Cash Back

Prepaid cards come in many shapes, sizes and colors. You have reload cards – some of which are ridiculously valuable, ala Vanilla Reloads, and others have less flexibility. Some cards can be added to a Bluebird account at a Wal-Mart money center, some can be cashed out at a bank or ATM and others can be depleted through Amazon Payments. Thus, the goal is to buy a pre-paid card (and often pay the extra fee), and find a way to extract the money from the card. Again, this “manufactured spending” is where you essentially buy cash, expecting the rewards to outweigh the fees.

Let’s look at this week’s CVS deal on Paypal Prepaid cards:

What a Deal!

Purchase a $150 prepaid Paypal-branded Mastercard debit and receive $50 in Extrabucks (essentially $50 cash that can be spent at CVS). While this ad states “limit 1 per household,” that restriction was not there when the offer first came out. So I walked 2 minutes to my local CVS, bought a $150 Paypal Prepaid card for $154.95 (because of the $4.95 fee) and received $50. I bought a 2nd $150 Paypal Prepaid card for $154.95 and received another $50. NSPfiance did the same thing. That left us with $600 cash held in prepaid cards, $19.80 in fees and $200 in Extrabucks to spend at CVS.

So what did we do? Amazon Payments allows you to send up to $1,000 for goods/services each month via credit cards. As NSPfiance purchased a number of items recently for the condo, including picking up the tab for painting, I owed her a decent sum of money. So I added the Paypal Prepaid cards to my Amazon Payments account, and sent the cash to NSPfiance. That left us with paying $19.80 in fees and receiving $200 to spend at CVS (not to mention the points earned from credit card spend).

The key is to know the differences in the cards and the fastest/best way to deplete them. I was once stuck with $1,000 in AMEX Prepaid cards that I just had to spend down because I bought the wrong version. While this isn’t easy, and like anything takes some time to learn, the rewards are endless. Once you have the knowledge, the process is very quick and painless. As you see from the above, not a bad haul for ~15 minutes of my time.

I applied, and was approved, for a Chase Ink Bold card this past June. This was a business card, and when I applied I was given a pending status. I immediately called Chase, they asked me a few different questions (i.e. what was the business, how much money did I make last year, how much do I plan to make this year, etc…) and 5 minutes later I was approved. The sign-up bonus was great: 60K Ultimate Rewards – which can be instantly transferred to Southwest (worth more than $700 in tickets, or $1,400 in tickets if you have a Companion Pass), Hyatt, United or many other airlines/hotels. To put it in perspective, this credit card sign-up alone will most likely get me from Bali to Cleveland, in Business Class, on an upcoming trip.

In addition to the sign-up bonus, one other feature of this card is amazing for racking up points quickly: All spend at office supply stores earn 5X Ultimate Rewards Points. You might be asking why earning 5X points at an office supply store is such a good benefit:

The Amazing Gift Card Rack

All merchant gift cards can be purchased without any additional fees. Macy’s? Check. Southwest Airlines? Check. This can either be viewed as a 5% discount (since Ultimate Rewards can be cashed out at $0.01/point) or worth roughly double that for airline miles. I wouldn’t recommend the Marriott Hotel gift cards, because they can often be found for a 10%-20% discount at other places online.

It might not seem like a big number, but if you are buying a $300 flight Southwest flight, purchasing the gift cards at Staples/OfficeMax/Office Depot will yield you 1,500 points, more than 10% of the way to a one-way flight on United.

Adding this asset to your toolbox just allows one more way to maximize points. Don’t forget about the various Dining Networks that give you up to 5 bonus points per dollar spent at restaurants you might already be going to. It takes 5 minutes to link your credit card once, and then you never have to think about it again.

Through maximizing miles/points, I currently have over 200K Ultimate Rewards points, and before booking my trip to Alaska (for $30), I had over 750K miles across many programs.

Vanilla Reloads and the AMEX Bluebird Debit card is a no-brainer. Not engaging in this means you are foregoing tens, if not hundreds, of thousands of miles and points every year. There are tons of posts and directions/instructions, but at the end of the day, the concept is this:

1. Purchase Vanilla Reloadable Cards from CVS with a credit card
2. Go to the Vanilla Reload web site
3. Enter the PIN from the Vanilla card and your Bluebird AMEX number
4. Use the AMEX Bluebird and use billpay to make payments for things you would normally not be able to use a credit card for

What can you do with the AMEX Bluebird? Use the billpay feature to pay anyone for anything: Mortgage, rent, student loans…even the credit card bill of the credit card you used to purchase the Vanilla Reloads.

Have bonus categories at drug stores for any of your credit cards? My Citi World had 5% back at drug stores during Q1. So did the Chase Freedom. Between the two, I netted over $200 in cash and 7,500 Ultimate Rewards points.

How to get started with this:

1. Go to Bluebird.Com and sign-up for a Bluebird Card
2. Purchase these cards from CVS (only these cards, not others, even if they say “Vanilla” on them!):
   

   Vanilla Reload Cards

3. Go to: Vanillreload.Com
4. Enter the PIN on the back of the Vanilla Reload card and your Bluebird Debit Card number
5. Click on the “Pay Bills” link on the Bluebird web site once you log in
6. Enter who you want to send a check to and the address. The funds will be deducted from your account and a check will be sent to pay whatever bill you want

The Math (some advanced knowledge here, but not necessary to utilize Bluebird and Vanillas):
Each Vanilla Reload card has a $3.95 fee associated with it and can be loaded with up to $500. Bluebird can be loaded up to $1,000/day and $5,000 per 30 days. That’s $60K/year. If you max that out, you are looking at $474 to earn at a minimum 60K points. If there are bonus categories, you are looking at 70K-80K points. Throw in sign-up bonuses and you should easily crack 300K-500K points.

I personally don’t pay off my credit card bills with Bluebird, as even though I haven’t heard of people getting their accounts shutdown, it seems to me a little too risky. Due to that, I don’t hit the max loads each month. Rather, I make sure my mortgage, car payments, student loans and bills get paid with Bluebird billpays (and thus credit cards).