[updated 8/25/13: reader Eric pointed out an error in my calculations below: buying $1,000 in Vanilla Reload cards with the PayPal Debit MasterCard will earn $10.08 in cash back, not $10.79 as I originally wrote. The post has been updated to reflect the slightly higher cost per dollar of manufactured spend.]
...the PayPal Business Debit MasterCard?
As readers know, I'm fairly obsessed with lowering my cost per dollar of manufactured spend. That's why I've long been intrigued by the PayPal Business Debit MasterCard. The card offers a unique value proposition: it's a 1% cash back card (on signature purchases), that can itself be loaded by credit card (using PayPal Cash reloads).
PayPal Cash reloads are very similar to Vanilla Reload Network reload cards, and in fact are sold in many of the same places, like gas stations and drug stores. However, they have different limitations: they can only be used to load a PayPal account, loads are limited to $500 per day and $4,000 per rolling 30-day period, and most importantly PayPal will immediately send a warning, then close your account, if you load your PayPal account with a PayPal Cash card and immediately withdraw the money to your linked bank account.
Enter the Business Debit MasterCard. By using this card for online load to my Nationwide and US Bank Visa Buxx cards, I earn 1% cash back on $3,014 ($3,000 in loads, $14 in fees) each month, bringing my total cost for $3,024 in manufactured spend to $7.56, or 0.25 cents per dollar.
That accounts for $3,000 of my monthly load allowance – but PayPal allows up to $4,000 in monthly loads. This has left me scratching my head about what to do with the last $1,000 in PayPal Cash loads, since May 1, when the Wells Fargo Prepaid card lost its usefulness .
The solution was staring me in the face the whole time: buying $1,000 in Vanilla Reload Network reload cards, at a cost of $7.90 in fees, will yield $10.08 in cash back. The $2.18 in profit from that transaction reduces your total cost for the $1,000 in PayPal Cash reload cards to $5.72: a respectable 0.57 cents per dollar in manufactured spend. If you buy your PayPal Cash cards at a store in one of your cards' bonus categories, this can push your cost per point into the low tens of a cent.
Before the comments erupt with sarcasm, let me be perfectly clear: this is not a technique for earning more miles and points, it's a technique for earning miles and points at a lower cost per point. If you're more interested in the number of points you earn, rather than the cost you pay per point, then you're better off simply buying a $0.70 Walmart money order with your remaining $1,000 in monthly PayPal Cash loads. This will raise your cost per dollar to 0.85 cents per point, but you'll be able to manufacture an additional $1,000 per month by purchasing your Vanilla Reloads with a points- or miles-earning credit card instead.
The point is, using techniques like this, and others like it, you control the cost you pay per manufactured mile or point – and that's worth a lot to me.
(N.B. You can also fund your $1,000 monthly free Amazon Payment with your PayPal Business Debit MasterCard and pocket $10, manufacturing $1,000 in spend AND earning $2.10.)