NPR, Planet Money | How Frequent Fliers Exploit A Government Program To Get Free Trips

We recently reported on the the government’s failed effort to persuade Americans to use dollar coins.

But the coins have found at least one group of fans: Travel enthusiasts who buy thousands of dollar coins with credit cards that award frequent-flier miles for purchases.

Once in possession of the coins — shipped to them by the government for free — they can deposit them into their bank accounts and pay off the credit card bills. The result: a free ticket to anywhere.

“We’ve used them to go on trips around the world,” says Jane Liaw, a 35-year-old public health researcher and science writer in San Francisco. Liaw says she and her husband, who use a variety of tricks for earning miles, are planning trips to Greece and Turkey, “all on miles and points.”

I don’t get it — what’s the mechanism whereby buying these coins translates into frequent flyer miles? The article never really explains it.

A Wall Street Journal version of the story from December 2009 clarifies a bit: they’re buying the coins with a credit card that rewards airline miles for transactions, so you’re effectively converting credit to cash, paying off the credit (so it becomes a zero-sum transaction), and earning the rewards as a side effect. A Consumer Reports version of the story from this week summarizes it similarly, while a post on the Practical Hacks blog from July 2009 suggests that the trick may not work anymore. Hmm.


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