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.

Watch The Tim Ferriss Experiment, the new #1-rated TV show with "the world's best human guinea pig" (Newsweek), Tim Ferriss. It's Mythbusters meets Jackass. Shot and edited by the Emmy-award winning team behind Anthony Bourdain's No Reservations and Parts Unknown. Here's the trailer.

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

  1. What AMEX business card did you use & like using before switching to the Platinum? Why did you choose your previous card it?



  2. Some of these tricks are pretty clever! I, too, have the Continental Mastercard and I use it for everything. EVERYTHING. And when I need to book travel for work, I try to use OnePass airlines to get the miles AND points for paying with the card.

    You make a good point: it’s crucial that you use these cards for necessary expenses you would be paying anyway, rather than searching for new things to buy. The latter makes the whole endeavor worthless.


  3. Isn’t getting credit cards in other people’s names gonna screw with their credit? Or worse, isn’t this fraud? Just curious.


    Hi Rob,

    I can see how this would be a bit confusing. You’re not getting cards with their names that you would use yourself — you are getting additional cards for your business/account that those people would each use. So, let’s assume your brother would like a card but has bad credit or whatever: you get him a card on your account, but it has his name so he can use it. You are responsible for paying for all of his charges.

    Hope that helps!



  4. I’ve been using a relatively simple technique to double my points. Most daily expenses are put on my AMEX. Chase offers a debit card which acrues points like any other credit card. I simply pay off my AMEX each month with my debit card on-line and I get points on my Chase account in addition to the standard points on my AMEX.


  5. NIce!!!!!!!….. I have been doing this the last 2 years with much success. Another good bank that seems really generous on credit lines is Wells Fargo. When I opened my account they gave me a 5k credit line and within 8 months I had them raise the limit to 10k and then to 20K. This was important for me b/c I was ordering large sums of materials(for the concrete business) and it really helped out. I have no personal relationship with Wells Fargo other than business. They give you airline miles for any airline. 25,000 points gives up $500 in a domestic flight and 50,000 points gives you $1000 in any international destination. I thought I would tell everyone about these options. My flight to Buenos Aires in Feb is thus being paid by Wells Fargo(SWEET!!!!) Other options, this one is good for those who are contractors: Home Depot gives a credit card with 0 payments and 0% interest for 12 months. This can be helpful if you put the money into a money market account(Fidelity offers an account that you don’t pay taxes on the interest) Anyhow, this blog is so true. This is a real smart to make the credit card companies pay for your travel and help your credit ratings.

    Tim, thanks again I look forward to some awesome blogs in 08,



  6. In New Zealand, Amex does “turbo” points, so you get 2 points for every dollar spent. I got this before I went on a work trip to Russia – cha-ching, $20K NZ and 40,000 points in 2 weeks :)

    Worth it for $40 NZ (around $30 US) per year :)


  7. here’s a way to make money using credit cards with any effort…

    I called up citibank to cancel my card but they convinced me to stay by giving me a balance transfer up to $20,000 at 0% apr for 12 months. I only had a debt of $1000 on my bank of america credit card so instead of transfering $1000 into my checking account to pay off my credit card. I transfered $20,000 into my checking account and paid off the $1000 debt and transfered $19000 into my ING orange savings account which gives me around 4.5% interest. I set a calendar reminder to pay off the $20,000 in a year before the deal expires and now “my free” money is making money for me without me doing anything. Awesome! As long as I don’t spend the money, I can easily “return” the money after it’s been sitting in my account making interest (remember it’s compound interest) for me. I even talked it over with the citibank representative to make sure it was okay. He was impressed and told me he was going to try that too! haha


  8. Great Post! I’ve been doing this for a while and landed on the Starwood Preferred Guest AMEX. A recommendation from a great article I read in Conde Nast Traveler. You get 1 Starwood point for every dollar, but you can then transfer Starwood points to airlines, hotels, etc at pretty good rates. For most airlines, you get an additional 5,000 points for every 20,000 you transfer.
    See Link


  9. As far as your mail stuff goes–I saw a bit on CNBC 2 mos. ago how a processing center will scan your mail and you no longer have to physically take delivery–only the stuff you want or something like that. You may want to add that to your arsenal instead of all that forwarding stuff.



  10. Tim,

    I also heard in my Real Estate circles about using the AMEX Blue Cash to get 5% cash back on purchases. They would use those same negotiating tactics to get their limit raised as high as $100K then start the recycling game. There are a million ways to win the game of life!

    (interesting note: Isn’t it ironic how Chase associates “Freedom” with credit card debt! LOL!)

    Also Jose, thanks for all the great comments recently!

    This Blog revs me up everyday! What a rockin Community!




  11. I don’t know if anyone did this, but Google Checkout was offering 0% merchant processing last year. It looked possible to send yourself a Google Invoice, pay it with your miles card and the money would be deposited back into your checking account fee free. Your money did a lap through your accounts and as long as you paid your full balance at the end of the month, you incurred no costs. With cards offering double miles, the points could add up fast.


  12. Almost forgot to add, You can also piggy back credit. In essence if you get a credit with your name on it under someone who has had great credit for years you get all the credit that had been gained with that card. This is probably best for married couples trying to bump each others credit score up. This is completely legal is one of the main things that those credit repair companies recommend. You can also negotiate the interest rate. When you tell banks that you are looking at different banks to see who has the best deal they tend to start giving deals.

    Great Days,

    Jose Castro-Frenzel


  13. The other great thing in New Zealand is that Air New Zealand’s Airpoints converts directly into dollars instead of points. With no blackouts you just accumulate Aipoints dollars which can be used on any flight and any seat at face value $400 flight = $400 Airpoints Dollars. We have all of our bills set to automatically get paid via the Airpoints Amex card (1.5% rewards) and also pay for all groceries with Amex and Flybys (which also adds to the points pool).

    As Tim points out the key thing is not to spend money just to earn points but to be smart about how you pay for your normal expenses.


  14. Tim,

    You second suggestion says: “2. Purchase gift cards that can be used as MC/VISA debit cards.”

    I checked USPS website and here’s what they accept for moneyorders: Purchase with cash, debit card, or traveler’s check

    will this AllAcess giftcard qualify as a debitcard?

    I could not find any info about getting money orders from walmart. Can I buy Money orders with Credit Card ?

    I have samsclub discover credit card that gives 2% money back on all purchases …up to 1 Million dollars per year. How can I maximize that.

    I own a convenience store, and If I can use my creditcard to purchase money orders and pay my vendors those money orders, I would be all set.


  15. Another trick to get a few more miles is to keep trying to cancel your card. Every time I call to cancel my Chase United card they offer me something new. Sometimes it’s only 1000 miles, other times it’s a free companion ticket. One of these days I’ll actually cancel it!


  16. In addition to my AMEX I have a Northwest Worldpoints MasterCard which allows you to accumulate 10 points for every dollar spent at qualifying restaurants. I use to find the best restaurants on the list and end up earning 10X the points for meals at premier restaurants that I would normally eat at anyways! I was able to accrue 60,000 points in a little over 4 months!


  17. Incredible information and great posts! Who knew?

    It would be nice to see this topic/information continued and expanded as a separate section. If this were all in one place, I would check back periodically to see what the new ‘games’ are.

    Thanks – Matt


  18. Tim,

    Isn’t time to get a jet at your own? One that you can cruise around the world, what’s about?

    I guess it would come ok if you would not miss socializing in the commercial flights, you know, that neighbor seat… otherwise, happy counting…

    For me it is great math, and I already took my notes (electronically – no pads like that pile of yours)…

    KISS ;-)

    Beleza Pura