I make sure to check a bag on every flight in hopes the airline loses my luggage. It happened so many times that I finally, accidentally learned what a blessing-in-disguise it is.
Why? When my bag is delayed, I get some fresh new duds! If you’ve read even a single article on this site, you know that frugality is our religion. It’s morally and financially defensible, and a way of life that leads to simplicity, wealth, and happiness. So naturally, the frugal human won’t frequently go out for a new pair of jeans, a jacket, or a jean jacket!
The great thing about losing luggage is that you are literally required to spend your money on ‘essentials:’ toiletries, clothing, etc. So your options are to either spend nothing and get by for a day or two with whatever’s in your carry-on or to treat yourself to a hundred dollars (or much more) worth of stuff. It’s a nice opportunity for a usually-spendthrift person to let loose a little and act like a
dumb consumer regular person. These systems are designed for the average customer, to whom fancy clothes are apparently essential.
Lest you suggest that the checked-bag fees outweigh the rare occurrence of delayed baggage, remember this: Checking is always free because, you guessed it, that’s another perk of having a travel card! In fact, having an airline-branded card typically earns you all of the benefits of having bottom-tier elite status, such as Gold with American Airlines. This makes trying to earn elite status a fruitless pursuit, especially considering the new requirements of “elite qualifying dollars.”
Travel Card Insurance
Simply put, delayed or lost luggage allows you to make purchases and be fully reimbursed by either the airline or your credit card. Because your checked bag should never have your laptop, medicine, or priceless family photo albums, you should be happy for the chance to upgrade your material belongings at no cost to yourself.
You rarely need to purchase travel insurance when buying an airline ticket because virtually every travel-oriented credit card includes it. In fact, the Chase Sapphire contract demands that you do not buy insurance when renting a car. If you do, you lose your card-provided insurance on that rental! If you rent a car a few times per year or travel internationally even once per year, a credit card with a ≈ $90 annual fee (and lucrative sign-up bonus) pays for itself.
When the airline inevitably loses your luggage, check your card agreement online and make sure your situation meets the criteria to make reimbursable purchases. Chase, for instance, reimburses you for essential purchases once baggage is delayed for more than 6 hours. You can get up to $100 per day for 5 days. That scenario assumes you get your baggage back. If luggage is truly lost (only 0.04% chance of happening), they’ll pay out up to $3,000. Make all purchases with the same, travel-insured card. Within the next few days, log into your credit card account, follow the claim instructions, and then wait patiently.
Cards usually include trip interruption and cancellation insurance as well, which comes pretty close to eliminating the need for travel insurance at all.
The Airline’s Obligation
Many cards will require you to file a claim with the airline first. A surprising discovery I made a couple years ago was that American Airlines reimbursed me for about $150 purchases when they lost my luggage for a few days– and I had no travel insurance. It turns out that many airlines do the right thing but don’t make it a well-known fact. It’s actually their legal obligation, so hold them to it!
If you’re filing a claim in the U.S. for lost baggage, you’re legally entitled to the value of the bag and its contents– up to $3,300. Credit cards often reimburse you for what the airline neglected to cover, usually up to $3,000, bringing your total to $6,300. Remember, though, that maximum number would reflect the actual value of your bag and its contents. No made-up valuables, please!
If you’re filing a claim abroad, Montreal Convention regulations apply, which ensure that airlines provide up to $1,750 in compensation. You’ll often be asked for receipts, usually for higher value items that cost more than around $100. That’s difficult to provide for 99% of the population. However, your rights ere on the side of your honesty and persistence: you’ll find luck in backing up your claims by taking photos of the contents of your luggage before flying.
In regard to delayed baggage, airlines have a less explicit legal duty. The DOT requires airlines to provide victims of delayed baggage with a stipend to buy clothing, toiletries, medicines, etc. However, airlines set those rates: so go immediately online and find what they’ve published on their official websites. Then, photograph that screen. Yes, really. It will likely be around $50/day for 5 days. Airlines also set the rules for what counts as ‘lost luggage.’ It may be 21 days or longer, so don’t go spending until you know will be paid back.
1. Keep a travel card and forget about paying for extra travel insurance.
2. Photograph your bag and its contents before flying.
3. Check a bag when possible in order to lighten your load in big airports and perhaps get an unearned shopping spree.
4. Remember to keep your purchases reasonable (no watches, earbuds, or tickets to the movies), and hold on to all of your paperwork.
5. Report the issue to the airline immediately. Document everything, be patient, and above all be persistent. Airlines are especially resistant to doing the right thing, so keep at it. Know the rules set by both the airline and the credit card, and you’ll win.
People often ask whether churning through credit cards just for their bonuses and perks is legal or, at best, underhanded or deceptive or even wrong. The answer is absolutely not.
Step back and think about who you’re taking advantage of here. The primary loser is the banks. I made about $4,300 dollars in credit card bonuses from 6 banks in 9 months. That’s about $716 per bank, which is nothing to them. Remember that they cost Americans 8.8 million jobs during the recession through reckless, unlawful, and immoral speculation. They’ll enjoy dangerous deregulation in the coming 4 years. They together allow the author of this article a credit line of $55,000, despite the fact that his yearly income is less than $20,000 and his loan debt is also five digits.
Banks exploit our ingrained consumer culture by offering inappropriately large credit lines to poor, young people who don’t fully understand the impact of the bloated, 25+% interest rates that credit cards carry. They line card agreements with hidden fees that kick in after they’ve enticed you with benefits that won’t outweigh the costs for at least the 50% of American cardholders who carry a balance each month.
The airlines also lose when they lose your luggage. And they don’t deserve it because they lost your luggage– are you really going to blame the airline for an honest mistake made by a hard-working, underpaid baggage handler? No. The airlines deserve it because, in a time of record-low oil prices, they’ve increased their costs. Because the government has allowed them to form a dangerous oligopoly. Because their customer service processes are designed to infuriate customers until they give up. Because they continuously devalue the points, elite statuses, and other earned benefits of loyal customers.
For now, we are clearly in a bubble. Banks and airlines are together offering benefits that are dangerous to consumers and themselves. But, while they race each other to see who can offer the most lucrative bonuses to cardholders that they hope to exploit, let’s take advantage of them. Let’s earn our thousands of dollars worth of free flights, travel insurance, lounge access, and other luxuries so that, for once, the average person can beat the banks at their own game.
There is something just so satisfying about getting the best of multi-billion dollar corporations. The house doesn’t always have to win. Want more beat-the-house advice? We’ve written about it here, here, here, here, and here. You should also check out The Points Guy and Mr. Money Mustache.