Vanilla Cards and Bluebird At WalMart - Lessons Learned

Over the last month, manufactured spending participants realized that they could no longer load their Bluebird cards at WalMart stores using Vanilla brand gift cards and debit cards. At first there was a clever workaround, but now the method appears to be truly dead for the foreseeable future. One reader wrote in to say that he had purchased two $500 Vanilla gift cards that he is now stuck with, so I wanted to examine some options for folks who find themselves in a similar predicament.

Alternate ways to cash out your Vanilla gift and debit cards

1. Spend on things you would have purchased anyway. This is the easiest and most obvious way to use up gift cards that can still be used anywhere within the Visa network. Nevertheless, doing so forces you to forgo earning credit card rewards, which is contrary to the point of purchasing the Vanilla cards in the first place.

2. Amazon Payments. Amazon will let you register a gift card as a form of payment, and pay another person who can withdraw that money to a bank account. There are no fees to do this for up to $1,000 sent and received per month, per person.

3. Money orders. There are some grocery and drug stores that will accept debit cards for money order purchases. These money orders can then be deposited in most banks, just like a check. You'll take a small loss by way of the money order fees, but the process is otherwise pretty painless.

4. Evolve Money. This free service allows you to use debit cards to make payments to most institutions (other than your credit card issuer). You can use any leftover debit cards to pay your mortgage, student loans, card loans, or utility bills. Just be sure to contact the receiving institution to ensure that the payment is allocated properly to your account. For example, many mortgage processors will automatically credit payments to the principal, rather than to your standard monthly payment.

5. Purchase reload packs. Although most debit card reload packs (such as Vanilla, Green Dot, and REloadit) can no longer be purchased with a credit card, it may still be possible to use a debit card. Certainly the fees are too high to manufacture spending this way, but it can be a quick way to dispose of a Vanilla gift card.

6. Pay taxes. You can use gift cards to pay federal taxes using one of the payment services authorized by the IRS. You can pay your estimated quarterly taxes this way throughout the year, but will incur fees between $2.49 and $3.95 per transaction.

Lessons learned

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For a long time, you could purchase Vanilla gift cards and load them onto your Bluebird card, and then you could not. While it's a little strange that a point of sale system is denying transactions from a single card issuer, those who practice manufactured spending should not be alarmed. Here are some lessons that everyone should heed:

1. Limit your risk. If you're going to buy gift cards in order to cash them out, don't purchase more than you can afford to be without. Limit your purchases to what you could easily cover with your savings, as you would never want this hobby to interfere with paying your bills.

2. Always have a backup plan. Manufacture spending strategies come and go. Products change, card companies alter their rules to limit or prohibit certain activities, and other links in the chain may fail. It's important to have an escape plan any time you invest heavily in one type of gift card or strategy. That way, when problems starts to arise, you can exit gracefully rather than scramble for solutions.

3. Diversify. Whether your goal is to earn enough points or miles for your next trip, or to meet the minimum spending requirement of a new credit card, it makes sense to use multiple techniques. Manufactured spending will always be a cat and mouse game, and those who employ many proven techniques will always come out ahead of those who put their efforts into only one.
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