Charlotte preview: Vanilla Reloadables

As readers know, there will be a gathering in Charlotte this weekend of some of the participants in the March manufactured spending competition (#milemadness) and readers who are interested in getting to know us better. Additionally, we'll be joined by some of the more, shall we say, reclusive members of the travel hacking community. I'm very excited to be presenting, and even more excited to be able to meet some folks I only know over e-mail or through enigmatic posts on FlyerTalk.

This week I though I'd share some reflections on my experience in the competition, and maybe elicit some subjects from readers and Charlotte attendees for further conversations.

I lost #milemadness – but that's ok

The manufactured spending competition privileged speed of liquidation, since you couldn't manufacture additional spend until you had liquidated an instrument, whether it was Vanilla Reload Network reload cards or electronics you bought for resale.

Additionally, all the spend we manufactured was "weighted" by the "Fair Trading Price" of the points currencies we earned. Whatever the advantages or disadvantages of FTP as a system for pricing points, it meant that those who were earning Ultimate Rewards points – especially at high multiples – were able to easily lap those of us stuck manufacturing almost any other points currency.

On the other hand, I ultimately manufactured about $43,000 in spend during the four weeks of the competition, or about $1,500 per day, an amount that I'm perfectly satisfied with. The ability to manufacture that much spend on a sustained basis puts all of my travel and financial goals within reach, which is one reason I finally became confident enough to decide to start blogging and writing full time.

Vanilla Reloadables

In today's Charlotte preview, I want to explain the reloadable prepaid debit cards I used to manufacture a big chunk of that $43,000.

"But FQF," you may well object, "Vanilla Reloads aren't a viable tool anymore! Why would anyone be interested in that?"

The answer, of course, is people who still have access to Vanilla Reloads.

Bluebird ($5,000)

Bluebird, and its cousin Serve, forms the hard core of most manufactured spending strategies.

• Limits: $1,000 per day, $5,000 per calendar month;
• Loading: online using Vanilla Reload Network, or in-store at any Walmart register;
• Unloading: transfer to a linked bank account, or pay bills directly;
• Adverse action: none.

JH Preferred ($11,000)

The JH Preferred card is a branded clone of the generic MyVanilla Debit cards. However, it's still possible to sign up for a JH Preferred card even if you've already used up all 3 of your MyVanilla Debit shutdowns.

• Limits: $2,500 per day, $5,000 per month published, limits only loosely enforced in practice;
• Loading: online using Vanilla Reload Network;
• Unloading: PIN-based transactions at Walmart;
• Adverse action: Many reports of shutdowns for over-the-counter bank cash disbursements.

Momentum ($4,000)

The Momentum prepaid card can only be applied for in-person at a limited number of check-cashing establishments. It's a very expensive and abusive product, with a high risk of shutdown.

• Limits: $2,500 per day (5 loads);
• Loading: online using Vanilla Reload Network;
• Unloading: $1 over-the-counter bank cash disbursement for the entire card balance;
• Adverse action: closed after third cash withdrawal.

HR Block Emerald ($5,000)

This is a great product that can be a bit tricky to sign up for, since you need to either have your taxes done in-branch at a HR Block location, or convince them to give you a card without having your taxes done. It is similar to Bluebird, but cost $3.74 to load at Walmart registers.

• Limits: $1,000 per day, $5,000 per rolling 30-day period;
• Loading: online using Vanilla Reload Network or in-person at any Walmart register (costs $3.74);
• Unloading: ACH pull directly from the account;
• Adverse action: none.

Conclusion

There you have it: a full $25,000 of my total manufactured spend during the competition was through Vanilla reloadable prepaid debit cards.

On the one hand, that's not a terribly creative approach to manufacturing spend. On the other hand, even if I were earning at a rate of one mile per dollar, that means I could have spent $197.50 (plus unloading costs, plus time) for enough miles to fly roundtrip anywhere in the continental US.

Update: JH Preferred spending limits

Background: Alert: JH Preferred limitations and shutdown reports
Background: JH Preferred cash advances: your miles may vary
Background: Update: JH Preferred

As you can see from the above background reports, the JH Preferred card is one that I've looked into in some depth. It's also a card about which there isn't a lot of information publicly available online.

Over the course of this month I've been using my own JH Preferred card fairly aggressively in order to manufacture as much spend as possible for the #milemadness manufactured spending competition. And that's caused me to run into one additional limitation of the card, in addition to those mentioned in the posts above.

Limitations on PIN-based debit card transactions

Between March 1 and March 13, 2014, I loaded $10,000 in Vanilla Reload Network reload cards to my JH Preferred account, unloading the same amount using PIN-based debit transactions at Walmart.

Today, I loaded an additional $1,000 without any problem, but was unable to make any PIN-based purchases at Walmart. Immediately fearing the worst, I made a signature-based "credit" transaction that was approved.

I ended up successfully unloading the remainder of my balance using a (credit) Amazon Payments transaction.

I dug up my cardholder agreement and found neatly filed with it an "Important Notice Regarding Changes to your JH Preferred Prepaid Visa Card:"

"The maximum amount that can be spent on your Card per month is $10,000.00."

From my experience, it appears that limit is enforced on PIN-based debit transactions, but not on signature or online credit transactions.

Conclusion

While I consider the above information valuable in its own right, for those seeking to take maximum advantage of the JH Preferred card, I also want to suggest that when your JH Preferred card is declined for the first time, don't panic. You may not have been shut down; you may simply have run up against the $10,000 monthly PIN-based debit transaction limit.

The next question I intend to investigate and report back on: is the $10,000 purchase limit based on the calendar month or a rolling 28-, 30-, or 31- day period?

Update: JH Preferred

Back on January 31, I shared some of my preliminary impressions of the JH Preferred prepaid Visa card. An Incomm product like MyVanilla Debit cards, the JH Preferred card was also "Vanilla-reloadable," but with no monthly fee and no transaction fee, which I argued made it the perfect candidate for Evolve Money liquidation. I also shared several posts from Flyertalk about account shutdowns after what seemed like pretty typical usage of the card.

On February 16, I related my experience unsuccessfully trying to get a $4,995 cash advance at my trustworthy local bank branch.

As I said in that post:

"I was ultimately able to liquidate my $5,000 JH Preferred balance by making 3 Walmart PIN-based debit transactions."

More information on load limits

Now that I'm entering my second calendar month with the card, I'm able to report some very interesting news: I loaded $1,000 in Vanilla Reload Network reload cards to my JH Preferred card on March 1, and was able to load an additional $1,000 each day thereafter. In other words, it appears that the $5,000 monthly load limit is based on the calendar month, not a rolling 30-day period.

Additionally, I was able to load $1,000 on March 6, 2014, even though that brought my total calendar month loads to $6,000. An additional load on March 7 was unsuccessful, so it's not clear whether the actual load limit is $6,000, or if there was some kind of technical error that allowed me to load an additional $1,000 this calendar month.

What is the shutdown risk?

I ask this not because I have an answer, but because I don't know. It certainly seems like the kind of activity I've had with the card – large loads and immediate unloads – is the kind of behavior that would attract shutdown risk. But my account is still open.

I've mentioned before that it's best not to take Flyertalk reports at face value, because there are certainly members there who have a vested interest in discouraging people from taking advantage of their preferred hacking techniques.

I'm not saying that's what happened here. But I am saying that – for now – it appears that JH Preferred cards have a slightly longer shelf life than I initially suggested.

I know my readers will share their own experiences in the comments.

JH Preferred cash advances: your miles may vary

One last post for tonight, after my epic (and successful!) quest to Philadelphia today.

I reported back on January 31 that the JH Preferred card had some limitations that some of my more enthusiastic blogger brethren had overlooked in their original reports. Namely, unlike their "direct" competitor, the HR Block Emerald card, JH Preferred doesn't allow ACH pulls from the account, which makes it simultaneously less convenient and more expensive.

After patiently loading my JH Preferred card up with $5,000 in Vanilla Reload Network reload cards, I ran into yet another limitation: my usually-completely-reliable local Bank of America branch was unable to process a cash advance for $4,995 (why $4,995? There's a $5 cash advance fee, and I don't have any interest in trying to rip $5 off from Bancorp).

I'm not willing to rule out user error on the part of the teller, but I do want to share my experience so my readers aren't unduly surprised if they're not able to liquidate their JH Preferred cards in one go. It may still be worth trying, if you have a bank branch willing to help, since there are a few reports of successful $5,000 cash advances in the relevant Flyertalk thread.

I was ultimately able to liquidate my $5,000 JH Preferred balance by making 3 Walmart PIN-based debit transactions, so don't despair if your cash advance attempts end up not being successful.

Alert: JH Preferred limitations and shutdown reports

If you read some of the same blogs I do, you may have noticed a deafening silence here about one new product: the JH Preferred card. That's for a simple reason: while I never hesitate to admit when I make an error, that doesn't mean I'm eager to make as many as possible. 

I first read about the card over at Personal Finance Digest, a truly interesting blog I mentioned just the other day. Having just broken the story of HR Block Emerald prepaid cards finally being Vanilla-reloadable, naturally I was excited to see one of their competitors come out with a similar card that explicitly advertises its compatibility with Vanilla Reload Network reload cards, and has routing and account numbers like the Emerald card.

JH Preferred Does Not Allow ACH Pulls

Ready for this? I'm going to reveal one of my absolute favorite tricks. It's not a secret, it's not a hack, it's just one of my favorite tools in my box: if you have a Fidelity Investment Rewards credit card (2% cash back American Express or 1.5% cash back Visa), you can easily verify whether any product does or does not allow ACH pulls by adding that account in your credit card's online bill payment tab. Fidelity will send out two test deposits — then it will attempt to withdraw them. If the withdrawal isn't allowed, you'll be notified like so:

View fullsize

I do this 5-10 times per month to verify whether various products allow ACH pulls. It isn't fool-proof: while the Netspend Prepaid Visa and the PayPal Prepaid MasterCard both allow ACH pulls, the PayPal account's routing number isn't recognized by Fidelity, so you can't test for ACH-compatibility. But it costs nothing, so it's a great place to start.

JH Preferred Shutdown Reports

As I spent the week patiently waiting for my card to arrive, reports were already trickling in of card shutdowns for the kinds of behavior you might expect from travel hackers. In the comments to Frequent Miler's post on the card, we saw:

• "JH closed my account as soon as I loaded 5k onto it over two days, without even trying to withdraw anything. Another person I know also got the card closed on him after loading 5k (albeit at smaller pace). Useless garbage."
• "Had to battle with a lengthy hidden phone tree to finally reach a nice US based CSR. She told me, 'Well sir this card is designed to be loaded and used over time for regular purchases and you just loaded it up fast and then wd the money. You cant do that.'"
• "Just a warning. I had both of these [HR Block Emerald & JH Preferred]. They locked up my account within a week and it took several weeks for me to get my money back."
  

Meanwhile over at Flyertalk shutdown reports were likewise appearing:

• "$5k in via VR...$5k out via WM BP...Shutdown"
• "loaded 5k via vr over a week and a half. CA 5k. Shut down 1 day later."

The Free-quent Flyer's Official Recommendation

The JH Preferred card is essentially the ideal use case for Evolve Money. Unlike the MyVanilla Debit cards which come with a punishing $0.50 transaction fee on purchases and $1.95 cash advance fee, JH Preferred has no purchase transaction fee and no monthly fee if you load $1,000 or more to the card each month.

I would argue that Evolve Money has two distinct advantage over the traditional methods of liquidating PIN-based debit cards, when it comes to these "vulnerable" cards:

• Since Evolve Money payments are free, you can make multiple, smaller Evolve Money payments throughout the month, reducing the impression of "quick" loads and unloads;
• Since Evolve Money payments are instantly deducted from your card balance, there's no risk of your funds being frozen between loading a Vanilla Reload Network reload card to the account and your bill payment being deducted.

Ultimately, it's not a race: you can load $5,000 per month, whether you do it in the first 2 days of the month or over the course of 30 days. Since it doesn't cost anything to make as many transactions as you want, do yourself a favor and take your time.

Have you ordered a JH Preferred card yet? Do you have a plan to avoid shutdown?