Pre-paid debit cards have really become all the rage in the finance industry in the after-math of the financial crisis. These cards are primarily aimed at those unable or unwilling to access traditional bank accounts. Rather than having a traditional account at a bank or credit union, pre-paid debit cards allow you to “load” funds on to them and you can then use the card as you would any other debit card to pay for goods, pay bills, even withdraw cash at an ATM. There are various ways to “load” money onto these cards, but the one that is of interest to the manufactured spend aficionado is the various “money packs” or “reload cards” such as Vanilla Reload cards, Green Dot Moneypaks or Reloadit cards, among many others. These are typically sold in grocery stores, pharmacies and gas stations and can sometimes be purchased with a miles or points earning credit cards. There is usually a charge for doing this of around $4 to $6, and you can “load” typically up to $500 on each card (so the cost of loading is typically around 1% of what you are spending). Once you have acquired the money pack you then load it onto the pre-paid debit card and then there are a variety of ways you can then get the funds back out of the pre-paid card such as bill-pay, buying money orders, cash advances or even writing checks.
Ingredient 1 – Reload Cards
There are a huge variety of different reload cards, money packs, or whatever you like to call them. I am just going to cover what I consider some of the more useful and readily available options.
Vanilla Reloads are perhaps the most well known and readily available of the various reload cards. They are widely available at CVS stores across the country, as well as a variety of gas stations and a few other places. In general it is possible to buy them with a credit card. CVS has an official policy that you can buy up to 10 reload cards a day and use a credit card (and with a maximum load of $500 per card that is a possible $5,000 per day on your credit card). However individual store managers have license to implement more strict policies, so you may find you can only buy $1,000 or just one card or even not be able to buy any with a credit card. Vanilla Reloads cost $3.95, so manufacturing $500 spend will cost at least that amount.
Vanilla Reloads are compatible with a variety of prepaid debit cards but most notably American Express’ Serve and Bluebird, both very good cards for manufactured spend. Other compatible cards which carry more risk are NetSpend, MyVanilla Debit, PayPal Pre-Paid and MIO.
GreenDot MoneyPaks are another form of reloadable card. Finding places that sell GreenDots with a credit card is much harder, CVS cash registers are hard coded to take cash only. However I have found them available at some grocery stores and also some smaller pharmacies such as Rite Aid. But YMMV (your mileage may vary) and finding a consistent source of credit card purchasable MoneyPaks is not easy.
However if you can find them then they are compatible with a huge variety of pre-paid cards including American Express Serve, H&R Block, RushCard, AccountNow, Vision PrePaid and a whole host of other possible options.
GreenDot MoneyPaks cost $4.95 each and can be loaded up to $500.
I have written about REloadit cards previously. These used to be readily available at Harris Teeter, but they have now largely updated their systems to enforce a cash only purchase policy. However it still works at the odd store and these are available at other grocery stores and even the odd home improvement store. Again YMMV but it’s always worth trying to see if you can buy one or two of these at a grocery store.
REloadit cards also have a long list of compatible pre-paid debit cards, the best of which I would say are Vision PrePaid and AccountNow.
REloadit cards cost $3.95 and in most cases can be bought up to $500, however some stores carry versions that can be loaded up to $950, which reduces the overall cost of manufacturing spend significantly.
Ingredient 2 – Prepaid Debit Cards
The next key ingredient to this technique is the prepaid debit cards that you will “load” the reload card onto. Once again there are a huge number of different types available, and I will just focus on a handful that I think are the most useful for general manufactured spend.
American Express Bluebird and Serve
I group these two together because you can only have one of each and not both. When these cards first came out there were some significant differences between them and generally Bluebird was seen as superior for manufactured spend. However Amex has since harmonized the benefits of the two cards. Serve features all the same benefits suitable for manufactured spending as Bluebird but in addition is eligible for the various Amex spend bonuses such as the recent lucrative Amazon promo. With that said, Amex has been more trigger happy in terms of shutting down Serve accounts, so Bluebird remains the safer play.
You can add funds purchased on Vanilla Reloads to either card (as well as funds purchased with GreenDot MoneyPaks in the case of Serve). You can add up to $1,000 per day with a maximum of $5,000 per (calendar) month. To add funds you just go to the web-site of the relevant reload pack, e.g. vanillareload.com, and enter the number of the reload card and the number of the prepaid card. After that your prepaid card account will have the money in it.
Both Bluebird and Serve have highly flexible ways to drain the funds once they have been loaded. Frankly the easiest is the bill pay feature. This allows you to pay bills such as gas, electric, insurance… or credit card! So going back to square one, you use a credit card to buy a Vanilla Reload card, costing you $503.95. You then load the funds onto your Serve or Bluebird card, giving you $500 on that account. Then you use the bill pay function to pay the bill of the credit card you used to make the original purchase. Your net cost will just be the cost of purchasing the original reload card, and you will have earned miles/cashback/rewards on the credit card.
Other Prepaid Debit Cards
I am going to generically group all other prepaid debit cards as they all share the same key higher risk characteristics: they will all eventually get shutdown if you load and unload large amounts of funds. However if you have a reasonable tolerance for risk, and never load more than you can afford to be without for several months if need be, then these are all ways of being able to unload additional reload cards:
- NetSpend (compatible with Vanilla Reload)
- MyVanillaDebit (compatible with Vanilla Reload)
- AccountNow (compatible with GreenDot MoneyPak and ReloadIt)
- Vision PrePaid (compatible with GreenDot MoneyPak and ReloadIt)
- WalMart Moneycard (compatible with GreenDot MoneyPak)
- And on and on and on… just look at the huge list of compatible cards for GreenDot MoneyPaks.
The key with all of these is to fund minimally and get your money out quickly. And then if and when you get shutdown by one, just move on to the next. Unless your volume becomes astronomical, you will never run out of options! The key things to understand with each card are:
- Which reload card/s is the prepaid card compatible with and can I buy those with a credit card? Vanilla Reloads are the easiest reload cards to buy with credit cards but have a relatively small list of compatible prepaid cards. GreenDot MoneyPaks have a huge list of compatible cards but are a little harder to buy with credit cards
- Make sure the pre-paid card can be unloaded easily. The easiest way is Billpay – some cards charge for this, some don’t, some simply don’t have the feature at all
Alternatives to Billpay for Unloading
While online Billpay is my preferred method of unloading any prepaid debit card, there are plenty of alternative mechanisms:
- ATM access – some prepaids allow you to withdraw cash from an ATM. Check for ATM fees
- Buying money orders using the pin code for a debit transaction
- Using the Billpay facility at WalMart MoneyCenter or at the customer service desk of various other grocery or pharmacy stores
- Actually buying things you would be buying otherwise. Some people like to mix in some “real” spend in the hope that this will make it less likely they will get shutdown. Personally I think this is a false hope, but if it makes you feel more comfortable, power to you.
- Cash advances at a bank – not my cup of tea, but using your PIN code you can generally do sizable cash advances on prepaid debit cards at bank branches
How Much Spend Can You Do?
There are two key restrictions on how much spend you can manufacture using this technique:
- Your ability to source reload cards that can be bought with credit cards
- The limits on the amounts that can be added to each prepaid card
Looking at the safest option, Bluebird, you can load $1,000 per day with Vanilla Reload cards, up to a maximum of $5k per month. So one individual can manufacture $60k in spend per year, at a cost of $474 in fees for the Vanilla cards ($3.95 each). A couple could double that between them. Other prepaid cards have their own limits so really it’s up to you to experiment carefully with those cards to see how much additional spend you can generate. I have found that you can manage anywhere from $15k up to $45k on the other cards – but be warned you will need to deal with the issuer at some point with a shutdown card, so I only recommend doing this once you are comfortable with the whole process and you can afford to live without the loaded funds for at least several weeks while you deal with the issuer.
Given the potential risks involved it is very important to keep good records. Here is how I handle my record keeping for this technique:
- When you buy any reload pack (Vanilla Reload, GreenDot MoneyPak, ReloadIt or whatever) keep the receipt for that purchase
- Once you have loaded the funds from the reload card onto a prepaid card, use a sharpie to notate that reload pack with the date and some identifier of the card you loaded it to (e.g. 1/6/13 to BlueBird 1234)
- Keep the receipt with the reload card and file it
- Keep the email and/or text you get from the prepaid card confirming the load
- If you unload the card via money orders or using an in-store BillPay, keep the receipts associated with that
While this may all seem as overkill, in the event you get shutdown, or the IRS starts questioning large amounts of money swirling around your credit card accounts, you will have a perfect paper trail of the transactions.
Prepaid debit cards combined with reload cards are a great way to manufacture spend. You spend money buying the reload card with a credit card for a fee typically around 1% of your spend, and then you can use a variety of prepaid cards to liquidate the money via online bill-pay or a variety of other methods.
You can subscribe to Miles Abound by email by signing up here. Keep up to date on ideas and experiences around miles and travel!