I haven't seen this talked about on the forum yet (perhaps I missed it), but it seems like the biggest muni finance news in a while. Anyone where own Detroit bonds?
This train wreck has been so long coming, no one is (or should be) surprised. Least of all, I imagine, Vanguard, Fidelity, etc.
Did quick overview of Vg Long-Term Tax Exempt holdings as of 03/31/13. It actually held 7 bonds with Detroit in their name. I'm not sure which ones are tied to a potential bankruptcy; but as noted above these likely insured regardless.
I also own Vg Tax Managed Balanced fund. It held only 1 bond with Detroit in the name out of 962 total bonds. I don't own Vg High Yield Tax-Exempt but I perused it too; it held at least 5 bonds with Detroit in their name out of 1057 total bonds. I don't own Vg Intermediate Tax Exempt. Its a much larger fund with 4152 bonds; I didn't peruse its holdings
bottomfisher wrote: Did quick overview of Vg Long-Term Tax Exempt holdings as of 03/31/13. It actually held 7 bonds with Detroit in their name. I'm not sure which ones are tied to a potential bankruptcy; but as noted above these likely insured regardless.
I'm fairly certain, but not positive, that the ones with "water" and "sewer" in the name are not the ones at risk. But don't know about the others.
A number of communities in S.E. Michigan depend on Detroit water. Therefore, Michigan would make sure that utility continued to provide uninterrupted service. I'm also pretty sure Michigan, Ohio, and Canada wouldn't want Detroit dumping raw sewage into the Great Lakes. However, Detroit sewer in general...?
Which represents 0.063% of the municipal bond market and recoveries via insurance and other means will be very significant.
rokidtoo wrote: A number of communities in S.E. Michigan depend on Detroit water. Therefore, Michigan would make sure that utility continued to provide uninterrupted service. I'm also pretty sure Michigan, Ohio, and Canada wouldn't want Detroit dumping raw sewage into the Great Lakes. However, Detroit sewer in general...?
What I meant was, the bonds from the water and sewer are secured/backed by the revenue from the water and sewer bills. The payments to the bondholders do not rely on the actual city of detroit general finances. The water/sewer system is financially sound, and those bonds are not affected by default of the city itself. Th
Detroit bonds in general are rated Caa3 by moody's, and the water and sewer system is B1. Until recently the water and sewer system was rated in the "A"s.
Detroit is very poor, e.g. $15,261 per capita income in 2010. In contrast, the Michigan's 2010 per capita income was $25,135 and Mississippi's (poorest state) was $19,977. Therefore, there's a limit to the revenue that can be generated from Detroit residents, whether in the form of taxes or public utility charges. Since the Detroit suburbs are relatively better off financially, any services they consume, e.g. water, are in better fiscal shape.
Detriot Water (DW) supplies a large part of the population in SE Michigan outside of Detroit. Sewer services are mostly I believe provided by county, not by Detroit Water.
Since DW has its own income stream, its bonds' obligations should be separate from the city's. Nonetheless, there have been newspaper articles asking whether bonds used for city obligations were floated using the credit of DW.
If I may venture a slightly political opinion, it is that the Michigan Governor is about the only responsible person in the government of the entire state, including especially the state legislature. In breaking news, the head of the Detroit City Council (Charles Pugh) has gone AWOL, and has now been fired by the Detroit Emergency Manager, Kevyn Orr.
When the issuer defaults, does the entity consider making partial payments, or stops making any payments waiting for the courts to settle the accounts? On that size of debt, I would think that there is some money for payment, just not enough money. I'm often wrong.
From what I can tell bond insurance only pays the scheduled coupon payments to maturity. Not sure what happens then. There is apparently no immediate return of principal if an issuer defaults.
Water - "The 1,079-square-mile water service area, which includes Detroit and 127 suburban communities, makes up approximately 40 percent of the state's population."
Sewer - "Wastewater service is also provided to a 946-square-mile area that encompasses Detroit and 76 neighboring communities."
General - The Detroit Water and Sewerage Department has 1,978 employees, has the fifth lowest combined water and sewerage rates per month among the 20 most populated cities in the United States, has an annual operating budget of approximately $408,197,200 million, and, statutorily, cannot make a profit.
Why is this confusing? It's insurance not a credit default swap or other exotica. The purpose of insurance is to restore the status quo ex ante. Usually the insurance contract spells out that the insurance covers the timely payment of principal and interest. The bond holders were expecting a series of payments, and they get a series of payments, including the return of capital on final maturity.
Detroit appears to be the urban planners almost unsolvable problem - but hopefully someone will come up with a solution - Perhaps the soon to be coming refugees from Afghanistan can be subsidized and persuaded to settle there ? So many used-to-be beautiful buildings in such a sad condition.
What Stratton is saying though is that the coupons are insured, but not the repayment of principal-- you are describing something different?
there is no immediate repayment of principal on default. The principal is repaid at final maturity - the same as insured mortgage securities.
I believe Stratton is mistaken. All the insured bonds I have seen are insured for principal and interest. I suppose it is possible that somewhere there is a bond that is insured for interest but not principal, but I have never seen it. IMHO calling such beast an "insured bond" would be, at best, deliberately misleading.
Dale_G wrote: there is no immediate repayment of principal on default. The principal is repaid at final maturity - the same as insured mortgage securities.
The normal process with a debt, any debt, is that the creditors petition the court for bankruptcy if an event of default has taken place (eg skipped interest payment).
At which point, the administration process then takes place and the debts of the company are repaid to the extent that they are going to be repaid.
If a company goes broke say 10 years into the life of a 30 year bond then the bondholders get their money back when the courts have resolved all the issues (in a complex bankruptcy like Lehman, 7-8 years I believe is the estimate for final payout), there's no need for them to wait 20 years.
(I'll ignore Chapter 11, that's a whole another can of worms, the company secures from the court a stay on payments of all debts)
hicabob wrote: Detroit appears to be the urban planners almost unsolvable problem - but hopefully someone will come up with a solution - Perhaps the soon to be coming refugees from Afghanistan can be subsidized and persuaded to settle there ? So many used-to-be beautiful buildings in such a sad condition.
It's already started. In that very low housing costs have attracted urban homesteaders, artists etc to Detroit (and to Buffalo). A significant urban farming movement.
However if law and order cannot be maintained, and if essential civic services cannot be funded, it's not likely to be much more than a quixotic gesture.
The US will have c. 450 million people by mid century (ie projecting 1% population growth pa), so it's hard to imagine these places will remain abandoned forever.
heyyou wrote: When the issuer defaults, does the entity consider making partial payments, or stops making any payments waiting for the courts to settle the accounts? On that size of debt, I would think that there is some money for payment, just not enough money. I'm often wrong.
AFAIK once the court has granted bankruptcy *all* payments stop, until the court orders payouts (of outstanding interest and principal) by class of debt. I imagine this would take at least a year, maybe 2-3 depending on how much litigation there is.
I sold my stake in Fidelity's Michigan Municipal Income fund (FMHTX) at a modest loss not just because of Detroit issues, it also presented a tax loss harvest opportunity. I grew weary of losing money, BTW same can be said about bond funds in general.
Valuethinker wrote: However if law and order cannot be maintained, and if essential civic services cannot be funded, it's not likely to be much more than a quixotic gesture.
For the last forty years there has been tremendous animosity between the suburbs and Detroit. However, when I visited Detroit this spring, I was pleasantly surprised by the emerging consensus that Detroit's demise was damaging Michigan's "brand". Suburban Schadenfreude has been replaced by "how can we fix this?" ----Jim
They opened a Whole Foods in Detroit and Dan Gilbert of Quicken Loans is buying up downtown and bringing in people and businesses. If things get cheap enough...
chicagobear wrote: They opened a Whole Foods in Detroit and Dan Gilbert of Quicken Loans is buying up downtown and bringing in people and businesses. If things get cheap enough...
Yes, and they are planning a new arena for the Red Wings near the newish stadiums for the Detroit Tigers and Lions.
But, that is window dressing. If you drive through the neighborhoods around City Airport and much of the rest of the residential areas of the city, the devastation is breathtaking. Mile after mile after mile.
The confluence of economic challenges and mismanagement and corruption in city government have taken their toll to create an unimaginable problem.
These are insured municipal bonds. There are three parties to the contract(s): The bond issuer, the bond holder and the insurance company. I can't give the exact legal details but if the bond issuer defaults effectively the bond holder becomes the creditor of the insurance company, under the terms of the original bond. The insurance company becomes a creditor of the issuer and gets whatever comes out of the bankruptcy, which is settled more or less the way you expect a bankruptcy to be settled, i.e. lump sum payment of part of the principal and cancellation of the rest of the debt.
In practice the settlement of the bankruptcy may be slightly different. In any bankruptcy the if the appropriate creditors can reach an unanimous agreement with the debtor the courts will accept that agreement. In the case of Detroit almost all the bonds were insured so they only have to deal with a small number of insurance companies, who will tend to be economically rational. Thus there is a reasonably good chance that there will be a negotiated settlement rather than a drag out court fight.
From what I have read the idea of this default is to restructure things to avoid bankruptcy which is sort of the stick the city has to encourage cooperation.
You're quite right. I should have said some thing like "insolvency process" rather than "bankruptcy". Formally filing for bankruptcy is just a small (though important) part of a sequence of events including negotiations, brinkmanship, payments, non-payments, legal filings and other actions. Depending on how everybody behaves different actions can occur in different orders. If everyone is being professional all of the negotiation can be done before (or instead of) an actual bankruptcy. If the negotiators conclude that a formal bankruptcy is desirable (because it can prevent uncertainty due to third parties) an agreement can be presented to bankruptcy court for it's OK.
OK I think I understand. In an insured bond, the insurer takes over payment and the bond simply behaves as if it was issued by the insurer, rather than the municipality?
How quickly falsified predictions are forgotten. I can't believe there is a thread entitled "Detroit to default on $2.5B of debt" that has had 33 posts without anybody even mentioning the name Meredith Whitney. (Please don't anyone say "she wasn't wrong, just early." If anyone does, please just assume that I thought of a snarky retort but didn't post it...)
Here's an opinion piece from the Detroit Free Press. The point is simply that there are so many players involved in the Detroit debacle that it (resolution of the financial crisis) is likely to be a long and messy process.
The seeds of Detroit's decline were sown long ago, about the time Meredith Whitney was born. I moved here in 1980 and in my opinion have observed a more or less linear progression from then till now. A tragic situation, with plenty of blame to be shared by all, over many years.
The brief article linked in the OP's post seems to suggest their general obligation bonds are the one's at risk for default. I think the implications for investors would be higher insurance rates to cover municipal bonds which would likely ultimately be passed on to investors. Perhaps interest rates would increase marginally in exchange for greater potential risk from bonds from certain municipalities with questionable finances. But just speculation on my behalf
Video report from Morningstar: Will Detroit's Muni Breakdown Force Others Off the Road? The outcome of the Detroit's distressed-debt situation could be a litmus test for how other municipalities nationwide move forward with their payment obligations.
bottomfisher wrote: Video report from Morningstar: Will Detroit's Muni Breakdown Force Others Off the Road? The outcome of the Detroit's distressed-debt situation could be a litmus test for how other municipalities nationwide move forward with their payment obligations.
Interesting that there seems to be a price increase for Detroit Water and Sewer Revenue Bonds from the lows of last few months. Suspect there is feeling that they won't take as much of a haircut, if any, long term. But too complicated for me to figure out, and too risky a market.
jdb wrote: Interesting that there seems to be a price increase for Detroit Water and Sewer Revenue Bonds from the lows of last few months. Suspect there is feeling that they won't take as much of a haircut, if any, long term. But too complicated for me to figure out, and too risky a market.
The talk is about a regional authority assuming control over the operation of the system, similar to what they did for Cobo Hall. It is felt the change in management could be a big plus.
Thanks cheese breath. I know almost nothing about these particular revenue bonds other than that they are paying attractive yields with relatively short durations absent haircut or default. I tend to look for individual muni buying opportunities, especially essential services revenue bonds, in distress situations so may look into these further but as someone who once lived in Detroit many years ago I feel for the community in this financial debacle.
Remember, even if a Detroit bond is insured, you also need to look at the health of the insurer. There are huge muni defaults in San Bernardino, Stockton, Jefferson County now Detroit. So a weak insurer with exposures to all of these might not have capacity to pay (this is not like the FDIC) so you need to look at the health of the bond insurer in order to judge the risk of owning these bonds, even if insured.
If you are interested in what is going on with Detroit's finances, I suggest you go to Google, select "News" and search on:
Kevyn Orr is the Detroit Emergency Financial Manager. Doing this search one a week or so will keep you current with what matters, I believe.
Coverage by the Detroit Free Press has been excellent, IMHO. If you tilt to the right, try the Detroit News.
Bondholders are gonna be the ones that take the biggest haircut,retirees with pensions etc...judges seem to understand that these are real people,alot of elderly etc.. and very little if anything will pensioners be asked to cut,a judge might feel the need for everyone to contribute to cutbacks,so he might make a tiny cut to them,but if you look at cases in other towns that have filed for bankrupty,its gonna be pretty much that same path...GM bankruptcy retires,pensionsers etc..pretty much got off scott free,it really didn't have to do with bailout money either.
the big question is how much of black eye will this be to bonds and bond holders now and in future..
Q: Does the Costco Anywhere Visa from Citi code Costco Food Court purchases as restaurant (3%) or just regular Costco purchases (2%)?
Any thoughts on IHG devaluing the free night to just those under 30,000 points and I think the annual fee is going up to $89 from $49?
I'm okay with the IHG devaluation. 30k points is still a good deal if the annual fee remains at $49. OTOH, if they raise the annual fee, I will probably cancel the card. No point in keeping it just to save ~$50/year (cash rate of 30k pt room - $89 annual fee).
Ugh, the entire IHG card experience has been a bust for SO and me. Signed up last year and will probably cancel the cards. I think they ended up allowing the free night certificate this year to be used for a 50,000 nightly room rate, but after that for sure if the annual fee rises to $89 we will cancel. At $49, not sure.
How hard is it to keep the points active? Website says activity every 12 months at an IHG hotel or partner. Anyone know if you can just go to the hotel coffee shop or similar and spend 10 bucks or something? I think that's the deal with SPG, though I haven't tested it yet.
That is a very simple and easy plan to follow. I am doing the same thing right now, expect all non-travel, non-dining and non-grocery costs are going on the card that I am working on finishing spend for, which happens to be a Citi AA card.
It was a toss-up between CSR or the Amex Platinum, but I think the CSR seems to fit better with my lifestyle and that I can pool Chase UR points.
Keep it for the first year for the uncapped anniversary night. On year two, you may want to cancel it when the annual fee comes due. I would burn through those points first, if you can. With the 4-digit pin, those accounts get hacked all the time. I got the 100,000 bonus points some time ago and I am down to under 15,000 now and plan to burn those when I can. Just put a couple dollar purchase on it every few months to keep it active and the expiration should reset. IF they make it an $89 annual fee and force convert everyone, then I will strongly consider cancelling.
On Marriott/SPG: I never understood the people using the SPG card as a daily driver. Sure, transferring to airline miles is nice, but it takes 2-3 days to transfer, which drives me crazy, and I would rather use the Business Plus from Amex for 2 MR or even the Freedom Unlimited for 1.5 UR, which to me are much more flexible. After the devaluation, it makes no sense to use the SPG card. I foresee serious Marriott/SPG devaluations coming when they implement peak and off-peak pricing, but I don't hoard those points, so that is fine with me.
- One of the bloggers had a recent discussion on this topic, and the comments ranged from "in one week" to "wait for 45 days until CSP clears from the system."
- Most bloggers recommend it, but I am wondering why should not I apply for FU later and get another bonus?
Okay, thanks for the tip to burn the points, really surprised to hear about the account hacks! I just checked and our accounts are intact, thank goodness! I guess a 4-digit code is easy to hack. I was going to say shouldn't one receive an e-mail alert about the hotel booking, but I guess you're saying or implying that the hacker then changes the registered e-mail? Still, shouldn't the original owner receive an e-mail alert? I guess they do but maybe overlook it ... that must be it.
SO canceled his Amex SPG card when the annual fee was up recently. I had one years ago and never renewed. Fortunately, SPG allows account consolidation and SO and I were able to combine our points into one account. Would be nice if IHG allows that, will need to look into.
I guess I'm a hoarder. We don't travel so much domestically and prefer to stay in small local places when we travel abroad to Europe. That said, I am thrilled to have booked an SPG airport hotel for an upcoming trip to Vancouver for 10,000 points. Zero desire to drop a few hundred bucks for a room to plop down in at 2 am only to high-tail out asap the next morning to head to a Whistler resort
To me, that's when hotel points make sense. In the case of IHG, I just haven't even found hotels where we were visiting that made sense. Okay, I did once. It was Asheville, NC and the entire experience was soooo frustrating. By the time I actually got my signup bonus points, the 50k room wasn't even available, and there was noooo way I was going to pay several hundred dollars for a room Indigo normally sells for a couple of hundred bucks.
ETA: Just checked to see why I didn't use IHG points for the Vancouver airport hotel. Now I remember, there were no rooms available, when I looked earlier and again just now. This is why I so dislike the IHG program. Really disappointing. You're right, I should just burn through the points asap and for sure will cancel immediately if the fee climbs above $49
Regarding #2, avoiding the $95(?) CSP annual fee in lieu of a no-fee FU would be a reason. I suppose the decision would be whether $95 multiplied by however long (in years) you think you will have to wait for a FU bonus to come along would be the break-even point, kind of. Personally, I figure cash in hand is worth more than an unknown that may or may not happen in the future (attractive FU signup bonus, and that Chase will allow me to partake in) and that may or may not have value to me (e.g., UR devalue between now and when you potentially get this unknown FU signup bonus).
#3, my opinion isn't worth anything, but I am not feeling much love from Chase these days. Not to me personally, but as a general matter. I don't follow their credit card strategies particularly closely, but perhaps they are trying to be more targeted in their marketing, in which case if they view you favorably, you could get a goosed-up CSR bonus, I suppose.
Fwiw, I have CSR, Freedom (downgraded from CSP, I think), and Chase Ink Business Cash (downgraded from Ink Business Preferred). Also have Chase IHG (may cancel if annual fee rises). Also have CPC (private client) status, though my balances have dropped over the years to what I would think are below their stated amounts for CPC.
Thanks. I am considering the choice between canceling CSP and product changing CSP into FU. In both cases, I would save $95 annual CSP fee (and acquire $450 CSR fee).
Got it, that makes sense. In that case, the decision would seem to be how much "value" FU will provide you between "now" and this potential future FU with another bonus. Fwiw, I feel that oftentimes when I try to be "too clever" with this stuff it doesn't pay.
For example, I think I had a Chase Amtrak Guest Rewards card that Chase automatically switched over to Chase Freedom when BofA took over the Amtrak card. I declined the card, I think because I wanted a signup bonus. But, I think it was the quarter when Chase had the 10x(?) points on Amazon purchases. Well, I should have taken the card. In my defense, it's possible that I wasn't into UR at the time. Still, to this point as recently as the last year or so I tried in vain get the card "reactivated". Even though I already have a Freedom card (received no signup bonus, was product change from CSP), when I learned that I could have two Freedom cards (I think), I figured it would be nice to have a spare for when the bonus categories were easy spends for me.
The other instance where I felt my "greed" got the best of me was with the Chase IHG card. I spent ridiculous amounts of time trying to get the higher signup bonus that was announced soon after I got my card. Eventually, Chase gave it to me, but I had to take points in lieu of cash. No longer recall the specifics, but maybe the promo I signed up for was $100 statement credit and 50k points, and I wanted the 100k bonus. They said that I could only get a $50 credit if I wanted 100k points (whatever it was, I did the math and figured it was an acceptable exchange, so I forfeited $50). Well, I haven't found a way to use any of my IHG points so far, and now the program terms are changing unfavorably.
Not sure it's exactly apt here, but in the markets the saying is "bulls and bears make money, pigs get slaughtered". I kind of feel that way about these credit card, etc points games. Admittedly, it's a fine balance. Sometimes, it pays to do your homework and dot your i's and cross your t's. Other times, it's better to not overthink things. Art not science, though, to know when to do what, imo.
It's been a few years for me. I had the CSR and the CSP (no longer allowed) and obviously didn't want to keep the CSP when its annual fee came due. I looked at my options and chose to convert the CSP to a FU.
- FU conversion meant no additional application on my record (impacting future potential offers available to me)
- I think the card # didn't change in the conversion, and I had a lot of automatic payments going to CSP, so that meant I didn't have to change these accounts.
We do not have several different credit cards in respect to a Credit Card Rewards Strategy. Our credit card strategy is to have a single CC account at Capital One with two credit cards with different CC numbers. But that credit card gives us a benefit when we buy a GM car, but we not always buy from GM, so it is underutilized.
We have a single CC account for simplicity and ease of checking for scammers. We do not want to get multiple credit card statements each month. Yes, simplicity is important in retirement when you are approaching 80.
We have no Credit Card Rewards Strategy. Our credit card strategy is to have a single CC account at Capital One with two credit cards with different CC numbers. We do that for simplicity and ease of checking for scammers. We do not want to get multiple credit card statements each month.
I personally would be concerned about putting all my eggs into one bank basket, but everyone's needs are different. I travel a lot internationally and carry cards from 4-5 banks with me, just in case one or more have a melt-down or decide that someone else must have taken my card abroad or ....
Conversion is recommended to get 1.5x UR on all non-bonus purchases, while not burning 5/24 slots. Outside of the recent 3x URs on everything for the first year promo I have not seen any FU bonuses that were worth a hit.
I'm a big fan of CSR and SPG. I haven't waded into the AMEX Plat and Gold worlds yet, as I don't want to pay the fees. I also have a lot of Hilton and Marriott points, as well as American Airlines. If you sign up for a bunch of cards, and then do the minimum spends, it can take your credit score down into the 600's but it quickly bounces back within a month or two if you give it some time without signing up for any new cards.
Yep. Got hacked and I know others did as well. While they gave me my points back (that were used by hacker to book hotels) they appear to stick with easily hacked pin security. Makes little sense - a bot needs a few minutes to figure out a pin.
If you have IHG consider getting yourself a unique email address (and don't use that for anything other than IHG).
That presumably assumes that they don't lock the account after N failed attempts to log in. They'd really be extremely careless if that was the case, but I have no desire to try it out on my account.
That's not to defend the PIN approach in any way; it's ridiculous in this day and age. And if their "password" file got stolen...
What probably happens is that someone has 10 million possible email addresses. They don't even want to guess the PIN for every single one of them correctly. They can just pick a single random PIN and try that on every single email address. It will work for a small percentage, but that small percentage is still a reasonably large number of accounts given the total number of accounts.
Hey guys, got a 100k point offer from Marriott in the mail other other day. worth it ? Can I transfer these points to airlines ?
Yeah, that's very good so do it. You can freely exchange those to SPG points. You can transfer Marriott points to Southwest, or use SPG points for good value on Delta or American Airlines.
It should only be a few days after you product change. Frequent Miler just did this and it was just a day, even if you do have to call recon. No personal experience, but that should work.
Doubt they will increase the CSR bonus. They are looking for ways to devalue and not ways to give more points. I would downgrade to the Freedom if you can max out even some of the categories. I have a couple and they really help with extra UR. If you are looking for simplicity, then I wouldn't be mad if you PC'd to the Freedom Unlimited. To me, I wouldn't apply for the FU because I would rather apply for the United, Marriott, or Southwest cards if under 5/24. I think you would get much better value out of those then 15,000 UR from the FU. If you wait until the United bonus goes up to 50,000 or possibly 60,000, then that is a pretty good haul. You can keep getting Chase bonuses every two years as long as you stay under 5/24, so getting the FU in later is fine. To me, for now, FU/Freedom are only good to PC to, not sign up for directly.
That's the standard bonus on the Marriott card now. Limited time, I am sure, but nothing special with that mailer. You can move them to SPG then to airlines from SPG, but it will work a bit differently after 8/1. The 20,000 to 25,000 won't be a thing anymore. The minimums will be higher. New way is: 60,000 Marriott Points (20,000 old SPG) become 20,000 airline miles + 5000 mile bonus for transferring 60,000. So, you would be able to get the transfer bonus one time with the Marriott bonus, but the offer is still good.
I applied a few months ago and was turned down due to 5/24. But recently we received an invitation in the mail for a chase business ink card addressed to a Business name that was actually just a website that my daughter had set up and subsequently closed (to sell stuff). I took that application, went to the online link, and put in my business information, and ultimately got approved.
They did actually mail and require me to send evidence that my business name and address were legit. Luckily I found an IRS form submitted years ago for a tax ID which I needed to set up a vanguard solo 401k.
It is the cash back version of ink business. $500 upfront reward for $3000 spend, and something 5% back on phone/internet, which will earn me $15-$20 a month. No annual fee.
So if I get 120,000 points (100k with bonus and 20k through spending) it will be only worth 2 x (20,000 + 5,000) = 50,000 miles ? Doesn't sound very good. Chase Ink still offers 80k just with the bonus and its transferable 1:1 to lots of airlines. I think I'm going to pass on the Marriott card just like I passed on the United card with Chase.
Correct. If you spent $20,000 and got 120,000 Marriott Points, after 8-1, you can transfer them to 50,000 airline miles. Not bad, though. I wouldn't spend $20,000 on the Marriott card, though. Just meet the minimum spend and move onto another card.
... Our credit card strategy is to have a single CC account at Capital One with two credit cards with different CC numbers.
Consider opening another account at a different bank. If you do get hacked you won't have access to a credit card until the delivery a new one. With a card at a different bank, you'll always have one available.
If being without a credit card isn't a problem, don't worry about it. Personally, I don't want to be stuck out traveling with a dead card.
An FYI for those responding in comments on the IHG card changes.... My research appears to show that those of us with the existing IHG card will be grandfathered in with the annual fee at $49 and it won't go up. The only change we have is that going forward, the free night is limited to hotels at 40,000 points. I will keep the card if that is the case. I believe we get one more unlimited free night at anniversary date this year but next year and onwards, it is limited to 40k which does cover most/many of their hotels.
Trying to figure out how to use my SPG points.... looks like transfer to AA or Delta is the best value? Should this be done before 8/1?
Annual fee won’t increase for now, but it may in the future. Everyone gets one more uncapped free night.
Definitely not the best value. AA miles aren’t terribly valuable and SkyMiles are referred to as SkyPesos for a reason. On 8/1, your SPG points get transferred to Marriott points at a 3 to 1 ratio, so there is no reason to move your points right now.
Does anyone know if Uber card by Barclays , which gives 3% cash back for travel counts cruise lines and car rentals as travel expense?
It's an interesting idea to have 2 x Chase Freedom. A large part of my 5x spending goes into Amazon Gift Cards, and consequently I am spending more on Amazon than I would have been spending otherwise. With a $3k/monthly budget I'd live on Amazon (double entendre?).
I don't have AMEX Blue Business Plus. A lot of my unbonused spending is when I am traveling abroad, and places that I am likely to use do not accept AMEX. I am getting 1.5% back from using a Capital One card. I am realizing that product changing (PC) to Freedom Unlimited (FU) would not offer any improvement over CapOne.
At the moment, it is hotel stays, but if there is ever a transfer bonus in the future or if you need the points to top off for an award, that works, too.
While I am in the “get Freedom” camp, for at least domestic purchases, I would take the Freedom Unlimited over the Capital One Quicksilver because the Freedom Unlimited generates UR where the Quicksilver is cash back. Since you’re getting a CSR, you can move the UR to the Reserve and have the flexible points. Internationally, the Freedom Unlimited will never make sense due to the foreign transaction fees.
I have had a little over 100K marriot points for several years now and find it very difficult to use them. Most hotels we would want to stay in are category 8 or 9 requiring 40K to 45K points per night. So we can get only two nights.
In addition, in the last year or so, DW and I have been opting to stay more in boutique hotels so there is less opportunity to use these points for free nights. We did go to Nashville last fall, but got much better value transferring Chase UR points to Hyatt for free nights at one of their properties (value was nearly 10% cash back equivalent on spending that generated points needed for those free nights).
I have looked at transferring to SPG and then to airline, but at a 3:1 conversion ratio, that does not really amount to very much value either. Part of me just wants to use these so as to get them off my radar screen as it has become more of a hassle than they are worth periodically looking into using them.
I'd say because we generally don't go for just two nights (I realize that points and cash can be combined for longer stays) and in my experience when we book travel we have been finding nicer (more interesting) places to stay than the options from Marriott. In other words, why choose a less nice option simply to use my Marriott points.
In some cases, using two free nights on a seven night stay at a Cat 8/9 hotel ends up costing more than paying seven nights at a different property or much better value can be obtained transferring Chase UR points to Hyatt and staying staying at a Hyatt property (if we are inclined to stay in a chain hotel property).
I agree. A lot of people are stuck on the "2% on everything" cards but we just booked a long car rental with CSR points with Enterprise and they can be used in so many ways.
All hotel programs, Hyatt, Marriott, SPG, Hilton are roughly equivalent in terms of value the hotels give you. Sure Marriott requires lots of points to redeem, but you also earn boatloads of points for stays. If you have 100k Marriott points you basically either don't book paid Marriott stays often, or signed up for a big credit card bonus. Those 100k points are going to get you roughly $500-$750 in value. What do you expect?
If you're staying for an extended period, using Marriott's 5th night free gets good redemption value for your points. I just booked a redemption at a resort that was 45K points per night for 5 nights (only have to pay for 4 nights) for 180K points. The cash value for the 5-night stay would have been $2,300 (peak season) so getting close to 1.3 cents per point which is pretty good for Marriott.
The problem I see with the 5th night free is it requires you have enough points to cover the first four nights (which I don't have - at least not at properties where DW and I would want to stay).
In terms of value per point, I stayed at a Hyatt in downtown Nashville last fall. Cash room cost would have been ~$1,300 for three nights. I used 42K Hyatt points which covered the full cost of the room. I transferred those points from Chase UR, which I earned at 3 points per dollar spent ($14,000 in charges on my CSR card). So cash-back equivalent on that $14,000 of spend was 9.3%.
DW and I are looking at a trip to Colorado (Springs and Boulder) in the late summer. A total of six nights I could book at two different Hyatt properties. Cash cost would be ~$1,400 for those six nights or 48,000 points. If I use some of my Chase UR points to generate the 48,000 Hyatt points, that would be 8.8% cash-back equivalent per dollar spent to earn those 48,000 points through CSR card spend.
When I look at Marriott, I can't find any deals remotely close to these levels of value per dollar spent to earn the points needed to cover the room cost. Maybe I am jaded by these high value Hyatt deals.
Another option to book hotel rooms is to use the Chase UR portal. There I know I can get 4.5% cash back equivalent for each dollar of CSR spend that generated those points. Comparing this to your example of 1.3 cents per point does not seem very competitive, unless I am missing something.
This is where I am finding the Marriott program to be lacking. Again, maybe I have not looked hard enough to uncover higher value deals with Marriott.
If your goal is the generate hotel stays via credit card points earnings and transfering to partners, yes Marriott (and Hilton) are bad deals. But for someone who actually stays at the hotel, Marriott offers one of the best rewards program.
A Platinum Elite Marriott member who spends $20,000 on Marriott hotels with a Marriott credit card is getting around 30% back.
Thank you for keeping me on track! I sometimes forget reasons for different cards. You are right: I can use Freedom Unlimited for un-bonused domestic purchases (and get URs) and continue using CapOne card for un-bonused foreign purchases.
Why wouldn’t you use your Sapphire for foreign transactions? With the CSR you’ll get minimum 1.5cpp value for travel and if you’re transfering you’d be getting even more than that (since you’d rarely transfer for less than 1.5cpp value).
This is my strategy. I'm constantly trying to improve it as I'm addicted to general optimization (it's what I do in my business). My general goal is free flights for vacation + maximum cash back.
Alliant -- General Spend - 3% back on everything, might cancel after first year due to annual fee kicking in. Will likely be switching to Amex Blue Business and using my Schwab Plat for 1.25 multiplier when Alliant hits 1 year. That will provide 2.5% back on everything with no annual fee.
Consumers Credit Union Cash Back Card to hit tier for 4.6% on my emergency fund checking acc of 20 K. This yields 4.6% back on checking + 1% back on the CC for the tier spend.
I also churn travel rewards cards very heavily (about 8 new cards a year, and my wife and I rotate for 2-player mode to overcome the Chase 5/24 rule) - these cards temporarily replace all of the above (except the consumers card). We never pay for flights and travel quite a bit. I also monetize my credit another way, but won't get into that here as I think its against the forum rules. Suffice to say, my credit hobby generates ~ 15 K/ year in total as a side hustle (not counting business spend cash back, which is very substantial). These strategies (particularly churning) are only beneficial if you keep your spending the same as if you weren't using credit. Most people succumb to either going into debt, or spending more than they would otherwise. It takes good financial discipline to avoid both of these pitfalls. For that reason I'm always apprehensive about sharing these strategies with friends.
Heard you can do .50 cent transactions buying Amazon credits , or something, but haven't looked into it.