Maximizing Prepaid and Reload Cards For Miles and Points – The Basics

Update: You can no longer purchase Vanilla Reload cards using a credit card and Vanilla Reloads are no longer available in Office Depot.

I've asked TPG contributor Jason Steele to take closer look at the various prepaid and reloadable card options out there that have allowed him to personally accrue thousands of points cheaply in a series that I'll be running this week. I hope you're not only learn the specifics of these products, but can decide which of these strategies might work best for you. Posts in this series include: Maximizing Reload Cards for Points and Miles: Vanilla vs. Green Dot vs. PayPal vs. REloadit, Maximizing Prepaid and Reloadable Cards for Points and Miles: Reloadable Strengths and Weaknesses, and Maximizing Prepaid / Reloadable and Reload Cards For Points And Miles - Choosing Which Credit Card To Use.

In the post One Card To Rule Them All, Frequent Miler shared strategies on purchasing Vanilla Reloads at Office Depot for use with American Express prepaid cards. While Vanilla reload cards are no longer sold at Office Depot, they are still available elsewhere and this is still a viable (and potentially lucrative) way to earn points and miles from credit card use. Along these lines, TPG recently shared his experiences Are More Flavors Than Vanilla: Maximizing Miles and Points With Green Dot & Paypal.

Today I'll be discussing the basics of both reload and prepaid cards before delving into the specifics of each in subsequent posts.

What are these products? Here are the basics on reload cards and the prepaid/reloadable cards you can use them to fund.

Reload cards or packs: These are physical cards, sometimes called packs, that are sold at retailers on the gift card rack. Reload cards cannot be used to make purchases directly, but their value is transferred to other financial instruments such as reloadable debit cards or prepaid cards such as the American Express Bluebird. The customer chooses the amount of value to be loaded, typically $20-$500 although some have limits as high as $1,000. In addition, a fee of $3.95 or $4.95 is charged at the point of sale.

Reloadable debit or prepaid cards: These are prepaid debit cards that are part of a payment network such as MasterCard, Visa, or American Express. Cardholders can add funds from to them from their bank account, through direct deposit, or from a compatible reload card or pack like Vanilla or Green Dot. These products are intended to be a substitute for traditional banking services or debit/credit cards.

What can you do with a prepaid, reloadable debit card?

All of these cards allow you to make purchases from retailers just as you would with a debit card. But in addition, most of these cards can be used at ATMs to withdraw funds, and many can be used for electronic bill payment to any person or business and even to issue checks like you would from a bank account so that you can pay for things like mortgages, car payments and utilities that you might otherwise not be able to with a credit card. Thus you are opening up the possibility of earning points on expenditures you could not have before.

How do you load a prepaid card with your credit card?

First, you need to purchase the reload card from a retailer using your credit card. Next, you visit the reload network’s web site. There, you enter in the card number from a compatible prepaid reloadable card along with the ID number from the back of the reload card. You must scratch off a concealing layer to reveal the ID number. The funds from the reload card are instantly available on the prepaid reloadable debit card.

How to earn points and miles with reload cards and prepaid reloadable debit cards

First, start by finding which stores near you sell one of the four major reload products, Green Dot, PayPal, Reloadit, and of course Vanilla. Next, figure out which ones will actually sell you these cards using a points-earning credit card. For instance, some merchants are now accepting only cash to pay for these reload cards, while others will take debit cards, and only some accept credit cards. In my experience, not only is each store different, but each individual cashier may follow different rules.

Next, obtain a compatible reloadable prepaid card that offers the best features and the fewest fees to make the purchases or issue the payments you will need, while avoiding products that close the accounts of users who cash them out too quickly.

Finally, determine what your cost per point is (factor in those point-of-sale charges) and whether or not this works for your needs. Also consider what your hassle factor is; how far you have to drive, how long you have to wait in line, and how much of a criminal you feel like when a cashier denies your use of a credit card (don't take it personally!).

Stay tuned

Those are the basic things you should be keeping in mind. This is just the first piece of a series of posts designed to explore how utilize the current products available. In my next post, I will compare and contrast the four different reload cards for sale including a summary of each product and its strengths and weaknesses, drawing from personal experience where possible. Next, I will offer an overview of the various prepaid cards on the market. Finally, I will conclude with an analysis of the costs and drawbacks of earning miles and points with these products.

In the meantime, order an Amex Bluebird card because it takes about a week to get – it’s free and there’s no credit inquiry, so you might as well.
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