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US Mint closes free-flights loophole

Credit card users will no longer be able to rack up frequent-flier miles by buying $1 coins from the government.

By MSN Money Partner Jul 25, 2011 2:38PM

This guest post comes from Paula Pant at AffordAnything.org.

 

Two weeks ago, NPR's Planet Money ran a story about rewards enthusiasts buying $1 coins from the U.S. Mint with their credit cards in order to collect frequent-flier miles.

 

Within a day, the story was a top trending topic on Alexa.com. The following day, I wrote a post explaining the U.S. Mint loophole on my blog. It ran as a guest post here at Smart Spending, where it was shared 2,377 times and sparked nearly 100 comments.

 

Exactly one week later, the U.S. Mint announced it is ending credit card payments for its $1 coin program. Here's a statement the U.S. Mint posted on its website:

The Mint has determined that this policy change is prudent due to ongoing activity by individuals purchasing $1 coins with credit cards, accumulating frequent flyer miles, and then returning coins to local banks. Local banks, in turn, returned coins to the Federal Reserve. While not illegal, this activity was a clear abuse and misuse of the program.

Don't get me wrong: This isn't the first time the U.S. Mint's $1 coin program made headlines. The Wall Street Journal ran a story in December 2009 called "Miles for nothing," featuring interviews with several people who used the program to purchase $10,000 or more. The Los Angeles Times picked up the story a few days later.

 

But did its recent resurgence in the news -- coming on the heels of an entire Planet Money series about the federal government's efforts to promote the $1 coin (which they titled, fittingly, "$1 billion that nobody wants") -- hasten the closing of the program?

 

I say yes, and I believe Planet Money takes the credit (or blame, depending on your point of view). The day after the Planet Money story ran, U.S. Rep. Jackie Speier, D-Calif., sent a letter to her fellow Capitol Hill lawmakers, announcing her intention to push a law through Congress that would halt the making of these coins.

 

"My bill directs the Secretary of the Treasury to stop minting the $1 coins, immediately halting production of these unnecessary coins," Speier wrote. "Taxpayer dollars that will be saved from this legislation will go towards the deficit."

 

Perhaps journalism can still change the world.

 

More on AffordAnything.org and MSN Money:

9Comments
Jul 25, 2011 4:30PM
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there is a simple solution, if the government wants the public to use dollar coins DON"T print any more dollar bills, they wear out and are replaced in 3 months (according to government surveys)
Jul 25, 2011 7:45PM
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It amazes me that our Washington leadership can work this quickly to close a loophole that for intents should be closed, but for whatever reason, whether posturing or trying to make the other party look like the bad guys can not resolve a serious issue in our country. Typical, we(Washington) will quickly get on those easy items right away, something that can really be detrimental to the common public and the country as a whole, we will sit on our hands and sees who will blink first. I wish I could give the lot a pink slip!
Jul 25, 2011 4:14PM
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I think the US consumer would accept a dollar coin if it had the size and weight of the old dollar coins. I tend to confuse the new coin with quarters which has cost me.
Jul 25, 2011 8:02PM
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1) stop printing $1 bills and start pulling them out of circulation.
2) print more $2 bills
3) make the $1 coin larger than a quarter and smaller than the half dollar coin.


Jul 28, 2011 5:05PM
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US Rep Jackie Speier is clearly over-reacting and under-intelligent.  I'm an American in Europe and I love having 1 and 2 (euro) dollar coins.  Simple reason: it's safer!  When you go to buy a drink, you're only opening your change purse- you're not flashing bills inside your wallet.  Yes, they're heavier but if thieves around me only see that I've got a pocket of jingles instead of a wad of bills, I'll bear the weight.  Ms Speier needs to get out of California and see a bit of the world to be a "US Representative".   
Dec 16, 2011 2:57PM
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I have spent time in both Canada and Australia, I loved the one and two dollar coins. In Australia there are no pennies as well. The price on items includes tax, making anything smaller than a five cent coin unnecessary. Congress should stop the printing of one and two dollar bills, and go to coins exclusively at those denominations. The savings are huge, about five billion over about ten years. The penny is another waste, the cost more to mint then their face value. The government can save large amount of money without cutting programs, seems like a no brainer to me.
Jul 25, 2011 4:19PM
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Why don't they just put a mark up on it (to cover credit card fee), and charge for shipping when using a credit card to make a payment (checking accounts are still free). Wasn't this the main cost that made it a bad deal for the mint (free shipping)?  Then, if someone wanted the coins for free, they would have to go to a bank and purchase them dollar for dollar.  I doubt you can pull out your chase platinum card to get 10k in coins on from chase bank.  Problem solved.
Jul 25, 2011 4:10PM
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But for how long has this been going on .......seems to me like the "elite set" have all gotten their share now it's time to shut it down for the common folkj!
Jul 27, 2011 4:59PM
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how the F is it any more of an abuse than the fact that the US has created this disgusting burgeouise paradigm for us to slave under?!?!?!?!?!

 

you should be giving away free airfare for the nonsense you make the citezens of this godforsaken land put up with!!!!!!

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