Tuesday, January 8, 2013

Credit Card Spending for the Rest of Us

Are you tired of hearing about Vanilla Reloads? Don't know what they are? Wondering what the big deal is in the first place? Keep reading.

The deal was people were buying Vanilla Reload cards using their Chase Ink Bold and Chase Ink Plus credit cards at Office Depot (for 5x's points) and then using American Express Bluebird and/or AMEX Prepaids to cash out. The $500 Vanilla reload cards carry a $3.95 fee and then you're just a few trips to the ATM or a wire transfer away from getting most of your money back in time to pay the credit card. Too good to be true? Office Depot stopped selling Vanilla Reloads back in October. So why are so many people still even talking about it? Maybe it has something to do with the mass-proliferation of Chase affiliate sign up links- That's my theory anyway. No doubt about it, it was a good deal, but it's over now.

Not all of us got in on the Office Depot deal in time and/or couldn't find Vanilla reloads in our area. So, yeah, thanks to all the other bloggers out there who continue to rub it in, while luring us to sign up for a Chase Ink card using their links. Sure, they're great cards (not only for the 5x's points but also because it lets you transfer Ultimate Rewards points directly to MileagePlus and a few other programs), but they're business cards. That in itself is bound to scare some off. You can still sign up for one claiming your eBay business or personal travel blog as a sole proprietorship and using your SSN in lieu of a Tax ID number, but you're more likely than not going to have to call a reconsideration line and talk to a real person over the phone about your "business". Now that the 5x's-Office Depot-Vanilla reload game is over, do you still really need the card? Maybe. Maybe Not.

So now that you can't buy Vanilla reloads at Office Depot, what about other places like CVS and Walgreens? Yeah, some of us haven't had the best luck there either. You have to understand that the Vanilla reload is supposed to be purchased with cash or debit. You're not entitled to buy it with a credit card. In fact some registers are hard-coded against it. So what happens when you try? A big red screen pops up on the register and you get to talk to a manager. I've read that some store managers out there are really cool, they understand what people are doing with the cards, and go out of their way to stock them knowing that it draws customers into the store. The guy at my local drugstore, is not one of those people. Then there's the cashier who patronizes you, tells you that you picked the "wrong card" and then escorts you back to the gift card aisle to try again. That of course is even more fun if you have an audience of at least 6 other people in line behind you. Totally embarrassing. Both of my attempts to buy Vanilla Reloads at drugstores using my 6x's Hilton Amex have been unpleasant and that hasn't really inspired me to go back and try again. Of course there's still the dollar store or 7-11, but in case I get a fraud alert call from my credit card company, I don't really want to explain why I'm spending thousands at a dollar store or 7-11. Anyway, I think it's my husband's turn to try buying a Vanilla Reload next, and in the meantime I'll continue to look for something else.

After Vanilla reloads, come Vanilla debit cards. The way people talk about them, you'd think they are the only prepaid debit cards out there. They're not. There's also Mio, Netspend, AccountNow, PayPower, Walmart Money...the list is too long to continue. So why all the love for Vanilla? They typically have lower fees than other prepaid cards. The ones you buy at the store are temporary cards (without a name on them), and then people just walk into the bank with them and ask for a cash advance (which only costs $.50 BTW). It's a good deal for buying miles/points, but that sounds incredibly SHADY to me, and not something that I want to try myself. If you the balls to pull it off, by all means go ahead (moderation is key), just be wary that your activities might appear as though you're laundering money, financing terrorism, etc., and stuff like can lead to Suspicious Activity Reports. No fun. I think I'll keep looking elsewhere.

What about all the other aforementioned prepaid debit cards out there (Mio, Netspend, AccountNow, Paypower, Walmart)? They're good (some of them), but not a great solution to racking up your spend. You usually buy a temporary card in the store, load it, and later a permanent one comes in the mail that has your name on it. You can also sign up for many of these cards online. You then buy reload packs (Vanilla, GreenDot, REloadits, etc.) to fill up the card. Be mindful that the cards and the reload packs are still cash-only, but because there are so many different products out there that are more widely available, you might have better luck finding something you score using your credit card. I've been able to buy $950 REloadit cards for $3.95 at Safeway using my 2x's Chase MileagePlus Select VISA with no problems (they simply ask to check ID) and I plan on going back there with my Chase British Airways VISA soon. So now that you have a VISA or MC debit card with a PIN number, you can use it for stuff like buying money orders and do other things you aren't allowed to do with your credit card. Some of the cards even have bill pay features. The downfalls are high fees, LOTS of fine print, and at some point you will get shut down. From what I've read it doesn't matter if you are modest and crafty about it or even use the prepaid for day-to-day spend. They'll still close your accounts eventually, but just like there are plenty of fish in the sea, there are lots of prepaid debit cards at the grocery store. Use them for what they're worth and move on.

The next best thing after prepaid debit cards are VISA/Mastercard gift cards with the debit logo. They usually have a fee to purchase them, I want to say around $5 for $100 gift card, which is expensive. Typically the higher the denomination, the lower the fee is as a percentage (i.e. a $200 card costs $6.95 or 3.4% whereas a $100 card costs $5.95 or almost 6%), but still expensive. The benefit is that you should have no problem buying these cards using a credit card. Another perk is that retailers sometimes offers promotions/discounts on them which can help cover some of the cost. For example the Staples-Black Friday deal. Recently Safeway had a promotion for $15 off a $100 Mastercard GC's. Another good one: AMEX Sync $20 off $200 at Best Buy (who conveniently sells VISA/MC giftcards). All of these deals are dead now, but use them as examples of what to look for. Think creatively. Sometimes its possible to even come out a little bit ahead, while racking up spend. Obviously promotions are limited by nature, typically one-per-person, so $15 minus the $6 card fee here or there isn't the next get-rich-quick scheme, but it all adds up and every little bit counts. Since these cards don't have a PIN, they're a little bit harder to cash out, but there are ways (with limits) like Amazon Payments, Paypal, and Serve. Don't expect to get more than about $1,000-$2,000 worth per month using this method.

In addition to VISA/MC prepaids and gift cards, there are AMEX ones. The gift cards are pretty much useless unless you intend to actually spend them, however the AMEX prepaids can be used at ATMs. The two AMEX prepaids you should be aware of are the standard blue-color ones that you can order directly online, and the Amex for Target ones (AFT) available at Target. You are allowed to have 3 blue cards, and 2 Target ones per person. The blue American Express prepaids are reloadable using Vanilla Reloads, or GreenDot Moneypaks. You can load the AFT ones at Target ($3 fee) using a credit card- be advised however, it has to be your credit card, with your name on it (no VISA/MC/AMEX gift cards here- I tried). Multiple cards plus the ability to load up to $1,000 at a time means this is a good way to rack up a lot of spend quickly, if you're willing to pay the price (load-fees plus a couple of bucks each time you visit the ATM). Since this method requires cashing out by actually going and getting cash, be aware that you might look like a drug dealer when you show up at your local bank with a fist-full of green attempting to make a large deposit. Again, moderation is the key to not looking like a criminal.

Then there's good 'ol Amazon Payments. Easy. Reliable. Modest. Keep it under $1000 and find a trustworthy friend/spouse/relative to play with. There's also Serve and they are waiving their credit/debit fees until March 15, 2013. $100/day and $250/month on credit cards. $250/day and $1000/month for debit. Bluebird vs. Serve- pick one because you can't have them both and keep in mind Bluebird is pretty much worthless without Vanilla. Paypal is good for a few tries, so plan accordingly and proceed with caution.

I know there's a lot of information here and at first it's a lot to take in for the "rest of us" crowd. Think of this as a starting off point to get you headed in the right direction. The next step should be to sit down with pen and paper to make a spreadsheet, flowchart, or whatever visual aide you need to try and piece together a strategy. Weigh the risks and benefits according to your own standards and develop a way to keep track of the expenses. Once you come up with the answer, let that be your guide in determining how many credit cards you sign up for and which ones. For the sake of trying to present as much stuff as I can in one place at one time, I skipped over a few details, but hopefully it shouldn't be hard to fill in the blanks. Nothing here is top-secret or privileged information, and it can probably be found in a hundred different forms in a million other places (and in greater detail) if you have the curiosity and will to look. Of course if that sounds like too much work you can always contact me with any questions, and I be happy to pass along everything I know. Finally, don't forget you can still always earn miles by flying. ;)











2 comments:

  1. I learn a lot from reading this post. Thank you so much for taking the time to write this.

    ReplyDelete
  2. I'm always happy to share! You're welcome :)

    ReplyDelete