Video SRQ: Can I Earn Points on Prepaid Cards?

by on April 14, 2013 · 7 comments

in Capital One, Credit FAQ, Debit Cards, Sunday Reader Questions, Video Blog Post

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TPG reader Ruth asked what options there are for earning points and miles if you have poor credit:

“For those who have bad credit who want to get a prepaid credit card, is there one where points can be earned as well ? If so, which one?”

Unfortunately there are no prepaid cards that give miles and points for spending. The only way you can get miles and points from a prepaid card is if you purchase them or purchase reloads for them using a points-earning debit or credit card.

If you have are considering a prepaid card because you have bad credit here are a few steps that you should consider if you want to get into the miles and points game.

First start off with a debit card.

Features and benefits of the Delta SkyMiles World Check Card

Features and benefits of the Delta SkyMiles World Check Card from SunTrust.

Since there is no hard pull on your credit when you set up checking account with a debit card, it should be relatively easy for you to get as long as you don’t have any incidents with that bank. One of the best options out there right now is the Delta SkyMiles World Check Card from SunTrust, which offers 1 Delta mile for every dollar spent. Check out this post for ideas on maximizing it.

Although I mention it in the video, one of the only other miles-earning debit cards out there, the Bank of America Alaska Airlines debit card, is no longer being issued. However, it wouldn’t be my top choice anyway since it was a lower value proposition and offered just 1 mile for every $2 spent.

The PerkStreet Financial Cash Back Debit MasterCard is another good option, although it does not offer miles or points. When you spend on it, you receive 1% unlimited cash back for all non-PIN debit card purchases, 2% cash back on online purchases at select retailers, 2% cash back in-store when you have a Current Account Balance of $5,000 or more at select retailers and up to 25% cash back on PowerPerks deals. Update: PerkStreet Financial will be closing permanently and ceasing all business operations on September 26, 2013.

The next step is to get good credit if you want to get deeper into the miles and points game.

One of the best ways to do this is to pay off all current debt so your balances are low, although I know that is not always easy to do. You can also get a secured credit card like the Capital One Secured MasterCard which is designed to help you build credit by reporting your on-time payments regularly to the credit bureaus. With this card you have to send in refundable security deposits that can be in the amounts of $49, $99 or $200 based on your creditworthiness. Even though you will have a very small credit limit, you’ll be paying off your balance every month on time so it will start to help your score.

If you’ve had a bankruptcy, it will be on your credit report for a long time but you can still start building back your credit by paying off your balances and showing that you’re responsible so that you can get in on credit cards. I would recommend starting off with more introductory cards like the Capital One Secured Card that I mentioned before or no annual fee cards like the Chase Freedom before you try for more premium cards like the American Express Platinum or Chase Sapphire Preferred. Whichever route you decide to take, you should always stay on top of you credit score and check it (for free) every so often so you know where you stand.

Use your debit/credit card to purchase prepaid cards.

Vanilla Reload cards can be used to fund prepaid cards like the Amex Bluebird.

Vanilla Reload cards can be used to fund prepaid cards like the Amex Bluebird.

Once you are approved for a points-earning debit or credit card you can begin using them to buy reload cards such as Vanilla Reloads, Green Dot MoneyPak, PayPal Load Money, and ReloadIt Cards. I suggest going out to your local CVS to see if the sell Vanilla Reloads, buying as many as you can and then loading them to your Bluebird account (up to $5,000 per month) so you can earn points on transactions that can’t usually earn points on, such as paying bills or even taking cash out of your account since the Bluebird functions like a debit card. To learn more about maximizing miles and points with prepaid cards read the posts from my Bluebird category.

I too have had some credit mishaps in the past so don’t worry. If you are responsible about your spending and payments, and do everything you can to get your credit up so you won’t be missing out on miles and points! I hope this helps you, but if not feel free to tweet me @thepointsguy with any follow up questions.

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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  • matt_pierson

    I can’t watch the video, so apologies if you covered this, but can’t you register prepaid cards for Frequent Flyer Dining Programs?

  • Lantean

    you’ve had credit mishaps before??? :(

  • Marcy Talso Manning

    You can register any card for dining rewards… I’ve registered Am Express gift cards on my Alaska Dining program. (Thanks for the free $100 and miles World Mark “owner update”)

  • Charles Clarke

    Key bank has a debit rewards program also. Not great, but there.

  • Mark Gross

    If you live in Japan, you can earn one ANA Mileage Club point for every 200 yen you spend with the Rakuten Edy prepaid card, which might be useful if you’re spending money at a retailer that doesn’t take credit cards (and there are still many) but takes Edy. However, there might be a residency requirement, so I don’t see this as being effective for tourists.

  • Dizzy

    There are some secured cards that earn miles through US Bank. I also have gotten denied for the “big” cards, so I will try a couple of these (Lifemiles for sure, not sure which other) this summer. Should be done paying off old debts next month. Bonuses aren’t as big as some, but you get 10,000 miles to start and usually 1 mile/$1, plus discount on their airline (various things like baggage, flight, etc)

  • Frank

    This is in the T&C of Amex Rewards:-

    The following transactions
    aren’t eligible purchases and you won’t earn points for them:

    Cash Advances

    Balance Transfers

    ….. etc, etc

    Purchases and loads of reloadable prepaid cards

    I jumped on this band wagon late, I know… bought 2 vanilla reloads on Tuesday at CVS and am now waiting to see if the points appear (or not). Not sure how long it usually takes to be honest… but it’s been 3days and no joy

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