A good run: AAA Visa gift card axe falls

I periodically write about AAA Visa gift cards: they're cheap (or free); they're PIN-enabled and thus easily liquidated; and they're available in many, though not all, parts of the country.

For those with access to AAA branches selling Visa gift cards, the problem has always been one of volume: those who bought and liquidated too many Visa gift cards in too short of order were inevitably and permanently blocked from buying any more. I thought I had avoided that outcome by buying slow but steady amounts at regular intervals.

Until yesterday, when I went into a local branch and was told, politely but firmly, that I needed to call Metabank to find out why I wouldn't be allowed to buy any more gift cards.

Back in January I wrote about new purchase limits in my AAA region:

"If the new limit is instead designed to slow people down so their accounts can be blacklisted before they can reach the total purchase numbers that were previously possible, it'll be a net negative."

That now appears to be prescient. After a single, $1,000 purchase under the new limits, my account was immediately blacklisted for future purchases.

Conclusion

During the periodic fee-free promotions, typically around graduation and the winter holiday season, I still think those who haven't yet been blacklisted should consider loading up on PIN-enabled AAA Visa gift cards. If you can then liquidate the whole haul over the course of 3 or 4 hours, you can still make off with a nice profit before your account is flagged.

But as far as I'm concerned, AAA Visa gift cards are no longer a viable avenue for consistent manufactured spend.

Regional: new AAA Visa gift card daily limits

I often joke that I'm the only person left buying Visa gift cards from AAA. And before anyone complains, I understand:

• Yes, you have to be a AAA member;
• Yes, they're only available in some regions;
• Yes, purchases can be pretty time-consuming if the person helping you isn't familiar with the Metabank system they have to interface with;
• Yes, frequent large purchases with immediate liquidation can result in being blacklisted from further purchases.

But the cards are PIN-enabled, they cost $3 most of the year and are free for 2-3 months per year (around the May/June graduation season and the winter holidays), and they're coded as purchases with every credit card I've used.

Changes to daily purchase limits

When I went in for my weekly purchase at the beginning of January, the clerk who always helps me told me that there was a new limit on daily purchases. Rather than the theoretically unlimited number of Visa gift cards customers were previously able to purchase, purchases were now limited to $1,000 per day.

I didn't ask whether this is a new national policy, is limited to my AAA region, or something in between.

Analysis

It's hard to say whether this is, on balance, good news or bad news.

On the one hand, $1,000 is less than I had previously been purchasing per trip, so this means I'll be manufacturing slightly less spend with these cards going forward.

On the other hand, the "unlimited" purchases AAA was previously willing to process was a honey trap for an unbelievable number of travel hackers. I've heard the same story repeatedly: "The first day I purchased $5,000. The second day I purchased $20,000. The third day I'd been blacklisted."

If the new $1,000 daily purchase limit keeps members of the community from falling into that trap, and therefore able to continue earning cheap miles and points, I'll consider it a net positive. If the new limit is instead designed to slow people down so their accounts can be blacklisted before they can reach the total purchase numbers that were previously possible, it'll be a net negative.

Conclusion

It was about AAA Visa gift cards that I first remarked on "What you miss when you miss MS." Affiliate bloggers who pretend that it's possible to earn significant travel rewards through everyday spending are lying to their readers in order to generate credit card commissions.

For example, talking about bonused restaurant earning on every affiliate blogger's "favorite" card, the Chase Sapphire Preferred, is preposterous when rather than spending $500 at restaurants in order to earn 1,000 Ultimate Rewards points, I can spend $6 at my local AAA branch.

Instead, the card you put your actual restaurants purchases on should be a card you carry anyway, either because of its annual benefits or because it's worth manufacturing spend on that card.

What you miss when you miss MS

In the last few weeks I saw posts from two of my favorite Boarding Area bloggers/punching bags that helped crystalize something I've been turning over in my head for a little while.

At the end of September, Gary at View From the Wing wrote about the AAA Visa card. Since I'm apparently the only person on earth who still buys AAA Visa gift cards, my ears perked up. But instead of actually exploring the card's (substantial) benefits, he put it up to a superficial comparison with the Chase Sapphire Preferred and called it a life.

Then just this week Lucky at One Mile at a Time wrote a handwringing piece entitled "Is The Mileage 'Game' Finally Dying?" He wrote:

"Let me start by explaining how I earn miles. Unlike others, I don’t do “manufactured spending.” I find that for the most part it’s only marginally “profitable,” so it’s not really something I do."

I strongly believe that no one should do anything they're not comfortable with, especially not just because you think everyone else is doing it. If you think it's wrong to come up with a business "idea" in order to apply for a small business credit card, you shouldn't do it. If you think it's unethical to take advantage of mistake fares, you shouldn't do it. And if you think manufactured spend is wrong, boring, or unprofitable, you shouldn't do it.

But to write that the travel hacking game is "dying" just because the tiny plot you studiously tend is going bust is ridiculous.

Which brings me back to Gary's post about the AAA Visa card. If you know anything about manufactured spend, the idea of earning 3% cash back (50% more than most non-bonused spend) on PIN-enabled Visa gift cards that are about 40% cheaper than the leading national brand ($3 versus $4.95) is an opportunity worth exploring.

If your job depends on maintaining the pretense that manufactured spend doesn't exist, you end up with nonsense like this:

"First off, I value Chase Ultimate Rewards points at more than 1.5 cents apiece. So 2 Chase points is worth more to me than 3 cents (the 3% back on travel offered by this card)."

I've said it before and I'm happy to say it again: you should not worry about the earning rate of your credit cards, unless you manufacture spend or are reimbursed for travel purchases by your employer (or are self-employed in a business with large credit card purchases, of course); you should put all your spend on a 2% cash back credit card and redeem your points for cash whenever you happen to meet a redemption threshold.

Spending money on goods and services is simply not a realistic way of achieving either cash or travel goals in the way that signup bonuses and manufactured spend are.

The AAA Visa credit card is a great deal

I don't have a AAA Visa credit card, but here's the relevant line from the card's terms and conditions:

"Earn 3 points per dollar (consisting of 2 bonus points and 1 base point) for Net Purchases made with the card through any participating AAA Club when AAA is the merchant of record[.]"

I can also report from my own experience that in-person Visa gift card purchases from AAA (where available) are coded identically to all other in-person AAA purchases – there's no special merchant code assigned to gift card purchases as opposed to, say, cruise reservations.

Reminder: AAA still sells Visa gift cards

[Note to readers: I have an old friend visiting town starting tomorrow so this may be the last full post for the week, unless I find some downtime and inspiration in between our adventures. Next week I'm traveling to the Western Montana Fair, where I will hopefully be able to get a few blog posts up in between trips to the rodeo. And no, I'm not competing.]

Last year there was a flurry of excitement on FlyerTalk when, as a holiday promotion, AAA branches in some parts of the country began selling PIN-enabled Visa gift cards with no processing fee. It was possible to use a credit card for the purchase, earn points, and pay only the cost of liquidating the gift cards. Once the promotion ended, folks realized that even with the processing fee, those gift cards may still be worth buying under certain circumstances.

Not all AAA locations sell Visa gift cards

I discovered once I returned from Chicago, where I was able to buy fee-free Visa gift cards over the holidays, to New England, that the AAA of Southern New England did not sell Visa gift cards at all; they have an exclusive relationship with American Express, whose gift cards, not being PIN-enabled, were useless to me.

Here in the Midwest, I found my local AAA branch to be well-stocked with Visa gift cards and more than happy to sell them to me by credit card. The cards cost $3 each, can be loaded with up to $500 each, and there is no discount for buying the cards in bulk.

AAA Visa gift cards are registered in the office

Unlike other brands of prepaid Visa debit cards, like OneVanilla cards, which allow but don't require you to register a ZIP code online, each AAA Visa gift card is registered to you (or perhaps, theoretically, another person) in-store at the time of purchase.

Once your card is activated in-store, you can call in to set your PIN number by following the telephone prompts.

There are unpublished limits on purchases

Since these cards are registered to the purchaser immediately, it's easy for Metabank, the issuer of the cards, to track purchase and unloading activity down to the dollar.

Unfortunately, that appears to be exactly what they do.

Back in November and December, when the deal first broke, the usual suspects went big, buying tens – or perhaps hundreds – of thousands of dollars in gift cards and unloading them as quickly as possible. Once such unusual activity was detected, Metabank froze their remaining gift cards and I believe insisted on mailing them refund checks.

Further attempts by those customers to buy gift cards at AAA were refused, either by managers or by the sales system itself.

During that promotion, I bought just $2,000 in gift cards and immediately liquidated them. I never heard anything from AAA or Metabank, but also didn't attempt to buy any more once the promotion ended since they weren't available locally.

For more information on these unpublished limits, you'll need to dig into the relevant FlyerTalk thread. Further, the usual caveats apply when using Citi credit cards for these purchases. There's at least one report of AAA gift card purchases being treated as a cash advance.

Conclusion

I don't consider AAA gift cards to be a highly scalable technique for manufacturing spend, but it is one that is still viable under some circumstances, and I wanted to remind my readers it exists.