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.
