How to Piggyback and Recycle Credit Card Points


Freedom or folly? (Photo codestr)

I almost never use cash for travel or electronics. How?

There are two simple methods for leveraging credit card point systems to cover both business and personal expenses: piggybacking and recycling.

The former is strategic expensing, whereas the latter is arbitraging cash (or equivalents) and credit (or equivalents) to mass produce points.

I use piggybacking exclusively, but I’ve heard some incredible stories about recycling. Do your homework before using either.

Piggybacking is particularly effective for those who have followed the muse development in the 4HWW, which provide templates for automated sources of income that are low maintenance but can be expensive in one or both of two tactical areas: manufacturing and advertising.

Regardless of where your expenses come from, shop for providers/suppliers that are willing to accept credit cards as payment, and negotiate this upfront. Here’s one approach: “Rather than trying to negotiate you down on pricing [only after you've negotiated up what they offer you for the same price to get a better yield per dollar], I just ask that you accept payment by credit card. If you can do that, we’ll choose you over Competitor X.”

This is yet another example of a “firm offer,” and not a question, that puts you in a stronger negotiating position.

“Piggybacking” is so named because it is the use of credit cards to pay for inevitable expenses, not the use of credit cards to actively accumulate points by buying things otherwise unnecessary.

The value of any reward point system is awful — generally one cent for every dollar spent. Focus on increasing your cash-flow and the commensurate increases in normal expenses you can then pay for using select high-yield credit cards. The points then simply “piggyback” your expenses, and the full balance of all cards is paid off at the end of each month. Don’t focus on points instead of profits, just as an addition.

I recommend getting two business credit cards, always separate from your personal credit cards, with at least two separate processing companies: American Express and MasterCard/VISA.

Sign up for all of your credit cards within 48 hours to minimize the negative effect these inquiries will have on your credit score. I currently use two cards for accumulating points, which I apply primarily to travel (assume 35,000 points/dollars-spent for a domestic roundtrip and 50-75,000 points/dollars-spent for an international roundtrip):

American Express Business Platinum Card

The Platinum card offers several excellent benefits to the would-be lifestyle designer, and I wrote an article about specific features that can get you a near immediate 300-400% return on investment.

AMEX also provides the most flexible point system, as their points can be transferred to the greatest number of other programs, such as Southwest Airlines Rewards and the OnePass Alliance (of which Continental, below, is a member airline).

The primary deficit of most airline-affiliated credit cards is their inflexibility: if you own an American Airlines card, your points can only be used on American Airlines tickets, and that is it. Screw those guys, as they will happily screw you by expiring your points and imposing related jerkiness.

AMEX, by contrast, is not only flexible but has a catalog of over 20,000 worthwhile products (including iPods and assorted electronics) for purchase directly via their website. I use this card to pay for all online pay-per-click advertising (Google, Overture/Yahoo, etc.), which in turn pays for all of my domestic travel and consumer electronics purchases. My current point balance at the time of this writing is 197,486 points.

Chase Continental Airlines Business Card:

Many businesses will not accept AMEX for payment due to its high discount (processing) rate, hence the need for a MC/VISA card. This particular Chase card is sponsored by Continental Airlines but points are applicable to the OnePass Alliance, which comprises nearly 20 airlines. It is critical that you attempt to get a card with no blackout or restricted dates that are reserved only for paying customers.

I was given 15,000 points upon signing, which left me with 35,000 points to acquire before any free international flights. I use this card to cover a minimum of $20,000 per month in manufacturing and $5,000 per month of print advertising, for an average of 6,250 points acquired per week.

This means I can get a free first-class roundtrip ticket to Japan or Brazil every eight weeks or so, particularly if I sweet talk a OnePass operator into helping me drop the miles needed, which can be done with a few sentences of playful begging. Call back until you get an operator willing to help.

One can also combine the AMEX points when needed and boost the points using recycling for an international roundtrip every four to six weeks, without any real effort other than normal business expenses (of course put on autopay) and a little well-placed charisma. My current point balance on the Continental card is 78,265 points.

Recycling Points

Recycling and related arbitrage allows you to legally move cash from credit cards to cash-like instruments and back to credit cards, without significant fees but with all the benefits of point accumulation. There are many methods at your disposal, but the least time-intensive I’ve heard of involves a simple 1-2-3 process:

1. Set your credit card cash advance limits to $0. You don’t want any nasty surprises if the processors or banks change their policies, and cash advances are an expensive way to learn. If they ask you why, just tell them you want to protect your account against identity theft.

2. Purchase gift cards that can be used as MC/VISA debit cards. An example of such a card is the AllAccess Card. “CharterOne Mastercard Gift Cards” used to be the cult favorite, but I couldn’t find them.

3. Use the gift card to purchase a Walmart or postal money order, which is then deposited back in your bank account to pay off your credit card balance and finalize the points. There is a nominal cost per 1,000 points associated with this ($1.25 or so per $1,000 money order with the USPS), but it is a useful tactic if you don’t have the requisite cash-flow or have a deficit of a few thousand points for your desired reward.

Alternatively, you can replace steps 1 and 2 by simply purchasing traveler’s checks at a AAA agency, which is often commission-free, and then redepositing them into your bank account to pay the credit card balance. The rules and restrictions for the cards change often, so the payoff may vary, but you shouldn’t get hurt in the attempt, assuming that you have a $0 cash advance limit and pay off your balance in full at the end of each month. Again, do your homework, as things change often.

Also… play nice and tell your dear accountant about your plans so his head doesn’t explode trying to figure out what the hell is going on with your cash-flow.

Last but not least…

If you are still a few thousand points behind par and need to inflate your rewards account quickly to get an international ticket, AMEX is often happy to provide a boost in exchange for spreading the wealth.

Call AMEX and tell them that you would like to get gold cards for your family and employees (even if you have none, they don’t check). The last time I used this, I received 2,500 per referral for a maximum of five people, or 12,500 points. I signed up the three members of my family and two of my best friends, whose cards were then mailed to me, at which point I simply cut them up and tossed them in the garbage.

Each card cost me $35 each, a total of $175, but it also pushed me over the threshold and allowed me to get a $1,000+ roundtrip ticket to Brazil for nothing but points.

This last tactic is needlessly expensive if you are not on a deadline of some type, but I was rushing for a pre-Christmas relaxation trip to warmer climates in 2004. If you are similarly short on time, this can put you on a plane where you wouldn’t have enough points otherwise.

Happy arbitraging :)

Related links:

Platinum Card Finally Gets Me
New Year, New You: How to Travel the World with (or without) Kids in 2008
“Chapter 14: Mini-Retirements: Embracing the Mobile Lifestyle” in The 4-Hour Workweek

Posted on: January 3, 2008.

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78 comments on “How to Piggyback and Recycle Credit Card Points

  1. hi everybody,

    I also did a little research for places selling gift cards which I can use to buy money order for my monthly rent. All Access has a limit of $250. Any other suggestions on how to pay off my rent with credit card. My rental office accepts only money orders and cashier/certfed checks.



  2. Hi there!
    That was a fascinating article! It is going to take me a little while to wrap my head around all those concepts.

    Here’s my question: If you have a large spending limit on your credit card, how do you take advantage of that to get points and be able to pay off your credit card balance each month (assuming you have less in your checking account then in you CC spending limit)?



  3. Tim,
    This is my first time here and it’s really interesting on some of the ideas on how to accumulate points. I’ve been searching for a new cc and want to get rid of my United card because their flight choices from the DC area are very limited. I have a corporate AMEX for work but never use it as I want to accumulate points w/ my Visa. My question is what should I get a Platinum AMEX (that would make 2 AMEX cards for me) and then a another Visa/MC card, perhaps a the Continental?
    I’m a rookie at this so any advice from you veterans would be much appreciated!


  4. Did anyone ever figure out how to convert gift cards back to cash-like instruments? As stated above and as I have personally experienced, I have yet to have heard about a MC/VISA gift/debit card that can be used to purchase money orders or travelers’ checks.


  5. I was totally oblivious about recycling credit card points – it all makes sense to me, it just didn’t cross my mind earlier. Do you mind if I copy some of the content from this article and give you credit for it?


  6. Hello…

    Does anyone know which debit card allows one to load cash with the American Express Blue Sky card? I have the Western Union, AccountNow and Ready Debit cards. It seems as though they only allow cash, direct deposit or dropping by some money cashing place. One of them allows Paypal but I don’t trust that service and plus they charge very high fees sending money.

    Thanks in advance.


  7. Hi Tim, Another great post. I thought your idea of applying for all your cards within a very short time is a particuarly good one so you get your applications through before any impact from the other applications shows up on your credit reports. Not sure what the banks would think of this but I think it’s a great concept!


  8. Hi Tim, Great article and tips for getting more and more points. I do a heap of PPC marketing and use an AMEX card for all my payments. Its great as with AMEX, unlike most reward programs, the points are uncapped and dont expire. In Australia most cards have tough limits on yearly point totals which then mean that they are basically useless for getting heaps of points. It pays to review the conditions of the rewards card before you sign up to see what points limitations may be available. I dont only book tickets for myself but for family and friends as well. I love not paying for flights, spending on something I had to anyway. Then as you mention there are online stores where you can convert the points into household purchases that you would otherwise have to pay for. Go rewards!


  9. TIm,

    I realize I am a little late to the party but better late than never. Does the 3-step process still work??

    I have contacted my credit card company (Bankofamerica, power rewards card) and they have told me there is no way they can change my cash advance limit because it is the same thing as my credit line. Are they BS*ing me? Do I need a new credit card? They also have told me that money orders and traveler’s checks count as cash advances. Would the method still work if I did it all on the same day? I know I’ve asked a few too many questions, but a break down of the 1-2-3 method is required.

    Thank you very much for your timely response (quoted you!),


  10. Does he ever answer the question of which cards can be purchased with credit cards? Seems like he just runs over that little point and I’ve seen question after question about it but nooooo answer. I’ve spent too much time here already.


  11. Since reading the 4HWW i’ve become a huge advocate of using rewards points to contribute towards my muses. Card companies are increasingly allowing points for cash redemption which really gives more freedom to use points for what you want.


  12. Are there any suggestions for which Amex card to get for someone who wants start accumulating points for daily purchases and bills but not an owner of a muse? I’ve been looking at the different cards and would love some input on which has the best bang for the buck. Thanks!


  13. Here’s another way to get points without spending a cent. First, make sure you check that what you purchase is able to be returned and fully refundable. I discovered this by accident after purchasing an expensive item on credit card, only to receive the same item shortly thereafter as a gift. I went back to the store, returned the item I had bought and they refunded the money back onto my credit card. However they did not deduct the points I had earned for the purchase. This happended a few years ago so I’m not sure if it still works.


  14. Gathering rewards through debit cards is even better – all the points (Ok generally not as generous as credit cards) but none of the risk of hefty interest.

    @ Ben – man, that’s a bit of a tough way to play. Poor merchant wouldn’t get their fees back even!!


  15. AAA no longer sells traveler’s cheques, verified by them. I don’t believe anyone will allow you buy them via credit card, similar to money orders.


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