Frequent Miler leaned over his laboratory workbench to examine the notice more closely.  Could it be true?  Is this real?  He turned quickly to the lab computer and ran a Google search.  Yes, it checked out!  The key to the perfect perpetual point machine was at hand!

Meanwhile, somewhere across the country, fellow schemer Greek2me saw the same notice, but came to a different conclusion.  He saw an opportunity to create a perpetual money making machine…

The notice read:

Dan’s Deals
CVS: Get A Bonus $5 eGift Card For Every $25 eGift Card That You Buy!

Why had a simple notice like this attracted anyone’s attention?

Frequent Miler’s Experiment

I often write about ways to earn huge numbers of points by buying $100 Visa gift cards online.  For example, see “What’s my X?”  If one could find an easy and reliable way to turn those gift cards into cash, then a perfect perpetual point machine would be at hand.  One could buy gift cards with a credit card, earn points, cash out the gift cards, use the cash to pay one’s credit card bill, and repeat.

The CVS deal wasn’t limited to $5 bonus cards.  For example, CVS was selling $100 e-gift cards and giving an extra $20 gift card for free.  So, one could easily convert a $100 Visa card into $120 worth of CVS gift cards!  From there, one could sell the gift cards at a 17% loss and still recoup all of the original $100.  I checked GiftCardGranny and saw that multiple gift card resellers were offering 85% for CVS gift cards!  This meant that a person could not only cash out $100 Visa cards, but they could even make a profit!

Of course I knew this deal wouldn’t last forever, but I was unable to find a stated end date, so I hoped it would last a while.

Greek2Me’s Experiment

Greek2Me bought two $150 eGift cards and received two $30 eGift cards for free.  His plan was to print the gift cards, take them to CVS, and use them to buy Visa gift cards.  If this worked, he could theoretically then use the Visa gift cards to buy more CVS eGift cards, and then repeat the whole process again and again.  Each time, his funds would grow larger!

Frequent Miler’s Story

The first part of my experiment ran without a hitch.  I had no trouble using a $100 Visa card to buy the $100 CVS eGift card.  Within minutes I received both the $100 CVS card and the $20 bonus via email. 

Next, I clicked through to PlasticJungle from TopCashBack to see about selling the cards.  It turned out that PlasticJungle did not allow sales of CVS eGift cards (physical cards only).  OK, on to plan B… 

Next stop was CardPool.  CardPool did accept eGift cards from CVS, but with an 80% payout (instead of 85% offered for physical cards).  Well, OK, I thought… With 4% cash back from TopCashBack, I’ll still do OK.  So I went ahead and sold the $100 gift card for $80.  Since I went through TopCashBack, I expect to earn an additional $4 for this transaction.  At this point, my losses amounted to 16% – still a decent take since I could afford to lose 17% and still break even.

The real trouble began when I tried to sell the $20 e-card.  CardPool would only take denominations of $25 or more!  So, I tried CouponTrade instead.  CouponTrade will take cards worth $20 or more.  Perfect!  Or so I thought…

The CVS gift card sold almost immediately on CouponTrade, but then I received a message to mail the gift card to the buyer.  Uh oh.  I sent a note to CouponTrade saying this was an e-card.  Can’t they just forward it to the buyer?  After some back and forth, it turned out that CouponTrade does not allow sales of e-cards from CVS, so the order was cancelled. 

I now plan to simply print the gift card and use it next time I’m at CVS.

Experiment Result = Fail.

Greek2Me’s Story

Greek2Me took his printed cards to CVS and tried to use them to pay for part of a $500 Visa gift card.  The cashier took the gift cards without complaint and tried to apply them.  Unfortunately, the register itself refused to complete the order.  It said that gift cards could not be used to purchase gift cards. 

Experiment Result = Fail.

Other Options: Nope

Other options still existed to meet our goals, but they are irrelevant now.  The promotion appears to have ended.

Last Saturday I teased readers with the post titled “Found! The perfect perpetual point machine.”  I followed up that post with “One card to rule them all” in which I showed how to use American Express prepaid cards to earn nearly 5 points per dollar everywhere. 

I detailed the idea behind Perpetual Point Machines in the post “The Perfect Perpetual Point Machine, Part 1.”  There, I defined a Perpetual Point Machine (PPM) as a scheme in which, after a little push, points and/or miles are accrued over and over again, forever, with little or no additional work.  I also laid out a few rules of what makes a perfect PPM:

1. It may take effort and money to setup initially, but must not take much effort or money to keep it going.
2. It must be able to generate hundreds of thousands of points per year.
3. It must do no harm.
4. Ideally (but optionally) it would also do some good for the world.

The idea of a scheme like this going forever is obviously ridiculous, but it would be great to find one that lasts a few years at least.  The Amex prepaid card meets the basic requirements of a PPM.  It takes a little work to order and register your card.  After that, it takes just a little effort to fill it up regularly.  The points are earned, indirectly, through regular everyday spend. 

How long will it last?

If you read the comments of my previous posts on this subject, you’ll see a healthy debate about this.  Some argue with conviction that this deal will be dead within hours.  Others argue that it can last quite a while.  The truth is, we simply don’t know.  Earning points through credit card sign-up bonuses is currently the best PPM that exists, and while it has changed drastically over the years, it still lives on.  In this case, the deal can be shut down instantly if Office Depot stops allowing credit card purchases of reload packs.  Or, it can be shut down later by Chase if they change the bonus rules for the Ink Bold.  Feel free to make your predictions in the comments below (but please keep the debate civil!).

Judging Perfection

Let’s see how this PPM stacks up against the rules I laid out for “perfection”:

Not much effort: For people who live or work near an Office Depot that carries reload cards, this condition is met.  Simply walk in once a week, or once a month, and buy a few cards.  No problem.

Hundreds of thousands of points: Since the Amex Prepaid card is limited to $2500 per month, this PPM is capable of generating 150,000 points per year (2500 X 5 X 12).  Does that count as “hundreds of thousands”?  Close enough in my book.

It must do no harm: Uh, well…  OK, that’s where this falls down a bit.  Chase loses money on 5X transactions.  Just like big credit card sign-up bonuses, they do this in order to attract and keep customers.  So, if we abuse this perk, then yes you can argue we are harming Chase.  American Express does very well with this scheme unless people abuse the ATM option.  However, anyone who does that will get shut down by Amex, so Amex is fine.  As to Office Depot, I truly don’t know.  I’ve been told by an industry expert that they do make money with the sale of these reload packs.  So, until I learn otherwise, I’ll assume Office Depot earns a profit from these sales.

Do good in the world:  That really depends on how you use your prepaid card.  If you use it to make charitable contributions (and add a little bit to cover the charity’s credit card transaction fee), or you use it to make Kiva loans, then we’re doing good!  OK, that’s a stretch.  This was an optional requirement anyway.

Overall, I’d say this is a really good, but not perfect PPM.  What do you think?

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At 5 this morning I received a message from my son saying he was sick.  He had been spending the night at a friend’s house because my wife had to leave very early this morning for a business trip, and I’ve been away for the weekend for frequent flyer fun.  The plan was for my son to go with his friend to school, but now we’re on to plan B.  I jumped on an early flight to go get him.  So, now I’m typing this with my laptop crammed on my lap while the passenger in front of me reclines peacefully.

On Saturday I posted a teaser claiming I had found a perfect Perpetual Point Machine (PPM).  I didn’t post details at that time partly because I’m evil, but mostly because my weekend was full with activities which were virtually non stop until now.  When I get home I plan to take a nap and then, if my son is doing OK, I’ll write up the first in a series of posts about the new discovery.  As a habit I write most posts the day before publication.  I schedule them to publish at 6:15 a.m. EST, but the automated feeds, tweets, etc. often don’t go out until about 7.

If you haven’t already seen them, I recommend you take a look at the comments from my teaser post.  The dialog ranges from exasperation to excitement, and proceeds to a debate about whether or not I should tell at all.  The whole thing is a lot more interesting than anything I’ve ever written, so thank you all for adding great content to this site!

Lowering Expectations

Tomorrow’s post won’t be described as a Perpetual Point Machine.  Instead, I will be highlighting a great way to maximize point earnings.  Instead of a radical new discovery, I’ll describe an important, but incremental improvement over ideas I’ve published before.  I’ll follow up later in the week with a discussion of how to turn the new approach into a PPM.  We can then happily debate whether or not it meets the definition of “perfect”.  Honestly, I think we’ll land somewhere closer to “really good”, but we’ll see.

Should I tell?

I discovered this a couple of weeks ago and have been struggling since then with the question of whether to tell.  The fear is that when people get too greedy, the deal will be killed.  After testing things out to make sure it all works, I then consulted with a number of people with more experience than me.  The general consensus has been that I should tell all.  Here’s why:

• The deal leverages publicly available offers.  There is not a single piece of this scheme that is anything like a mistake fare.
• The deal is based on a new product that will be advertised more and more going forward.  This isn’t rocket science.  Everyone playing our game will know about this sooner or later.
• There are built-in limits to the deal.  While the average person can probably squeeze out about 20K points per month, it would be extremely difficult to do more than that.  And, if you try to do more, it is likely that you will get shut down, but the deal will go on for others.
• Finally, yes, of course I hope to draw in new readers.  If this deal eventually dies, more will follow in the future.  While some discoveries come from the Frequent Miler Laboratory, most come from reader tips.  With more readers, I expect to see more tips and the game will go on.

I want to thank everyone I confided in to help me reach this decision.  I spent many sleepless nights agonizing over this question, but I finally slept well on Saturday night after reaching a decision.  For those of you agonizing over the wait, please accept my apologies.  As I said early, I am most certainly evil and so will milk this for all it’s worth .

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Yes, I believe that a Perfect Perpetual Point Machine has been found!  I need time to write it up, though.  Currently I’m busy at Frequent Traveler University and have other stuff going on through Monday, so I don’t know how soon I can do it justice.  The earliest possibility is Monday.  Tuesday is more likely.

Sorry for the teaser, but I just can’t wait to share!  If you find me at FTU, ask me about this and I’ll give you a preview.

A while ago I posted a series about the search for the perfect perpetual point machine (PPM).  In those posts, I asserted that the following characteristics would make a PPM perfect:

1. The PPM may take effort and money to setup initially, but must not take much effort or money to keep it going.
2. The PPM must be able to generate hundreds of thousands of points per year.
3. The PPM must do no harm.
4. The perfect PPM would also somehow do some good for the world, not just for the recipient of the points.

Could the Staples Free After Rebate deals that I’ve been writing so much about qualify for perfection?

Not much effort

When the idea of a Staples PPM was first raised by Steelsnow eons ago (November 17th), it sounded like a pain in the butt to me so I passed along the info, but didn’t ever try it.  In February, though, a few readers pointed out the latest deal to me and I finally gave it a try.  I was amazed at how easy it was!  It hardly takes more than 15 minutes to log into the Ultimate Rewards Mall, click through to Staples, buy the right items, and then submit the rebates.  Done!

I’d say that this PPM easily meets the first criteria above.

Almost big enough?

Since I started publishing Staples deals in February, I’ve listed $1,905 in FAR (Free After Rebate) software downloads.  That amounts to an average of about $950 per month.  If this trend continues, we’ll be able to spend $11,400 at Staples each year and get all of that money back.  With a Chase Ink credit card it is possible to earn 9 Ultimate Rewards points per dollar for those transactions.  So, it is possible to earn over 100,000 points per year if Staples continues these offers at the pace that was set in February and March.  Do I really think it will continue at this pace?  No.  Am I hoping?  You bet.

The bar set for a perfect PPM is pretty high.  It’s unlikely Staples will lead to hundreds of thousands of points, but if it leads to 100K per year, that’s awesome!  If Staples continues with FAR deals at the current frenetic pace, I’d say this PPM is close enough to meeting criteria #2.

Is anyone harmed?

Usually when points are free they come at someone’s expense.  There are three potential losers in this scheme: Chase, Staples, and the software manufacturer.

Chase: Chase presumably gets paid by Staples for the points given out through the Ultimate Rewards Mall so they should be fine there.  They do give out a lot of points for Ink spending so one could easily argue that they are hurt by that, but since 5X at office supply stores is a standard card benefit they’ve only harmed themselves on that front.  I’d say Chase is fine.

Staples:  Staples most likely does quite well with these deals.  They are not the ones paying for the rebates.  They do provide a great service through their Easy Rebate program, but in return they make a huge number of sales.  I’m betting that Staples wins big with these through lower margins but higher sales.

Software Manufacturers:  Companies like Trend Micro and McAfee are the ones who pay for these deals.  They must lose money on each one.  Why do they do it?  Offering mail-in rebates often makes sense since a large portion of customers never collect.  With Easy Rebates, though, I can’t image this happens too often.  My guess is that their goal is to get people to install their software so that they can advertise directly to users each year when a new version of the software is available.  If that’s true, then we are foiling their plans when we buy their software but never use it.  We could actually help them more by donating the software to schools or other organizations since they would then become potential customers in the future.

While a case could be made that the software manufacturers are harmed, I think that’s a stretch.  I believe they know what they are getting into when they offer these rebates.

Doing Good?

Doing good in the world isn’t really a requirement of a perfect PPM, but it’s a definite nice to have.  I know that I haven’t done anything useful with my purchases, but it would be really cool to find schools or startup businesses that could use this stuff.  That way it would do more good than simply earn points.

So, is it perfect?

What do you think?  I’d say it’s very close!

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In previous posts (such as this one), I defined the Perpetual Point Machine (PPM) as “a scheme in which, after a little push, hotel points and/or airline miles are accrued over and over again, forever, with little or no additional work or money.” We have yet to identify a perfect PPM, but it has been fun and rewarding pursuing it. Today I’ll describe a PPM that works as long as certain pieces are in place.  Here goes:

Step 1: Buy Sears gift cards via Ultimate Rewards Mall

As long as you have a Chase credit card that gives you access to the Ultimate Rewards Mall (see Preparing for Miles), you can log into the Ultimate Rewards Mall, click through to Sears, and buy gift cards.  The Ultimate Rewards mall is currently offering 4 points per dollar if you log into your Sapphire or Ink Bold account, and 5 points per dollar if you log into your Freedom card account.

Step 2: Upgrade to EBay gift cards

Find the gift card rack in your local Sears or Kmart to see if they sell EBay gift cards.  If so, use your Sears’ gift cards to buy EBay gift cards.  Note: not everyone has found these in their local stores so this might not work for you.

Step 3: Use EBay gift cards to buy Walmart gift cards

Usually, low denomination Walmart gift cards are overpriced on EBay, but I’ve found that $500 gift cards are often available for less than face value.  Even at face value, this is a bargain since EBay will award you with 2% back in the form of EBay bucks which can then be applied toward future purchases.

Step 4: Use Walmart gift cards to buy Visa gift cards

Walmart sells $200 Visa gift cards online for $206.24 and they will let you use Walmart gift cards to purchase them.  As long as you buy your Walmart gift cards for a bit less than face value, the 3.12% fee will not cost you much out of pocket.  Once you receive your Visa gift cards, you can go back to step 1 and use those gift cards to buy more Sears gift cards!

Add it up

Let’s say you start with $1000 in Sears gift cards.  From this initial purchase, you will get at least 5000 Ultimate Rewards points (1 point per dollar from your credit card and 4 points per dollar from the UR mall).  You then upgrade to 20 $50 EBay cards at no extra cost to you (except your time).  You then buy 2 $500 Walmart cards for, say, $490 each on EBay.  From that purchase you will get back $9.80 in EBay bucks.  So, you now have a total of $29.80 in EBay money to use later.  You then buy 5 $200 Visa gift cards from Walmart using your gift cards plus $31.20 of your money to cover the gift card fees.  So, after round 1, your $1000 has come back to you in the form of Visa gift cards, and you have earned 5000 Ultimate Rewards points (worth $65.50 in Fair Trading Price) and $29.80 in EBay credit which is almost exactly offset by $31.20 in fees.

In subsequent passes you will earn fewer Ultimate Rewards points since you will no longer use your points earning credit card for buying the Sears’ gift cards, but you will still earn at least 4000 points.  Over time, your EBay credit will increase enough to buy an extra Walmart gift card and you can then increase the size of each cycle (e.g. buy $1500 worth of Sears’ gift cards instead of $1000).

Analysis

Is it worth the trouble to do this PPM?  For me, no, not really.  Even though I have two local stores in which I can upgrade to EBay cards, it is still a hassle to do.  If / when Sears goes back to 10 points per dollar in the Ultimate Rewards mall, though, I might then be tempted…

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This Perpetual Point Machine is best with two people working together.

In previous posts (such as this one), I defined the Perpetual Point Machine (PPM) as “a scheme in which, after a little push, hotel points and/or airline miles are accrued over and over again, forever, with little or no additional work or money.” We have yet to identify a perfect PPM, but it has been fun and rewarding pursuing it. Today I’ll describe a PPM that requires a little team work.

Gift Card Harvesting

Yesterday, I showed how it is possible to grow the value of gift cards over time (see Gift Card Harvesting). The idea is to buy Sears gift cards, use them to buy EBay gift cards at Kmart, and then use the EBay gift cards to buy discounted Sears gift cards. With the addition of 2% back in EBay Bucks, you will end up with more money than you started with! There are a few problems with this technique, though: 1) Not all Kmart stores / cashiers allow buying gift cards with gift cards; 2) Not all EBay gift sellers are honest (they can sell you a gift card with $0 balance, for example); and 3) There is no guarantee that Sears gift cards will be available to buy on EBay (especially if a lot of people start doing this trick!). I will explain soon how these issues can be overcome, but first let me remind you of another scheme:

Buying Miles

Last week, I wrote a post about how to buy miles cheaply (see Buy Miles for 1.2 Cents or Less). The idea there was to buy Sears gift cards for 6 to 10 extra points per dollar through the Ultimate Rewards Mall, then use them to buy more valuable gas cards (BP, for example) at Kmart, and then sell them through a service like PlasticJungle. As with Gift Card Harvesting, there are a few problems with this technique: 1) Not all Kmart stores / cashiers allow buying gift cards with gift cards; 2) From reader comments, it seems that not all Kmarts carry gas cards; and 3) Some people have reported having very bad luck with PlasticJungle. Now let’s see a way to overcome these issues:

Working Together

To make this PPM viable, you need two people: a gift card harvester and a mile buyer. The gift card harvester needs to live or work near a Kmart that carries EBay gift cards and is willing to let you buy them with Sears gift cards (Kmart is owned by Sears and their gift cards are interchangeable). So, this PPM doesn’t avoid the problem of finding a way to buy gift cards with gift cards, but only one person in the scheme needs to be able to do so. Both people need EBay accounts (you must be at least 18 years old to have one).

Here is what to do:

Step 1: Both Buy Sears Gift Cards through the Ultimate Rewards Mall

On December 9^th, all Sears’ purchases through the Ultimate Rewards Mall are awarded 10 points per dollar. This is the day to buy them! The mile buyer, in particular, must make sure to buy the highest $ value cards allowed ($500 each).

Step 2: Gift Card Harvester (GC Harvester) upgrades Sears gift cards to EBay cards at Kmart

See this post for more details about this step.

Step 3: Mile Buyer lists a $500 Sears Gift Card for sale on EBay

Set the “Buy it Now” price at $490 (or whatever amount both of you agree to).

Step 4: GC harvester buys the gift card through EBay

The gift card harvester needs to be ready to go as soon as the Sears card is listed because you don’t want anyone else to snatch it up! By selling a high dollar value item at a fixed price, the seller saves a bit on EBay seller fees. In this example, if the card is sold for $490, the buyer will get $442.59 after EBay and Paypal fees are factored in. This is 90.3% of the selling price or 88.5% of the card’s face value. Remember though, that the Sears cards were bought through the UR Mall and with a rewards credit card (ideally the Chase Sapphire Preferred). This way, the buyer receives 11.49 points per dollar spent on Sears gift cards. Since points are worth more than a penny each, the mile buyer comes out ahead. Meanwhile, the gift card harvester has just increased the value of the gift card by $19.80 ($10 by buying at a discount and $9.80 in EBay Bucks).

Step 5: Delivery

One of the hidden fees in selling things on Ebay is the cost of shipping whatever you sell. Ideally, the friends working together on this PPM live or work near each other and can simply hand over the purchases. This way, shipping fees are nonexistent and there is no danger of losing things in the mail.

Step 6: Repeat

Steps 2 through 5 can be repeated until the Mile Buyer has sold all of his/her gift cards. Note that EBay only allows you to list one gift card for sale at a time so you really do need to do this sequentially. If you want to go back to step 1 and buy more Sears cards, note that the value of buying gift cards will drop after December 9^th (probably back to 6 points per dollar). I expect (and hope!) that there will be more 10 point promotions in the future, though.

Variations

The mile buyer can do even better with this PPM if he/she becomes a “Top rated seller” on EBay. In this way, they will get discounted fees and so earn more with each transaction. The rules for becoming a top rated seller can be found here: http://pages.ebay.com/help/sell/top-rated.html

You might be tempted to play both parts of this PPM yourself. You could theoretically open two EBay accounts under different names and do it all. I would advise against that, however. I’m pretty sure it would violate EBay rules and maybe even break a law or two. You really don’t want to risk getting caught with something like this.

Analysis

I think this PPM is viable, but I have to admit I haven’t tried it. I’m new to EBay so there could be additional “gotchas” that I haven’t thought about. I also don’t think the rewards here necessarily justify the effort involved. Most of the risk and work is on the side of the Gift Card Harvester so that person really needs to think about whether it is worth it to them. Let us know in the comments below what you think. Are you going to play this two player PPM?

Ultimate Rewards

Many schemes I have (and will) publish require access to the Ultimate Rewards Mall. In my opinion, the best option for getting access to the mall is the Chase Sapphire^SM Preferred Card. If you don’t already have one, you can sign up with this link. Even if you don’t want to try any Frequent Miler schemes, this is a great card. The signup bonus alone is worth $500 in cash back, or $625 in travel booked through Chase, or more than $1000 in travel if you convert the points to United Airlines miles and/or Hyatt points. That last point is really key to the value of this card: Ultimate Rewards points earned with this card are instantly transferable to a number of airline and hotel programs. So, you can shop around to find the best miles and points redemptions before transferring your points and in that way get some incredible values from these points! I will get a small commission if you use my link, but you’ll get the same best offer available anywhere. I promise I would recommend this card with or without the referral commission. In fact, I have recommended it many times prior to my signing up for a referral network.

An enterprising reader volunteers a working PPM

Wow, I was late writing today’s post when an enterprising reader helped me out by writing the post for me! First, if you are unfamiliar with the idea of a Perpetual Point Machine, checkout the posts here.

In the comment section of a separate post, reader Steelsnow described a working perpetual point machine (PPM). The following are Steelsnow’s words quoted exactly with the exception that I’ve expanded a few acronyms and abbreviations:

So here’s a slow but working Perpetual Point Machine…. All the Staples items in this have been well tested and documented on SlickDeals (posted bvph is terrific at the details), I am just adding the hypothetical points twist with Ultimate Rewards (UR) Mall and the gift cards.

Join Staples Rewards (Office Max & Office Depot have similar points programs and could be used for this at their points rates).

First, going through UR Mall, purchase Staples gift cards, earn 5 total points/$1.

Check Staples ads for items with 100% rewards – they are usually posted weekly on SlickDeals as well – these items (Sharpies, post-its, reams of paper, occasionally other better items too) earn 100% of their cost in rewards points.

Going through UR Mall, purchase 100% rewards items, making sure to enter your member #. Earn 4 more UR points from mall, and 100% of purchase cost will be earned in Staples rewards.

Staples rewards are paid out quarterly, the time lapses are the weak point of this PPM. So a purchase now would not result in a Staples rewards check until January, etc…

When rewards check is received, check Staples ads for software that is free after rebate(s). You have 90 days to use the rewards $’s, but it has been reported that there has not been a problem finding the software deals in the past. Big news as of yesterday was that rewards checks are currently allowed to buy gift cards while they are available.

Purchase Free After Rebate (FAR) software with Staples rewards $’s. Submit rebates and keep a copy of rebate documentation.

When the rebate check is received, your $’s will be back to the beginning. In the process (if the gift card portion works), you earn 9 UR points per $1, a whole bunch of free office supplies, and free computer software. Downside is that with rewards cycles and rebate turnarounds, this is likely a 6 month cycle. Otherwise it would be (and is) a working PPM model….

What do you think readers? Have you done anything like this? Will you? It’s a great idea, but personally I hate filling out rebate forms, so I think I’ll pass. That being said, the ability to purchase non-Staples gift cards online opens up a world of possibilities. I can’t wait to seeing what else Steelsnow and others come up with!

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In part one of this series, I introduced the idea of the quest for the perfect perpetual point machine. A perpetual point machine (PPM) is a scheme in which, after a little push, hotel points and/or airline miles are accrued over and over again, forever, with little or no additional work or money. In itself, this sounds great, but I also introduced some rules that would be necessary for the machine to be perfect:

1. The PPM may take effort and money to setup initially, but must not take much effort or money to keep it going.
2. The PPM must be able to generate hundreds of thousands of points per year.
3. The PPM must do no harm.
4. The perfect PPM would also somehow do some good for the world, not just for the recipient of the points.

A New Idea

Previous attempts toward creating PPMs involved buying gift cards through online shopping malls that award points for each purchase. We came close to a working PPM in part two of the series, but then the Ultimate Rewards Mall suddenly dropped the number of points awarded for Sears purchases from 10 to 5 per dollar. While this is still a good deal if you need Sears stuff, it is not enough of a bonus to make a PPM work.

The new idea here is to use online advertising as a way to both spend money and to earn money. If you can balance your spend such that it perfectly matches earnings driven from the spend, then you will be able to rack up huge numbers of points via whatever rewards credit card you use. If your goal is to accumulate points, then look to the American Express Gold Business card which offers two points per dollar spent on advertising and currently comes with a 50,000 point signup bonus. If your goal is airline or hotel elite status, then checkout ThePointGuy’s post on how to spend your way to elite status.

Until a few weeks ago, I had no experience with buying online ads or using ads to generate revenue. However, I was vaguely aware of a couple of things: 1) Google Adwords allows you to buy ads that show up next to Google search results, and you can set your own price on the most you will pay, and you only have to pay if your ad is clicked; 2) If you have a web site, there are (at least) two ways to get paid for ads that appear on your site: 1) cost per click (CPC) and 2) cost per mille (CPM). With CPC ads, you only get paid if someone clicks on an ad on your site. With CPM ads, you get paid for every 1000 page views (also called “impressions”). I came across a company named ContextWeb that facilitates setting up CPM ads on your site and allows you to set your own price. So, the idea I had was to create a simple web site using free online tools, and then pay Google to send people to the site, and then get paid through ContextWeb. If I could pay Google the same amount to send 1000 people to my site as I receive from ContextWeb for 1000 views then I would come out ahead because I would use my credit card for purchasing ads and therefore receive miles or points through the card’s rewards program.

Almost Perfect

If the idea I outlined above were to work, it would conceivably meet all of the requirements of a perfect PPM:

1. Initial Setup: Sure it takes a bit of work to setup a web site initially, but depending on the site, it might not take much work to keep it up to date over time.
2. Hundreds of Thousands of Points: With this PPM, if one were to pay $10,000 per month in advertising and receive back the same amount, then one would break even financially, but would also collect 240,000 Membership Rewards points over the course of a year using the Amex Gold Business card
3. No Harm: With this scheme, everyone comes out ahead: Google gets lots of your money, web surfers get to visit your awesome web site, advertisers get real people viewing their ads, and the credit card company profits big time through transaction fees. Best of all, you get hundreds of thousands of points!
   
4. Do Some Good: I think of this as an important, but optional, aspect of a perfect PPM. There are a few ways one could take this idea and do some good with it. One way is if the web site itself is somehow geared towards helping people. It might help connect people to the best charities, give people valuable health information, etc. Another option is that if the site starts earning more money than is spent on advertising, one could pledge to donate that money to charity.
   

There is really only one barrier to this being a Perfect PPM: It doesn’t work.

The Experiment

I built a website called BestTravelHacks.com using the free Google site BlogSpot. On the site I simply listed my favorite current travel hacks and categorized them into topics: Earning Miles, Using Miles, Cheap Travel, and Improved Travel. Each hack is described briefly and then there is a link to a blog post (often by other bloggers) that goes into more depth. I signed up for both Google Adwords (for buying Google search result ads) and ContextWeb (for getting paid for ads on my site). After signing up for each of these services, I quickly saw the flaw in my plan. I had to pay Google Adwords almost a dollar per click, whereas I would get from ContextWeb about a dollar for every thousand page views. In other words, for every 1000 dollars spent on Adwords I would collect a dollar or two. Not good! Theoretically, I could raise my asking price on ContextWeb, but then ContextWeb advertisers would be less willing to buy the ad space. Alternatively, I could lower the maximum price I would pay on Adwords, but the lower I went, the less prominent my ad would become in Google search results, and fewer people would click through to my site.

In the end, I learned a lot, but I did not end up with a working PPM.

An Alternative

I still like the idea of spending money on ads as a way of fueling a PPM. If you own a business, it might be possible to pull this off like this:

1. Use a starting budget for advertising, and use that budget to advertise your business via Adwords (or any other service that accepts credit cards). If you are new to Adwords, you can use this link to sign up for $75 of advertising credit.
   
2. Over the course of a month, measure the incremental profit gained by your business from the ads. Depending on your business, it might be possible to track this directly. Otherwise you will have to estimate based on prior months’ profits.
   

3. If the incremental profit is equal to or greater than the amount you spent on advertising, then you’re golden, and you can increment your advertising budget each month until you see diminishing returns. If the incremental profit is smaller than your advertising spend, you have a few options:
   

   1. Consider whether your business needs longer lead times to see profit increases
      
   2. Consider redesigning the ads to make them more effective
      
   3. If all else fails, give up on this PPM
      

Thoughts?

What do you think? Is advertising a path toward the perfect perpetual point machine? Please comment below.

See also:

• The Perfect Perpetual Point Machine, Part 1
• The Perfect Perpetual Point Machine, Part 2
• All Perpetual Point Machine (PPM) Articles

In part one of this series, I introduced the idea of the quest for the perfect perpetual point machine. A perpetual point machine (PPM) is a scheme in which, after a little push, hotel points and/or airline miles are accrued over and over again, forever, with little or no additional work. In itself, this sounds great, but I also introduced some rules that would be necessary for the machine to be perfect:

1. The PPM may take effort and money to setup initially, but must not take much effort or money to keep it going.
2. The PPM must be able to generate hundreds of thousands of points per year.
3. The PPM must do no harm.
4. The perfect PPM would also somehow do some good for the world, not just for the recipient of the points.

I’m not going to claim that I’ve found the perfect PPM, yet, but today I will introduce a scheme for an imperfect PPM that could nevertheless result in hundreds of thousands of miles for anyone who wants to put in the effort. This scheme capitalizes on an opportunity I’ve written about before to double-dip on Ultimate Rewards bonus points for shopping at Sears. Through the Ultimate Rewards Mall, you can buy Sears gift cards and earn 10 bonus points for every dollar spent. These bonus points can be redeemed directly for cash (at a penny each), so you can essentially buy Sears gift cards for 10% less than face value. The double-dip comes when you go through the Ultimate Rewards mall a second time and purchase Sears merchandise using the gift card. Even though the mall makes it look like you need to use your Chase credit card for purchases, several readers have asserted that you will receive bonus points for purchases that use gift cards. I am testing this theory and will post with the results as soon as I can. Assuming it is true, it means that it is possible to buy anything you want from Sears online and receive 20% back in the form of Ultimate Rewards points. A nice little bonus is that if you sign up for the Sears Shop Your Way program (it’s free), you will get an additional 1% back in the form of Shop Your Way points. So you’ll really get 21% back for all Sears online purchases.

NOTE: AS OF NOVEMBER 2011, SEARS PURCHASE BONUSES HAVE DROPPED TO 6 POINTS PER DOLLAR

The Sears Double Dip Machine

This Perpetual Point Machine idea is to buy items from Sears and re-sell them at lower cost, over and over. You can discount these products up to 21% off and still come out ahead. How? By using the Chase Sapphire Preferred card for its outstanding rewards. In addition to 1 Ultimate Reward point for every dollar spent, this card also offers a year-end bonus of 7% of all points earned. If you were to buy and sell $10,000 of Sears merchandise per month without profit, you would still earn 10,000 base points per month from credit card spend and even more thanks to the year-end bonus: Through the double-dip, each 10,000 of spend amounts to 200,000 UR extra points plus 10,000 base points. Your end of year bonus, then, would be 7% of 210,000, which equals 14,700 bonus points per month. So, in total, you would earn 24,700 UR points each month for a grand total of 296,400 points per year!

This probably sounds like a ridiculous amount of work in exchange for a few hundred thousand points. Consider this option, though, to make it much easier: list for sale high end, low margin products on eBay or Amazon before you have bought them. When someone orders an item from you, go through the Ultimate Rewards portal to Sears to buy enough gift cards to cover the purchase. Then, go through the mall again to purchase the item (using the gift cards) and have the item sent directly to the buyer. That way you never have to deal with having unsold stock on hand, and you don’t have to worry about packing and shipping! By concentrating on high end products, you will have fewer sales to deal with. If, for example, you can sell just five $2000 laptops or TVs per month this way, you would do well.

When pricing your items, you need to account for all of your costs: vendor fees from eBay or Amazon, sales tax, shipping fees, etc. I’ve done the math for a few sample products and have found that it is still possible to undercut the cheapest vendors (on Amazon, for example), but there isn’t much room for error. Also, it is critical to find items where Sears has a good price relative to the competition. Otherwise you’re out of luck.

Why this machine is imperfect

1. It takes more work to setup and keep going than I’d like. Personally, I wouldn’t want to deal with cranky customers who have shipping problems, product questions, and returns.
2. Sears will catch on. At some point, Sears will figure out the double-dip scheme and close the loophole.
3. This PPM does not fit the “do no harm” rule. At the very least it hurts Sears’ margins. At worst, they lose money on every one of these sales.

Still Searching

Personally, I’m not planning to do the Sears Double Dip machine. How about you? Instead, I’ve been working on another scheme that could meet all of the criteria for a perfect perpetual point machine. I’m happy to report that this scheme does not involve Sears or Ultimate Rewards in any way. On the down-side, it has been harder to get it going than I had thought. I won’t reveal the details of the new scheme just yet, but I’ll give a small hint: I put together a new website called “Best Travel Hacks“. This site is itself an attempt at a perpetual point machine. Yes, “Best Travel Hacks” is, itself, a travel hack! I think, though, that people will find it useful as well. Look for more info soon.

See also:

• The Perfect Perpetual Point Machine, Part 1
• The Perfect Perpetual Point Machine, Part 3
• All Perpetual Point Machine (PPM) Articles

I began blogging as FrequentMiler with a goal of simplifying free travel. As a newbie to travel hacking I was amazed by the opportunities that existed, but also overwhelmed by the complexity. There seemed to be countless tips and tricks all of which required understanding arcane airline specific rules, hotel policies, credit card bonuses, and the like. It seemed to me that I could do a service by writing a dead-simple “how-to” blog targeted to those who don’t want to dig through mountains of Milepoint and FlyerTalk threads or read dozens of blogs a day.

Instead of making things simple, though, I think I’ve done the opposite. I’ve posted complex schemes for buying and selling gift cards, triple-dip shopping, and buying miles for less than a penny. I plan to get back to my original goal (soon, I promise!), but for now I’ve become obsessed with trying to find the perfect perpetual point machine. A perpetual point machine is a scheme in which, after a little push, points and/or miles are accrued over and over again, forever, with little or no additional work. I truly believe that the perfect perpetual point machine is out there. We just have to find it!

Actually, an awesome perpetual point machine already exists and is well known: credit card sign ups. Much has been written about the incredible signup offers that are readily available to people with good credit scores. Simply by applying for a handful of cards and meeting minimum spend requirements, you can earn thousands of dollars worth of travel rewards with very little effort! Every three or four months, you can apply for more cards and earn even more free travel. It’s simply amazing. If you’re not already taking advantage of some of these deals you should seriously consider it!

So, if there is already such a great perpetual point machine available, why am I looking for another? To me, this is a great game in which we win by earning huge amounts of points for very little effort or expense. Since the credit card machine is already so well known, playing that game only gets us to even ground with everyone else who is playing the same game. If we find a new machine, though, we’ll get ahead! In the end, hopefully, everyone will have fun along the way, and everyone will go home with the prize of free travel.

So, how about it? Do you want to help in the search for the perfect perpetual point machine? If so, here are some criteria to help us judge whether we’ve found it:

1. The Perpetual Point Machine (PPM) may take effort and money to setup initially, but must not take much effort or money to keep it going.
2. The PPM must be able to generate hundreds of thousands of points per year.
3. The PPM must do no harm. In my earlier post “Perpetual Point Machine… Not!” I described a failed scheme to buy gift cards with gift cards and earn miles each time, indefinitely. The problem with that scheme is that, if it had worked, it would clearly harm the retailer who would have been responsible for buying all of those miles.
4. The perfect PPM would also somehow do some good for the world, not just for the recipient of the points. Kiva loans are a great example of this, but the number of points that can be accrued annually is limited by the amount of money you have available to loan. For most people, this won’t come anywhere near the goal of achieving hundreds of thousands of points per year.

So that’s it. Did I miss any important criteria? Do you have any great ideas that qualify? I actually have an idea that might meet all of the criteria. Before I publish it, though, I want to try it out because I’m not really sure it will work. Once I’ve had time to try it out I’ll blog all about it. In the meantime, what are your ideas?

See also:

• The Perfect Perpetual Point Machine, Part 2
• The Perfect Perpetual Point Machine, Part 3
• All Perpetual Point Machine (PPM) Articles