Fly for Free Thanks to the U.S. Mint

by John Giuffo
Thursday, July 14, 2011

For some people, racking up frequent flier miles can border on obsession. Supermarket purchases, restaurant meals, clothing, entertainment -- if it can go on the frequent flier card, it does. But racking up thousands of frequent flier miles for free? That's a trick that all but the truly dedicated can only dream about.
But it's possible, and best of all, it's legal.
Not exactly ethical, but it's not a crime -- at least not yet. The trick (it feels more like a scam) is to use a government program meant for promoting the circulation of dollar coins for everyday use. And it's not new: travel hackers have been doing it for years, and it's only recently that the federal government has caught on and done something about it.
It goes something like this: The U.S. Mint, through a 2005 act of Congress, is required to place $1 billion worth of the golden presidential and Sacagewea dollars into circulation in an effort to stimulate general use. The only problem is, the coins haven't really caught on with the general public. But there is one group of people that have enthusiastically embraced their use: travel hackers, so called because they aggressively look for loopholes in promotional programs and for tips on travel websites for ways in which to make the best use of their travel dollars. Much of this "hacking" involves taking advantage of frequent flier programs in unique and innovative ways.
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The dollar coin trick involves purchasing large amounts of coins with a frequent flier card, waiting for the Mint to ship the coins (free shipping!), and then taking the coins to the bank, where they are deposited and the money is used to pay the credit card charges. No money is lost, the frequent flier miles rack up, and travelers can use them for upgrades or completely free flights whenever they want. According to NPR's Planet Money, which broadcast a story about the scheme on Wednesday morning, the Mint caught on when some customers started buying hundreds of thousands of dollars worth of free coins, so it has since limited purchases to $1,000 every ten days. But 3,000 free frequent fliers miles per month still isn't a bad deal. NPR quotes Mint spokesman Tom Jurkowsky about the ways in which the Mint has tried to curb the practice: "Do we feel a little bit violated? Yes, and that's why we aggressively sought measures to eliminate what we called an abuse."
One site, TravelHacking.org, promotes these methods as a way to gain money through membership through its website, but it's not really necessary to pay any money at all to learn some of the best ways to travel hack -- in fact, many of these methods are enthusiastically promoted on various travel sites. Popular travel website Gadling wrote about the tactic in April, discussing the trick's growing popularity, how it resembles a cash advance, and how the IRS doesn't consider it a cash advance for tax purposes. For many with the financial flexibility to have $3,000 a month in circulation, it seems like too good an opportunity to pass up. As stated above, it's not a new phenomenon: The Wall Street Journal wrote about the coin trick in 2009, which ultimately may have played a role in the Mint's crackdown.
Contrary to some reports, the practice hasn't ended since the Mint enacted the new rules; it's only slowed down. You can find the web page for the Mint's coin program here.
And until frequent flier miles card issuers catch on and do something about the practice, it seems likely to attract the sort of customers who are looking at the fine print of their rewards programs for any and all ways in which to maximize their mileage.