Why You Should Love Changes in PIN Requirements for Prepaid Cards

As of April 1st, the Federal Reserve is requiring all prepaid MasterCard and Visa cards to provide a PIN number to users.

This would be drab news except for the fact that it opens up a whole new world of possibilities for mileage and points collectors.

As a primer to this post, you’ll want to be familiar with these two posts:

How to Earn Points or Miles Paying Your Mortgage

Bluebird Introduces a Checkbook = More Mileage Earning Oportunities

In this post, I want to highlight what I think are a few of the new possible opportunities with the card.  They all involve finding free or close to free ways to use credit card to purchase prepaid cards, and then turning around and uploading those cards to your Bluebird account since that provides an infinity of opportunities for using your miles.

1.  For Ink Bold, Plus, or Classic card holders: Buy at Your Local Office Supply Store

As a test, this week I went into a local office supply store and bought $800 worth of Visa prepaid cards.

Here’s how the math works out:

You can purchase a $200 Visa gift card for $6.95, thus your total cost would be $827.80.

At 5x per point, you’d earn 4,139 Ultimate Rewards at the cost of $27.80 or .67 cents each.

To put this in perspective, your $27.80 worth of Ultimate Rewards could be transferred to Southwest for $46.92 worth of Wanna Get Away flights. That’s a savings of 59%.

If you preferred, you could transfer these points to British Airways, and for $30.15 you’d have enough points for a short haul flight within the US.  You could transfer the points to Hyatt, and for $33.50 worth of points you’d get a Hyatt category 1 hotel for a night.

2.  Buy Free Prepaid Cards with a Chase Credit Card

For a limited time, Chase is offering some of their prepaid Visa cards without any fees.  They are currently waiving the $4.95 shipping fee as long as you buy the card with a Chase credit card.

I don’t know how long this will last, nor do I know how much you should buy on each card.  There is a limit of $2,500 on each card in a one month period.

If you’re trying to reach a minimum spend on a Chase card, this could be the best way to reach the minimum spend!

You’ll earn your standard bonus when you purchase this card, so $1,000 worth of cards should give you at least 1,000 points.

Hat tip: The Points Guy

3.  Buy Prepaid Cards Online

In order to get even more value, I’d suggest you sign up for a cash back website like FatWallet.com who will give a 1% rebate through giftcardmall.com.  ExtraRebates.com will also give a rebate of 1.25%.  I have used FatWallet.com for other purchases and was rewarded the proper cash back, so I only feel comfortable recommending them.

Through the appropriate cash back portal, visit giftcardmall.com where you can buy a $1,000 Visa gift card for a purchase fee of $3.95.  With your cash back you should actually come out about $6.00 ahead.

4.  Buy Prepaid Cards at Your Local Grocery Store

I noticed that my local grocery story sells $500 cards with a $5.95 fee.  It’s not the most cost effective way to buy cards, but it does diversify things, and it probably makes more sense if you have a card that gives a bonus for grocery purchases.

In my case, I have the American Express Premier Gold card which gives 2x per dollar at grocery stores.  As such, I’d pay $5.95 for 1,000 Membership Rewards points.  That’s not something I’d do if I didn’t have a better bonus unless I needed the spend to reach a minimum spend.

A Note about Vanilla Cards:

Despite the fact that all prepaid MasterCard or Visa cards are supposed to have PIN numbers allowed, they don’t all allow it, and Vanilla cards still haven’t enabled the feature.  You may want to make a smaller test purchases to be sure you can assign a PIN to your card.

How to Use Your Prepaid Card with a PIN Number:

  1. Upload to Bluebird.  Once you have assigned a PIN number to your card you can use the card to upload funds to your Bluebird account.  There is a limit of $1,000 per day.  Also, I think I heard that there is a limit of four transactions per day.
  2. Use the card to pay your taxes.  If you were to use a credit card to pay taxes, the best rate you’ll find is 1.89% or $18.90 for a $1,000 payment. However, if you purchased a $1,000 Visa card as outlined above, you could pay through a site like payUSAtax.com which only charges $3.49 per debit card transaction for paying taxes.
  3. Buy Money Orders at Walmart. There is a small fee to do this, and you should do this in moderation.
It may even be possible to get some cash back when you make a PIN based purchase as certain retailers.  Experimenting will help you find out where this will and will not work.
Strategy Highlights:
I think a combination of these strategies is especially advantageous for spending bonuses with credit cards.
As an example, my wife got the British Airways credit card when they offered 50,000 Avios after first purchase and 25,000 after spending $10,000 in the first year, plus an extra 25,000 when you spend a second $10,000 in the first year.  This card also has a companion pass after spending $30,000 per year.  While there would be some extra expenses, I think we can use the strategies above to help earn at least the first $10,000 spend bonus.  When we trigger each spend bonus, we get 36,250 points (1.25 per dollar spent plus 25,000 bonus).  That’s 3.62 points per dollar spent.
Still, my suggestion is to do this in moderation and spread the spending across several different vendors.

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