[Expiring] Advanced techniques for manufacturing spend

Update 3/6/2013: as first reported in this thread, beginning May 1, 2013 the Wells Fargo Prepaid card will only be loadable using Wells Fargo credit and debit cards, preventing the hack described in this post:

wells fargo load change.png

Original post:

The first thing every reader should do once they take a serious interest in travel hacking is make sure every possible purchase is charged to a points- or mile-earning credit card.

Once you've established that base level of spending, you can consider more advanced techniques like using Kiva or Amazon Payments to "manufacture" points-earning purchases.

Today I'll explain one of the most advanced methods for manufacturing spend, with a twist that makes it even more lucrative.  Here's what you'll need:

It's possible to load your Bluebird account directly with Vanilla Reload Network Prepaid Reload cards.  These cards can be purchases in denominations of up to $500, with a flat fee of $3.95.  Since you can use the money immediately to pay off your credit card, or any other bill, this allows you to manufacture spend at a cost of $0.0078 (.78 cents) per dollar in manufactured spending (3.95/503.95).  This is a great value, especially if you're using a card that earns bonus points on purchases at drug stores like CVS, where Prepaid Reload cards are often sold.

However, by taking a slightly more circuitous route, you can drive down your cost per point even further.  The Wells Fargo Prepaid card allows you to load up to $2500 per load at a cost of $5, and a total of $4500 per rolling 30-day period (one $2500 load and one $2000 load).

Here's where the advanced technique comes into play.  Normally you can only earn rewards from the initial charge to a rewards-earning credit card.  However, a PayPal account and linked PayPal debit MasterCard allow you to earn rewards for both loading and unloading the card.  Here's how: many stores that sell Vanilla Reload Network Prepaid Reload cards also sell similar, PayPal-branded reload cards, known as "My Cash" cards.  You can earn your normal credit card rewards by purchasing these cards, which have the same cost structure as Prepaid Reload cards ($3.95 for loads up to $500).  However, once the money is loaded into your PayPal account, you can then use your linked PayPal debit MasterCard to load your Wells Fargo Prepaid card and earn 1% cash back on each transaction.

Once the money is loaded to your Wells Fargo Prepaid card, you can load the funds onto your Bluebird card as a debit transaction at any Walmart and use the funds to pay off your credit card.  Note that the Wells Fargo card has a transaction limit of $600, and the Bluebird allows debit loads up to $1000 per day, so you'll need to make two $500 loads per day.  

Let's compare the beginner and advanced techniques:

Beginner technique: Prepaid Reload card to Bluebird

  • Buy a $500 Prepaid Reload card at a cost of $3.95;
  • Load $500 Prepaid Reload to Bluebird;
  • Pay bills with Bluebird's bill pay service, or withdraw to a bank account;
  • Total spend generated: $503.95.  Total cost: $3.95.  Cost per dollar: $0.0078.

Advanced technique: PayPal My Cash to PayPal to Wells Fargo to Bluebird

  • Buy four $500 PayPal My Cash cards at a cost of $15.80;
  • Load four $500 My Cash cards to PayPal;
  • Load $2,000 to Wells Fargo Prepaid at a cost of $5, earning $20.05 cash back;
  • Load $2,000 to Bluebird for free at Walmart (in four transactions on two separate days);
  • Pay bills with Bluebird's bill pay service, or withdraw to a bank account.
  • Total spend generated: $2015.80.  Total cost: $0.75 ($20.80 in fees minus $20.05 cash back).  Cost per dollar: $0.0003 (.03 cents per dollar in manufactured spend).

If you're interested in trying this technique, keep the following in mind:

  • PayPal allows up to $500 per day in My Cash loads, and up to $4,000 per calendar month;
  • Wells Fargo allows up to $2500 in loads within 24 hours, $3500 within 15 days, and $4500 within 30 days.  Thus to maximize this card you should load $2000 per load, 16 days apart, at a cost of $5 per load;
  • If you have money in your Wells Fargo Prepaid account on your monthly statement date, Wells Fargo will charge a $3 monthly fee, which will raise your cost per point (in the above example, it would raise it to .18 cents per dollar in spend).  If your account is empty, most reports are that the fee is not charged.

Happy hacking!