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.


Clifton Griffin

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.

Mickey

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

Steve S.

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?

Paul Clapham

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".

mpod

Well I'm sure the complete lack of use of physical Canadian dollars throughout the world as a trusted and known currency is a completely irrelevant factor in comparing the ease of phasing out paper Canadian dollars versus United States dollars.

jason

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.

Aaron

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".

Andrew

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

Ben

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.

Eric M. Jones

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

Adam

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.

The Regular Joe

Brilliant! now all those people are stuck with small change...
here is some ways the can use it wisely
http://theregjoe.blogspot.com/2010/11/small-change-can-go-long-way.html

Mike

Some research notes (using Delta and the AMEX Gold Card

$329 price of ticket from Tampa FL to Madison WI round trip

25,000 cost in miles

$1 purchase gets you 1 mile

1,000 miles = 13.16 = (329/25000)*1000

You may only purchase $1000 every 10 days

365/10 = 36.5

13.16 x 36.5 = 480.34 (annual expected return)

480.34

average transaction time 10 minutes (guesstimate assuming you go to/near a bank regularly and register your US MINT account the first time)

(36.5 * 10) / 60 = 6.08 hrs / year
480.34 / 6.08 = $79.00/hr

Not to shabby, but there are other factors to consider.

How much happiness do you derive from screwing the Government?
How much is lost worrying about those coins sitting in your mailbox, just waiting to get stolen?

I personally find it worth while to pay my rent in dollars (or as I state to my land lord "GOLD GOLD GOLD!!!!!!")

All told there are better ways to earn money, and depending on your tax rate (you do intend to pay taxes right?) you might not get more than your hourly rate after taxes.

But hey dollar coins are fun... so I'm all about it. (I do circulate f.y.i)

Read more...

pawnman

Why is the government so obsessed with moving to coins? I hate them. I accumulate a few nickels and dimes in the course of my day, and get rid of them in a jar as soon as I get home. I can't cram 20 $1 coins into my wallet. And I certainly don't need them jingling around in my pocket with my keys and cell phone.

Sbard

Check out the kinds of wallets people carry in Europe. When I was in Rome last year and decided to buy a wallet for my girlfriend it was surprisingly hard to find a good one because on so many of them, two thirds of the wallet's volume was taken up with a large coin purse.

terence

Why doesn't the US do what Canada has done? As you send out Coins into circulation, pull bills *out* of circulation, via banks. No stockpiling, and you transition your currency to the wanted coins. It's pretty simple - why aren't they doing it?

Ian M

Who uses coins? What is this 1995.

I spend less than one half of one percent of my net income with physical currency.

AJ

My wife just returned to Canada from a trip to Boston. With her she must have brought home about 20 US dollar coins. Now assuming that we can use these at par up here, she made a cool 80 cents [20-(20*.96)]! Me thinks there's an opportunity here!

Bill McGonigle

Christopher Walken. What was the question?