Last month I wrote a post titled “How to buy Ultimate Rewards points for 1.05 cents”.  The scheme involves using an Amex business card to buy Barnes & Noble gift cards through the Ultimate Rewards Mall where you gain 10 points per dollar. Next, you sell the gift cards for a slight loss, but the points gained make up for the loss.  In my original write-up I hadn’t properly taken into account gift card shipping fees charged by Barnes and Noble.  It turned out that the real cost for points came to 1.10 cents each if you limited your purchases to one $200 physical gift card at a time.

A new discovery has changed the math for the better.  As I mentioned a couple of days ago, a reader told me about TopCashBack which offers 4% back for selling gift cards to PlasticJungle.  Previously I had advocated using ShopAtHome for 1.6% back.  This new finding sweetens the pot considerably!

Prerequisites

To get in on this deal, you need a Chase Sapphire Preferred credit card and the intention of keeping it at least until annual dividends are paid in early 2013.  You also need an American Express business credit card with OPEN Savings.

Risks

• The trick here involves going through the Ultimate Rewards Mall to Barnes & Noble for 10 points per dollar, but paying with your Amex business card.  Does this work?  Usually, yes. See my post “Ultimate Question” for more.  However, there is a real risk of not getting points so do this only if you accept that risk.  The reason you need to pay with your Amex business card is that this trick relies on the 5% cash back you’ll get from the Amex OPEN Savings program that is available only to Amex business cards.
• Another risk is the possibility of PlasticJungle lowering the rates that they give for Barnes & Noble gift cards.  The current rate of 81 cents to the dollar has held steady now for many months, though, so I believe this risk to be low.  The easiest way to view current rates is via GiftCardGranny.
• Finally, I have no experience with TopCashBack.  Are they reliable?  Only time will tell.

If you’d like to proceed despite the risks, here’s what to do:

1. Buy a Barnes & Noble gift card:

• Log into the Ultimate Rewards Mall and click through to Barnes & Noble
• Add a single $200 physical gift card (not an e-card) to your shopping cart.
• Check out and pay with your American Express business card (make sure it has OPEN Savings).  The total should come to $200.95

2. Once you get the gift card, sell it:

• Log into TopCashBack and click through to PlasticJungle (TopCashBack will give you 4% cash back for selling gift cards to PlasticJungle)
• Sell your Barnes & Noble gift card to PlasticJungle for 81% of its value.

3. Add it up:

Here is how the math works out with the purchase and sale of a $200 gift card:

• Total expenses: $200.95
• Total rebates: $178.53
• OPEN rebate: 5% of $200.95 =  $10.05
• PlasticJungle Payment: $162
• TopCashBack rebate: $6.48
• Total cost: $200.95 – $178.53 = $22.42
• Total points earned: 2352
  • Ultimate Rewards: $200.95 X 10 = 2010 + 7% annual dividend = 2151
  • American Express points = 201
• Total cost per point = $22.42 / 2352 = .95 cents per point.

Notes

• The type of points earned from American Express depends on which card is used for purchasing the gift card. For example, you might earn SPG points, Membership Rewards points, Delta Skymiles, etc. If you use a card that gives more than 1 point per dollar (such as the Hilton Surpass), then you will obviously earn more points with this approach.
• Theoretically you could make many individual purchases in this way.  Don’t be surprised, though, if you get a call from Barnes & Noble investigating this “suspicious” activity.
• Barnes & Noble has offered 10X bonus points via the Ultimate Rewards Mall for several months now, but the terms say “Special increased earnings now through 3/31/2012!” so the deal may expire soon.

Disclaimer

I have not yet tried this trick all the way through.  There are several risks as shown above.  As always, proceed at your own risk.

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A faster, better, easier way to buy miles and points

In a previous post, I showed how it is possible to buy airline miles and hotel points for less than a penny. The problem with this approach was that it was overly complicated, required very high spending, it led to the risk of nasty credit card account reviews, and it violated terms and agreements (see a quick note about square). Other than that, it was great.

Today I’ll describe a better approach. Sure, the miles may cost a little bit more, but this approach is easier, has no minimum spend requirements, and is completely above-board. In fact, toward the end of this post I’ll show a variation of this approach that will let you buy miles for less than a penny.

Here is the basic idea: go through a points-back online shopping mall to buy gift cards; then upgrade the gift cards to more valuable gift cards; and then sell the gift cards. In the process you will lose a bit of cash, but gain lots of miles. Below are step by step instructions.

Preparation

Before you can follow the directions given below, you will need your own Chase Sapphire^SM Preferred Card. If you don’t already have one, you can sign up with this link. Even if you don’t want to buy miles, this is a great card. The signup bonus alone is worth $500 in cash back, or $625 in travel booked through Chase, or more than $1000 in travel if you convert the points to United Airlines miles and/or Hyatt points. That last point is really key to the value of this card: Ultimate Rewards points earned with this card are instantly transferable to a number of airline and hotel programs. So, you can shop around to find the best miles and points redemptions before transferring your points and in that way get some incredible values from these points! I will get a small commission if you use my link, but you’ll get the same best offer available anywhere. I promise I would recommend this card with or without the referral commission. In fact, I have recommended it many times prior to my signing up for a referral network. Another great benefit to this card is the 7% annual bonus for all points earned in the calendar year. This is a key part of the plan outlined below.

Step 1: Buy Sears or Kmart gift cards through the Ultimate Rewards Mall

The Chase Sapphire card gives you access to the very lucrative Ultimate Rewards Mall. By doing your online shopping through this mall, you can earn bonus points on top of the points regularly awarded for credit card spend. Also, unlike many other online malls, Ultimate Rewards is very good about crediting your purchases quickly. Most of my purchases have been credited within a week. The slowest took two weeks. The mall currently offers 6 extra points per dollar for purchases at Sears or Kmart. So, by going through the mall to buy Sears or Kmart gift cards, you will earn 7 points per dollar (1 base point from using the credit card and 6 extra points from the mall) plus another 7% for a total of 7.49 points per dollar spent. I recommend buying the physical gift cards instead of the e-gift cards. Both will work for this scheme, but the physical cards are a bit easier to use since the e-cards sometimes require manager overrides if spent in a physical store. The physical cards are also easier to sell if you need to get rid of them.

Step 2: Upgrade your gift cards

Go to your local Kmart and find a gift card rack. They often have multiple racks around the store. The trick is to find the one with the most cards from other retailers. The goal is to find the most valuable gift cards they sell and buy those cards using the Sears/Kmart gift cards you have in hand. To figure out which cards are most valuable, go to GiftCardGranny and search for cards that you can sell for at least 90% of their listed value. The best tend to be gas station cards (BP, etc.). Write down the list and bring it with you to Kmart (or look it up on your smart phone). I recently bought some BP cards from Kmart that are currently listed at 91% value.

Step 3: Sell your gift cards

The easiest way to sell your gift cards is through online gift card exchanges like PlasticJungle. GiftCardGranny is a great starting point because it lists the exchanges that are available and shows how much each will pay. I only have experience with PlasticJungle so I’ll describe how that works: You go to PlasticJungle and select “Sell us your gift card”. From there you can enter the type of card and the amount on the card. PlasticJungle will email to you a free mailing label so that mailing the card will cost you nothing. PlasticJungle will then pay you either through your PayPal account or by sending a check.

Another way to sell gift cards is through EBay. The problem is that EBay charges 9% in seller fees and another 2.7% in PayPal fees. So if you sell a card at face value, the most you will get is 88.3 cents per dollar. Strangely, though, gas station gift cards on EBay often sell for more than their face value. So, you actually do have a chance to profit more by selling through EBay than by selling to an online gift card exchange.

Step 4: Tally it up

Let’s say you follow the advice above by buying $1000 in gift cards. And, let’s say you sell those gift cards at 91% value. This means that you will receive $910 back for a net expense of $90. Now tally up the miles earned. Remember that you get 1 point from your credit card, 6 points from the Ultimate Rewards mall, and an extra .49 points from the annual bonus. Therefore you can multiple your $1000 by 7.49 to see that you have earned 7,490 miles! Since you spent $90, you can now see that you just bought your miles for 1.2 cents each ($90 / 7,490).

It gets even better (or worse)

The points awarded for Sears and Kmart through the Ultimate Rewards mall seems to change regularly. At the time of this writing, they are offering 6 points per dollar, but that amount might go up or down at any time. If you’re interested in this scheme, though, get ready for December 9^th: the Ultimate Rewards mall has a number of holiday promotions and one of them is Sears for 10 points per dollar on December 9^th!  Thanks goes to ThePointsGuy for pointing out the December specials! If you follow this scheme and buy your gift cards on December 9^th, you will get 11.77 points per dollar (1 credit card point, 10 extra points, .77 end of year bonus). Your total cost per mile will be .76 cents! If you convert Ultimate Rewards points to cash for a penny per point (I don’t recommend it, but you could), you could actually pay yourself back completely, and still get 2.77 miles per dollar spent!

Thank you Gabe!

A reader named Gabe recently commented in one of my posts about how he is profiting from his Sears gift cards. He has an ingenious scheme (which I’ll write about in a later post) that actually grows the value of his gift cards indefinitely, over time. The key to his scheme starts with the fact that you can buy non Kmart gift cards at Kmart — using your Sears or Kmart gift cards! Ever since I read Gabe’s scheme, my head has been swimming with possibilities! Frequent readers will probably see the possibilities for perpetual point machines (yep!), new ways to meet minimum credit card spend (yep!), and much more. So, over the last several days I made a few trips to Kmart to make sure this stuff works and it does! Stay tuned for more… much more.

THIS DEAL IS NOW DEAD: As reported by DealsWeLike (see comments), the Aadvantage shopping mall is no longer offering 10 points per dollar for Sears’ purchases. However, for those with Chase rewards cards, the Chase Ultimate Rewards shopping portal currently offers 10 extra points per dollar for Sears, Macy’s, and Kohl’s. Ultimate Rewards points cannot be transferred directly to Aadvantage miles, but if you’re shopping for Continental Airlines miles, Hyatt points, or several others, this might be a great opportunity. For more see my prior post 30,000 Continental Airlines miles for $2,000 Sears spend!

Since American Airlines announced an end to their previously very generous Million Miler program, people have been scrambling to find ways to bump up their Aadvantage miles before the rules change at the end of November.  For those not familiar with this, I’ll summarize:  Prior to the new rules taking effect, all Aadvantage miles a person earns through flying, credit card purchases, bonus awards, etc. count towards the person’s million mile status.  Once a person reaches a million miles, they are awarded Aadvantage elite status for life.  After November 30, achieving this milestone will become much harder because, at that time, only miles flown will count (with one specific credit card exception, but I digress). So, back to the rush for Aadvantage miles.  People can buy miles directly from the airline, but the airline charges a hefty 2.95 cents per mile and limits purchased miles to 40,000 per year. In this post, I’ll propose an alternative. As I’ve posted before, the Aadvantage shopping mall, until the end of September, is offering 10 points per dollar for all Sears purchases. Even better, there does not appear to be any restriction against buying Sears’ gift cards. And, there is no limit to miles earned through the shopping mall. Here is an excerpt from their FAQ:

Q: Is there a limit to the number of AAdvantage® miles that I can earn through the AAdvantage® eShopping mall? A: No. The more you shop – the more you can earn! As a reminder, you cannot earn miles for taxes, special handling charges, freight or shipping costs, and any unshipped or returned products. In addition, please refer to the retailer offer page for complete information regarding eligible purchases for each retailer.

So, how can a person take advantage of this and buy miles for less than 1.6 cents each? Follow these two steps: STEP 1: Using an Aadvantage branded credit card, go through the Aadvantage shopping mall to Sears and buy as many gift cards as you would need to reach your mile target. You will earn 11 miles for each dollar spent (1 mile from the credit card and one from the shopping mall).  So, if you want to earn 50,000 miles, simply calculate 50,000 / 11 = 4545.  Round that up to $4600 and that’s the amount you need.
STEP 2: Sell the credit cards at PlasticJungle.  PlaticJungle will pay 83 cents on the dollar for Sears cards. With the steps above, you will have effectively purchased Aadvantage miles for only 1.55 cents each! Let’s walk through an extreme example. Suppose I want to earn 1 Million Miles right away. I calculate that 1 Million miles divided by 11 miles per dollar equals $90,909. Let’s round that up to $91K. So I log into the Aadvantage Shopping Mall, click through to Sears, and put 182 $500 gift cards into my shopping cart. Of course I would have to have an insanely high credit limit and a lot of patience with Sears’ fraud department to pull this off, but hey, this is just an example. Once that is all done, I go to plasticjungle.com and sell $91K worth of Sears’ gift cards. I receive in return $91K * .83 = $75,530. That means I have spent, in total $91K – $75,530 = $15,470. In return, I am now a lifetime elite on American Airlines and I have over 1 million airline miles in my pocket. Not bad!

UPDATE: A post in Deals We Like indicated that the 10X offer may only be valid until September 23rd (so hurry!), and that the miles will post 8 to 10 weeks after October 8th.  If this is true, it means that the miles will post after the Nov 30th cut-off date.  On the other hand, they may be simply giving themselves plenty of “just in case” time to get the miles posted.  If you’re in it just for lifetime status, you might want to pass.  If you’re in it for cheap AA miles, then hurry!

Until the end of September, Delta is offering to double SkyMiles that are transferred from one person to another.  This is the perfect time to make use of little pockets of miles in different family members’ accounts by consolidating all in one place, and doubling miles as you do so.  Unfortunately, transferring miles isn’t free: Delta charges a penny per mile plus a $30 transaction fee (up to 30K miles per person per transaction).  However, the result is that by shuffling miles around from one person to another you can effectively buy SkyMiles for just over a penny each. 

Is this a good deal?  It definitely can be if you know you’ll use the extra miles.  Recently, when I looked into a few potential personal trips (to Europe and to Central America), I found that if I used this trick to buy my way into First/Business class, I would pay about the same as the best coach ticket I could find with a similar itinerary.  Or, I could use half the miles to travel in coach and pay far less than I would have by buying tickets outright.  Note that if you use SkyMiles awards to book your travel you won’t earn miles or status from the flight so you need to factor that in to your situation to determine if it’s really a good deal.