Liquidating tiny-denomination prepaid debit cards

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If you read yesterday's post and rushed out to buy up a slew of 5% Back Visa Simon Giftcards, and then triggered 5% cash back on each of them, you are probably feeling pretty good about yourself.

You're also probably realizing that you've got a drawer full of $25 Visa debit cards, and may need some suggestions for liquidating them. I'm here to help.

Buy gift credit

If there's a particular world-swallowing online merchant you do a lot of shopping with, you can simply use your $25 debit cards to reload your gift card balance.

This goes for any merchant where you have a consolidated or well-organized method of keeping track of gift credit — Uber and Starbucks spring to mind, with their beloved smartphone apps.

If you are buying gift credit at a merchant where you already reliably spend money, this is a good way to convert prepaid debit cards into cash savings, as long as your swollen gift card balance doesn't make you spend more money than you otherwise would have.

Pay bills

I don't personally have very many bills, but I'm assured by experts that most people have a great many bills. They might be:

  • Phone;
  • Internet;
  • Cable;
  • Walker (dog, cat);
  • Insurance (homeowner's, renter's, car, health, dental, long-term care, yacht, RV, flood, drought);
  • Utilities (electric, gas, hot water, cold water, lukewarm water, elevator, heating oil, cooling oil).

Some of them may accept debit card payments at face value. Even if you usually make these payments quarterly or annually, you may be able to prepay them and have the balance roll over from one billing cycle to another.

This is a basically excellent idea, but like buying gift credit, you will quickly run into problems when you're producing more $25 Visa debit cards than you need to cover even your most speculative bill payments.

Liquidate as usual

Of course, these are PIN-enabled Visa prepaid debit cards, so it's also perfectly possible to liquidate their (small) balances as usual: by buying money orders or making bill payments at any merchant that allows those services to be paid for with PIN-enabled debit cards.

The problem with this approach is that while it's likely to be the cheapest in out-of-pocket cost, it's likely to be the most expensive in opportunity cost, because the same trips could be used to liquidate higher-denomination (and more profitable) PIN-enabled debit cards instead. This is the issue I've referred to in the past as "liquidation bandwidth."

If your local merchants don't throttle payments, that may not be an issue for you: you can liquidate these tiny-denomination cards side-by-side with higher-denomination cards. But if you're limited to 4 debit card swipes, or a single swipe, then you'll likely be better off swiping a higher-denomination, rather than lower-denomination, card.

Pay up

It's not nearly as sexy as loading up a Starbucks card or settling a decade's worth of car insurance payments, but there are also ways to simply pay to liquidate small-denomination debit cards. You can pay many kinds of bills online using Plastiq at a cost of 2.5% (61 cents on a $24.39 payment).

If you enroll using my personal referral link you also earn "Fee-free dollars" which allow you to make eligible bill payments without paying any fees at all — I get 400 fee-free dollars (16 $25 cards!) and you get 200 fee-free dollars (8 $25 cards!).

Plastiq has one key advantage over other bill payment services for liquidating these tiny-denomination cards: it doesn't have a minimum fee. When liquidating high-denomination cards the objective is to have a low, flat fee. That's one reason online quarterly tax payments are popular — at least among self-employed bloggers who have to make online quarterly tax payments anyway!

On the other hand, when liquidating low- or tiny-denomination cards, it's much preferable to have a fixed percentage fee no matter how high it is.

Conclusion

The good news is that 5% Back gift cards are capable of producing almost pure profit, no matter how much you have to pay to liquidate their residual balances.

The bad news is that once you have a stack of cards with residual balances, you really should put in a little bit of time to figure out the cheapest, most efficient way of liquidating those balances back to cold hard cash.