Wealth Finance

Travelers are taking advantage of a U.S. Mint program that offers no markup and free shipping on dollar coins. The program was supposed to help put the coins into general circulation. Instead, would-be travelers use their credit cards to buy thousands of coins in order to collect frequent-flier miles, according to National Public Radio.

When the coins arrive, the customers deposit them at the bank and use that money to pay off the credit card purchase of the same coins.The customer racks up points, and the coins end up piled in Federal Reserve vaults, defeating the government’s plan to put them into circulation.

The Mint first caught on back in 2008, when it noticed a small number of people repeatedly buying large numbers of dollar coins. The top 20 customers bought between $219,000 and $696,000, according to NPRs report. The buyers were then simply bringing the coins to the bank still wrapped in U.S. Mint packaging.

The Mint has now limited dollar coin purchases to 1,000, every 10 days, and states on its website that “the immediate bank deposit of $1 coins ordered through this program does not result in their introduction into circulation and, therefore, does not comply with the intended purpose of the program.”

In a previous report, NPR examined the history surrounding the failed government action to get consumers to use dollar coins, and why the coins are still being made, even though they have not successfully entered general use. One expert contacted by NPR recommended that dollar coins be destroyed. “People will not accept these coins. Nobody in America wants to use them. As long as they have a paper currency, they will use that.”

How Frequent Fliers Exploit A Government Program To Get Free Trips

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