In defense of American Express for Target

American Express for Target prepaid cards were, until earlier this month, one of two popular methods for running up credit credit spend at Target store locations. Loads of up to $1,000 cost $3 each, and it was possible to liquidate the funds on the cards using fee-free ATM's, where the first withdrawal each month (of up to $400 per day) was free, and each subsequent monthly withdrawal cost $3.

When Frequent Miler was reporting on the end of free Prepaid REDcard loads at the beginning of this month, he mentioned in passing:

"Amex for Target is now almost useless

I tried loading it with a credit card.  No luck.  I tried using it to load REDbird first as a credit card and then as a debit card (yes, I knew that wouldn’t work, but figured it couldn’t hurt to try). No luck. The only remaining use I can imagine for the Amex for Target card is if you’re stuck with a bunch of Vanilla Visa gift cards that don’t work at Walmart and you don’t have a REDbird card."

The cost structure of American Express for Target cards hasn't changed

I only had 3 or 4 good months of earning before Target stopped allowing credit cards to be used for prepaid card reloads, but it was a very good 3 or 4 months, and I developed a certain fondness for American Express for Target cards. The loading and unloading limits of AFT cards creates a very simple cost structure:

• Loading $1,000 costs $3;
• Unloading $1,000 costs an average of $6 ($4.50 for the first $1,000 each calendar month, $7.50 for the second).

In other words, American Express for Target cards are now a more-expensive-than-usual method of liquidating PIN-enabled debit cards.

The value of American Express for Target depends entirely on your earning rates

There are many reasons why Frequent Miler would reject the idea of paying $9 per $1,000 in liquidated manufactured spend. If you purchased $500 PIN-enabled prepaid Visa debit cards with a 2.22% cash back card, you might pay 1.4% in purchase fees, and an additional 0.9% in liquidation fees would consume the rest of the rebate value of your manufactured spend.

But if you were earning 3.75% cash back on your prepaid Visa debit card purchases, and are able to split payment for your loads between two PIN-enabled debit cards, you're suddenly netting at least 1.9% on each card.

Conclusion

Of course, if you're fortunate enough to be earning 5% cash back on certain prepaid card purchases with an American Express, Wells Fargo, or TD Bank credit card, then you are probably hunting for liquidation options at virtually any cost. A mere 0.9% liquidation fee is small change in the context of a lucrative-enough earning environment, which is yet another reason everyone needs to ask what role non-bonused spend should play in their manufactured spend strategy.

I'm not loading up on business Amex gift cards today (but you probably should!)

In case you missed it, perhaps because of job responsibilities in the formal economy, today TopCashBack (my referral link) is offering 2.25% cash back on business American Express gift cards purchased after clicking through their shopping portal.

TopCashBack is personally my favorite cashback portal, both because of their consistency in tracking transactions and the ease of requesting ACH payments (BeFrugal, for instance, still requires you to have an open PayPal account in order to be paid electronically).

Personally, I'm sitting out this increased bonus, for 4 reasons:

• I already have $8,000 in American Express gift cards on order. That's just about my comfort level for having outstanding American Express gift cards, because of the limited range of liquidation options. If my grocery store went out of business tomorrow, I might be forced to slowly liquidate them using Vanilla Visa prepaid debit cards;
• I don't have any available space on my 2% cash back credit cards. When you manufacture as much spend as I do, and have credit limits as relatively low as I do, sometimes when increased payouts like these come along you will happen to be out of available credit. It happens, you move along. This week I happen to be particularly cramped because my Fidelity Investment Rewards American Express was recently compromised and I'm still waiting for my replacement card to arrive.
• My alternatives aren't particularly appealing. I have a slew of 1% cash back credit cards, but even with an additional 2.25% earning rate, American Express gift card purchases aren't really competitive with my HHonors Surpass American Express and Flexperks Travel Rewards bonused earning at grocery stores, where I tend to liquidate most of my American Express gift cards.
• I can't get business American Express gift card orders approved, and declined orders tie up my credit limits for a week or longer. If you've run into this problem, Frequent Miler recently mentioned in the comments section of his blog that he's been able to use his last name and Social Security number as his "business" information. I haven't had a chance to try that yet (and for the reasons above, won't be trying today), but I do hope it works for some of my readers.

Conclusion

This is a fantastic opportunity that comes along every few months to generate a higher-than-usual return on your unbonused manufactured spend. I can't quite fit it into my strategy today, but if you can, enjoy it in good health!

An interesting FlyerTalk thread on blogging and bloggers

These days I don't spend much time reading other blogs, or FlyerTalk for that matter (although I do periodically post random thoughts on savings and investment in the Saverocity Forum). I'll skim the headlines in my RSS reader for new American Express "Sync" deals, and to see if any techniques are at risk of overexposure, but in general I have better (read: more profitable) things to do with my time than read about Japan Airlines award availability.

Award availability blogging is an interesting niche, it just doesn't have the slightest interest for me.

And of course the fact that so many bloggers recycle the same hoary talking points about the same commission-paying credit cards is another of the many reasons I rarely bother reading them.

Loyalty Traveler needs your pageviews

George, who blogs at TravelBloggerBuzz, recently pointed me towards an interesting thread on FlyerTalk, where some forum members were questioning a recent change in the format and content of the Loyalty Traveler blog.

The original poster posed the following question:

"Seems like there has been a shift from a 10 year+ focus on creative budget travel bookings to very frequent posts on rather ordinary airfare deals from SF Bay Area. 

Has Ric addressed this new direction in any post? What is the motivation for these abrupt changes."

Lo and behold, the blogger himself appeared and gave the following explanation:

"The addition of airfare deals was motivated by a need for more page views for Loyalty Traveler blog. Ad revenue has dropped by more than 50% in the past two years, meaning 100,000 page views pays me less than half what I used to get. I can't publish two blog posts per day anymore and make enough ad revenue to stay afloat.

I'll probably start affiliate links this year too for hotel bookings. 

Too many bloggers are writing in the hotel space these days to allow me to post content in the hotel space that is uniquely different enough from stuff readers see on other blogs. BoardingArea has become the 800-blog gorilla crowding me out. 

I'd love to only write about places to go, but those stories do not generate enough interest to pay a living wage. I started blogging as a lifestyle job, so I can work from home and organize my days the way I want to live my days. For eight years, I have been sustaining my self-employment without the need to sell readers anything from affiliate links."

Motivated blogging is usually bad blogging. It may still be profitable!

Ric obviously knows his business model better than I do, so it may well be that he finds his profit is greater with the addition of West Coast flight deals than it was before.

And as a gleeful dropout from your economy, I understand perfectly well the desire to blog as a "lifestyle job," in Ric's words.

But since I mostly can't stand to read travel blogging, I understand even better his readers' point of view: reading those west coast flight deal posts feels exactly like reading posts written with the sole purpose of generating additional pageviews in order to increase the blogger's revenue.

Turns out, that's what they were.

Conclusion

Obviously it's easy for me to sit here and snipe, since my livelihood (let alone my lifestyle!) doesn't depend on pageviews. Here's a fun chart of my all-time Google Adsense revenue:

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On the other hand, it's not just some kind of insane luck that I'm able to make a living writing the posts I want to write, when and how I want to write them. Rather, I set up this enterprise that way (almost) from the beginning.

The way I look at it, I have a simple deal with my readers: I write the best blog I can write, and enough readers sign up for monthly subscriptions to make it worth my time to keep writing. And honestly, when I glance at just the front page of my site, I see a slew of posts that make me think, "damn, this is a great blog."

So here's hoping it stays that way!

Documents responsive to United Danish Kroner mistake fare FOIA request

A reader passed along and asked that I share some documents provided by the Department of Transportation in response to his FOIA request regarding the Danish Kroner mistake in February, 2015. For those who weren't following the play-by-play, this was the second time I'm aware of the DoT allowing United to revoke tickets that had been issued at an incorrect price, the first being Hong Kong 4-mile mistake awards in July, 2012.

These documents appear to me to be a generic batch of e-mails and files that the Department has decided to send to anyone submitting FOIA requests regarding the Danish Kroner mistake, and they've been heavily redacted. My reader believes, and I'm inclined to agree, that the redactions are not appropriate and obscure several key parts of the decision-making process that would be in the public interest, especially since the department sided with a for-profit corporation against that company's customers.

I'll post an update if there's any movement on that front.

The documents

With all that said, here are the documents themselves. The first 2 pages are the Department's explanation of the contents, pages 3-23 are the internal DoT communications, and the remainder are social media and news reports on the mistake fare.

Riveting stuff.

Suntrust has politely asked that you step up your game

It seems that in the last few days Suntrust has been mailing letters to holders of Delta SkyMiles-earning debit cards, notifying them of a radical devaluation in the terms of the program, effective July 25, 2015.

Via Doctor of Credit, for cardholders who don't have a Signature Advantage account with Suntrust:

• the annual fee will rise to $95 from $75;
• earning will be cut to one SkyMile per $2 spent with the card from one SkyMile per $1 spent with the card;
• and earning will be capped at 2,000 SkyMiles per rolling 30-day period.

Signature Advantage accountholders will have slightly more favorable terms, but pay a $25 monthly maintenance fee.

Confession: I've been slacking off

I've had a SkyMiles check card since last April, and have earned a few hundred thousand SkyMiles with it since then. But I could have been earning far, far more, and I wasn't.

The reason is somewhat risible, though it seemed to make sense at the time: Suntrust caps free, next-day inbound transfers from external accounts at $20,000 per rolling 30-day period. After that, the only free option for inbound transfers is 3-business-day transfers, which would involve tying up funds for days at a time without anything to show for it.

There have always been other options for transfers: I could use a third-party banking platform like Google Wallet or Amazon Payments, or pay a nominal fee for external ACH "pushes" from one of my local banks or credit unions. But that would also take additional time and raise the price I paid for miles for which I didn't have any specific redemption in mind.

So I didn't, and instead limited myself to $20,000 in SkyMiles check card purchases per rolling 30-day period.

But no more!

I'm not aware of any volume limits on Suntrust's 3-business-day transfers, so once I hit the $20,000 monthly limit on next-day transfers, I'll be aggressively using the longer, less-convenient, but still-free transfers. By initiating a transfer each day I should (after the first 3 days) have funds available for my SkyMiles check card each business day.

By my reckoning, I have 10 weeks and 3 days to earn as many SkyMiles as possible under the program's current terms and conditions.

Since I just paid the current, $75 annual fee in April, I'll probably hold onto the card until April, 2016, earning 2,000 SkyMiles per month at a cost of approximately $13.40. It won't make me rich, but I like flying Delta, and that's a price I'm willing to pay for the additional miles each month.

Conclusion

What do my readers think? Have you been using the Suntrust SkyMiles World Check Card as aggressively as you could have been? Will you start, now that we have just 73 days to take full advantage of it?

Anniversary post: your economy doesn't interest me much

A little history

I graduated from college in 2007, and that fall decided to pursue a longtime dream of mine: teaching English in Russia, where I had studied abroad as an undergraduate. In the fall of 2008, I returned to the United States to look for the kind of white collar, middle class job many of my readers no doubt enjoy.

A few weeks after I landed stateside, I was standing in the atrium of the Annenberg School for Communication at the University of Pennsylvania watching the stock market collapse as Congress voted down the first version of the TARP legislation. The Great Recession had begun, and I proceeded to scratch out a meager (though cheerful as always) living as a temporary office rat while I applied for hundreds of full-time jobs.

But no one was hiring.

After a year of living hand-to-mouth, I'd had enough and decided to escape the so-called "real world" (which didn't feel particularly real to me) and return to school. I studied in an advanced, federally-funded program to develop Russian fluency, then was admitted to a prestigious doctoral program in Slavic languages and literatures.

It was at that point, settled into a pleasant, walkable New England city with a plethora of CVS stores, that I went from applying for the occasional rewards-earning credit card and meeting minimum spending requirements with Kiva loans, to identifying the most lucrative cards I could use to manufacture spend on an ongoing basis.

My responsibilities at the university were negligible, besides teaching a section of undergraduate Russian each semester and pretending to care about 18th century Russian literature, so I wrote an e-book, manufactured more and more spend, and began writing this blog.

At the same time, I looked around at my classmates and realized that the chances of turning a PhD into the kind of tenure-track position they were all aspiring to were nonexistent. I like to gamble, but I wasn't interested in spending 6 years gambling on a career in academia.

So on May 13, 2014, I left New England and the university behind to dedicate myself to the present endeavor.

Your economy doesn't interest me much

In the last year, I've received one or two comments and e-mails each month either berating or interrogating me about my lack of interest in the traditional job market. As I hope the foregoing makes clear, the traditional job market wasn't interested in me. There was certainly a window, after returning from Russia, when the right corporate gig could probably have lured me into a 40 year career, house in the suburbs, and matched 401(k) contributions.

Entering the job market when I did, those jobs weren't on offer. And rather than hanging onto what was an increasingly-unrealistic fantasy, I adjusted my expectations to suit reality. In the reality I was thrust into, the only bets worth making were sure bets. That meant federally-financed educational programs, guaranteed university funding, and finally working for myself, where my livelihood depends exclusively on my own ingenuity and effort.

Readers seem to have two reactions to my decision. On the one hand, some people try to "explain" to me that my writing and manufactured spending can't consume every waking hour, so I could theoretically work a full-time job in addition to all the extracurricular activities I'm currently doing for fun and profit.

But other readers castigate me for not being "productive" and working a "real job," and those are the comments I have the most difficult time processing. Since no one has yet commented to actually offer me job, I can only conclude that what I'm being blamed for isn't not working, but rather not caring. And they're exactly right. I don't care about your economy.

Your economy just wasn't that into me, and I lost interest.

Caring is so baked into the cake of the American job market that it's no surprise many readers don't even realize they're doing it. But for me, caring would feel hopelessly masochistic. Writing resumes and cover letters, creating online accounts with hundreds of corporate job websites, and submitting application after application in the vain hope of securing the lifestyle many of my readers take for granted is not something I'm capable of doing any longer.

Because I already did it all, and in vain.

Conclusion

I'm nothing if not practical, and I know perfectly well that no deal lasts forever. When manufactured spend dries up completely and my blog subscribers abandon me, you can be sure I'll be there in the mailroom at Goldman Sachs, trying to catch the attention of the bond traders so I can make a quick fortune before destroying the world economy again.

But in the meantime, you'll find me right here. I'll keep writing the best blog I can as long as you keep reading.

Bonus plug

Interested in keeping this project afloat for another year? Consider a monthly blog subscription!

What role should non-bonused spend play in your miles and points strategy?

Last week Shawn at Miles to Memories wrote about his experience buying PIN-enabled, Metabak-issued, personalized Visa gift cards from GiftCardMall, after clicking through a cash back portal like TopCashBack.

I responded to him on Twitter, remarking "I think you're begging the question; real issue seems to me what role unbonused spend plays in strategy."

Since I have this blog lying around, I figured I can explain myself more completely.

How is your manufactured spend throttled?

I've written before about the kinds of throttles that prevent us all from manufacturing an unlimited amount of spend. Even with huge credit limits, unlimited stock, and compliant cashiers, you'll still be constrained by the time you're willing to spend manufacturing spend, so in a concrete sense everyone's manufactured spend is throttled.

Of course, most of us don't live in that ideal manufactured spend landscape, and so regularly run into credit limits, dwindling supplies, suspicious cashiers, and a simple shortage of convenient or accessible stores.

Liquidation throttles matter most

There is no way to manufacture, on a monthly basis, more spend than you're able to liquidate, and in a fundamental sense manufactured spend is really manufactured liquidation: the search for more, easier, faster, and cheaper ways to get cash back out of the products we buy. After all, there's no special trick to buying cheap printers; the trick is getting virtually all your money back, so you can pay off your credit card while pocketing the rewards you earned on your purchase.

Different forms of manufactured spend are throttled differently

A few examples illustrate this point clearly:

• You may be able to buy an unlimited number of OneVanilla prepaid Visa debit cards on credit, earning 2 Ultimate Rewards points per dollar using a Chase Ink Plus card at 7-Eleven store locations, but if you have only one Serve card, you can only liquidate $5,000 in Vanilla Visa cards per month at Family Dollar. At the same time, you might be able to liquidate an unlimited number of Metabank-backed Visa gift cards at Walmart.
• If you have a Target Prepaid REDcard, you may be able to liquidate up to $5,000 in PIN-enabled debit cards per month at Target for free, but if your Target store locations require you to use cards that match your ID, you may not be able to liquidate any cards purchased at merchants where your credit cards offer bonused earning.

Match your liquidation bandwidth to bonused spend first

By allocating your liquidation bandwidth to your credit cards' bonus categories, you'll maximize your earning over however much spend you're able to manufacture and liquidate each month.

The logic here is simple: Shawn's personalized GiftCardMall Visa gift cards may cost him just $4.59 each, while a Visa gift card purchased at a grocery store might cost $6.95. But if Shawn uses a Hilton HHonors Surpass American Express card to purchase each, he'll be paying 0.3 cents per HHonors point at GiftCardMall and just 0.23 cents per HHonors point at the grocery store. If he cannibalizes his liquidation bandwidth with "cheaper" GiftCardMall gift cards, he'll end up paying more per point than he would by swallowing the higher per-card charge.

A special note on American Express gift cards

American Express gift cards, purchased after clicking through a portal like TopCashBack, are capable of adding a cash back bonus to any non-bonused spend, which can be well worth doing to diversify your strategy away from just miles and points. On the other hand, you'll only be able to liquidate them at merchants that accept American Express cards and don't specifically prohibit gift cards (like Simon Malls).

If there's room left for non-bonused spend, that's fantastic

There are forms of manufactured spend that are intrinsically unbonusable:

• Visa Buxx cards can only be loaded with Visa and MasterCard credit cards in the Buxx cardholder's name. If you load them with a Barclaycard Arrival+ MasterCard, for example, you'll earn 2.22% cash back, and there's no way to juice that earning rate with an intermediary step (although you may have a different preference for the funding card).
• Serve cards can be loaded with third-party American Express cards like the Fidelity Investment Rewards American Express, but not with American Express gift cards. You'll earn 2% cash back on up to $1,000 in online loads each month, and you'll be glad to get it.

Finally, there are forms of manufactured spend like the personalized GiftCardMall Visa gift cards described by Shawn, and Simon Malls Visa gift cards, which can usually only be purchased with credit cards in the purchaser's name. They have the advantage of being relatively cheap and available in relatively large volumes, but the disadvantage of not receiving any spending category bonuses.

Conclusion

By now I hope my point is obvious: while the large volumes possible with those products do represent a real, concrete advantage that I have no intention of minimizing, if you're capable of liquidating such large volumes you have to first ask whether you've really exhausted all your bonused spending opportunities!

If you have, then manufacturing additional, non-bonused spending that fits within your liquidation bandwidth is common sense. But if you haven't, then you're leaving miles, points, and cash back on the altar of volume.

Possible point-of-sale update rolling out to Family Dollar (nothing to worry about)

This seems like it's been a week of minor updates, but during a promotion as lucrative as the one we're currently living through I don't consider that a vice.

I ran into an extremely minor hiccup while liquidating some deeply-discounted Vanilla Visa gift cards at Family Dollar yesterday, and wanted to pass along a heads up in case any readers run into a similar problem.

Vanilla Visa gift cards should be automatically detected as debit cards by Family dollar registers

Until yesterday, every time I used a OneVanilla prepaid Visa debit card or Vanilla Visa gift card at Family Dollar (as long as the card was activated properly, and I waited a sufficient interval before using it) the card was automatically detected as a debit card, asking me only how much cash back I wanted (none) and for a PIN number (any 4 digits, selected the first time the card is used).

Yesterday, at one store, they weren't

I have two relatively convenient Family Dollar store locations, which is terrific since, due to still-poorly-understood velocity limits, any one store is of only limited use each day.

Yesterday at the first store I visited, swiping either of two $200 Vanilla Visa gift cards generated an on-screen error message of "Visa tender not allowed." Fortunately, it occurred to the cashier helping me to press the "F2" key on her register before I swiped, which directed the terminal to treat my Vanilla Visa gift card as a debit card. After that, I was prompted for my PIN and the transaction was successful.

At the second store I visited, an identical card (indeed, one that had generated an error at the first store), went through without the "F2" intervention.

Conclusion

I have absolutely no reason to believe Family Dollar won't continue to be an avenue for liquidating PIN-enabled Vanilla-branded Visa cards for the foreseeable future.

However, slightly different point-of-sale software may be rolling out in waves that will require additional input from cashiers before Vanilla Visa cards are recognized as debit cards.

Waiveable annual fees

Preface

I'm not going to write about any changes to the Target Prepaid REDcard until tomorrow. For all the wailing, lamentations, and gnashing of teeth you could possibly want, go read boardingarea.com or something. We'll all know everything there is to know, soon enough.

Waiveable annual fees

As I've written before, signup bonuses play a trivially small role in my miles and points strategy. Instead, I focus on cards that offer either valuable ongoing benefits, like the US Bank Club Carlson Business Rewards credit card (at least until the last-night-free benefit is discontinued at the end of this month), or sufficiently high returns on my manufactured spend, like the Barclaycard Arrival+ MasterCard, which earns a functional 2.22% cash back on all purchases.

Unfortunately, those cards and several others I carry come with annual fees and the requisite (after a quick call to see whether threatening to cancel will earn you a worthwhile retention bonus) annual soul-searching about whether those annual fees are worth paying.

Two cards I carry waive that annual fee for high spenders, but in two very different, very roundabout ways.

US Bank Flexperks Travel Rewards high-spend bonus

After spending $24,000 in a cardmember year on the US Bank Flexperks Travel Rewards Visa, you earn a bonus in your anniversary month of 3,500 Flexpoints.

Additionally, roughly two months before your anniversary month, the Flexperks Rewards site enables the option to redeem 3,500 Flexpoints against your annual fee of $49.

Now, that's a pretty screwy system. First of all, 3,500 Flexpoints are worth up to $70 in paid airfare, so at first glance it seems like a rotten deal to redeem them for a statement credit of just $49. But second of all, if they wanted to waive the annual fee for cardholders spending $24,000 on the card, you'd think they could just waive the damn annual fee (interestingly, that's precisely how the FlexPerks Business Edge Travel Rewards card works)!

Squaring that circle is easy once you remember my maxim that the least valuable point is always the one you don't redeem, as well as its corollary, that the most valuable point to your bank is the one you don't redeem. Seen in this light, their high-spend bonus scheme is a win-win from US Bank's perspective:

• If you hoard your Flexpoints and refuse to redeem them for a paltry $49 annual fee, you have to pay that annual fee, which goes directly to US Bank's bottom line;
• If you redeem 3,500 Flexpoints against the annual fee, you'll be further away from your next award ticket, increasing the amount of time you sit on worthless, unredeemed Flexpoints, and decreasing the chances they'll ever be redeemed.

In my opinion, the least bad option, unless you actually need the bonus Flexpoints for an upcoming, high-value flight redemption, is to redeem them against your annual fee and forget about them. That turns this up-to-4%-earning product into the most valuable, year-round, no-annual-fee credit card out there.

Barlcaycard Arrival+ World MasterCard's redeemable annual fee

Never having paid an annual fee on my Arrival card, until Frequent Miler wrote about his experience downgrading his card I hadn't realized that the card's $89 annual fee counted as a redeemable "travel" expense.

I often say that the $89 annual fee of the Arrival+ is only worth paying if you manufacture more than about $44,500 on the card each year. That's the amount where the 10% rebate on travel redemptions will generate $89 in Arrival+ miles.

But if the $89 annual fee is a redeemable travel expense, that calculation doesn't hold precisely true, since you can redeem 8,900 Arrival+ miles against the fee and earn an 890 mile rebate, worth at least $8.90 in future redemptions.

Remember, our goal is to find the amount of manufactured spend which justifies keeping the Arrival+ MasterCard, and with that $8.90 rebate against the annual fee, you need spend a maximum of just $40,050 on the card to offset the now-miraculously-lower $80.10 annual fee.

Unconvinced? Here's a quick proof: spend $40,050 and earn 80,100 Arrival+ miles. Redeem 8,900 miles against the annual fee and earn an 890-mile rebate. Redeem 72,090 miles and receive a 7,209-mile rebate. Redeem 7,209 miles and receive a 720-mile rebate. You've now received $88.19 in rebates from $40,050 in spend and just 3 redemptions (one of which – the annual fee – didn't even require an eligible travel purchase).

Obviously, the proof above also illustrates that the more redemptions you make, the closer you'll come to achieving the theoretical maximum return on manufactured Arrival+ spend of 2.22%, which is one reason to privilege small redeemable transactions over larger ones.

Conclusion

Credit card companies earn money from cardholders in 4 main ways: interchange fees on purchases, annual fees, cash advance and interest charges, and selling customers' personal information to their marketing partners.

If a bank has a target for the profitability of each cardholder, it seems only right to me that high-spending customers (earning the bank higher interchange fees) should receive a break on annual fees.

But few credit card products have explicitly adopted that philosophy yet, hoping instead to earn both swipe fees and annual fees from the same customers.

Quick update: Vanilla Visas and "Delayed Redemption"

In my post yesterday I forgot to mention an occasional problem that arises when manufacturing spend with Vanilla-branded prepaid Visa debit cards. This oversight is especially unfortunate since it actually occurred to me yesterday: the dreaded "Delayed Redemption."

The problem

Sometimes, but not always, attempts to liquidate Vanilla-branded prepaid Visa debit cards soon after purchase using a PIN (any four digits, selected the first time you use the card), whether they're marketed as "gift" cards or not, are declined.

When that happens, when you frantically call the number on the back of your card from the parking lot of whichever store you're visiting, you'll be relieved to know the funds are still there on the card. But when you go back inside, the card will still be declined.

When you get back home, or log onto vanillavisa.com from your smartphone, you'll see this message in your transaction history: "Denied : Delayed Redemption."

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When does this happen?

I won't venture a guess as to why this happens, but I can share a few datapoints from my own experience about when it happens:

• The first time this happened to me it was with a $500 OneVanilla Visa prepaid debit card purchased at Walgreens;
• This has never happened to me with any OneVanilla Visa prepaid debit card purchased at a 7-Eleven or CVS store location (although I did have a OneVanilla Visa improperly activated at CVS);
• The second time it happened was yesterday, with two $200 Vanilla Visa gift card purchased at Office Depot.

The solution: patience

If you're taking my advice from yesterday, you might be buying thousands of dollars of deeply-discounted Vanilla Visa gift cards in the next 12 days, and you might run into the problem of your PIN-based transaction being denied shortly after purchasing a card.

If that does happen to you, wait.

It's not glamorous or fun, you just need to wait. I recommend 24 hours, although you may be able to liquidate your cards sooner than that.

Conclusion

Vanilla Visa prepaid debit cards will sometimes reject PIN-based transactions shortly after cards are purchased, even if they've been properly activated. Wait 24 hours and they'll be fair game.