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Will Credit Card Companies Flag $60k A Year In Purchases When My Annual Income Is $95k?

by on January 19, 2014 · 30 comments

in Amex Bluebird, Credit Cards, Sunday Reader Questions, Vanilla Reloads, Video Blog Post

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TPG reader Andrew emailed asking about the Amex Bluebird:

“I signed up for a Bluebird account last year in Q4 and have been maxing out the $5k spend per month on Vanilla Reloads at CVS.  Here are my two questions:

1) My yearly Vanilla Reload spend on the one credit card (the one that provides the most value) will be $60K. My income is ~$95K a year.  Do you think any banks will flag my account since I’ll end up putting around $75K on the card for the year including personal spend?  Also, would they flag it for the disproportionate amount of spend at one place (i.e. CVS)?

2) If I diversify my credit card spend on Vanilla Reloads, do any banks charge cash advance fees for these purchases?  I did a Google search and heard Citi was changing them for Vanilla Reloads purchased at CVS.  Any insight if this is true?  So far I’ve been using Chase with no problem.”

Andrew has a great spending strategy that involves purchasing $5,000 a month worth of Vanilla Reloads at his local CVS, loading the value into his Bluebird account (it’s a checking/debit alternative) and then using that to pay his expenses and other bills. He’s just worried that the issuer of the credit card he’s using to buy all those Vanilla Reloads is going to take a closer look at his credit and reevaluate him based on his annual salary versus spending habits.

Just because your salary is $95,000 doesn’t mean you don’t have other sources of income or something like a trust fund, though.  Issuers also know that salary that you initially list on credit card applications can change drastically over the years, so it is very unlikely that credit card companies are checking up on you to make sure you’re spending within your means. In fact, credit card companies make money on people spending beyond their means and paying interest on their balances so I wouldn’t really worry too much about that.

Vanilla Reloads used to be a great way to generate points-earning spend.

Buying Vanilla Reloads can be a great way to maximize your points-earning.

I would, however, suggest mixing in other spending and purchases on the your credit cards that you are using to buy Vanilla Reloads. You never want it to seem like you are doing anything illicit like money laundering or anything else suspicious, but simply charging $5,000 per month in reloads should not be an issue.

Now to answer Andrew’s second question. Generally banks do not charge cash advance fees for Vanilla Reload purchases. The purchase of a Vanilla Reload from a retailer like CVS will simply show up as a purchase from that retailer, especially if you tack on a few extra items that you needed anyway. Citi does charge cash advances for some purchases like gift cards, though generally not for Vanilla Reloads from what I’ve heard. Chase will sometimes charge gift card purchases as cash advances but in general I think you’re pretty safe buying Vanilla Reloads.

Let me know if you have any other questions by messaging me on Facebook, Tweeting me or emailing me at [email protected]

For more information on Bluebird, check out these posts:

Bluebird From American Express – The Basics
Maximizing American Express Bluebird FAQ’s
Maximizing Prepaid / Reloadable and Reload Cards For Points And Miles – Choosing Which Credit Card To Use
Maximizing Prepaid and Reload Cards For Points and Miles
CVS Raises Daily Vanilla Reload Purchase Limit to $5,000
Maximizing Reload Cards – Vanilla vs. GreenDot vs. ReloadIt
My Permanent Amex Bluebird Card is Active and the Points Are Flying

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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  • Parker

    As a grad student I made only $30k a year, but I was able to hit the $25k Delta Platinum Amex spending threshold for the 10k MQM. I wasn’t flagged.

  • Mooper

    The biggest reason they don’t flag it, especially with business credit cards, is that many people run small companies with expenses that are many times their income. For example, if you have a company with revenues of $300K/year, $250K in expenses ($150K of which are on credit cards), you might have an income of $50K but CC spending of $150K and be perfectly legit before even considering manufactured spending.

  • David

    Do the cc companies look at each individual card or all of your cards as a whole (I have 4 Chase cards)? I am wondering if it matters to spread them out amongst the cards instead of putting on one.

  • flyinace2000

    I often spend about 75% of my yearly salary on my Chase sapphire card, but most of that is reimbursable travel expenses from work. So my year end statement is a crazy high percentage of my yearly take home, but in reality most of it is not out of pocket.

  • Peach Front

    They don’t flag it because there are no consequences to the credit card company if you’re a money launderer or have “other” sources of income like selling illegal drugs. Indeed, as TPG points out, the entire CC business model is predicated on Americans
    spending more money than they should have so that they can get stuck
    with all kinds of fees. The money laundering laws that send clerks etc. to jail for filing a piece of paper wrong pertain to cash instruments. Not credit cards. A credit card is already a paper trail of your activities so no need for a further reporting requirement on you. If the gov’t ever decides to prove you are earning more than you say and audits your credit card spending, their case is made for them. But I can’t imagine what CC company would file a suspicious activity report on you of their own free will…how would they benefit from that? Note: I’m not a lawyer, and you need to talk to your own lawyer, not some guys on the internet, before you do anything that might trigger an audit or a federal investigation of your financial activities. But the whole question is worded strangely. Why on earth would a credit card company care if you are earning and spending MORE than you say you earn? That’s a concern for law enforcement and tax authorities. CC companies are not the FBI.

  • Michael Heffner

    I pay my cards to zero biweekly. Are cash advances percentages or fees? I’ve not seen one line itemized on my statements. However I want to ensure I’m not paying them for beans or gift cards

  • Pat F of DCA

    I have a related question. Will I call attention to my vanilla reload purchases if I pay off the credit card used to buy the vanilla reload cards with my Bluebird account funded by the vanilla reloads?

  • percysmith

    Citi closed down the card accounts of a lot of people who had uncapped 5X offers and used Vanilla Reloads to maximise their spend and also Gift Cards to manufacture spend http://www.flyertalk.com/forum/credit-card-programs/1465023-citi-cards-closed-typ-confiscated-reasons-not-disclosed.html

    A lot of affected cardholders took Citi to Small Claims Court. Those who did recovered their TYP and legal costs.

    I participated in an uncapped promotion with a bank based in HK too. Essentially the offer was 6 miles per US$ with no cap on eligible spending. I centralised my family’s considerable spending on my card, issued subsidiary cards to family members, paid expenses for others and manufactured spend.

    About in the last month of the promotion the bank tried to cancel our points and close our cards. Like Citi TYP a number of cardholders were affected.

    The bank essentially tried to argue the eligible spending was multiples of our credit limits and income, and therefore was irregular spending and not eligible for points. They also tried documenting the amount and number of times we’ve repaid our account.

    Over the phone they also accused me of paying for others and violating the promo’s intent (whatever that means).

    After being taken to the local bank regulator, the bank eventually had to concede very early on that one times credit limit is definitely not irregular, and gave the miles back to those complainants.

    The bank eventually gave all of us back our miles because no matter whether the bank had cause to shut the accounts or not, they had no right to confiscate points earned before the account closure.

    i talked to some of the Citi complainants in the FT thread and we all agreed one times credit limit per month is perfectly safe.

  • Babs Johnson

    I was doing $5k a month in Vanilla Reloads and all was well. Until a few months ago at the register, my card declined. I was very embarrassed and went back to my car to call customer service. I was told that my account has been closed because I have not used my card for its “intended purposes per T&C.” I have been paying off my card in full every month, no delays. Do it at your own risk…

  • percysmith

    Since Chase has individual card limits then spreading will help avoid Chase cutting your account and/or confiscating all your points/miles. But some cards earn better than others, no?

  • percysmith

    Ha. Read my post below and the Citi TYP thread (is yours Citi TYP?). If you plan to go >1x credit limit it’s a matter of avoiding the radar (or the guillotine). Banks here and in the US don’t have a universal service obligation so they can pick and drop customers at will, however those who try to go after spilt milk (accrued points/miles) are another matter.

  • scott

    You need to share more info. It’s interesting that you said you were doing 5k a month and that your “card” was declined. Were you putting $5k a month on that card from CVS? These types of charges need to be spread around on different cards. You shouldn’t put $5K a month on any one card from CVS. Were you making other purchases on the card as well?

  • Brandon

    I’ve been wondering this as well…any one know???

  • JJ

    I tried to buy Vanilla Reload Cards today (01-19-14) from CVS, and all of them declined the purchase with a credit card. What should I do? Thanks

  • scott

    I tend to play it safe and avoid paying off the credit card with my Bluebird account directly.

  • Brandon

    Dang, an income of $95K! That’s crazy. I’m so envious.

  • Val

    Can someone do me a HUGE favor and break it down for me what exactly a Vanilla Reload is, and what a Bluebird account is? I feel like I am missing the big picture. This sounds like a great way to accrue points/pay regular bills– but i am TOTALLY lost!
    Thanks.

  • durr

    lol, no. Search bar is that way ^^^^

  • thepointsguy

    Which card is this? Were you putting any other spend on it?

  • Jfadds

    I spread out my 5k monthly vanilla spend over 5 cards
    Also always add something to purchase so number is always different

  • scott

    probably. this is the easiest way for a credit card company to notice whats going on! why would anyone even try to do this? if you don’t want to be caught, you can’t be lazy, people!

  • Pablo

    i did this until i ended up spending $40 on such items in one month (thanks mint)! then I realized that you can pick any fraction of 500.00 with which you want to load the card. So I pick some random number over $475, ending in .04, .38, .52, .77, .98 or whatever. The difference is mere basis points compared to the 0.0079% financing offer my maxing out at 500 each time and you fly under the radar!

  • tomg63

    To determine whether you will get shut down or not, you should consider who is losing money on the deal. Let’s assume the Chase and Citi value their UR and TYP at 1 cent each. That means buying a $500 item at 1x costs them $5 and at 5x costs them $25. These companies also charge the merchant processing fees. Let’s assume those are 2%, so they would charge the merchant $10 for a $500 purchase. In the 1x case, chase is making $5 per transaction. In the 5x case, citi is losing $15 per transaction. Chase will therefore let you do 1x all day long because you are helping them make money. Citi will shut the deal down. This is why the 5x deals get killed quickly or are limited.The fear should be that the merchant will shut the 1x deals down, not that the banks will.

  • http://www.StartDoingBusiness.com/ Zach Smith

    Same here, Babs, what card were you using? @thepointsguy:disqus

    can you comment on this as well, perhaps?

  • http://www.StartDoingBusiness.com/ Zach Smith

    I’m just getting started and seriously considering the BlueBird and Vanilla Reload set-up with my Chase (5X points at Office Supply Stores), or, I could really use any card, even 1X points would be great on things like a mortgage. Where to go to do this? What works 100% of the time NOW, going forward, 2014 and beyond?

    And, what should my plan of attack be?

    @thepointsguy:disqus I’d love your help with any comments or feedback as well, to guide me in the right direction.

  • http://www.StartDoingBusiness.com/ Zach Smith

    Where are you buying nowadays, if you don’t mind me asking.

  • Ryan

    Instead of using Bluebird to pay it directly, transfer the $ to your real bank account and pay it that way,

  • dave

    for some reason im really not sure how this vanilla reload works i read alot and its still not clear. more specifically;
    why does it have to be vanilla reload and not just any visa master card or amex gift card?
    whats the best way to get the money on to my blue bird?
    if i buy gift cards can i spend them in a family business or through a family charity and just withdraw it afterward?

  • Daniel

    CVS stop sell VR with CC here in Virginia Beach. I got a couple yesterday in Deleware, but my Chase Business card kept rejecting even after I cleared it on the phone. Never had a problem with Chase or Virgina last year. Sucks…

  • Adam

    Last year I didn’t have one red cent of manufactured spending, and spent roughly 220% of my salary. (my company lets us use personal cards for travel and occasional supplies) I paid off the balance in full each month. This year, I think it will be a challenge to hit the single 60,000 on my Amex Reserve card, so I began buying VR cards and some OfficeMax promo gift cards. I’ve actually only spent $3,200 on MF spend. Bought some VR cards yesterday at the only CVS in my state, and I got flagged for fraud protection. I called and confirmed the purchase. I hope that doesn’t get me on any review lists…

    Now I am worried…

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