).

That leaves the heavyweight in my wallet – Amex Plat which just dinged me $695 for renewal but it pays for itself. I’ve documented how Plat pays for itself but of course you have to play the Amex game and make the right moves. None of that is hard however.

On the Portugal-Spain trip I got a $200 hotel credit (for booking a Hotel Collection property), $85 refunded on miscellaneous Delta charges, and 5X points on airline flights and hotels booked via Amex tools. And that’s just in one two month span.

What’s key is that to make the Plat card work for you you have to use it. Do that and the annual fee literally is paid for with the perks you get.

What’s in your wallet? Is there dead weight you can throw overboard?

By Robert McGarvey

First this: do the Camino de Santiago, an ancient pilgrimage route in Spain and Portugal where all paths lead to Santiago de Compostela.  Multiple routes exist where even a slow walker can complete a Camino in maybe 10 days.  Go. Spending day after day where the only agenda item is walking liberates the mind. If you can walk you can do this. Personally, I like it so much I’ve done it twice in two years and already have started planning a third.

Now for some specifics from my recent trip which involved a 13 day walk from Porto to Santiago through rural Portugal and Spain (Galicia), but started with six days split between Lisbon and Porto and ended with six nights split between Santiago and Madrid. There are highlights and lowlights.  What went better than I had a right to expect and what went worse.

Let’s get the losing moments out of the way.

*Delta checked baggage.  No surprise of course but, yes, I am still waiting for three hiking poles that had been checked because they have to be. There no obvious reason for this policy but it’s the policy so we first checked the poles with Iberia when flying from Santiago to Madrid – they showed up fine. We then checked them on a Delta Madrid to Atlanta flight, continuing with an Atlanta to Phoenix flight.  They showed up in Atlanta where we claimed them, as required, and then put them back into Delta’s hands for transport to Phoenix. Four days later there still is no sign of them and Delta’s customer service is simply terrible.  Just don’t check luggage with Delta.  We used carryon backpacks – Osprey 40 liter bags – so had no problems with that. But the hiking poles have vanished.

*TAP’s bag hustle.  I thought I’d seen every airline hustle but in Madrid airport TAP did something I’d never seen. As passengers waited to board a flight to Lisbon a TAP employee circulated among us with a cardboard bag sizer and put just about every bag to the test – and, guess what, many were “too big.” Rejected bags had to be checked and many passengers – with discounted airfares – had to pony up Euros to check their bags. Literally dozens of bags failed the sizer test in the minutes I watched.  Mine were not even sized so I have no personal gripe.  But flier beware with TAP.

*Delta Club. After depositing the hiking poles in the about to be lost forever bin and walking to my gate for the flight from Atlanta to Phoenix I saw a Sky Club literally feet from the gate. Might as well go in, right, since I have Amex Plat. Uh no. That’s because a noticed a line of about 10 people waiting outside the club and this was a line that wasn’t moving. It of course meant that inside the club was jammed as well. Airport clubs really do suck now.

Now for the best moments from a month in Iberia.

*The weak Euro. The last time the dollar was at parity with the Euro was 2002.  On this trip I kept celebrating the reality that a 100 Euro meal was actually costing me only $100, maybe even a little less.   A year ago when I did a similar trip to Spain the Euro was worth $1.15. If you need another reason to go to Europe, you have it: the dollar is just so powerful.

*The AMEX Hotel Collection. For a stay in Madrid I booked three nights at ME by Melia, on Plaza de Santa Ana in centro Madrid.  I had never stayed at a Melia hotel – hadn’t heard of the company to be honest – but the location sold me.  I paid $1020.81. But I got a $200 credit from Amex plus Melia gave me a $100 onsite credit – which paid for breakfast for two for two mornings.  I also got 5105 Amex miles (a 5X haul).  I hadn’t made much use of this Amex perk but count me a convert.  I also am a fan of ME by Melia.  A lovely hotel at a great price.  

*Luzeiro Suites Lisbon. Joe Brancatelli is a fanboy and he is right. The hotel is in a great location – convenient to many restaurants, the subway and wonderful streets for walking.  Rooms are clean, reasonably sized and the staff are helpful. But it’s the price that hooked me. 440 Euros for three nights – in a nice hotel in a European capital in the middle of plenty of action.  If you are going to Lisbon – and these days just about everybody seems to have a jones for Portugal – just stay at this hotel.  

*Don Quixote Restaurant, Santiago de Compostela. It was a Sunday, mid-day, many restaurants weren’t open but this one – which specializes in Galician food and is a short distance from the Cathedral – had an available table.  And a remarkable thing happened. For our main we ordered a lobster and rice dish and a bottle of good Spanish wine. But then the sommelier came by and urged me to change the wine order.  The wine I wanted was too good, he said. He talked me into a wine that cost half as much. “It’s not as good a wine but better for the lobster,” he said.  His wine choice proved a great complement to the lobster – and the meal for two cost $116. 

*T-Mobile international data.  Free data, that says it.  T-Mo covers hundreds of countries and the data may be slow but it is free.  Don’t you remember the trips you took maybe in 2010 and data bills for hundreds of dollars inevitably rolled in? Not for me today. Not with T-Mo. Yes, T-Mo offers higher speed data for a price but I never enrolled.  Wasn’t necessary.   Also included gratis is inflight WiFi on at least some flights.