Maximizing Prepaid / Reloadable and Reload Cards For Points And Miles – Choosing Which Credit Card To Use

by on December 20, 2012 · 88 comments

in Credit Cards, Prepaid/ Reloads

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All this week TPG contributor Jason Steele took us through the basics of Maximizing Prepaid and Reload Cards for Points and Miles with a series on the topic including Maximizing Reload Cards for Points and Miles: Vanilla vs. Green Dot vs. PayPal vs. REloadit and Maximizing Prepaid and Reloadable Cards for Points and Miles: Reloadable Strengths and Weaknesses. Today he outlines strategies to maximize the powerful points-earning potential of these products by choosing which credit card you use to purchase them.

With some time, patience, skill, and a little bit of luck, you can unlock the nearly limitless potential to meet your credit card’s minimum spending requirements, and create points and miles at very little cost.

Let’s take a look at three different paths to travel rewards using these products and some scenarios for using popular reward credit cards to manufacture points and miles:

Vanilla Reload site

Which card should you use to purchase Vanilla Reloads? Find out which will earn you the most points for the least cash below.

Purchasing $500 Vanilla Reloads with a $3.95 fee

Card Merchant Category Cents per point Example of use
Starwood Amex 1 points per $1 0.784 80k Starpoints for Business class to Europe on American Airlines for $627.20
Hilton Amex and Hilton Surpass 6 points per $1 at drugstores or supermarket 0.131 50k points for a night at a Category 7 Hilton for $65.33
Amex Premier Rewards Gold 2 points per $1 at gas stations 0.392 100k points to Air Canada Aeroplan for business class to Europe on United for $392
Chase Ink Bold and Ink Plus 2 points per $1 at gas stations up to $50,000 annual cap 0.392 100k points to United for business class to Europe for $392
Chase Freedom Limited time: 2013 Quarter 1 spending bonus – 5 points per $1 at drugstores up to $1,500 0.157 You can only max this out at $1,488.15, earning 7,441 Ultimate Rewards points – at a value of about 2 cents each, that’s about $148 back in value.








Purchasing $950 REloadit cards for $3.95 fee

Card Merchant Category Cents per point Example of use
Starwood Amex 1 point per $1


80k Starpoints for Business class to Europe on AA for $331
Hilton Amex or Surpass 6 points per $1 at drugstores or supermarkets


50k points for a night at a Category 7 Hilton for $34.50
Amex Premier Rewards Gold 2 points per $1 at supermarkets


100k points to Air Canada Aeroplan for business class to Europe on United for $208
US Bank FlexPerks Visa 2 points per $1 at supermarkets (if this is your major monthly expense)


Points are redeemable for between 1.33-2 cents each, so you’d be getting between $6.70 and $10.08 back in value per $500 card.
REloadit reloads come in denominations up to $950 - meaning you can earn even more points at once.

REloadit reloads come in denominations up to $950 – meaning you can earn even more points at once.

Purchasing $500 Green Dot reloads with a $4.95 fee

Card Merchant Category Cents per point Example of use
Starwood Amex Any 0.98 80k Starpoints for Business class to Europe on AA for $784
Hilton Amex and Surpass 6 points per $1 at drugstores or supermarket 0.163 50k points for a night at a Category 7 Hilton for $81.68
Amex Premier Rewards Gold 2 points per $1 at gas stations 0.490 100k points to Air Canada Aeroplan for business class to Europe on United for $490
Chase Ink Bold and Ink Plus 2 points per $1 at gas stations up to $50,000 annual cap 0.490 100k points to United for business class to Europe for $490


During the brief time when Office Depot sold Vanilla reloads, and Bluebird existed, Ultimate Rewards points could be purchased for an astonishing .157 cents each using the Ink Bold and Ink Plus to earn 5 points per dollar.  That would have sent you to Europe in Business class on United for a mere $157 plus taxes. But as you can see, it is still theoretically possible to use an American Express Premier Reward Gold card to buy $950 REloadit cards at the supermarket to earn the same ticket through Aeroplan for a total cost of $207 (or even less if you take advantage of a transfer bonus); as well as the Ink Bold or Ink Plus if you’re under the $50,000 annual cap to earn 2 points per dollar at gas stations on those cards.

But unfortunately theory doesn’t always match up with reality. For example, I had no problem walking into my local Office Depot and purchasing as much as $20,000 worth of Vanilla Reloads. In contrast, most drugstores and supermarkets in my area will not let me purchase any of these reload packs on my credit card. The stores that do will only let me purchase one at a time. Ultimately, it is too much effort to visit the drug store a hundred times to accomplish what I once did in one trip to Office Depot.

That said, your experiences will vary depending on the retailers you visit, the region you live in, the store you shop at, and the individual cashier you use.

Here are my tips:

  1. Purchase reload cards along with other goods. Cashiers are less likely to object.
  2. Be nice to cashiers. Smile and get to know them so that they when you find one that is willing to let you use your credit card, you will remember each other the next time. For example, I am on a first name basis with my friends at my local Office Depot.
  3. Never argue. If denied, don’t let it get to you. You are offering to pay money in exchange for goods. Each store can choose to accept your form of payment or not. Either way, it is up to them. When denied, I politely say “thank you anyways” and leave.
  4. Always consider the hassle factor. Outside of meeting minimum spending requirements, focus on 6x rewards for Hilton cards or perhaps the 2x points Amex Premier Rewards Gold and the Chase Ink cards that earn 5x Ultimate Rewards. I only need to purchase about 16 Vanilla cards with my HHonors Amex to get a category 5 award night at Hilton. In contrast, I would need to purchase dozens of $500 reloads with my Starwood card to earn a night in a similar hotel, and 160 to earn a business class award with most transfer partners.
  5. You can still earn 5x Ultimate Rewards points. If you simply must have Chase Ultimate Rewards points, consider purchasing $500 prepaid American Express or Vanilla debit cards at Office Depot, and using them to purchase reloads, along with the $4.95 fee for each one. This takes more effort, but you will be paying only .352 cents in fees per Ultimate Rewards point when you purchase $500 Vanilla reloads and even less if you can purchase Green Dots or REloadits in larger denominations.
  6. Pay your balances early. I always keep my outstanding credit card balance as low as possible, even if that means making payments before my statement closing date or due date. This helps your credit score while keeping your bank from becoming concerned. Banks are far more concerned about the risk of default than supposed “perk abuse.” In addition, never have a positive balance on a credit card, as it can trigger a fraud alert for some reason.
  7. Keep looking for new opportunities. I would be naïve to think that even these four posts are comprehensive. I am sure there are other options out there, so keep looking.

What have you found to be the best way to earn points with pre-paid cards? If you let me know, I promise not to tell anyone!

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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  • Larry

    $20,000 at one time!? Seriously? And you wonder why that deal is dead…. thanks a lot. No more clicking on your affiliate links, and it looks like if someone tells you their secret it will die a quick, abused death.

  • Jason Steele

    If it helps, I split it between two cards. Have you ever seen guys like Pudding and Pickles show how they earned 7 figures worth of points and miles? Beaubeau earning 8 or 9 figures? Look, 20k VR earned me 100k UR. Would you feel better if I had visited OD 40 times? And how is this different than getting a 100k BA sign up bonus? 100k will barely take my family on a domestic round trip in coach. I’m sorry you are so disappointed.

  • Jfadds

    “In addition, never have a positive balance on a credit card, as it can trigger a fraud alert for some reason.”

    what does the above mean please- not familiar with concept

  • Mark

    Your math is incorrect. In the vanilla example you have the PR AMEX at 3x and the Ink at 2x then in the last example you have them both at 2x. I think the values of both of those should be the same

  • Rmarkoff

    The T and C for the Hilton Surpass Amex card specifically state that reward points will not be inssued for purchases of reloads or gift cards. So, even if the charges are “hidden” by adding additional merchandise to the purchase, doesn’t one risk wasting time buying the reloads and then “spending them” through Bluebird and not getting the points?

    Seriously, how many people make $500+ purchases at drug stores on a regular basis? Don’t you think this could trigger an inquiry from the fraud department just because of the high spend at that category?

    Don’t you feel any obligation as a blogger promoting the use of the Hilton Amex to get 6x points at a drug store to buy reloads to inform your readers that they could potentially not receive any points for doing so?

  • guest

    This “guy” def. had more impact on the closing of this loophole than someone doing a few k per month.

  • Mileage Update

    Buying $20k didnt get the deal killed. Walmart is moving into this space. It wont die if you can buy large amounts there either.

  • thepointsguy

    Thanks for pointing that out – fixed it.

  • Patricka5

    I enjoy this hobby, but $20,000 in one trip is crazy! I can’t believe Chase didn’t shut you down immediately. I mean the whole idea behind their “business” card getting 5 points at Office Supply stores is because you have a BUSINESS and you’re supposedly buying BUSINESS supplies. I know this is a lucrative little game being played here, but at least make it look a little bit like a legitimate purchase.

  • guest

    Ridiculous amount. This is shameful.

  • Jason Steele

    I met my minimum spend and received my bonus points, largely based on my drugstore and grocery store purchases. I haven’t had the card long enough to get points from spending, but obviously I would not be doing this if I didn’t think I would get the points.

    That the terms and conditions say that I am not entitled to points from prepaid cards doesn’t mean that I won’t actually receive them. The language is boilerplate and there are many instances of people receiving points and miles despite terms (multiple sign up bonuses, miles for award flights, etc) If we never got points and miles when the terms said we wouldn’t, we would all be traveling a lot less.

  • Jason Steele

    Actually, fraud killed VR at OD. At least that is what the manager at my OD told me. He was very happy to have my business, but recounted that other ODs in the area had people purchasing VRs with stolen credit cards. Apparently, when cashiers failed to check ID, they had to bear some of the liability, and eat some losses, which was painful.

  • Jason Steele

    It is counter-intuitive, but I have heard of people who pay their credit cards in advance of a long trip, so that they have a positive balance and don’t have to worry about payment. They did this, but then had their account shut down for potential fraud. This was more common before electronic bill pay became popular and it became easier to pay bills from anywhere. The point is, never pay your credit card company more than your balance.

  • Jason Steele

    An OD manager told me that they were pulled due to purchases on stolen credit cards. Deals come and go, and I am unapologetic about trying to maximize the deal before it goes. OD was happy to have my business, and I haven’t done anything illegal or unethical.

  • Jason Steele

    Chase extended me and my wife more than sufficient credit to make that purchase. Why would they shut me down for utilizing it? Chase doesn’t know WHAT I purchased at OD; I could have bought a dozen laptops. I could have bought 20k worth of Home Depot gift cards for my contracting business. What does it matter?

  • ChuckG

    “100k will barely take my family on a domestic roun trip in coach.”

    Favorite quote of the month. The shame your family must feel.

  • shavalaristke

    Chase HAS shut down people for spending ‘too much’ at offices. You are obviously TPG’s latest poodle but don’t shoot your mouth off when you don’t know shit.

  • Lively

    I’m a rewards member at Office Max. I get rewards for purchases….but not for gift cards purchases. These office supply stores know what you buy. However….I thought it was a very good/interesting post.

  • Jason Steele

    Thanks for the support. Clearly the stores know the nature of the purchase, but I have yet to see any evidence that the banks do.

  • Rmarkoff

    I always like to see what kind of people I am accepting advice from. Since you seem to feel no obligation to inform your readers that there is a chance they won’t get something they are not entitled to-

    Just trying to get a handle on your morality compass-

    Would you also advocate for people to buy an expensive diamond ring online at Costco with a Visa/Mastercard (and get points/miles) and then return it to the store and get a cash refund (because they do not accept those cards at the stores but will allow you to return on-line purchases- or at least used to?)

  • Ja

    Hi — I have the Amex Business Gold rewards card. The one that comes with a 50,000 point bonus for a $5K spend in 3 months. I met the 5K spend within two months by using reload cards/etc. Paid off that 5K balance early (even though I have only one official statement of under $1K and the rest of the charges are part of a statement that closes later this month). I want to use my points to book a hotel for a trip in early Feb. Is there a best way of getting Amex to expedite my points/bonus?

  • Jason Steele

    Points are awarded on your statement closing date, and you can move that to an earlier date. On the other hand, Amex will advance you points. If you don’t earn the points in a year, they charge it to your account at 2.5 cents each, I think.

  • Jason Steele

    I heard that whole Costco, diamond ring thing over a year ago. I haven’t done it and haven’t written about it, though I am not sure that this is a terribly deep examination of my morals.

    How about you? If you got miles from an award flight, would you call the airline to make sure they were removed?

  • Patricka5

    None of what we do in this game/hobby is probably illegal. I wouldn’t say the same about unethical. You seem to think that just because the bank can’t figure out what you’ve done, makes it OK. You said you “could have” bought 20 laptops. But, you didn’t. Don’t kid yourself – a lot of what we do in this game is unethical.

  • Rmarkoff

    I’m not the one writing a blog.

    Jason, I use Bluebird monthly and I max out my 5k bill pay spend each month.

    The point of my post is that as a blogger, I feel you have an obligation to your readers to mention potential pitfalls of a system you are promoting. There is a very real chance that after hours of searching CVS stores to try to find reloads, and with a $1k per day purchase limit, that a significant amount of time could be invested (plus the time to expense the reloads) -all for nothing. Sure, many have received or may receive points for purchases made on the Surpass card. I am just disappointed that you feel no obligation to your readers to lead them down a path that may have a pitfall and tell them about it so they can determine if they want to take that risk before they do so.

  • Toni Perkins Southam

    Oh my goodness; people are incredibly rude and ungrateful for the time Jason has put into writing this blog series. I, for one, and very grateful for the information and am a big girl, so I can read the posts and decide on what to do with it from there. I don’t need to blame him or criticize him for anything!

  • Tim Wave

    Aloha – I’ve looked into CVS, Walgreen, Walmart, etc. and it appears that buying these cash cards using a credit card is not accepted. Am I missing something?

  • Jason Steele

    Fair enough. But keep in mind I am not writing about anything that I would not do myself.

    Also, I know of no 1k per day purchase limit, but obviously you can only load 1k per day on each Bluebird card you and your family has.

  • Jason Steele

    You seem to think that my intent is the key factor here, because obviously Chase and OD are happy to have my business. On that scale, getting a credit card with the intent of receiving a sign-up bonus, but not using the card seems much worse. Or how about a mileage run where the intent is to earn miles and not visit the destination. Obviously, I don’t take this so seriously that I believe that my private thoughts matter much in a totally above board transaction. I even told OD that I do this to earn miles, and they still encourage me to return. Chase sends me emails and brochures about how great their UR program is. Let’s just say I am not trying to be more Catholic than the Pope.

  • Toni Perkins Southam

    I have a question! Is there a “second best” card, after bluebird, to use with the vanilla reloads ? I found a grocery store here where i live that will sell me the vanilla reloads, but they don’t take amex, and the type of vr’s that they sell are the ones without a pin (apparently you just load the money directly onto the prepaid right at the counter). We tried doing it with my bb, but since it is an amex it wouldn’t register in the system.

  • Jon

    Is ID required to purchase a Vanilla Reload card? Merchants can’t require ID simply for accepting credit card payment – that is prohibited in the merchant agreement.

    Though this does make me curious…what happens when a customer disputes a charge with the credit card company? Does the CC company make the store liable, or does the CC company eat the cost? I always assumed the CC company would eat the loss, which means this would have no impact whatsoever to merchants.

  • Ace

    Great post. Don’t let the whiners get you down. They are the same people who maxed out the Mint and are living in the past.

  • Jason Steele

    Thanks guys. The Netspend card has bill pay and looks good, but there are a lot of stories about people being shut down.

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  • Jason Steele

    No, you are not missing anything. This is hit or miss. Sometimes it works, sometimes it doesn’t. When it works, that’s great, when it doesn’t, no worries.

  • Jason Steele

    I showed my ID this morning at Walgreens, and didn’t hesitate. It seems likely that chargebacks might have been an avenue for pathetic fraudsters. Stores hate chargebacks, and I think retailers are made to shoulder some liability if they failed to follow procedures in the sale.

  • Rmarkoff

    Every CVS that I frequent (that has Vanilla Reloads on the racks) in San Diego has a $1K per purchase per day limit. I have spoken with the store managers in two locations and they looked it up in a notebook in front of me.

  • Jason Steele

    Thanks for the info!

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  • Adam

    this is so rude. when you lose your manner you lose grounds. it doesn’t help with your argument to convince people.

  • LAX

    The time? All of this has been written and rewritten countless number of times over the last few months. I’ve lost track on how many times just TPG or one of his contributors has written about this topic. It’s cut and paste at this point.

  • Wolfgang

    Every region/store is different. I once bought 8 at one time (using 4 different cards). No issues.

  • Jeff

    So I am thinking the I can use this to pay property taxes, school taxes, and utility bills. This would save on fee’s since if you use a credit card to pay property taxes it could cost 2.5% + $0.60. Even if I had to get 5x $500 vanilla reload cards that would only cost me 19.75 instead of $62.50 and also get the perks of bonus points.

    Paying utilities would save money as well since getting a $500 vanilla reload card would pay my electric bill for 2-3 months. Paying with a credit card cost me $2.25 each time. The savings there would be small but still nice. I would also still get the bonus points.

    So my plan is going to be to funnel my future tax bills through bluebird. I will save on fee’s and get boat loads of points.

  • seeya

    “I had no problem walking into my local Office Depot and purchasing as much as $20,000 worth of Vanilla Reloads.”

    Well then, I’ve just lost all respect for this blog. This is abuse, this is how deals get shut down, this is how greedy idiots ruin things for everyone else.

    Greedy. Idiot. And, I can see from your replies to other comments, with the attitude of an entitled, self-important, spoiled brat. You whine, “100k will barely take my family on a domestic round trip in coach.” Well, well, boo-fricking-hoo….oh the humanity, you poor thing, break out the tiny violins.

    Last click you’ll get from me.

  • thepointsguy


  • Stevento

    This is ridiculous. So what if he charged $20K at OD? Do you think Chase was upset about this? You don’t know his spending patterns, maybe $20K is a regular charge for him. If I charged $20K at one merchant, the bank wouldn’t bat an eye,as it would be well within my pattern. If you have a legitimate business, $20K charges aren’t uncommon.

  • Chris

    I appreciate the effort that went into the table and the information presented, thank you. One suggestion, consider adding a column that shows the difference between cost-per-point and value-per-point for each example. Related question your table almost helps answer – if I could buy VR at a drugstore, would I get max value from using Hilton AMEX, SPG, or Chase Bold?

  • Jason Steele

    You might be overthinking this. You can simply pay your credit card bill.

  • MeLlamo

    At least he isn’t pimping credit card offers this post …

  • Rich

    Could not agree more. Society is full of people thinking they are entitled to things and the points craze certainly illustrate that.

    And what legitimate business expense did you use the $20K for?

  • Mary

    I was under impression Office Depot don’t carry Vanilla Reloads anymore?

  • Scott

    While I too was shocked at the $20K at a time figure, but as has been noted, this probably isn’t what shut down the OD/VR deal – TPG was obviously well known to his local OD staff, unlike the CC fraudsters.

    Look at it this way – the folks that spend $20K at a time are like the canary in the coal mine – they’ll be shut down (and blog about it) long before the CC companies come after me for buying one or two $500 reloads a week.

  • Reince Priebus

    They don’t anymore – because A-holes like this blogger would go in and clean out their entire rack with a single purchase. God forbid his family would ever have to suffer in (shudder) coach.

    Agree with seeya – this guy is a greedy idiot, EXACTLY the kind that ruins everything. Assrocket.

  • DRE

    I have filled up the limit on my bluebird and paypal for the month…so

    I bought a reloadit card at winn dixie, a grocery store here in Orlando, with my amex hilton for 6x pts. I then signed up for the account now silver prepaid to load the reloadit value. The reloadit card has a $20-$500 in bold like the image of this post, can I load $950 or is there a card that says $950?

    I like this blog more than any other on the points/miles subject but 20K on one pop seems careless, I have not been in this game long but it seems there is some Etiquette, to blog about it seems like boasting and is asking for ridicule.

  • Lskfja

    People who did chargebacks/fraud screwed it up for everybody. Cry some more why don’t you? LOL

  • Jason Steele

    There are some REloadit cards that are $500 and some that say $950, often at the same store.

    As for the ettiquette, everyone has their own unwritten rules, and gets really pissed off if others don’t follow. I really wasn’t trying to brag, just offer an example. I have been to frequent flier events were people talked about several orders of magnitude than this, and got a round of applause. Must be a different crowd.

    Also keep in mind that the VR at OD deal has been dead for over a month. Certainly, my offhand mention of this well known exploit, long after it died, didn’t cause anyone harm. But this is the Internet, and there are some really off-balance people. Was it careless? I don’t think so. It obviously wasn’t my first purchase of VR at OD,and I knew all the risks and rewards. Keep in mind that there are 1,100 ODs in the US, so 40 cards is less than a drop in the ocean.

  • Jason Steele

    That makes sense, but the value of points and miles varies greatly with the redemption option used.

  • Stew01

    Could not buy an Amex reloadable card at OD yesterday (12/21) in California with my Ink card. They said cash or debit only. They said that it was a new policy.

  • Jason Steele

    UPDATE: I can now confirm that I did in fact receive all bonus points from Amex from reloadable cards purchased at supermarkets and drug stores, as expected. My online statement just came out.

  • Patricka5

    What does it matter? Uh, I guess it doesn’t to you.

    Since T&C don’t matter, here’s another idea you might want to try. Most states offer 529 plans and give a state tax deduction for contributions. Use your 20K and put it in the 529 plan. Take a state deduction on your taxes. After you get your refund withdraw the money (and repeat every year). Just like the bank doesn’t know that your 20K of OD “purchase” isn’t for business use, the 529 plan doesn’t need to know that your withdrawal isn’t for college expenses. Sure, it’s in the T&C of all 529 plans, but you “could” have used the money for college, right? What does it matter?

    Obviously, I’m joking. Nobody do this. It’s unethical and illegal (fraud). Just be careful on some of the points playing game.

  • Mileage Update

    Which state allow that large a 529 contribution that gets a deduction? Also you can w/d money at any time in a 529 its not illegal or unethical. You have to pay taxes on any gains but there is nothing illegal about the w/d you speak of.

  • Charles Clarke

    I suspect Jeff’s ethics line is that it is okay to use for ‘real’ expenses, but not for a money wheel spinning off points. Different values. Obviously you feel comfortable with more.

  • Travel4Nana

    I too am aghast at purchasing 20K worth of VR. I guess that is why many of us couldn’t find any locally when people like you were buying them all up. I felt a little greedy buying 4 of them. I guess I was taught to share better than some others were.

    I am able to buy the VR’s at DCVS using my credit card; no ID asked for, able to only buy $1000 at one time using my credit card though I can make multiple transactions and use different credit cards OR use the same credit card. I have been to three different CVS’s around where I live and it is the same procedure.

  • Patricka5

    My state allows $20K (MFJ) as a deduction. Last year I contributed $100K into my state plan and will take $20K state income deductions each year for the next five.

    Yes, you could withdraw money, but if it isn’t used for college, you’d have to include the $20K back into your state income plus pay taxes on earnings. On the federal you’d have to pay taxes on earnings and 10% penalty on earnings.

    My scenerio above assumed that you would withdraw the money and just forget to tell the IRS (and state) that you didn’t use it for education (kind of like the non-business use on business credit cards). They’ll never find out – right?

    If you withdraw your money and pay all taxes and penalties (because you admitted that you didn’t use it for college), then you’re right – nothing illegal or unethical.

  • Jacob

    Hey Jason, you mentioned “guys like Pudding and Pickles show…..and Beaubeau” just wondering if you have links for these guys, as I would like to read their story. Thanks.

  • quietobservant

    Pigs get fat, hogs get slaughtered!

  • disqust101

    Amen. People like this little twat is the reason why OD killed VR so fast. $20K at one time. F me! Now he’s too effin lazy to buy GCs…

  • disqust101

    Sure, this little twat is spending $20 large regularly. Gimme a break…

  • disqust101

    Hmm. Haven’t been in a few days. Will have to see if this is the same new policy in my neck of the woods (Bay Area)

  • disqust101

    40 ODs – I never saw that many on the racks in all the trips I went to OD combined. I guess twats like you were the reason…

  • StopWhiners

    Another name calling whiner. Poor you…TWAT.

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  • Bob Erickson

    The answer you supposedly got is nonsense. You can purchase ANY gift or reload card using a stolen credit card! Why haven’t they stopped selling the rest of them? Simple – the credit card fee on a VR card is greater than the gross profit the store earns on those cards. OD was hemorrhaging losses on these cards and not getting enough in-store sales to make up for it. YOU helped shut this opportunity down with your greed.

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  • Justin

    Count me among those who will not read TPG again after this…

    As mentioned below, fraud can be committed by purchasing ANY GC’s with a stolen CC. In fact, buying a product that you use to reload a semi-permanent card (VR) that’s presumably tied to your name is much harder than buying a VISA GC that can be used at any POS that takes VISA (including millions of places that don’t have security cameras).

    Doing the math, OD probably pays just north of 2% of purchases on World Elite MC, Visa Signature type cards. So on a purchase of $503.95, that’s ~$11 at ~2.2%. That’s ~$7 higher than the purchase fee–which goes most (if not all) to Incom. So they’re losing around $10 per VR give or take. When you buy $20k of them, you cost them $400. That’s equivalent to walking in there and hitting a $800 computer (their cost $400) with a baseball bat.

    You absolutely should be ashamed of yourself. It’s not your prerogative to determine what is and isn’t a loss leader–and that’s why they stopped carrying VR’s… because assholes like you couldn’t stop walking in there and costing them $400 at a time.

  • Justin

    HA! I see my post was already deleted… I’ll stick to just the math as best I can this time:

    Assuming OD pays a bit north of 2% — we’ll say 2.2% — for premium cards like MC World Elite, Visa Signature, etc, they’re paying around $11 in transaction fees for your $503.95. And assuming Incomm doesn’t take 100% of the purchase fee, let’s assume their net loss on that is $10. For you to buy $20k worth, you’d need to buy 40 reloads, which costs them $400 in losses every time you step in the store and can’t so much as buy a candy bar to offset the cost.

    That is akin to walking into the store and smashing a $800 computer (assuming their cost of $400) with a baseball bat. If you think that’s NOT the reason they shut this down, you are out of your damn mind.

    I know many people justify this by saying, “well, a bunch of other people are doing this; it’s going to get shut down soon anyways, so I may as well exploit the hell out of it until that happens.” And they’re not wrong about the first part. But you have to realize that when you’re posting content on a blog that probably gets >10k hits per day, even if you act like an entitled jerk, you shouldn’t encourage other people to act that way too.

  • thepointsguy

    No offense, but you have no idea what you’re talking about. Why would a retailer sell a product at a loss?

  • Justin

    Because it gets people in the door who (hopefully) buy other things.

    Let’s assume for a moment that OD gets 100% of the purchase fee and they only pay exactly 2.0% for a transaction fee. That’s a pretty good scenario for OD and probably not the case, but for the sake of argument…

    2.0% of $503.95 is $10.08. That’s a $6.13 loss per reload pack. And again, that’s a rosy scenario for OD assuming Incomm takes no cut. Even assuming OD only pays 1.0% (and NOBODY pays that on non-discount cards like World Elite MC), that’s $5.04 in losses. There is absolutely no way that it’s not being sold at a loss.

    If they get 100% of the purchase fee, and Incomm makes their money on the back end from the banks issuing the cards they reload, OD may break even on lower level credit cards, and even make money with debit cards and cash, so that combined with the fact that gift cards get people in the store, may have meant they felt like it was worth carrying them knowing that on some credit cards they will take a small loss per product. But all that person has to do is spend $10 on something else to make it up.

    This is similar to the way some stores offer loss leaders on Black Friday knowing people have lots of shopping to do, and it’s worth it if they do more shopping in the store while they’re there to get the loss leader.

    The problem is that going in and buying $20k of reloads and nothing else totally skews the cost/benefit of selling them. If they’re losing $10 a pop because the person is buying with a non-discount card, and the person isn’t buying anything else, that’s unprofitable. If word gets out (via blogs and other means), then it becomes a real problem and they stop carrying them. How is it not just as easy, if not easier, to commit fraud with the various other Visa/MC/AX gift cards at OD? Why are they still on the rack?

  • JudyJFLA

    I will stop the flaming and ask a legit question. On the Reloadit cards, what are the cheapest options of a debit card to load it on to, seems most have a monthly fee, and I hear that PayPal blocks accounts at will

  • Distantarray

    it’s good to note that $800 computer is not a accurate comparison because $800 is pure loss, so if they make 20% profit on the laptop due to markup, now they have to successfully sell five $800 laptops to comphensate for the loss.

  • Josh L.

    I noticed you didn’t add the value of delta amex platinum 25000 miles + the 10000 mqm bonus?

    Also are you saying the SPG card is has the least value when churning with VRs?

  • Eugene Kim

    Thanks! Loved this series – very informative, and helpful. That said, I’ve been starting to purchase VRs to load my BlueBird account, for which I plan on paying off rent and other bills, but if I’m hitting the $5k/month max, I’ve got funds leftover to play with (and to help pay off the CCs I’m using).

    I heed warnings about making ATM cash withdrawals, but from your experience, is there any concern with making electronic withdrawals to a linked checking account on a regular basis?

    I have buddies who are doing the same thing, and we’ve discussed setting each other up as billpay recipients – is it even worth that level of effort? I know PayPal is very strict about churning funds and occasionally freezing accounts, but not sure if that’s as much of a concern with BlueBird.

  • fallingfar

    Couldn’t you technically use the Ink Bold to buy few $500 Visa debit at OD for .196/pt and use that for a majority of your monthly purchases, and then use an Amex Gold or Hilton to top up the prepaids for Bill Pay? Or get a cash advance on the debit card and deposit it back into your account?

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  • JC

    Aren’t you sweet?

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