As always, before I get started with today's news I have to get a few things out of the way.
First of all, the hack that I'm discussing today involves PayPal. I know everybody hates PayPal. Heck, I hate PayPal too. But they've also been very good to me. If you feel like ranting about PayPal, the comments, as always, are open.
Second, as always I want to give credit for this hack where credit is due. That's a pretty short list this time. I originally got the idea from a comment left here on the blog by Phil. If you read this, thanks Phil! Over the course of the day or two I spent researching this, I was only able to find one veiled reference (I think) left on a Frequent Miler post over the summer. So, thanks to DFW, too, I guess.
Finally, I haven't tried this personally. I'll be applying for new cards at the end of January or beginning of February, and will of course post an update then. In the meantime, I would love to hear about readers' experiences if they're able to make this work – or, especially, if not.
The PayPal Business Debit MasterCard
As my readers know, one of my favorite tools for manufactured spend is the PayPal Business Debit MasterCard. It has two amazing functions:
- It earns 1% cash back on all non-PIN transactions, including all online transactions;
- It's a PIN-enabled debit card that can be loaded using PayPal My Cash cards and emptied at Walmart.
This is an amazing combination of features. But unfortunately as it stands, you have to choose which benefit to take advantage of: access to debit features like money orders, Walmart Bill Pay, and prepaid card loads (Bluebird and Gobank), or 1% cash back.
Your New .83% Cash Back Debit Card
When you don't have enough funds in your PayPal account to cover a Debit MasterCard transaction, instead of having your transaction rejected, PayPal gives you the option of pulling the funds from a backup funding source. You can choose any bank account linked to your PayPal account, or you can use a PayPal Extras MasterCard.
The PayPal Extras MasterCard earns "points" which can be redeemed for cash into your PayPal account: you can redeem 6,000 points for $50 in cash, or 0.83 cents per point. You can only earn 50,000 points per year (8 $50 redemptions, plus some change).
According to Phil's comment, these backup funding transactions earn points on the Extras MasterCard.
Since I don't have an Extras MasterCard yet, I can't confirm the limits on these backup funding transactions or whether they earn points. The standard limit on backup funding transactions is $1,000 per day, but I don't know if the same limit applies when the backup funding source is a PayPal Extras MasterCard.
It Gets Better
As I mentioned, the backup funding source is only used when you don't have enough money in your PayPal account to cover a debit card transaction. That means that rather than loading your PayPal account with a PayPal My Cash card and then emptying the balance with your Debit MasterCard, you will want to use your Debit MasterCard when your account balance does not cover the transaction.
Amazingly your PayPal Extras MasterCard is managed from within your PayPal account and you can use your PayPal balance to pay off your Extras MasterCard. That means you can load a PayPal My Cash card to your account and move the money directly into your Extras MasterCard to pay off the balance you incurred using your Debit MasterCard.
What it Means
Let's take a look at a simple pass through this hack.
- Assume a PayPal balance of $0.70;
- Use your PayPal Business Debit MasterCard to purchase a $1,000 money order from Walmart;
- After using the $0.70 in your account (and covering the money order purchase fee), your PayPal Extras MasterCard will be charged $1,000;
- Buy 2 $500 PayPal My Cash cards at CVS for $7.90 and load them to your PayPal account;
- Move the money from your PayPal account to your Extras MasterCard;
- Redeem 1,000 points for $8.33 (when you have 6,000 points).
You'll have spent $8.60 for the money order fee and My Cash cards, and earned $8.33 worth of Extras points – and manufactured $1,007.90 in spend at CVS.
What do you think?
Does it work? Are you going to try it? Should I have kept my mouth shut? Inquiring minds want to know! See you in the comments.