There Are More Flavors Than Vanilla: Maximizing Miles and Points With Green Dot & Paypal

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Update: You can no longer purchase Vanilla Reload cards using a credit card and Vanilla Reloads are no longer available in Office Depot.

Vanilla Reload cards can be difficult to find these days- and even when you do, some stores may mandate that you can only pay in cash. However, that doesn’t mean that you still can’t reap miles and points with the purchase of other pre-paid and reload able cards that allow other means of paying bills and withdrawing cash.

Green Dot offers a pre-paid and reload card for $4.95 (max load of $500), both of which can be loaded directly into your PayPal account.  I had absolutely no issues purchasing $500 versions of both products with my Chase Freedom at a Manhattan RiteAid this past weekend.

Green Dot cards at a Manhattan Rite Aid

Once I got home, I went to Moneypak.com, which displays the option to “Use your MoneyPak to add money to your PayPal account for instant online spending power”.
I’ve been a PayPal user for over 10 years and have a merchant account, so I know that I can transfer money to my checking account for free. I clicked the button and it prompted me to sign into PayPal and once verified it showed that my maximum monthly load amount was $4,000- sounds good to me! It then asked for my MoneyPak number and once I entered the first card info, it showed immediately in my PayPal balance. I actually had a small existing balance that I’d been meaning to transfer to my checking account, so I processed a checking account transfer which went off without a hitch.

I then loaded my last $500 into my PayPal account and initiated a final $500 transfer to my checking account- no issues, whatsoever. I looked throughout the T&C and nowhere did it say that transferring to PayPal and then onto your checking account was against the rules. Sure PayPal wants me to use their service to pay bills and other vendors (so they can generate processing fees), but I’ve given them enough money over the years and my account is “legit” enough, where I felt like this small withdrawal wouldn’t raise a red flag.

However, the following morning I got an email from PayPal compliance stating:
“At PayPal we regularly screen activity in our system. A recent review of activity on your PayPal Account shows that you have been using the Green Dot MoneyPak to deposit cash and then withdraw it. Unfortunately, this activity is not acceptable use of the MoneyPak and we must request that you discontinue this activity.

The Green Dot MoneyPak was designed for the purpose of depositing cash to your PayPal account for retail purchases. Continued use of the Green Dot MoneyPaks with PayPal for the purposes of cash withdrawals will lead to limitations on or closure of your PayPal Account.

We apologize for any confusion regarding intended purposes of this new feature. Please feel free to contact us if you have any further questions.” 

Fair enough that they sent me a warning without shutting down my account. Now that I know they are sensitive to this activity, I’ll make sure to mix in a lot more activity, such as bill payment and payment transfers to people who I owe money so I don’t trigger any more alerts. Per the PayPal fee schedule, sending money to other people within the US is free when you use your PayPal or checking account to fund the transaction.

So while this isn’t a perfect solution and I clearly prefer to use Vanilla Reloads purchased with Amex Prepaid cards that I buy at certain office supply retailers for nice category bonuses, it’s another way to meet minimum spend and generate miles for less than a cent per piece.

Take for example the $500 card I bought with my Freedom card- since I have it linked up to Chase Exclusives Checking program, I get a 10% bonus and 10 points per transaction. The $504.95 purchase netted me 566 Ultimate Rewards points (505 base + 51 + 10) for $4.95 or just under .9 cents a piece. If I can max out the $4,000 a month in loading to my PayPal account, that would mean 54,336 Ultimate Rewards points a year for $475.20. I generally value my Ultimate Rewards points higher than any other currency at about 2 cents a piece, so  I’m getting more than twice the value with this method.

There are risks to this method (getting your PayPal account shut down), but great upsides as well. I’d highly recommend mixing up your activity to not draw red flags and start slow to test the waters. Also, make sure your purchases don’t hit as cash advances, slow before diving in. Think through your strategy to make sure it makes sense- if you are just going to use pre-paid cards for normal purchases, getting hit with the $4.95 fee is unnecessary- just use your points earning credit card to make purchases! However, if you can turn spend like rent/mortgage/payments owed to other into points-generating activity and you can get more than 1 cent per point/mile, then this strategy could be very lucrative.

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