PayPal knows what I'm doing...and doesn't care?

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As my readers know, back in August while I was still overseas, both my business and personal PayPal accounts were frozen. A few weeks later both accounts were restored.

In the intervening period, while my accounts were "limited," I filed a report with the Consumer Financial Protection Bureau, asking for my accounts to be reopened and/or for PayPal to return my account balance to my funding account. A few days ago, I received an e-mail from the CFPB, saying:

We wanted to let you know that the company responded to your complaint.

After creating an account and logging in, I was able to view PayPal's response to my complaint, which I found truly remarkable. For that reason, I want to share it here. 

The response opened with some standard boilerplate:

Explanation of closure 
Please understand that even though we always aim at processing all transactions immediately, we still have to take security measures to protect all our users.  
We offer you our sincerest apologies for any difficulties you may have encountered while using our services. We value you as a customer and want you to continue using our services for years to come. Please feel free to contact me if you have any questions or concerns or if I can be of further assistance to you.

Fair enough. The second section started to get a little more specific:

 Relief
Your [sic] transferred $xxx.xx from your personal PayPal account to your business PayPal account and complain that the funds were unavailable and your account access was limited.  
At the onset it’s important to note that PayPal has taken the action you requested and restored your account access and the $xxx.xx payment amount was returned to your balance.  On August 16, 2013, you withdrew the $xxx.xx to your bank account ending in xxx7.

Then it started to get really weird:

Response
On [date], you created a Business PayPal account and on [date], you created a personal PayPal account.  Each time you created these accounts, you agreed to PayPal’s online User Agreement (“User Agreement”).
On August 6, 2013, you sent a payment of $xxx.xx from your personal PayPal account to your Business PayPal account.  This transaction triggered our transaction monitoring tools and we placed the payment on a temporary hold so we could conduct an internal security review to verify the legitimacy of the payment.... 
...The User Agreement permits PayPal to place a payment on hold when we “…believe there may be a high level of risk associated with you, your Account, or any or all of your transactions…”  User Agreement at Section 10.5.  In determining that a high level of risk existed with this payment, PayPal carefully considered a number of factors that when viewed together, indicated in PayPal’s reasonable determination that such a high risk existed.  The following risk factors were identified:
- Inconsistent login information.  At the time of this payment, the login to your account was from a different geographical location outside of the United States.  Your previous logins had consistently been from [New England].
- This payment was funded with a financial tool that had not previously been used on the account for any transactions.  Specifically,  you had only added funds to your PayPal account via MyCash.  This payment was funded with money from the bank account ending xxx7.
Based on historical data, inconsistent account activity creates a higher risk for chargebacks, claims and reversals. 
During this time, your accounts were limited because your transaction activity warranted review.  Specifically, you had been using your MyCash Card to add funds to your personal PayPal account.  You would then send personal payments to your business PayPal account and used these funds to purchase gift cards from CVS Pharmacy and US Bank.  Based on our experience, this type of activity is consistent with money laundering which is why your accounts were limited.  On August 22, 2013, after further review, your account access was restored.

What I find so interesting about this document, and why I think it's worth posting, is that it appears to me that PayPal knows exactly how I'm using my account: funding with PayPal My Cash cards, then unloading the card for 1% cash back at CVS and using Visa Buxx. And they don't seem to have a problem with it: they reopened my account after meticulously documenting all of my account activity.

Why would PayPal allow me to carry on? Because this activity is profitable for them. Remember, there's a logic behind the 1% cash back you earn with the PayPal Debit MasterCard: you only earn it on online purchases and those you sign for. That is to say, you earn 1% cash back on "credit" transactions, for which PayPal earns somewhere between 2.5% and 3.5% of the purchase amount. They're more than happy to kick back 1% to me since they're earning 2-3 times as much in merchant swipe fees.

I wrote up this technique in somewhat more detail in this post from back in June. 

 

Gobank loses its luster: account closures continue

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As the first blogger to break the news of the Bluebird competitor Gobank, it gives me no pleasure to report that it no longer appears to be a long-term option for manufacturing large quantities of miles and points.

Background

Back on May 30, I reported that I had been called by Gobank's Customer Care department and asked about my account usage. I responded more or less honestly, and continued as before. Then on June 11 (after another statement had closed) I was called again and told that my account usage was "very unusual" and that if I continued to violate (unspecified) limits, then my account would be closed. After that call, I drastically reduced my account activity to slightly less than $5,000 per statement cycle.

Unfortunately, yesterday on my statement closing date, when I logged into Gobank on my PC all of the account tabs had been greyed out, except "HOME:"

Today, I found an additional notification that my account had been closed.

What does this mean for you? 

If you're using Gobank to manufacture miles and points, then it's a very good bet that your account volume is violating their new unpublished limits, either for loads, unloads, or simply the amount of profit your usage is generating.

That means that I can now happily recommend that you use Gobank as aggressively as possible to manufacture spend until your account is closed.

My data points

For reference, here is my record of load and unload volume since I started using Gobank back in April. These numbers are based on my statement dates, which are on the 3rd of the month (so the May numbers cover from April 4 to May 3):

  • May: $4,602 in 12 deposits, $5,901.77 in 9 debits
  • June: $17,001.27 in 27 deposits, $16,000.86 in 14 debits
  • July: $4,900 in 6 deposits, $6,098.64 in 8 debits
  • August: $4,994.05 in 6 deposits, $4,994.05 in 6 debits
  • September (no statement generated): $3,500 in 5 deposits, $3,500 in 3 debits

And no, I have no explanation for why my credits and debits don't align perfectly, except that when I joined, Gobank was still in its "beta" release, so they may not have worked out all the kinks yet in their statement generation software.

What do you do with SkyBonus points?

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As readers of my eBook (The Free-quent Flyer's Manifesto) know, in addition to individual frequent flyer accounts, airlines also offer "small business" rewards programs, which allow companies that are too small to qualify for corporate accounts to receive rewards for directing their travel towards one airline. Eligibility, earning rates, and rewards vary depending on the airline.

The program I have the most experience with is Delta's SkyBonus program. You can view the program's earning and redemption rates here. SkyBonus is easy to join, gives 3 SkyBonus points per dollar spent on economy tickets to and from Delta hubs (including ATL, CVG, DTW, MEM, MSP, and SLC, but excluding JFK), and 6 SkyBonus points per dollar spent on all other economy flights.

Business class tickets earn 10 and 30 points per dollar to/from hubs and non-hubs, respectively.

Tickets must be issued on Delta, KLM, Air France, or Alitalia ticket stock to earn Skybonus points, and you won't earn SkyBonus points on any taxes or government surcharges. You can easily tell if your ticket qualifies by the first 3 digits of your paid ticket number. If the number begins with 006, 057, 074, or 055, you should be able to earn SkyBonus points.

Now, the first thing you need to know about SkyBonus is that the points are not very valuable. For example, you can redeem 10,000 SkyBonus points for 10 on-board service coupons, good for a premium beverage or headset, or 30,000 points for 4 one-day Sky Club passes (not single-entry passes, like the Scrooges over at United). If you carry a Delta American Express co-branded credit card, then an onboard beverage costs up to $5.25 and Sky Club entry costs $25, putting the value of a SkyBonus point between 0.53 and 0.33 cents each. Still, since you earn 3-6 SkyBonus points per dollar spend on economy tickets, that works out to a 1-3% rebate on the cost of your paid tickets, and travel hacking is all about finding that edge (obviously the rebate value on Business class tickets is even higher). That's how I redeemed my first 40,000 or 50,000 SkyBonus points.

Then I noticed I was accumulating more and more points, and looked at some of the more expensive awards. A round-trip domestic flight in Coach class, in very restricted fare classes, costs 85,000 SkyBonus points. Using the values we calculated previously, that would be more valuable than the beverage coupons if the flight cost more than $450 and more valuable than the Sky Club passes if the flight cost more than $283. Of course, periodically domestic flights do cost that much or more, so this could be a great way to save some money. The trouble is the restricted fare classes SkyBonus tickets are eligible for: in order to be worth saving up your points for an 85,000 point award, you'd need to find an expensive flight – in a cheap fare class! Of course it happens, but you'll need to remember every time you book a ticket to check whether there are eligible fares available.

Managing my SkyBonus account has become a first-world problem for me, since I generally live by the rule that the least valuable point is the one you don't redeem, but I'm drawn to the potentially big payday of a valuable SkyBonus flight redemption. I think for my own points management strategy, I'll probably keep 85,000 SkyBonus points in reserve, in case I need to buy a ticket for someone else (SkyBonus tickets don't earn redeemable or Medallion Qualification Miles) . Then I'll aggressively redeem my miles in excess of that amount for beverage coupons and Sky Club passes.

If you participate in SkyBonus, what's your strategy for points redemption?

Unleash your manufactured spend: Part 5

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It's been quite a week, hasn't it? On Monday I outlined the basic principles of a so-far unblogged travel hacking technique: using a PIN-based debit or gift card to pay off credit cards directly at a Walmart Money Center or Customer Service center (depending on your location). On Tuesday I gave a cost per manufactured dollar analysis of various PIN-based cards which can be used to take advantage of this opportunity. On Wednesday I shared my thoughts on the vigorous reaction my posts had received so far. Then Friday morning I shared my own plans to double the part of my manufactured spend I generate at Walmart by shifting my Gobank and Bluebird loads from Vanilla Reload Network-compatible cards to gift cards I purchase at grocery stores using credit cards that bonus such transactions, and using my high-transaction-limit Visa Buxx and MyVanilla Debit cards for Walmart bill payments.

I want to conclude this series with a few data points from my own experience using this technique. Let me start by saying that among travel hackers, my earned income probably puts me in the bottom 20% – if not lower! There's no denying that although it's now more accessible than ever, this sport is still largely (though far from exclusively: Mommy Points runs with the best of them) played by business travelers, and that I am not. However, thanks to this game we play, I have virtually unlimited cash liquidity, so I don't mind having my money locked up for a month or so if one of my accounts is frozen or closed. 

Fortunately, it hasn't happened yet. Even my PayPal account closure, which I assumed was permanent, was actually quickly reversed, and even while my accounts were frozen I was able to withdraw my remaining balance over the phone. Nonetheless, if a few thousand dollars actually went missing it would be a real hit to my net worth, and I'm sure many of my readers feel the same way, whatever your annual income.

The purpose of this post is to keep your blood pressure within a healthy range while you wait for your first Walmart bill payments to appear on your online banking statements.

So far, I've made Walmart bill payments to four of my credit cards, with one from each of the four major payment networks (I don't have a Diner's Club card, and they're now owned by Discover so I'm not sure which payment network they technically belong to – reader experiences in the comments are welcome!). The payments posted at different speeds, but they all posted eventually.

While Discover cards and American Express cards are issued by the same banks that process the payments (usually – there are a few exceptions, like the Barclaycard Travelocity American Express, issued by Barclaycard but using the American Express payment network), Visa and MasterCard products are issued by a range of banks, and how quickly your payment posts is going to depend on the issuing bank much more than on the payment network, so take my experience with a healthy dose of salt, unless your cards have the same combination of issuing bank and payment network as mine.

Finally, all my payments were made in-store before 7 pm, the cutoff time for next business day bill payments.

  • Citi Visa: $1.88 next day payment. Paid on Thursday, shown online early Saturday morning, with Friday posting date.
  • Barclaycard MasterCard: $1.88 next day payment. Paid on Sunday, shown online Wednesday afternoon, with Tuesday posting date.
  • American Express: $1.00 3-day payment. Paid on Sunday, "payment received" e-mail Wednesday, shown online Thursday with Wednesday posting date.
  • Discover: $1.00 3-day payment. Paid on Sunday, reflected in "available credit" Wednesday, shown onlineThursday with Wednesday posting date.

Obviously the biggest missing piece here is Chase, whom I haven't had an opportunity to pay yet. I'll update this post when I do make a Chase credit card payment. In the meantime, do any readers have reports on how long Chase bill payments take to post?

Conclusion

Neither this technique, nor any other, is for everyone. Without knowing the details of a specific situation (access to Vanilla Reload Network cards, access to gift cards, access to Walmart, access to competent cashiers) I can't recommend that anyone incorporate this technique into their own miles and points strategy. What I can do is promise that I won't hold back the details of a travel hacking technique in order to keep it for myself or "save" it for people in the know. 

If you do enjoy this blog and especially if you find it useful for your own miles and points strategy, please consider buying my eBook, The Free-quent Flyer's Manifesto. It costs just a few bucks, and 100% of the proceeds are used to bring you original content here on the blog and throughout the website. 

And who knows: you might learn something new!

 

Unleash your manufactured spend: Part 4

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This post was supposed to go up yesterday, but I'm moving apartments this week and yesterday got a little out of hand. So, my apologies for that. There'll be a wrap-up post this evening and then next week we'll return to our regularly scheduled programming.

In today's entry in my series on the ability to pay credit card bills using PIN-based debit and gift cards at Walmart (Part 1, Part 2, Part 3), we're leaving theory behind and I'm breaking down my own plans to maximize this technique in my own miles and points strategy.

First, a little background. As someone who constantly ridicules Walmart's model of "low prices, no training, starvation wages," immediately before discovering this technique I was running just 5,000 per month through Walmart, with just two trips per month (unless I had an urgent need to generate a lot of spending quickly, in which case I could buy additional money orders). On a typical visit, I would make 3 deposits to my Gobank account: a $1,000 US Bank Visa Buxx swipe, a $500 Nationwide Visa Buxx swipe, and a $1,000 MyVanilla Debit swipe. By loading my Buxx cards with my PayPal Debit MasterCard, which was funded with PayPal Cash cards, my net cost for $2,519.75 in manufactured spend (per visit) was $12.18, or 0.48 cents per dollar ($11.85 in PayPal Cash fees, $7.90 in Vanilla Reload Network fees, $7 in Visa Buxx load fees, one $0.50 MyVanilla transaction fee, and a $15.07 rebate for using my PayPal Debit MasterCard). Since I manufacture almost exclusively in bonus categories – the exception being the Barclaycard Arrival World MasterCard, which doesn't have bonus categories, but earns 2.22% cash back on all transactions – this put my cost per point in the low tens of a cent.

Meanwhile, I would load my Bluebird account online with $1,000 using Vanilla Reload Network reload cards on each of the first five days of the month.

As I suggested yesterday, PIN-based billpay at Walmart led me to rethink my entire miles and points strategy. The point isn't that it's cheaper than loading a Gobank account – on the contrary, it's more expensive. I I were going to manufacture the same amount each month as I have been, I'd be crazy to use billpay instead of Gobank. The point, rather, is that at a slightly higher cost per dollar of manufactured spend, it liberates my entire Gobank and Bluebird loading budget for use with gift cards.

Now, with the same Visa Buxx and MyVanilla Debit spending pattern I was using before, I can directly pay my credit card bills at the Walmart Customer Service center (see Tuesday's post for cost per dollar analysis). Then, I can load $3,500 in gift cards to my Bluebird and Gobank accounts at any register in the store. Using a card that bonuses grocery store spend, like the American Express Hilton HHonors no-annual-fee and Surpass cards (5 HHonors points and 6 HHonors points per dollar spent at grocery stores, respectively), the American Express Premier Rewards Gold card (2 flexible Membership Rewards points per dollar spent at grocery stores), or even the US Bank Flexperks Travel Rewards card (2 Flexpoints per dollar, worth up to 4 cents when redeemed for paid airline tickets), I can literally double my monthly manufactured spend while only slightly increasing my cost per point.

Of course, this does entail additional trips to Walmart and additional risks. Since Bluebird has a $1,000 daily load limit, I can't load $2,500 per visit as I do with Gobank. To use giftcards to max out my Bluebird load limit, I'd have to make 5 visits a month – not likely! But 4 visits per month, one per week, seems eminently reasonable.

Meanwhile, I'll incur additional risk by moving $4,000 in Vanilla Reload Network reload card loads from Bluebird over to my 3 MyVanilla Debit cards. Since Walmart Billpay is actually cheaper than bank teller cash advances, at least for some transactions ($1.50 for American Express and Discover bill payments, compared to $1.95 for cash advances), I'll stop doing large cash advances, which will hopefully protect me when I start making larger swipe transactions with the cards.

And that's how I'll be turning $10,000 in manufactured spend into $19,000 in manufactured spend on Walmart visits. I'll pay a slightly higher cost per point, but the value of the points I earn will outweigh the higher costs 5-10 times over.

Check back tonight, when I'll offer my concluding thoughts and provide some valuable data points so you know what to expect when you make a Walmart bill payment.

 

Unleash your manufactured spend: Part 3

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On Monday, I published a post outlining the details of a long-standing but little-known travel hacking technique: using PIN-based debit cards to make credit card payments at Walmart Money Center and Customer Service registers.  Then on Tuesday I compared the potential cost per dollar (CPD) of manufactured spend you can achieve using various PIN-based debit products.

In the days leading up to this week's series, I promised "a new, game-changing hack which will double or triple the amount of manufactured spend" you can generate each month. But when the details were revealed, they were met with a shrug from many of my readers. I'm not here to judge – I'm here to provide you with my ideas, analysis, and experiences in the world of travel hacking. But the indifferent reaction did start me thinking about the following question:

What do you do when you find out about a new travel hacking technique?

The natural impulse when a new technique like Walmart billpay comes along is to think "how can I add this to my existing system?" And there is a perfectly natural answer: buy PIN-based Visa prepaid debit cards, preferably at a merchant that gives a category bonus (like supermarkets with the American Express Hilton HHonors and Surpass cards), and liquidate those cards at your local Walmart Money Center or Customer Service center.

I would argue that that's the wrong impulse, and that's part of what has led to a lot of frustration among people who've tried using this technique and found it to be more trouble than it's worth. Indeed, it sounds like a special kind of hell buying Visa gift cards in sets of four, taking them to Walmart, asking an underpaid, undertrained Walmart cashier for a $1,998.12 bill payment – and then asking to pay using four $500 gift cards! It's no surprise that people experience a lot of resistance and heartburn if that's their unloading strategy.

But remember the features of the products you've already been exploiting for months: Bluebird allows you to load up to $1,000 per day and $5,000 per calendar month in Vanilla Reload Network reload cards OR register loads at Walmart – and those loads can be done at any Walmart register (I've even done them at the small register at the end of the self-checkout aisle).  Gobank allows up to $2,500 per day in PIN-based debit loads at Walmart. While you can load $1,100 twice using a MyVanilla Debit card for a total cost of $1.00, you can also load $500 5 times, at 5 different registers, for free using PIN-based gift cards.

Even better, if your local Walmarts have Money Center kiosks (mine don't), you can load your Bluebird and Gobank accounts there, without even interacting with a cashier. 

Then you can use your MyVanilla Debit cards, or other high-limit PIN-based debit products to make single, large, credit card bill payments at the Customer Service desk or Money Center without any fuss: no split transactions, no anonymous gift cards. The same goes for your US Bank and Nationwide Visa Buxx cards (but don't forget the $800 rolling 7-day purchase limit with Nationwide Visa Buxx).

I'm not recommending this, or any other, specific loading and unloading strategy. What I'm recommending is that rather than just stacking new techniques on top of your favorite existing techniques, think about your miles and points strategy holistically in order to get the most out of each horrible, soul-crushing, but shockingly lucrative trip to Walmart.

With that said, I'm dismounting the soapbox! Check back tomorrow, when I'll share my plan going forward, integrating Walmart billpay into my own miles and points strategy, and on Friday I'll share some additional data points that I hope readers will find useful.

 

Unleash your manufactured spend: Part 2

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Well, yesterday's post sure got a reaction out of my readers, both long-time and first-time, and I can't say I'm surprised: it was an "unblogged" technique that a lot of people have been using to manufacture spend for months, or longer, and they were understandably concerned about anything that might signal an end to that. I strongly recommend taking a look at the comments to that thread, since in addition to people scolding me there are some valuable observations by readers correcting details and making observations based on their own experiences.

I want to single out commenter Brandan who pointed out that "it says on the FlyerTalk post you linked to that it's possible to have Best Buy Chase as the payee for a Chase credit card (and reduce the bill pay fee to $1)" and commenter Jewsus for pointing out that he can pay his American Express credit card using the "next business day" service for $1.50, not $1.88 as I had posted (the 3 business day service costs $1). Thanks guys. I don't have every credit card and I haven't made payments to all the credit cards I do have, so there's a lot of information about specific issuers that I'm not going to be able to report firsthand.

Cost per Dollar (CPD) of manufactured spend: my analysis

Since this technique has a very high limit (up to $8,999 or $9,999, according to various reports) but a flat cost, the cost per dollar of manufactured spend you pay is going to vary depending on the size of your payments. For the sake of simplicity, I'm going to confine this analysis to four payment amounts, where applicable: $500, $1,000, $1,500, and $2,000. Hopefully this will illustrate the potential return of this technique, and you can repeat the calculations for your own preferred payment amounts. Here are my calculations, in increasing order of CPD.

Bank Debit Cards

This is the cheapest option for earning rewards, but is also inherently limited by the amount of money in your checking account. Further, Bank of America and Suntrust, the two banks which issue rewards-earning debit cards that pay rewards on PIN-based transactions, are understandably sensitive to so-called "perk abuse," and you risk having your checking account closed by your bank for "excessive" use of this technique.

Personally, I have made $1,000 Gobank deposits using my Bank of America Alaska Airlines debit card and the miles have posted normally, so I'm not worried about Walmart bill payments around that level. Your miles may vary. 

Since there's no fee for using your bank balance to fund a PIN transaction, your cost per dollar of manufactured spend is just $1.00 or $1.88 (or $1.50 – see above), divided by the size of your transaction (note that the Suntrust Delta Airlines debit card earns 1 Skymile per dollar, while the Bank of America Alaska Airlines debit card earns 1 Mileage Plan mile per 2 dollars): 

This is the same CPD calculation you should use for free Chase gift cards, if they're available in your state. 

Visa Buxx

The Nationwide and US Bank Visa Buxx cards have slightly different limits and fees: the Nationwide card allows 2 loads per month of up to $500 each, at a fee of $2, while the US Bank Buxx card allows 4 loads per month at a cost of $2.50 each. Both cards allow your balance at one time to be up to $1,000, but the Nationwide card has a 7-day rolling limit of $800 in purchases. For the purposes of this chart, I've pro-rated Nationwide's $4 load fee so $3.20 is "charged" to your Walmart bill payment when you make an $800 payment:

PayPal Debit MasterCard

The PayPal Debit MasterCard is loadable using PayPal Cash cards, which can still be purchased using a rewards-earning credit card at some – but far from all – vendors. In addition to its 1% cash back function when you sign for a purchase or use it online, the PayPal Debit MasterCard also functions as a PIN-based debit card. Your daily purchase limit may vary: mine is $3,000.

In this case, in addition to the bill pay transaction fee, you'll also pay $3.95 for each reload card, with up to $500 in value each:

MyVanilla Debit Cards

Loading a MyVanilla Debit card using a Vanilla Reload card costs the same as loading a PayPal Debit Mastercard. However, there's another $0.50 transaction fee charge on every purchase made with the card, slightly raising your cost per dollar of manufactured spend:

Gift Cards

There are a lot of different PIN-based debit gift cards on the market today, and the price per card can vary between $4.95 and $6.95. For the sake of these calculations I'll use $5.95 as a "typical" cost per $500 gift card. You should adjust the calculation depending on the cards you have available in your area:

Conclusion

There's a reason that I use "Cost per Dollar" analysis rather than "Cost per Mile/Point" analysis: I don't know what credit cards you carry, and I don't know how you value your miles and points.

I carry a ThankYou Preferred card that earns 5 ThankYou points per dollar at drug stores, and I can use those point to pay off my student loans for pennies on the dollar. That makes the ability to unload Vanilla Reload Network cards wildly valuable to me, even if I have to pay as much as 1 cent per dollar (earning "only" an 80% discount on my student loan payments). If on the other hand you're earning 1 Ultimate Rewards point per dollar spent at drug stores, you may be much less interested in liquidating Vanilla Reload Network cards at volume.

On the other hand, you may have an American Express Hilton HHonors Surpass card, and have some upcoming award trips planned where you'll be getting over half a cent per point in value. In that case, paying as much as 1.23 cents per dollar at a supermarket – 0.205 cents per point – means over a 50% discount on your hotel stay.

This series will continue tomorrow with some reflections on how this technique – and these blog posts – have affected my views on travel hacking, and I'll conclude on Thursday with my thoughts on how I'll personally be taking advantage of this technique in the future.

 

Unleash your manufactured spend with Walmart billpay: Part 1

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First of all, I want to thank all of my readers for their patience for the last few days while I've been hinting at today's post. The reason I couldn't post earlier was not just to build buzz, but to make sure that I had personally tested every part of this technique. I've now done so, and I'm pleased to report that it's real, and it's spectacular.

Second, to the best of my knowledge the technique I'm about to describe has never been blogged about openly before, which I expect to change soon. However, it is not the result of my work alone, so before I begin I want to acknowledge the people who set me on the path to discovering it: Jerry in the comments to this New Girl in the Air post; Nathan at the very end of the comments to this post; this PointsChaser post; and of course above all this slow-burning FlyerTalk thread which was the first place to report a number of the indispensable elements that make the technique work. I'm deeply indebted to all those sources for the basic elements of this technique; any errors are of course mine alone.

Having said that, let's get started. 

Walmart allows you to pay credit card bills using any PIN-based debit card

How it Works

Walmart Money Center registers and, in locations without a separate Money Center, Customer Service registers are integrated with the CheckFreePay bill pay network. At any such register, you can ask to make a credit card bill payment and use any PIN-based debit card to pay the bill and the associated fee.

You can use up to 4 PIN-based debit cards per bill pay transaction, while paying a single transaction fee.

Credit and debit cards are issued by banks: Chase credit cards are issued by Chase, American Express credit cards are issued by American Express, Bank of America credit cards are issued by Bank of America. However, each card is also linked to a payment network: Visa, MasterCard, American Express, Discover.

The single most important thing you have to know in order to take advantage of this technique is that when you pay your credit card bills at Walmart, you must make the payment out to the payment network, not the issuing bank.

So even though your Chase Sapphire Preferred Visa Signature card and your Chase Ink Plus MasterCard are both issued by Chase, to pay your credit card bills at Walmart the payee for the Sapphire Preferred will be "Visa" and the payee for the Ink Plus will be "MasterCard."

What it Costs

This section is based only on my experiments at my local Walmart store locations: your experience may differ. 

There are two price points in the CheckFreePay system at Walmart: $1 "3 business day" payments and $1.88 "next business day" payments. Unfortunately, not every credit card payment network has both payment speeds enabled. Here are the results of my experiments:

  • Visa: Next business day only ($1.88)
  • MasterCard: Next business day only ($1.88)
  • American Express: Next business day ($1.88) or 3 business day ($1)
  • Discover: Next business day ($1.88) or 3 business day ($1)

So if you want to make a credit card payment to a Visa credit card at my local Walmart, you must pay $1.88: the $1 payment option is not available. This may vary by store location or employee. 

Why it Matters

Ever since the Federal Reserve issued new regulations forcing prepaid card issuers to allow their cards to be used as "true" PIN-based debit cards, we've been in a very exciting time for travel hacking. For example, Chase allows up to $2,600 in free gift card purchases per Chase credit card, per rolling 30-day period. Likewise, many grocery stores (a common bonus category) allow you to purchase $500 Visa and MasterCard gift cards at a typical cost of $5.95-$6.95.

Besides gift cards, in many parts of the country it's still possible to buy Vanilla Reload Network reload cards at drug stores like CVS, and PayPal Cash cards at 7-11 store locations that are processed as gas stations. 

The problem in this era of virtually unlimited manufactured spend is liquidating prepaid cards once you've purchased them.

Bluebird is a free option, loadable at all Walmart registers using PIN-based debit cards up to $1,000 per day and $5,000 per month, but those loads count against the same $5,000 calendar month limit as Vanilla Reload Network cards.

Gobank is another great option I've extensively covered, but while it's free to load Gobank accounts at Walmart up to $1,100 per transaction and $2,500 per day, it's a Green Dot product that's subject to shutdown if you exceed undisclosed monthly limits or if your loading pattern is deemed "unusual."

PayPal has a $4,000 rolling 30-day load limit using PayPal Cash cards, but unloading your account can cause problems since PayPal is notoriously sensitive to abusive behavior.

All of those problems have now gone away: you no longer need an intermediate product to liquidate your prepaid cards.  Instead, you can bring up to 4 PIN-based debit cards per bill pay transaction to your local Walmart and at a cost of $1 or $1.88 send the card balances directly to your credit card.

The Risks

There are 3 primary risks to this technique that I want to be perfectly clear about up front.

First, there's the risk of having an account shutdown. There are many reports of MyVanilla Debit cards being shutdown without warning, and it's still unclear what loading and unloading pattern is safest. I don't have an inside line on MyVanilla Debit's fraud prevention algorithms, but I believe cash advances are probably the riskiest method of unloading the cards, because of the high limits and fixed $1.95 fee. Large Walmart transactions are probably a close second. So while this is a great technique for liquidating MyVanilla Debit balances, you still should be careful about spacing your loads and unloads out over the course of the month. And of course, even being careful can't guarantee that your account won't be closed.

Second, there's the risk that Walmart will consider your payments suspicious activity. There are lots of reports in this thread of Walmart employees being prompted to record customers' Social Security numbers, home addresses, and other personal identifying details. Those requests seem to be triggered by credit card payments over $2,000, although the exact level that triggers scrutiny isn't clear. Many people are made uncomfortable by disclosing this sensitive information to Walmart tellers. It appears the best way to avoid doing so is to keep your bill payments below $2,000, although this will raise your cost per dollar of manufactured spend.

Finally, when it comes to Walmart there's always the risk of employee incompetence. This can take a number of different forms. Of course, an employee may simply not know how to make these bill payments. Alternatively, there are reports that some store locations demand that you physically bring your most recent credit card statement into the store. Further, some store locations refuse to allow bill pay transactions to be funded by gift cards (cards that don't have your name embossed on the front). Finally, some employees may feel uncomfortable with multiple, high-value transactions, and simply refuse to help you. Be aware that this is not corporate policy: you've just found an incompetent employee, or a store location with an over-vigilant store manager. Visit another location or return at a different time.

These are manageable risks, but they do exist and you should be aware of them before beginning to use this technique. As always, I recommend starting slowly, using money that you can afford to be temporarily without if something goes wrong, and watching your credit card statements carefully to make sure that each payment posts correctly.

Conclusion

This is a very basic overview of this technique. It works and it can increase your volume of manufactured spend while only slightly increasing your cost per point.

Tomorrow, I will provide my analysis of the volume and cost per dollar of manufactured spend that you can achieve using this technique, and I'll compare it to some other popular techniques.

Later in the week I'll discuss some of the most lucrative opportunities this technique unlocks and share my own plans to use it going forward.

If you've already been using this technique, please share your experiences in the comments. How long do your CheckFreePay payments take to post? Do they post at the beginning or end of the business day? What problems have you had dealing with Walmart employees, and how have you resolved them?

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Do this now: IHG 3rd third promotion

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[updated 7:57 pm: thanks to commenter Adrian for pointing out that Mommy Points is not earning IHG Rewards points, but airline miles. Her haul is still somewhat lower than the other bloggers (e.g. 4,000 airline miles versus 25,000 IHG Rewards points for "Win big"), but not by nearly as much as this post suggested]

Some hotel loyalty programs run seasonal promotions, some run quarterly promotions, but this year IHG Rewards (the Club formerly known as Priority) is running a thirdly promotion: you can earn bonus points for reaching certain milestones between September 1 and December 31, 2013.

You need to register for the promotion here  to find out which milestones you've been targeted for. A number of bloggers have posted their targeted milestones, including: One Mile at a Time, the Points Guy, Mommy Points, View From the Wing.

Here's a quick chart I threw together to compare the various reports (including my own), so you can see how your targeted promotion compares:

As you can see, Mommy Points needs to work harder to get on IHG's good side, while View from the Wing is the "big winner" here. [see correction above]

To the best of my knowledge, I've never stayed at an IHG/Priority Club property, but I have been a member forever. It's hard to imagine what else I have in common with the Points Guy!

Register now, before you forget. 

 

Now I've seen everything: PayPal accounts restored

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Somebody smarter than me is going to have to explain this one.

I reported earlier this week  that one of my favorite hacks had been abruptly shut down when PayPal closed both my business account (which had a linked 1% cash back debit MasterCard) and my personal account (which I was using to funnel PayPal Cash cards to my business account). By calling into PayPal I was able to withdraw my remaining funds to a linked checking account, and I moved on.

That is, until Thursday afternoon, when I received the most remarkable e-mail: 

And then just one minute later:

I immediately checked, and the first e-mail was sent to my personal account's linked address as well. Having been given this reprieve, what do I plan on doing with it? What do you think?

But this time, I'm taking some simple steps to minimize my risk going forward:

    • I immediately applied for an additional 1% cash back debit MasterCard for my second, personal account. No more sending money back and forth between my PayPal accounts.
    • I'm going to empty my account exclusively with my debit MasterCard, primarily by buying Vanilla Reload Network reload cards at CVS. This will reduce my cost per dollar of manufactured spend to 0.57 cents (0.07 cents after taking Plink rewards into account).
    • And obviously, I'm going to empty my account as quickly as possible after loading it. 

    Besides the possibility of buying PayPal Cash cards at 7-11 store locations, what I'm most excited about is renewed access to Kiva. Now that I have a US Bank Cash+ card, I'll be happy to earn $100 in cash on the first day of every quarter, plus as many Flexpoints as I have short-term liquidity.

    Remember to check in on Monday and all next week, when I'll be describing a new technique that will radically accelerate the points-earning potential of even the most casual travel hacker, and giving detailed analyses of the possibilities unlocked by that new technique. You don't want to miss it.