Update on Maximizing Credit Card Spending Strategies With Prepaid and Gift Cards

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CVS recently hardcoding its registers not to accept credit card payments for Vanilla Reloads last week has prompted a major shift in credit card spending strategy. Earlier this week, TPG contributor Jason Steele share strategies for purchasing Vanilla Reloads elsewhere. Today he expands his focus to recalibrating your credit card spending strategy on prepaid and reloadable cards.

Manufactured spending has grown to be the accepted term to describe generating points and miles by purchasing reloadable or prepaid cards with a credit card and then loading them into an account that can somehow be used to pay its bill. While there have been no earth-shattering developments in this field in recent months, it has been steadily “Evolving” (pun intended).

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

Coping with the death of Vanilla Reloads

Purchasing Vanilla Reloads with a credit card has been one of the best ways to generate spend for several years now. Cardholders applied these reload packs to reloadable cards and accounts, and then used the money to pay bills to any person or business. While other stores may or may not accept credit cards for the purchase of Vanilla Reloads depending on the individual store’s policy, CVS appears to have rolled out an update to their point of sale system that prevents even the most cooperative cashiers from completing a sale with a credit card.

Questions about Bluebird too

One of our readers sent a Tweet to @ThePointsGuy asking if Bluebird is slowly dying out and transitioning to Serve. The reader citied the appearance of a Serve logo in the Bluebird bill pay program.

Besides the fact that I haven’t seen the same phenomenon, I am confident that American Express is standing by its Bluebird debit/checking alternative product. For one, it has been increasing the functionality of the Bluebird card with features like paper checks and FDIC insurance. In addition, Bluebird is well positioned within the American Express strategy of appealing to a broader demographic than just premium rewards cardholders.

Finally, it is well known that Bluebird and Serve are very closely related products and that customers cannot simultaneously hold cards in both programs. For that reason, it is widely assumed that the same systems are behind both cards, and it is not hard to imagine a misplaced graphic appearing sporadically. So without any further evidence, I am willing to consider this a cosmetic bug and not a harbinger of things to come.

Other pathways to manufactured spending

Without any CVS stores in my hometown of Denver, my Bluebird card has been collecting dust for some time, so I know that there are still many other ways to manufacture spending without Vanilla reloads. Reload cards for the other two major programs, GreenDot and ReLoadit, are widely available but cannot be consistently purchased with a credit card.

ReLoadit

This payment network sells reloads that can be used to load various pre-paid debit cards such as AccountNow and, netSpend, and Paypal. Its newest feature is the “ReLoadit Safe” that allows you to store value online and use it to pay certain bills. The available bill pay options include various utilities, mortgage service providers, and insurance companies, but not credit card issuers. So unlike Bluebird’s ability to pay bills to “any person or business,” the ReLoadit Safe is much more limited.

GreenDot can be a good alternative.
GreenDot can be a good alternative.

GreenDot MoneyPak

GreenDot MoneyPak cards are also available widely, but not always with a credit card. My favorite GreenDot compatible card, the AccountNow Silver (which is also compatible with ReLoadit), has been closing the accounts of many credit card rewards enthusiasts. That is sad, since it has no annual fee or bill-pay fee. However, we note its passing but we do not mourn, as there are dozens of different prepaid cards that are part of the GreenDot network. If you are the type of cardholder that utilized this product heavily enough to get shut down, then switching to a different card with a small monthly fee should not affect you significantly.

Evolve Money

This free, online bill pay service has been very popular as a way to liquidate gift cards. The value proposition is not strong enough for most people to purchase gift cards at office supply stores with their Ink Bold and Ink Plus cards, given the $7.95 fee per $200 card. Yet whenever office supply stores offer some sort of discount or rebate for gift card purchases, it begins to make sense to those who have the time to apply multiple cards to their mortgage, insurance, or other bills.

The Fuel Rewards Network offers some interesting options.
The Fuel Rewards Network offers some interesting options.

Fuel Rewards Network

The Fuel Rewards Network is an interesting program is similar to a lot online reward portals, except it has a strong brick-and-mortar component as well. Membership is free, and you receive a card in the mail that you can present at gas stations, supermarkets, and participating retailers. You can also link your existing MasterCard accounts so that your purchases automatically qualify for this program.

For every $50 spent at gas stations and supermarkets, cardholders can earn a 5 cent per gallon discount on fuel purchased from Shell stations. Participating grocery stores include BI LO, Country Mart, Homeland, HyVee, Lucky, Save Mart, Smart Foods, and Winn Dixie. The one-time discount applies to gasoline purchases of up to 20 gallons, making the discount worth up to $1.00 total. This is the equivalent of 2% of the purchase price, or somewhat less if your vehicle won’t hold the full 20 gallons.

The interesting part is that the gasoline discounts are stackable, so that you could end up with a nearly free tank of gas (it appears that you have to pay at least $0.01/gal). Furthermore, the ability to buy gift cards in this program appears to be a feature, not a bug. For example, this page compels customers to:

“Buy gift cards from the kiosk inside participating Shell stations. Be sure to swipe your registered Fuel Rewards Network™ (FRN) card when checking out. Fuel Rewards® savings will be added to your FRN™ Account automatically and will combine with your other available Fuel Rewards savings.”

So if a 1-2% rebate in the form of gasoline is enough to make the difference when you are evaluating the purchase of gift cards for manufactured spending, then you should consider joining the Fuel Rewards Network.

So though the Vanilla Reload door has closed for now, there are still other ways to maximize reloadable and prepaid cards, and the field continues to develop all the time, so stay tuned for more updates on spending strategy.

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