A couple of weeks ago I presented at Frequent Traveler University in Los Angeles.  One of the topics I covered was how to earn 5 points per dollar (or more) on all spend.  We started with a moment of silence for the end of Vanilla Reload cards at Office Depot (see “Office Depot discontinues Vanilla Reload cards“).  We then went on to discuss a number of opportunities that still exist.  Below is a brief outline…

1. Buy gift cards and use them

Many grocery stores, drug stores, gas stations, and office supply stores sell gift cards.  The trick is to use a credit card that offers 5X or more at one of these locations to buy gift cards that you can then use elsewhere.  See “Best Category Bonuses” to find credit cards that offer the best bonuses.

Example 1: Suppose you are about to make a big purchase at Lowes.  You can always stop by a different store first to buy Lowes gift cards (usually with no fee and no sales tax) and then use those gift cards at Lowes.  The advantage is that, depending on which card you use, you may earn 5 or 6 points per dollar when buying the gift card compared to 1 point per dollar if you made the purchase directly at Lowes.

Example 2: Go to a store in which your credit card earns a high multiple and buy a bank gift card (e.g. Visa, MasterCard, or American Express).  Use that gift card for all purchases in which you would normally have earned only 1 point per dollar.  Watch out for fees, though!  Most bank gift cards have very high fees as a percent of their overall value.  For example, most $100 cards have $5.95 fees.  That means you would be paying 6% in fees in order to earn 5 points per dollar.  It’s not worth it!  Instead, look for $500 cards with $4.95 fees.  Losing just 1% in order to earn 5 points per dollar is often a great deal.

Caution: When you buy merchandise with a gift card, you do not get the benefits such as extended warranty and purchase protection that many credit cards offer automatically.  Use gift cards only to buy things where you are sure those protections don’t matter. 

2. Buy reload cards

Prepaid reload cards are more versatile than gift cards because they can be used, indirectly, to pay bills that can’t usually be paid by credit card.  The way they work is that they come with a PIN number that is used online to load the money from the reload card into something else.  The “something else” could be your Bluebird account, your PayPal account, or one of many prepaid reloadable debit cards.  For more information, please see “The reload game is on.”  Currently, reload cards are no longer available at office supply stores, but can be found elsewhere.  As with gift cards, the trick is to use a card that earns a high multiple at a place that sells reload cards (see “Best Category Bonuses“).

3. Buy reload cards with bank gift cards

This is a combination of options 1 and 2, above.  The idea is to buy bank gift cards at a place that offers you the best points per dollar, then use that gift card to buy reload cards at a different store.  While I and many others have had success with this, it doesn’t always work. Some stores that sell reload cards won’t allow gift cards as a form of payment.  Note also that you now have two fees involved: there is the initial fee for buying the bank gift card (e.g. $4.95 for a $500 card) and then the fee for buying a reload card (e.g. $3.95 or $4.95 for a $500 card).  Make sure these fees are worth it before doing this!

4. Load a Target Amex card with bank gift cards

Full details of this technique can be found here: The 5X everywhere backup plan

5. Load an American Express Campus Edition card

The American Express Campus Edition prepaid card can be loaded at the register at Barnes & Noble campus bookstores.  Find a card that offers a high multiple at bookstores, and you can earn points by reloading this card.  Yes, it works!  More details can be found here: American Express Campus Edition

Caution

5X Everywhere techniques often involve some risk and hassle.  Please see my post “5X dangers and headaches.”

Discussion

As shown above, there are quite a few ways to continue to earn “5X everywhere”.  In my talk, I described ways to take things ever further, but I’ll leave those details for another day and venue.  Is it worth the hassle?  That really depends on your tolerance for this stuff.  Yes, its possible to earn far more points with these techniques than without them, but at a cost of time and sometimes great frustration.  I’ll follow up soon with a post about putting 5X into perspective.

Through Saturday, use this coupon to get a $10 gift card when you spend $50 in-store at Target.  That means you can get $60 worth of stuff for $50.  That amounts to a 16.67% discount. 

Yes, you can buy merchant gift cards, but not Target gift cards.  Some people have reported success with buying Visa gift cards.  You can use Target gift cards to pay for your purchase.

RomsDeals has the details (but arguably the wrong math) here.

I recently signed up for the US Bank Cash+ credit card.  The card is free, and it is very likely the best cash back card there is (see “The best cash back card?“).  I know that a lot of my readers care only for points & miles, not cash back, but I believe that’s a sub-optimal view.  Even if you value miles above cash, you can often end up with many more miles by getting cash back and then using that cash to buy miles cheaply (see “Giving Cash its Dukedom“).

What makes the Cash+ card exciting is that each quarter you get to pick one 2% cash back category and (more interestingly) two 5% cash back categories from a set list.  Even better, through a couple of tricks, it should be possible to increase that cash back to over 9%!

Here is an image of the current 2% and 5% categories:

Now that I have the Cash+ card, I’m excited to begin a series of experiments. Here is what I have going so far:

Verify that the cash back rate is 6.25% when redeeming rewards $100 at a time

This seems very clear from the online documentation, but I might as well double check this.  When you cash out your awards in $100 increments, US Bank promises to give you a $25 bonus.  That means that 5% cash back rewards are really 6.25%.  Sweet.

Verify that checking account bonuses stack with other bonuses for up to 9.375% cash back!

As a reader recently informed me, US Bank has two checking accounts that offer an automatic rewards bonus for Cash+ and FlexPerks cardholders.  The Gold account offers a 25% monthly bonus, and the Platinum account offers a 50% monthly bonus.  If these bonuses stack with the $25 bonus for each $100 withdrawn, then you can increase your 5% return to 7.8% or 9.375%, respectively!  Each account has fees that can be waived through various means.  See this page for details.

To see how this should work, consider a person with the Platinum checking account who spends $4000 in 5% cash back categories.  That person, will earn 5% cash back, which amounts to $200.  Then, at the end of the month, they should get a 50% bonus which would increase their total cash back to $300.  Then, if that person withdraws $100 at a time, he/she will get an extra $25 each time.  In total, this person should get $375 cash back.  $375 is 9.375% of $4000!

Check whether Kiva loans count as charity contributions

Many people have reported that Kiva loans are counted by US Bank as charity contributions with the FlexPerks card (see, for example, this Mommy Points post).  It will be very interesting to see if the same holds true with this card!

For more about Kiva, see “How to maximize points and virtue through Kiva loans,” and “Minimum spend requirements? Kivalens to the rescue.”

See what counts as Department Store purchases

Target: It’s very unlikely, but if Target counts as a department store, it would be awesome to get over 9% cash back for reloading the Target Amex card!  See “The 5X everywhere backup plan.” 

Sears: Sears is definitely listed as a department store.  I just need to verify that gift card purchases from Sears are counted as such.  If so, you can expect several posts about leveraging that opportunity!

Others?  Can you think of any other stores that might count as department stores and would be worth checking?  Ideal candidates are those that sell a variety of gift cards and/or those in which online portals tend to offer high payouts.

Reader Suggestions

There seems to be an endless number of ways to leverage this card.  Do you have ideas worth exploring?  Have you used this card?  If so, what have your experiences been so far?  More importantly, have you found a good way to figure out how your purchases are classified?  When I look at my transactions online, it doesn’t seem to indicate anything about this.  Do I need to wait for my statement?

The American Express for Target card that I wrote about yesterday is hardly revolutionary.  Compared to the generic American Express Prepaid cards, the Target Amex has higher ATM fees and much stricter limits (for example, the card may only be used within the U.S.).  Compared to the new Bluebird card, the Target Amex doesn’t compare at all.  It doesn’t have bill pay, you can’t move money out to your bank account, and there are no plans to allow check writing.  However, the Target Amex has one awesome feature that the others don’t have: you can load this card in-store with a credit card.

To get your own American Express for Target card, please see my post “How to get the American Express for Target card.”

Fees and Limits

The Target Amex card has the following fees and limits:

• $3 per reload in-store
• $3 per ATM withdrawal after the first free withdrawal each month.  Note that ATM owner fees apply as well.
• Number of cards: Each person is allowed up to two cards.  Only one may be purchased in a day.
• Maximum balance: $2500 per card
• ATM withdrawals: Limited to $400 per day

Running up spend

There are many reasons you may want to run up spend on a credit card.  Here are a few examples:

• Meet credit card minimum spend requirements.  Many credit card sign up offers require high spend to receive the full value of the offer.  For example, the Ink Bold and Ink Plus currently require $10K of spend in 3 months in order to get the full 50K bonus.
• Achieve high-spend bonuses.  Some cards offer bonus points when you reach certain thresholds of spend.  Other cards offer airline or hotel elite status.  Personally, I use “manufactured spend” tricks with the Delta Reserve and Delta Platinum cards in order to achieve high level elite status on Delta each year (see “Mileage running, from home“).
• Maximize promotions.  Some cards target cardholders with temporary incentives (such as extra points) to use their cards more.

Whatever your reason for wanting to run up spend, the Target Amex can be a nice addition to your tool chest.  It’s not free (like Amazon Payments), and it’s not a game changer (like Vanilla reload cards), but it’s pretty good.  Here are two approaches to using the card to run up spend…

Straight-Up Approach

The simplest way to use the Target Amex to run up spend is as follows:

1. Use your credit card to pay for each reload.  Load the maximum allowed $1000 each time in order to make the $3 load fee as small of a percentage as possible.
2. Find the lowest cost ATMs around and unload the card $400 at a time.  Some people have been lucky enough to find free ATMs at their local credit unions.  Some have reported finding 99 cent ATMs inside MacDonald’s.  Others have settled on the still inexpensive ATM’s in Costco ($1.25 per withdrawal).

If you load and withdraw $2000 per month, and use Costco ATMs at $1.25 per use, your total costs will come to $24.25, or 1.21%.  If you don’t count the value of your time into the equation, this can be a very reasonable price to pay to get points!

Indirect Approach

There are many variations of the indirect approach.  The basic idea is to get extra points or cash back when buying bank gift cards and then use those bank gift cards to load your Target Amex.  For this post, I’ll focus on a simple cash-back strategy for buying Amex gift cards at a discount:

Buying Amex gift cards at a discount

I’ve had this post planned for weeks, but coincidentally, Frugal Travel Guy reminded the world about this trick yesterday (see “A look back and ahead at Bigcrumbs.com“).  The idea is to go through the online portal BigCrumbs to buy American Express gift cards and receive 1.4% cash back.  Here’s how:

1. Sign up for BigCrumbs.  (If you would like to contribute to Frequent Miler, please consider using this referral link — I’ll earn a small bonus each time you get cash back).
2. Search BigCrumbs for “American Express”.  You’ll find two options: American Express Gift Cards – Business, and American Express Gift Cards – Personal.  Click through either one.
3. Order gift cards for yourself.  Except when special promotions are going on, each card has a $3.95 fee, so your best value is to buy one $3000 card at a time.  You will also be charged $8.95 for 2nd Day shipping. 
4. Pay with your credit card.  Note: do not do this with Citibank cards since it has been reported that Citi treats these purchases as cash advances!  In my experience, both Chase and American Express treat these as regular purchases.  If you’re unsure about your bank, consider buying a small denomination card first to test the waters.

In total, your fees will come to $12.90 or .43%.  From BigCrumbs, you should get back 1.4% of $3000, which is $42.  After subtracting out the fees, you still gain $29.10 which is a .97% profit!

Liquidating Amex gift cards

Now that you have Amex gift cards that you effectively got at a discount, you can liquidate them by using them to load Target Amex cards and then withdraw the money from ATMs.  By going through this indirect approach, your total fees for running up spend will come down to a miniscule .24%!

Scale up

With the options shown above, you can easily “manufacture” $2000 spend per month.  Yes, you could go to $2500, but then you wouldn’t be perfectly optimizing the fees since you would have to do a $500 load each month.

One easy way to scale up beyond $2000, is to get a second card.  That way, you can go up to $4000 spend per month.  Further, if you have a partner you can work with, they could get two cards as well.  A couple could manufacture $8000 in spend per month!

Warnings

I’ve cautioned heavily before against doing exactly what I wrote about above.  With either the regular Amex Prepaid cards or the Bluebird card, I think it would be a mistake to abuse them by using them just for loading and unloading.  Amex counts on you using these cards for real credit card transactions.  If you don’t, they have the ability to close your accounts.  Just as concerning, loading and unloading cards looks like money laundering.  So, you do run some risk of being investigated (even though there’s nothing illegal about the procedure I wrote about).

Everyone needs to use their own judgment about the level of risk they’re willing to incur.  In the case of Target Amex cards, my guess is that the fees are just high enough to put us in the clear.  What I mean is that Amex and Target probably don’t lose money (at least, not much) when we load and unload cards as described in this post.  If true, then they would have little or no incentive to spend resources on monitoring how we use these cards.  I can’t stress enough, though, that this is just my educated guess.  Use your own judgment about how (or whether) to proceed.

See also

• How to get the American Express for Target card
• The 5X everywhere backup plan

I recently posted “The 5X everywhere backup plan” where I showed how people unable to buy Vanilla Reload cards could still earn 5 points per dollar everywhere by making use of the American Express for Target card.  I consider it the backup plan to the “One card to rule them all” trick.  I also plan to follow-up with one or more additional posts showing how best to leverage this card.

In this post, I’ll tell you how to go about getting one of the Target Amex cards.

Unlike the regular American Express Prepaid cards and the new Bluebird card, the Target Amex cards cannot be ordered online.  Instead, you need to first buy a temporary card at a participating Target and then wait for a permanent card to (hopefully) arrive.  I found the whole process surprisingly difficult.  To save you some headache, I’ve laid out below everything you need to know:

Find a participating Target

In order to get the American Express for Target card, you need to go in person to a Target store that carries them. You can find those stores here.

Find the temporary card in the store

Finding the card isn’t easy.  In my case, I had to ask four or five employees before I found someone who knew what I was talking about. Most employees pointed me towards regular Amex gift cards. In the end, I found the card I wanted by one (and only one) of the many checkout lanes. Here is what to look for:

My advice is to look at all of the displays near and above the checkout lanes until you find a card that looks like the one pictured above.  Make sure it says “reloadable prepaid card.”  Otherwise you may be buying a simple, uninteresting gift card.

Buy the card

Now that you’ve found the card, it should be easy to buy it right?  I wish!  The surprising thing here is that when you buy this card, the cashier will be prompted to ask you all kinds of questions that you probably don’t really want to answer while a line of angry customers forms behind you. They’ll ask for your full name and address. They’ll ask you to input your SSN on the keypad.  I can’t remember all of the questions I had to answer, but I’m pretty sure they asked me to describe my life’s most embarrassing moment (“easy – this one!”).  Finally, after sharing all of your personal information with the cashier and the angry mob behind you, you can pay for the initial card load with any credit card. There is a $3 fee for each load.

NOTE: In case you’re worried that a credit card load will be treated as a cash advance: I have tested loads and reloads with Chase, Amex, and Citi credit cards.  All transactions were credited as regular Target purchases, not as cash advances (that’s a good thing).

Wait and hope

The card you just bought at Target is a temporary card that cannot be reloaded. You can use it for regular credit purchases, but not for ATM withdrawals. If all goes well, you will receive your permanent card in the mail in a few weeks. If not, you’ll receive a letter or email stating that they were unable to verify your identity. That’s what happened to me.  So, I called and they resubmitted my application.  A few weeks later I received another letter stating that they were unable to confirm my identity (Really?  You know I carry a gazillion Amex cards, right?).  Ultimately I had to buy another temporary card in order to try again. The second attempt succeeded. I have no idea why the first attempt failed, but I’ve heard from others who have had similar experiences so don’t be surprised if it happens to you too!

Good luck!

Last Tuesday, thanks to a tip from SteelSnow, I wrote “Breaking News: Today only buy Target gift cards 10% off!”  Target gift cards are usually quite valuable so this was an amazing deal, but there was a lot more going on than a simple 10% discount…

I didn’t put details in my post, but people over on SlickDeals had a great scheme going.  They were buying Target e-gift cards for 10% off and then using them to buy more e-gift cards for 10% off, and so on!  In other words, they had a great perpetual money machine going while it lasted. 

I call this Target’s “4 Mile Moment” because it reminds me of United’s 4 mile mistake fare from a couple of weeks ago.  In that case, United had a programming glitch in which people were able to book first class flights to Hong Kong in exchange for only 4 miles.  In this case, I think Target’s marketing department simply hadn’t realized how this promotion could backfire.  In the heat of the moment, United stopped their bleeding by temporarily blocking all award flight redemptions to Hong Kong.  Later, they canceled all bookings that began more than a week out.  Target stopped their bleeding in three ways:

1. Target delayed delivery of e-gift cards until the next day (when the sale was over).  Their web site promises delivery “usually within 4 hours”.  They were saved by the word “usually.”  I thought this was a smart move by Target.
2. Target also imposed a 10 item limit clause that was apparently buried in some document somewhere.  Most people who ordered more than 10 items had their extra orders canceled without explanation.  Some people were lucky enough to have more than 10 orders go through.
3. Most gift cards were out of stock before the day was through.  I can’t figure out how anyone can run out of e-gift cards, but that’s what happened. 

Personally, I found both United’s and Target’s mistakes to be great fun regardless of how they turned out.  All three of my United trips were canceled.  With Target I did better.  I had more than $1000 of Target gift cards at home in preparation for other experiments, so I used them to buy 14 $100 e-gift cards and 1 $100 physical card.  5 of the e-gift card orders were canceled, but still I was able to turn $900 worth of gift cards (that I had bought at a discount previously) into $1000 worth of new gift cards.  Nice!

How did you do?

Put a $100 gift card in your basket and checkout.  With an electronic gift card, you should see this:

And then on the checkout screen, you’ll see this:

If you read Frequent Miler much, you know what to do.  Working on minimum spend?  Go to it!  I’ll update this post as this deal progresses. 

UPDATE 1:
Thanks to Steelsnow for tipping me off to this deal!  Please read the comments to see how people are leveraging it.

Using a bunch of physical gift cards lying around, I just bought a dozen or so $100 e-gift cards.  Yes, Target allows you to buy gift cards with gift cards.  I have yet to actually receive the e-gift cards though (4:56 PM).

UPDATE 2: 10:39 EST
The deal now appears to be dead.  Congratulations to everyone who got in on it in time.  Let’s hope Target doesn’t pull a “United Airlines” and cancel our orders!

UPDATE 3: 10:51 PM EST
Reader Jason reports that the Foam Finger gift card still works.  I just tried it and found that the physical $100 card does appear to work.  You might be able to get e-gift cards to work in lower denominations than $100 (e.g. 4 X $25).

As of this morning (Feb 1), there are a number of changes to the payouts from Chase’s Ultimate Rewards Mall for the Chase Sapphire Preferred and Ink Bold (note that when logging into the mall for other Chase cards, you will have different offers).

Let’s look at some key bonus rates for the Sapphire Preferred and Ink Bold:

• Avis: 5X
• Barnes & Noble: 10X (up from 7X)
• Drugstore.com: 5X (down from 10X!)
• Groupon: 0 (has been missing from the UR Mall since January)
• Hotels.com: 4X
• HP: 3X (down from 5X)
• Kohl’s: 10X
• Magazines.com: 40X
• Office Depot: 5X
• Sears: 4X (Same as before. Boo!  I was hoping Sears would go up!)
• Staples: 4X (down from 5X)
• Target: 3X (down from 5X)

Comparing to predictions

Last night, I made the following predictions:

• Staples.com will stay at 5X
• Target.com will decrease from 5X to 3X
• HP will stay at 5X
• Drugstore.com will decrease to 8X
• Sears will increase to 6X or 7X

How did I do?  I got Target exactly right.  I also correctly predicted that Drugstore.com would go down, but it actually went all the way down to 5X instead of my predicted 8X.  Against my predictions, Staples and HP both went down, and Sears stayed the same.  So, I batted 1 (or maybe 1.5) out of 5.  Not very impressive!

Analysis of Changes

Ick.  Most of the changes are not so good.  Sears staying at 4X is a big disappointment.  Staples dropping from 5X to 4X slightly lowers to value of the Ink Bold double dip I’ve been writing a lot about lately (in fact, I need to re-write a new post that I had ready to go).  Office Depot at 5X doesn’t help too much as their terms and conditions explicitly say that gift cards are excluded (but it’s a great deal if you actually want to buy something from Office Depot).  Also Groupon is still missing from the site altogether.  On the plus side, it’s great to see Barnes & Noble back up to 10X.  I’m really pleasantly surprised, as well, to see Magazines.com staying at 40X and Kohl’s staying at 10X!  Also with Avis at 5X and Hotels.com at 4X there could be some great opportunities to save on travel and double-dip with other promotions.

What’s Next?

Virtually every shopping portal, including the Ultimate Rewards Mall, is heavily promoting Valentine’s Day related merchants right now.  So, my next bold prediction is that rates will change again on Feb 15th.  Let’s hope for some good news then!

Win a Nook!

Reminder: Until Feb 14th, you can win a Barnes & Noble Nook Color simply by adding a comment to our ever growing story. Visit this page to participate!