Dollar Coins for Airline Miles? Bon Voyage!

(Hemera)

A few weeks ago, we wrote about the Fed’s $1 billion stash of unwanted coins, and the Federal government’s seemingly failed experiment to get us to trade in our dollar bills for dollar coins. The folks over at NPR’s Planet Money got inside access to see the pile of coins, which so far has cost $300 million to manufacture. Despite the clear failure to create demand, the program, authorized by Congress in 2005, won’t end until 2016.

Now it seems some folks have found an easy way to profit from all those unwanted coins. Planet Money reports that people have started buying the coins with their credit cards, thereby earning lots of airline reward miles. The coins are sent to them by the government for free. The buyers then deposit the coins in their bank accounts, pay off their credit card bill… et voila, a free plane ticket to Paris. While the U.S. Mint is a bit miffed by the scheme, a spokesman admits that there’s nothing illegal about it.

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  1. Clifton Griffin says:

    This story is actually quite old. The WSJ covered it a year and a half ago. (http://online.wsj.com/article/SB126014168569179245.html)

    There have been some crackdowns and I believe some credit card companies are watching for this and counting such transactions as cash transfers instead of legitimate purchases.

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  2. Mickey says:

    Easily fixed. Make people pay for shipping. Its rare in the private sector to find free shipping, all the time

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  3. Steve S. says:

    As a casual numismatist, I love the idea of the coins and am equally disappointed at why they don’t “stick”. I know the monetary system has received some coverage on this blog, but I would welcome more conversation on this and similar topics. For instance, what would happen if the public wasn’t given a choice between paper or coin? Would the people revolt, and would we see the dawn of a new cashless society? And also on this topic, what is the history of the idea of being cashless? Seems like its bound to happen sooner or later, right?

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  4. Paul Clapham says:

    Well, it’s not like the US government didn’t have the example of many other countries around the world before embarking on this so-called “experiment”. It ain’t rocket science. Issue metal coins, demonetize equivalent paper bills. Job complete, after a couple of years transition.

    We did that in Canada in 1987 and again in 1996, without any problems. I’m starting to see why Justin Wolfers recently referred to the people running the US government as “idiots”.

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    • mpod says:

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      • jason says:

        Not at all. As old/worn bills are taken in, you only replace them with coins. BTW, the Canadian mint creates currency for more than just Canada. It is well respected.

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      • terence says:

        how do you think they did it in Europe, when the conversion to the Euro happened?

        It’s not rocket science, man – the US just has to apply a few principles that many, many countries already have. It’s easy.

        That, and I’m pretty sure coin US currency is used in the same places you mention – who cares if it’s a quarter or a dollar coin? Money is money – the same places that accept a $1 bill will accept the coin.

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  5. Aaron says:

    I agree with Clifton – this is quite old. Unfortunately, I think that the CC companies are getting the mint to code it as a cash advance rather than a ‘product’, so it will get charged advance fees. You should have seen the howls on the flyertalk boards when this one “got out”.

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  6. Andrew says:

    Did the same with a cash back credit card when it was paying out 2% cash back on post office savings bonds easy way to make a few hundred bucks before they caught on and build credit too

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    • Ben says:

      I do try to spend them, but my actual spending is nothing compared to what some are churning. At the beginning of the program they had a mere 99 box limit. Each box has $250, so that a lot of money.

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  7. Eric M. Jones says:

    I just checked (cc in hand). They are all sold out.

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  8. Adam says:

    The NIH is sending out 2 dollars in cash to zip codes that may be predominantly black/hispanic for an AID’s survey – however no one is required to take the survey in order to keep the money. Considering they are simply giving it away and most people know sending cash in the mail is not wise… Wouldn’t this be a good program to use the coins? I mean since the coins are sitting there not doing anything, and the 2 dollars in the mail is taxpayer money, at least using coins would be giving something back… though very small in nature, at least it begins using some of the inventory. If nothing else, it puts some of the coins in circulation, increasing awareness that they are in fact real, usable currency.

    Just a thought considering this topic seems to pop up. Just for the record, I don’t care to carry coins, but if they want to give them away… I’m sure we’d all take them.

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