October 23, 2011
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:
- The PPM may take effort and money to setup initially, but must not take much effort or money to keep it going.
- The PPM must be able to generate hundreds of thousands of points per year.
- The PPM must do no harm.
- 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
- 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.
- Sears will catch on. At some point, Sears will figure out the double-dip scheme and close the loophole.
- 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.
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.
- The Perfect Perpetual Point Machine, Part 1
- The Perfect Perpetual Point Machine, Part 3
- All Perpetual Point Machine (PPM) Articles