Microhacking fixed-value prepaid debit cards: when is it worth it?

/

Long-time readers know that for many years my main method of prepaid debit card liquidation was through Walmart money orders, which typically allowed me to liquidate $2,000 in debit cards per trip, and if the cashier was in the right mood, potentially even more than that. The game is always changing, and that avenue has lost most of its interest for me in the last few months: having a blocked ID meant making smaller transactions, if I was able to liquidate anything at all. What makes sense at one success rate and volume makes less sense under different conditions, and that’s fine (if regrettable).

The key advantage of Walmart money orders was volume. Even total costs as high as a penny per point might conceivably be worth paying if you can buy enough miles and points at that rate: $1,600 for a round-trip flight to Europe or Asia in business class is a pretty good deal, after all (with economy even cheaper).

With that liquidation opportunity in my past, I naturally got to thinking about other opportunities, and when and whether they’re worth pursuing.

Office supply stores

Office Depot/OfficeMax and Staples both regularly run promotions on Visa and MasterCard prepaid debit cards. The OD/OM promotions typically offer $10 or $15 off $300 or more in gift card purchases, and the Staples promotions usually waive the activation fee, which amounts to the same thing within a dollar or two. If you have a legacy Chase Ink Plus/Bold or Ink Cash card, these promotions are always worth emptying out the shelves of your local stores for: 5 Ultimate Rewards points per dollar are worth at least 5% cash back and potentially much more than that if transferred to a high-value travel partner.

The current promotion is for $15 off $300 in Visa purchases, though the only store in my area was wiped out on the first day.

Grocery store fixed-value cards

For the last week I’ve been taking advantage of Safeway’s promotion for $10 off fixed-value prepaid MasterCard debit cards, which brings the total price of a $100 gift card down to $95.95 (after the $5.95 activation fee). This is a good opportunity to illustrate the value of volume:

  • purchasing a $100 prepaid card for $95.95 using a credit card that earns 3% in rewards at grocery stores yields a profit of $6.93 before liquidation.

  • purchasing a $1000 prepaid card for $1003.95 using a credit card that earns 2% in rewards yields a profit of $16.13 before liquidation.

Mechanically, paying full price for a higher value card yields more profit than paying a discounted price for a lower value card.

In general, I don’t try to put a value on the time I spend manufacturing spend. After all, I like getting out of the house and going for walks, so it would seem strange to “bill” myself for the time I spend doing something I enjoy.

It’s equally true that if the same time can be spent doing something more profitable, rather than less profitable, it would be more profitable to do that instead! That brings us to another interesting question.

Grocery store variable-value cards

Grocery stores also sometimes offer discounts on variable-value cards, and when they do it’s almost always worth maximizing the value of those promotions, whether it takes the form of gas points or grocery discounts.

The interesting thing is that depending on your liquidation costs, it may still be more profitable to buy unbonused variable-value cards than discounted fixed-value cards. Using the same logic as above:

  • purchasing a $100 prepaid card for $95.95 using a credit card that earns 3% in rewards at grocery stores yields a profit of $6.93 before liquidation.

  • purchasing a $500 prepaid card for $505.95 using the same credit card yields a profit of $9.23 before liquidation.

Consequently, if your liquidation costs are low and fixed for each card, you’re better off buying the more expensive, high value card. If your liquidation costs are high and variable, the discounted, lower-value card may be more profitable.

Conclusion

These three examples aren’t meant to be comprehensive, but rather to spell out the logic I use when deciding which opportunities are worth pursuing. Travel hacking is not just intensely localized, it’s also intensely personalized: the opportunities I have available aren’t the same ones you do, not just because we live in different regions of the country, but because we have different abilities and responsibilities. A person with limited mobility may need to do as much volume as possible in as few trips as possible, while a traveling salesman may have the opportunity to visit dozens of different stores per day.

And to me, that’s not just fine, it’s great! If we didn’t know different things, we wouldn’t have anything to learn from each other.