I think that post title is pretty clear-cut. I made one LARGE purchase on Groupon and scored close to 20,000 Alaska miles, enough for a one-way first class flight from Coast to Coast.
You can find the best shopping portal rates on CashBack Monitor. I check it daily to see if there are any smoking rates (usually 8x points or higher). About three weeks ago I was on CashBack Monitor and noticed that Groupon was paying out 10x Alaska Miles on purchases. The rates fluctuate every day, so you have to keep an eye on it and act fast.
Groupon is probably not the first merchant that comes to mind when you think of earning a huge chunk of points. Surprising to some, Groupon actually sells a lot of expensive electronics. In this instance I found a decent HP laptop deal.
I figured at 10x points I would be willing to break-even or take a small loss. I spent close to $2,000 @ 10x earnings, so getting 98% of my money back seemed like a good trade-off for nearly 20,000 Alaska miles. Alaska Airlines shopping portal was also offering 500 extra points if you spent over $200 with any merchant, that was too easy.
Go for it
I pulled the trigger on four laptops which totaled $1,1919.96 before taxes. My sales tax rate is only 6.3% but keep in mind that shopping portals typically don’t pay on the taxes and extras, only the cost of goods. The grand total was $2,040 after taxes. Since I paid with my Capital One Venture card at 2% back, I received $40 in cashback on top of portal miles earned.
At this point you are probably wondering how I am going to get rid of these laptops. Well, I am going to sell them on Ebay, and I should be able to clear them out for about $540 a piece. After eBay fees I will net roughly $500 per laptop. I have an eBay store and I am a top rated seller, so eBay takes 3.2% on laptops and PayPal takes 3%.
Since my post tax amount was $510 per laptop, I will lose a little money on each sale. Fortunately my $40 in cashback from Cap1 will cover my small loss.
Is it worth it?
All-in I will spend about two hours listing and shipping the laptops to break-even, sounds crappy at first. But remember, I’ve since earned 19,199 Alaska miles plus 500 bonus Alaska miles. That is a grand total of 19,699 Alaska MileagePlan miles. Not bad for two hours of my time plus breaking-even on the cash side.
I value Alaska Miles at about 1.7 cents a piece, that means my earned points are worth roughly $334. Reselling four laptops at a “break-even” amount doesn’t seem so crazy now. Keep in mind, this is done while never leaving the house. The laptops are shipped to my door, I sell them and USPS picks them up for free.
One thing I always stress to newcomers is to never treat points at “face value”. You always want to look at what points can be redeemed for and if you have good use for them. When shopping on Groupon I had the choice to earn 10% as straight cashback or 10x Alaska miles.
Miles or cash?
Here is why I chose the Alaska miles. The 10% cashback is the same “earning rate” in theory as the Alaska miles, but the redemption value is a much different rate. I can only spend 10% cashback at face value. (unless you are privy to some illegal trick that I don’t know). However, I can redeem my 10x Alaska miles at OVER 1 cent per piece.
5,000 mile one-ways
You now need only 5,000 Alaska miles for a one-way from San Francisco to Seattle, for example. Currently, a one-way from SFO to SEA is $85 if paying cash. That means 5,000 Alaska miles are “worth” $85, or 1.7 cents per mile in this case.
If I had chosen to receive 10% cashback I would have received close to $200 from my large purchase. I would need to use $85 of the $200 to cover the flight from San Francisco to Seattle. By choosing to earn almost “20,000” miles instead, I’ll need to redeem only 5,000 miles for the same flight.
With this SFO to SEA example, the miles are worth 1.7 cents a piece which would actually have made my effective earning rate 17% at Groupon!
If we do a little math, $1,919 X 17% = $326. If you add in the 500 bonus miles that means my earned miles are worth about $334, the cashback at 10% would only be worth $197. (duh) If you know how to best redeem your points and like to travel, online reselling can become very lucrative.
Sell four laptops, fly first class
I recently posted how you can fly from the West Coast to the East Coast for 7,500 Alaska miles one-way in economy. Since Alaska and Virgin are merging, you can now use Alaska miles to book Virgin America flights. If you want to fly Virgin first class, the same flight would only be 15,000 miles Alaska miles. (remember, I made 19,699 Alaska from this Groupon purchase)
The same flight that can be booked in first class for 15,000 miles would cost you $838 if you paid cash! In that scenario your Alaska miles would be worth almost 5.5 cents each. That is an extremely high redemption rate for Alaska miles. (or any miles/points for that matter). Here is how you can book ultra-cheap flights using the one-way trick.