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Top 7 Ways to Maximize Miles and Points With Pre-Paid, Reloadable and Gift Cards

by on November 27, 2012 · 68 comments

in Bluebird, Credit Cards, Prepaid/ Reloads, Top 10

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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.

It’s a well-known fact that getting credit cards for lucrative sign-up bonuses and then putting everyday purchases on your card will earn you points. However, when you try to use your card to pay big bills like mortgages, rent and car payments you’ll usually get hit with nasty processing fees, usually around 3%, which can easily negate the value of the points earned from the spend. So most people just make direct payments from their checking and savings accounts and are forced to lose out on any points earned from those expenses.

Prepaid, reloadable and gift cards are all the rage

However, this year the game has changed drastically. While new financial regulations have made debit card transactions much less profitable for banks (and thus we’ve seen most drop the mileage earning ability on debit cards) there has been a proliferation of prepaid card products that are aimed at consumers who may not have or be able to get traditional credit cards, but want the flexibility of being able to pay bills electronically and send and access money easily. This is a huge opportunity for traditional credit card companies to score millions of new customers with little risk and a lot of upside.

The beauty of these prepaid cards is that many can be loaded either directly with points-earning debit cards or by “reload” cards that can be purchased with points-earning credit cards. So instead of paying 3% in processing fees, it is now possible to get those fees to under 1% and sometimes even as low as 1/3 of a cent per point. Not only are you earning miles and points at a rate that’s much cheaper than their value, but you’re also able to put a greater portion of your spend on your credit cards, which means it’s easier to achieve credit card sign-up spend requirements and also hit category and spend bonuses on your credit cards.

Did you think it would be impossible to spend $30,000 to get that British Airways Visa Travel Together Ticket? Well now that you can pay your rent, utilities and withdraw money from these cards, hitting those lofty spend thresholds is much easier than it has ever been before. And when you “buy” points for 0.8 cents apiece, that means that that 100,000-mile business class roundtrip ticket to Europe next summer is only costing you ~$800 + taxes and fees – a pretty good deal to me!

Too Good to Be True?
The intention of these products is to allow people to conveniently and securely spend and send money. The banks are making money in many ways – fees when the cards are purchased (usually $3.95-$4.95 per card), merchant transaction fees when the cards are used to purchase items and interest on all of the cash loaded into accounts. That being said, they are extremely sensitive to any activity that might indicate money laundering (loading of funds and instant withdrawal of cash) and credit card cards are also wary of people who may look like credit risks (mixing out their cards to buy cash equivalent products right before declaring bankruptcy), so I’d recommend only using these products for their intended purposes and taking a slow, sensible approach.

Also, not all retailers will allow you to purchase some of the products listed with a  points-earning credit card. In fact, different stores within the same chain may have different policies, so it may take a little bit of trial and error to create a strategy that works for you, but once you figure it out, it can absolutely be worth your while. I personally have been able to purchase products at Office Depot, Walgreens, CVS and Rite Aid with no issues at all, though be prepared to show identification.

Here are the top 10 concepts you need to understand in order to get in on the prepaid/reload game that so many people (myself included) are taking advantage of these days.

Bluebird main account homepage

1. Use Bluebird to pay everyday bills like mortgages and insurance and even take out cash. Bluebird is a credit/debit alternative. You don’t earn points by using Bluebird – it’s all about earning points when you buy products that can be used to load it. Bluebird is amazing in that once funds are loaded, either via in-store Walmart using a miles earning debit card, or by Vanilla Reload cards, direct deposit or from a checking account – you can then pay any bill, even if your vendor isn’t listed in the system. Bluebird has the ability to cut anyone a check for free and you can even withdraw money from ATMs. See this post for more details on the wonders of Bluebird.

2. Purchase Vanilla Reloads to fund your Bluebird account. Reload products cannot be used to purchase items – only to reload prepaid cards or Bluebird cards. So in the case of Vanilla Reload, perhaps the sweetest and cheapest reload product, you can purchase a $500 card with your points earning credit card at many retailers across the US (including Walgreens and CVS). The cost is $3.95 for a $500 card and that card can instantly be loaded into Bluebird account (up to $5,000 per month). $3.95 for 504 miles is just under 8/10th of a cent per point/mile generated. It is possible to earn many more points depending on where you buy the card and with what credit card, so see #10 below for more maximization tips.


3. Purchase Vanilla Prepaid cards at bonus category stores to purchase your Vanilla Reloads. Be very careful to not accidentally purchase a Vanilla Prepaid card when you really mean to get a Vanilla Reload, because Prepaid cards cannot be loaded into your Bluebird account, but instead can be used just like any Visa card to make everyday purchases. You only want to purchase these at stores that give a spend bonus, like 5x at office supply stores or 6x at drug stores, and then use them for everyday spend or to even purchase Vanilla Reload cards, which can then be loaded into your Bluebird account.

Green Dot cards on sale at a Manhattan Rite Aid.

4. Purchase Green Dot reload and prepaid cards and use them to pay bills and fund your PayPal / Amex Serve accounts. These cards can be used to load PayPal accounts and PayPal allows you to transfer money for free to other people or your own checking account. Note: PayPal is very strict with compliance and will shut your account down if you simply load your account with Green Dot cards and then withdraw the funds. Instead, get a PayPal debit card and then load your Bluebird account using that card in store at any Walmart. See this post for more information on my experience with Green Dot.

 

 

5. Leverage Netspend for Large Purchases. Netspend is another prepaid product that has more fees than most other products, but allows you to load more money ($7,500 in any 24 hour period) and withdraw up to $940 per 24 hours, which might be ideal for big payments, like taxes.


6. Use the right debit cards. There aren’t a ton of mileage-earning debit cards out there anymore, but the following might make sense not only to use with prepaid cards, but also with paying taxes with lower fees.
Delta issued by Suntrust: 1 mile per $1 spent
Alaska Airlines issued by Bank of America: 1 mile per $2 spent
PerkStreet Financial: 1% cashback, 2% at Walmart - Update: PerkStreet Financial will be closing permanently and ceasing all business operations on September 26, 2013.

7. Use the most powerful credit cards. You don’t have to use the ones that give the best category spend bonuses, but doing so makes everything more lucrative and time worthy.

However, using cards that give elite status and major perks in addition to regular miles, might be just as lucrative as getting a multiple of points on every purchase. Check out these posts for the top airline credit card and hotel credit card perks.

 

Disclaimer: The responses below are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

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  • http://www.facebook.com/profile.php?id=685121871 Christopher Wu

    I spend a fair amount of money typically at Amazon (~500/month). I just got my Ink Plus card and started buying Amazon gift cards at Staples. 5x bonus; no fees.

  • Sergey

    I am confused – if I buy AMEX prepaid card at OD – can I use it for online shopping without registering it?

  • Gladlock

    The Points Guy – I took your advice and signed up for a Hilton HHonors CC which I received in the mail last week and I was reading the fine print of the CC agreement and noticed they changed their terms of service which now makes the credit card useless for the Vanilla reloads trick! Beware! Most credit card companies are catching on to this trick and have changed their ToS.

  • Giovinyc

    Will getting a blue bird card/vanilla reloads affect my credit? I’m planning on purchasing a home in the next couple of months…

  • Grant Thomas

    CVS also sells Amazon gift cards up to $500 which you can purchase with a Hilton honors card at 6x

  • Ssdf

    Milk it till it dies milk it till it dies TPG.

  • Eric

    This post was great! Nice job summarizing.

  • MeLlamo

    Pimping the same old stuff …

  • thepointsguy

    No credit pull/ negative effect

  • thepointsguy

    What it says in the T&C and what happens in reality are often two different things. These products are not loaded into most store inventory as “money orders” or cash equivalents so most credit card companies don’t assess extra fees. Try a small amount and test for yourself

  • thepointsguy

    You got it.. Ill be blogging about miles and point earning opportunities as long as they exist.

  • Brian

    What are your thoughts on using the Bluebird to pay credit card bills? For example, I would use my Chase Freedom for all my spending and then pay the bill every month from my Bluebird which was funded by my Chase Ink. I would pay off the Chase Ink every month directly from my checking account. I feel like this could be a risk since I am technically paying off my Chase Freedom card with my Ink card. Is what I just described crossing the line?

  • http://mreverydaydollar.com/ Mr. Everyday Dollar

    Just catching up to Bluebird. So, if I want to pay my mortgage – say $1,000/mo – I would sign up for Bluebird and then purchase vanilla reloads to fund it.

    Then I’d buy 2 $500 vanilla reloads to load into my Bluebird account, using my Chase Sapphire Preferred. So I would spend $7.90 for the 2 cards, in return earning 1,000 UR points for that amount. The cost per point is 0.0079 cents.

    If I want to stay at a mid-grade Hyatt, for example, at 12k-15k points/night it would cost me $94.80-$118.50. Cheaper than rack rate but a lot of hassle it seems. I’m on the fence about doing this.

  • Erikdessler

    More like pimping the same old stuff to squeeze as much affiliate income from my readers who will sign up for anything that I post.

  • Grant Thomas

    get an ink bold or plus card and your cost will be 1/5 of that amount…

  • MeLlamo

    You got it.. Ill be blogging about credit card referrals with a few random miles and point earning opportunities as long as they exist.

    Fixed it for you.

  • Grant Thomas

    That’s not what Amex wants you to do, but they allow it. I have done that for several different cards, no problems so far, but I suspect that will change in the future.

  • LAX

    TPG – you forgot the bright colored arrows to direct us

  • LAX

    So is step 11 to call the credit card companies and get them to shut this down? Or are you just forwarding them a copy of your post? Thanks.

  • User name

    No – you’re confusing himwith the other bottom-feeder

  • RP

    You should be able to. I did it once. The paper that comes with it says you can, and to call them if you have issues.

  • RP

    I have both Bluebird and Serve. I signed up online for Bluebird, then for Serve on the same day.

  • Mmccolm86

    Which would be the best way to earn AMEX point for paying my BoA mortgage? It has to be linked to a checking account and I always have wished this was possible, missing out on some serious points.

  • thepointsguy

    Bluebird is probably the easiest and cheapest.. You’ll just need to be able to but Vanilla reloads or use a mileage earning debit card at Walmart to load your account

  • Mmccolm86

    Awesome thanks!

  • Adam

    hilton points are worthless and barely make sense. how can a WA property be only twice the amount of points of a Hilton Garden Inn? I don’t understand what they are thinking about. Outside of the Office Supplies 5X there really don’t seem to be much incentive.

  • LAX

    I’m sorry, their ridiculous posts are so similar I have a hard time telling them apart.

  • SafeOverSorry

    it sucks that you can’t buy vanilla reloads at office depot anymore, but i’m willing to buy prepaid cards there and then use those to buy the reloads at CVS. my question is: with fees from both the prepaid cards and reload cards combined, is it still lucrative? (assuming you’re using a chase ink card). got some numbers, tpg? thanks

  • Jon

    What does it say in the T&Cs??

  • Mike

    Walgreens now requires cash payment for Vanilla Reload cards. Just tried this at a Walgreens in Hawaii. Looks like they’re getting smart on this. Fail.

  • buckaroos

    Absent a 5x bonus, this all seems hardly worth the trouble.

  • Eric

    Went to two different CVS’s. Sold out of VR’s, so tried the Green Dot reloadable. Told me they could only be paid with cash, despite no mention of this on the card. The Green Dot Prepaid Visa’s do say cash only on the back. Additionally, even before I purchased, they asked for ID and the clerk said to the other clerk they need to do this because of ‘what happened with some people’

  • Ace

    Transacting high level arbitrage, I entered a new OD today to buy some vanilla visa and-omg-2 vanilla reloads were there! I brought them up to the cashier…and…they registers are hard coded to stop the transaction dead in its tracks. O well.

  • JL100

    My thought is to pay Citi and Chase bills if I buy the cards on Amex, or just pay mortgage and property taxes. I am thinking I will build up a balance in Bluebird so it won’t look like fraud with immediate withdrawals, and then make a few large payments. I still think it’s a lot of work unless you have the Ink Bold, and I don’t yet.

  • RP

    Instead of Flyertalk, your link in #6 takes me to your Green Dot post. :)

  • Bc

    Tpg – I registered my Amex gc and tried to load to my serve account that i just created but looks like it isn’t accepting the card… Do you know if Serve stopped allowing ppl to load from gcs?

  • Toni

    I’m trying to figure out if I can there are any programs like vanilla/blue bird that I can take advantage of to pay my mortgage and other monthly bills, i.e. power, garbage, etc, so that I can earn some serious points and meet my spending. Vanilla cards are not an option; I’ve been to every Walgreens in town and they all only accept cash. Any suggestions? I wanted to cry when Walgreens told me I couldn’t buy the Vanilla with my cc. I live in a relatively small area as well, and from my research, no other stores sell the Vanilla reload cards. OD stopped carrying them a few weeks ago. Thanks so much for the help!!! I love your site and all the wonderful advice you provide! :)

  • RJ

    brian,

    for what its worth, i much prefer the old style comment section that you didnt have to click “show more” every few comments. very annoying. thanks RJ

  • thepointsguy

    I didn’t make any changes so not sure why “show more” even happens. Will look into it!

  • DealFinder

    points earned on Vanilla Load can be transfered to Aeroplan/Delta/BA/FlyingBlue?

  • thepointsguy

    Depends what credit card you use.. So potentially any of those currencies

  • DealFinder

    Debit card->Vanilla load->BlueBird=Miles to transfer to Aeroplan/Delta/BA/FlyingBlue?

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  • Rick

    Looks like the office supply stores are now aware of the gift card buying of visa and mastercards. The highest amount you can get per card around my area is $200.00. Now the fees add up to a point where it’s not worth it.

  • Michand1

    Chill, guys. It’s information. Take it or leave it. So far I’m riding the Bluebird/Vanilla Reload gravy train wondering when the other shoe will fall, i.e., it really always was too good to be true all along. Well, que sera, sera. But meantime–and more in my control–I’m close to hitting the required $5000 Ink Plus spend for the second installment of the 50,000 point bonus. But I’m wondering if purchases of Amex Prepaid cards at Office Depot will count toward the $5000 spend required for the full bonus. I need to know soon so I can rack up some “hard spending”. Any final word on this?

  • Bill

    Before you get to excited please remember that many of us have found our local CVS and Walgreens only accept cash when selling the Vanilla reloads. This is the case for me in WI.

  • HeyJuan

    Sounds like you have some cranky followers?
    Wonder why they still follow you? Must have nothing to do but bitch.

  • thepointsguy

    These are mostly people who are getting in on the deal and want to discourage others. I frankly don’t care if they are cranky.. If something is potentially a great deal I’m going to write about it so my readers can decide for themselves if it makes sense for them

  • http://mreverydaydollar.com/ Mr. Everyday Dollar

    Whoa, that’s great to know as a fellow Wisconsinite. Thanks.

  • RJ

    I can take a screen shot and PM it to you if you’d like? it says “Load more comments” at the bottom of the comments to keep viewing them. Very annoying after every 5 or so comments it happens, so if you like to read the comments as I do, you have to click that very often to keep reading them.. thanks RJ

  • Coralbeachred

    Is someone in MeLlamo-ville forcing you to read this blog?!

  • simona

    got bluebird, check. Got new Chase Ink Card in the mail today, check.
    Giddy with glee, headed over to Office Depot. Empty spots on the rack where the Vanilla Prepaid used to be. Manager reports that head office called them and told them to just “pull them all”. Same at CVS.
    Dang, too late to the 5x loop party! If it is too good to be true, I guess sooner or later they will figure it out…. :-)

  • http://twitter.com/zekenix Zeke Kersey

    Sorry, but I just can’t get on the Hooray Bluebird bandwagon. As I’m typing this, I had waited on hold with their customer service line for over 30 minutes before I spoke to a representative. They screwed up the FIRST payment I attempted. It was to my mortgage holder who actually appears in their list of payees. I’m on hold again while they “research” it. They won’t refund my payment–they will “dispute” it. Now I’m going to have to spend double the money in December to ensure A payment reaches my mortgage company… What a load of BS. Sorry, Brian, but Bluebird is crap as far as I’m concerned.

  • Scott

    Tried to buy Vanilla Reloads today at Walgreens and two CVSes. (Hilton Surpass: put on $500 for $504, get 3,024 Hhonors points worth about $45!)

    All blocked me. They have programmed their computers to tell the sales staff, “Cash Only.”

    This approach to point accumulation may be a flash in the pan. :(

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  • Reba

    I was afraid I wouldn’t be able to buy Vanilla Reload cards with my credit card after reading some of the comments. But last night my husband and I each purchased a Vanilla Reload card at our local Walgreens with our AMEX Hilton credit card and experienced no problems at all! We weren’t told we had to pay cash. Just wanted to share!

  • Drew

    With the Vanilla pre-paid card, you have to purchase the vanilla card with your Chase or other credit cards in order to earn the points? The reason why I ask is at the counter, I tried paying it with my credit card and the person at the counter said that I can only load money with cash? Can you explain this a little bit more clear for me. Thanks,

    Drew

  • NYNJ

    I don’t own a business- can I still apply for a business card without having problems in the future when and if I do start a business or otherwise impact my credit negatively? How would I fill out required business info for a card like chase ink bold ?

    Thanks.

  • Ianatseven

    so to be clear…… Can I still purchase regular master card, visa and amex gift cards at OD using my ink bold but I just can’t load those gift cards unto Bluebird.

    Am i understanding this correctly or is it strictly cash for all gift cards going forward at OD

  • Euriko

    Just left Office Depot in Framingham, MA and all the credit card gift cards over $100 were pulled off the shelf. This includes the Amex and Visa cards you were able to put up to $500 on. I talked to the store manager about it and he said Office Depot would no longer be selling those cards. He said the same thing about the Vanilla Reloads before it was announced they would stop selling them, so I have no reason not to believe him about this. I’m going to miss the 5x points on cards there. The smaller denominations just aren’t worth it.

  • http://www.facebook.com/profile.php?id=579206895 Dan Treviño

    well…Looks like the Austin area is shut down from both an OD and a CVS standpoint. As we all knew already, OD pulled the VR cards. I got the VV cards and then headed to CVS, then another CVS…then another…it seems ALL of the managers there have been communicated to about “laundering” and are not allowing gift/debit cards to purchase vanilla reloads. They all used the same terminology, so they much have received formal communication about it. So now we’re left with purchasing Visa or Amex gift cards from OD and just using those for dinner, grocery, gas, etc…much lower $$ amounts than if we could pay our mortgage, car payments, etc…but still a little bit of a bonus.

  • Dan-lauz

    Any possibility for us canadian fans… ?

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  • Diane

    FYI: Be sure to read the terms and conditions for a miles-earning debit card before making a purchase to determine what type of transactions will actually earn miles. In the case of the Alaska Airlines debit card, ->any<- government payment will not earn miles. However, one can purchase reload cards or transfer funds to a Bluebird account and earn miles.

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  • Timmy T

    DELTA AMEX CARD & BLUEBIRD MODEL….Is it worth it? check my math below please and share your thoughts

    If my mortgage is $1,500 I would have to purchase 3 Vanilla Reload cards (3 x $4.95 = $15).

    With a 1 point per $1 purchased (Delta Amex rewards credit card program), I would get 1515 points (1500 points for value on cards + 15 points for purchasing vanilla cards)

    So 1515 points / $15 = 101 points / $1

    Typical ticket with Delta ticket round trip is 32,500 points (+5 fee)

    So at 101 points / $1 ……. 32,500 points would cost $321 (+5 fee).

    If you purchase the same a round trip ticket directly from Delta it would cost you $377 (with tax). This is $49 more than using the bluebird / vanilla reload model.

    Based on the comments of others who have been dissapointed with the service, accesibility, and freedom of the bluebird card, I don’t think $50 is worth the headache.

    It’s not like you’re getting double delta credit card points for using your bluebird card to purchase Delta tickets. Iif you do use your delta dredit card to purchase your ticket you do get double points and a free check in bag.

  • Ty

    Seems one of the three recommended point earning debit cards is closing up shop. PerkStreet is closing in late September.

    http://www.perkstreet.com/announcement.aspx?PerkStreetCode=73100000

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