Maximizing Prepaid / Reloadable and Reload Cards For Points And Miles - Choosing Which Credit Card To Use
Quick summary
Update: Some offers mentioned below are no longer available. View the current offers here.
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:
Purchasing $500 Vanilla Reloads with a $3.95 fee
| Card | Merchant Category | Cents per point | Example of use |
|---|---|---|---|
| Starwood Preferred Guest Credit Card from American Express | 1 points per $1 | 0.784 | 80k Starpoints for Business class to Europe on American Airlines for $627.20 |
| Hilton Honors Card from American Express and Hilton Honors Surpass Card from American Express | 6 points per $1 at US supermarkets. Terms apply. | 0.131 | 50k points for a night at a Category 7 Hilton for $65.33 |
| Premier Rewards Gold Card from American Express | 2 points per $1 at US 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
(No longer open to new applicants) | 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 | 0.414 | 80k Starpoints for Business class to Europe on AA for $331 |
| Hilton Amex or Hilton Honors Surpass Card from American Express | 6 points per $1 at US supermarkets. Terms apply. | 0.069 | 50k points for a night at a Category 7 Hilton for $34.50 |
| Premier Rewards Gold Card from American Express | 2 points per $1 at US supermarkets | 0.208 | 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) | 0.207 | 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. |
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 Hilton Surpass | 6 points per $1 at drugstores or supermarket | 0.163 | 50k points for a night at a Category 7 Hilton for $81.68 |
| Premier Rewards Gold Card from American Express | 2 points per $1 at US 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 |
Analysis
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:
- Purchase reload cards along with other goods. Cashiers are less likely to object.
- 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.
- 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.
- 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 Honors 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.
- 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.
- 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.
- 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!