A gift card deal too good to resist

[update 2/6/14: please see my post on Upromise Investments]

Gift card churning seems like a lot of fun for those who enjoy it. The really serious guys like Frequent Miler wait for a big opportunity to come along and then go big, turning gift cards into merchandise and then trying to liquidate the goods, generating credit card spend and – hopefully – a small profit.

Personally, I only dabble in gift cards when opportunities come along that already fit into my overall strategy. For example, I was happy to pay $7.50 for 3,500 Flexpoints last May.

Today I made an exception and strolled down to my neighborhood Staples to buy some hanging folders – and a $100 Visa gift card, which came with an activation fee of $5.95. Just to magnify the insanity, I didn't even use a card that bonuses office supply stores: I used my American Express Hilton HHonors card, which earns 3 HHonors points per dollar spent on non-bonused purchases.

American Express Offers for You

By now you've guessed where this is going: my HHonors card was targeted by Amex for the Staples "Offer for You," which reads:

Get a one-time $25 statement credit by using your enrolled Card to spend a total of $100 or more on qualifying purchases at Staples by 3/17/2014.

If you carry any American Express cards, log into your online account and see if any of them have been targeted. From the reports I've read online, most people are only receiving the offer for one of their credit cards. If you get the offer for more than one card, then use the "Multiple Browser Tabs" trick described here to register for the offer on each eligible card.

Plink

In addition to the $25 statement credit I received from American Express, I also made sure to add my Hilton HHonors card to Plink in order to earn 300 Plink points (worth $3 in Amazon credit) for spending more than $60 on my linked credit card at Staples.

Breaking: Liquidate with Evolve Money

Finally, I was excited to take advantage of this offer in order to run an experiment liquidating Visa gift cards using Evolve Money.

I'm more than happy to report that I was able to successfully add the Visa gift card to Evolve Money (after registering the gift card online), and make a bill payment to one of my utility companies.

This is extremely exciting since it effectively reduces the cost of gift card liquidation to $0. If this technique continues to work with other prepaid cards, like the One Vanilla cards sold at CVS, it will mean $28,000-$31,000 in monthly manufactured spend with no liquidation costs.

The possibilities here are truly staggering, but I'm going to refrain from any additional speculation until later this week when it becomes clearer what kinds of possibilities exist to liberate cash using Evolve Money.

Gobank's Launch Challenges Bluebird

For the last week I've been experimenting with the beta version of Gobank, the new simplified, smartphone-centered bank product from Green Dot, the same people who sell cash-only Moneypaks at retailers all over the country, which can be loaded to many prepaid products, as well as PayPal accounts.

I'm happy to report that Gobank is a true competitor for American Express's Bluebird banking product.  Unsurprisingly, as a product in beta release, Gobank is still very poorly documented.  That's why I'm here to walk you through all the features I've explored so far.  There's a lot of information here, so read this post carefully, and if you want to know more about Gobank, post your questions in the comments section of this post and I'll do my best to answer.

Getting an Account

Since Gobank is still in beta, you first need to sign up to receive an invitation.  After a few weeks of waiting I reached out to their extremely active social media team on Twitter @Gobank and asked if they could help.  A day later I was able to create an account (although strangely, I didn't receive my invitation until a day or so after that).  This seems to be the main function of their Twitter team, so don't hesitate to tweet them and ask for an invite once you've signed up to receive one.

The best way to get a Gobank account, however, is to have someone who already has an account send a nominal amount of money to your e-mail address.  The notification gives you the option of receiving the money in a newly set-up Gobank account.

Online Debit Card Loads

The first, most obvious feature of Gobank is the ability to load your account online using a debit card.  In principle this is limited to $200 per day and $1,000 per month.  Based on my limited experience (5 successful loads) of unsuccessful and successful debit load attempts, I believe that either the Gobank servers are located on another continent in a different time zone, or the $200 limit is a rolling 24-hour limit.  My unsuccessful load attempts returned an error that only one load "per day" is possible, even if the first load was the previous calendar day.  Later in the evening I was then able to make the load successfully.  This needs to be explored further in order to use this service consistently.  My tentative recommendation is to either leave 2 or more days between loads, or wait 24 hours between loads.

According to some reports on Flyertalk the account can also be funded using credit cards, by ignoring the "debit" prompts throughout the process.  I personally won't be using this option, since I think the risk of having the charge classified as a cash advance outweighs any marginal benefit.  Having said that, this does appear to be a viable option for now.

ATM Withdrawals

One of the most exciting aspects of Gobank is their promise of free ATM usage at over 40,000 ATMs nationwide.  According to the Terms & Conditions,

You may only withdraw up to $500 from an ATM in a single day.

Yesterday I visited one of the ATMs the Gobank iPhone app directed me to, and was able to withdraw $400 without any ATM fee or fee from Gobank.  I only withdrew $400 since that was the ATM's transaction limit, though I do suspect that Gobank would allow a withdrawal of up to $500.

This is in contrast to the Nationwide Visa Buxx card, which is a great product, but which charges $1 per ATM withdrawal (even at their "free" ATMs!), and limits ATM withdrawals to $200 per week (7-day rolling period).

Walmart Rapid Reload Network Loads

Today I visited my local Walmart and loaded my Gobank account with about $800 from a MyVanilla Debit Visa card, one of the true pin-based debit cards I discussed in one of my very first posts.  I was not charged any fee by Gobank or Walmart (although I was charged a $0.50 transaction fee by MyVanilla, one of the reasons it's among the worst prepaid debit card products on the market).  Just like with Bluebird, you can load the card at any Walmart register, even at stores that don't have a dedicated MoneyCenter.

The ability to load cash from a PIN-based debit card is game-changing, since it allows you to avoid the high fees imposed on cash advances, money orders, or ATM withdrawals, and use the money to pay anyone in Gobank's bill pay database.  Be aware that some users have reported having their MyVanilla Debit cards closed by Incomm, the company that issues them, for using their accounts too aggressively.

Bill Pay

Bill pay is one area where Gobank falls short, so far, of American Express's Bluebird banking product.  Bluebird allows you to create multiple "pay to" accounts for a single payee: for example, if you have multiple Chase credit cards, or multiple bills through a single utility company (gas and electric), you can clearly separate each account number as a separate "bill pay" account, and even give each account a different nickname.  

As of now Gobank's bill pay feature doesn't allow multiple account numbers for a single payee.  While this may not seem like a big deal, for those of us with multiple credit accounts at one bank this radically decreases the usefulness of the bill pay feature, since only one account per payee can be paid from the Gobank account, and the others need to be paid through other banking products like Bluebird.

Person to Person Transfers

Like Bluebird, Venmo, and Paypal, and as mentioned about Gobank allows you to send money to a person's e-mail address, cell phone number, or Facebook account, and fund the transaction with your available Gobank balance.  If the recipient doesn't have a Gobank account, they can deposit the money instantly into their Paypal account

Limits

  • ATM withdrawals: $500 per day.  Self-explanatory.
  • Deposits: "The most you can deposit to your account in any day in cash is $2,500."  I interpret this to refer to the sum of online debit card loads ($200 per day) and in-person Walmart Rapid Reload Networks loads ($2,500 per day).  So, if you load $200 online, you should only be able to load $2,300 at Walmart.
  • Person to person transfers: $500 per day ($2,000 starting April 17, 2013), $5,000 per month.

Fees

  • Monthly fee: $0.  Like the Bluebird, Gobank doesn't charge a monthly fee, although they do allow you to pay up to $9 per month voluntarily.
  • Foreign transaction fee: 3%.  Unlike the Bluebird, which charges no foreign transaction fee, Gobank charges 3% on foreign transactions.  This is not a foreign currency fee, so it will still be charged even if the transaction is conducted in US currency.  Additionally, it applies to all transactions, not just purchases, so foreign ATM withdrawals are also assessed this fee.
  • Out-of-network ATM withdrawals: $2.50.  Fortunately Gobank has a very large network of ATMs, and you can get cash back at most grocery stores, so you should be able to avoid this fee.

Summary

Gobank is an exciting new development in the rapidly changing market of alternatives to traditional brick-and-mortar banks, which has so far been dominated by American Express's well-designed and well-implemented Bluebird product.  Gobank has a lot of promise, and a lot depends on the continuing implementation of their product.  Over the next few days I'll be giving some more analysis and suggestions of ways to maximize the value proposition offered by Gobank, as well as a bit of a refresher on the granddaddy of these products, Bluebird.

Avoiding foreign transaction fees

Using rewards-earning credit cards for overseas purchases can incur foreign transaction fees which cost more than the value of any rewards you earn on your purchases.  To avoid these fees, it's best to use either cash, or a card that doesn't charge such foreign transaction fees.  Today we'll take a look at a few such cards.

American Express Bluebird

The Bluebird, which is technically a prepaid debit card, charges no foreign transaction fees on foreign purchases or foreign ATM transactions.  To earn rewards on your overseas purchases made with the Bluebird, you can load the card with Vanilla Reload cards purchased in the US, for example at drugs stores like CVS; you can load the card at Walmart using a rewards-earning debit card; or you can simply transfer in money from a linked US bank account.  However you choose to load the Bluebird, you won't pay foreign transactions fees when you use it overseas for purchases or ATM withdrawals.  You can also order a Bluebird card without any impact on your credit report, since it's a prepaid debit card, not a credit card.

Discover Cards

Since 2008, when Discover acquired the Diners Club overseas credit card network, Discover cards have had increasingly wide acceptance internationally, and all Discover cards have no foreign transaction fees.  I recommend the Discover it card (formerly known as Discover More) since it has no annual fee and potentially lucrative rotating 5% cash back categories.  For example, in the last quarter of 2012, Discover gave 5% cash back on all "online purchases," a very broad category!

Capital One

Like Discover, all Capital One cards have no foreign transaction fees.  These cards include the Capital One Venture Rewards card, which allows you to redeem your points for travel expenses.

Chase Sapphire Preferred and Chase Ink Bold/Plus

These premium credit cards, which earn flexible Ultimate Rewards points, incur no foreign transactions fees on purchases made outside the United States.  The Sapphire Preferred has a $95 annual fee after the first year, as do the Ink Bold and Ink Plus cards.

American Express Platinum

While this card with its $450 annual fee certainly isn't worth getting just to avoid foreign transaction fees, if you already have a Platinum card you can use it overseas and earn Membership Rewards points without incurring any additional fees.

Co-branded Credit Cards

If you're interested in earning points with a specific rewards program, the following cards also have no foreign transaction fees:

Chase

Citi