Hacking is an chance to travel; travel is a chance to hack

One of the most frequent e-mails I receive is from readers who complain to me:

"That technique sounds great, and it's too bad that CVS/7-Eleven/grocery stores in my area don't accept credit cards!"

Trust me, I feel for you! Over the last year 7-Elevens and grocery stores in my town have stopped accepting credit cards, which is a real pain since those are two of the most lucrative categories in which to manufacture spend, for example using Chase Ink cards for gas, the American Express Premier Rewards Gold for groceries, and US Bank Flexperks Travel cards for either.

Fortunately, what I do is more than extreme couponing. I'm a travel hacker, and that means the opportunity to regularly visit lots of different cities, where stores have different policies. There is no national policy on the acceptance of credit cards at 7-Eleven store locations, for example, so while it's becoming harder to find locations willing to accept credit cards, it's still possible, and it's still worth it.

For example, just in the last month while visiting Chicago and Portland, OR I was able to find 7-Eleven store locations that accepted credit cards for PayPal My Cash cards (I'm happy to share those locations by e-mail with anyone interested).

Likewise, while AAA offices here in the Southern New England division sell only American Express gift cards, in Chicago they sell PIN-enabled Visa gift cards you can use to buy money orders, make bill payments, or load prepaid cards at Walmart.

Now, I'm not saying you should visit Chicago just to pick up a few thousand dollars in manufactured spending. But I am saying it's worth knowing all the techniques that are available, even if you can't apply them on a day-to-day basis – you never know when your travels will take you to a city where they'll pay off, hopefully in a big way.

What are my readers curious about?

I'm putting together a year-end summary of my mile-and-point activity, scouring my rewards accounts for data that might be interesting to my readers. So far I've put together a collection of data on the cost of my manufactured spend, my fixed-value points redemptions (i.e. Citi ThankYou student loan rebate checks), and airline and hotel redemptions.

But I can't help but think that there must be specific questions my readers are interested in. What do you want to see included in my year-end summary?

Here's a quick glance at some preliminary data:

• Minimum measurable manufactured spend: $189,755 (for information on why I call this the minimum measurable MS, check back for the complete dataset);
• Cash spent on manufactured spend: $1,554.70;
• Maximum cost per dollar of manufactured spend: $0.0082 (0.82 cents per dollar)
• Value of fixed-value and cash redemptions: $5,435.81;
• Fixed-value and cash balances remaining at EOY: $1,041.89;
• Annual fees paid: $259;
• Minimum cash profit this year: $4,664.

So, what do you want to see included in my year-end summary?

5% cash back is back (for now)

I wrote early last month about my search for a new "workhorse" card to replace my Citi ThankYou Preferred card which, during my first 12 billing cycles, earned 5 ThankYou points per dollar spent at grocery stores, gas stations, and drug stores. With just a week left in that promotional period, imagine my excitement in seeing this FlyerTalk thread.

By opening this link in a new browser, "private browsing" session or "incognito" window, it's still possible to apply for what people are calling the "old" Blue Cash card. This "old" card has a totally different earning structure than the "new" Blue Cash Everyday and Blue Cash Preferred:

• On your first $6,500 in purchases made with the card: 1% cash back at gas stations, grocery stores, and drug stores, and 0.5% everywhere else;
• after spending $6,500: 5% cash back at gas stations, grocery stores, and drug stores, and 1% cash back everywhere else.

In other words this card is roughly comparable to the Citi ThankYou Preferred offer that's expiring for me, and I plan on applying for this card later today (after I decide on some additional cards for this impromptu application cycle).

Here are a few things to keep in mind:

• Your net annual earning rate will be slightly less than 5% because of the lower earning rate on your first $6,500 in spend;
• but unlike ThankYou points, which must be redeemed for mortgage checks, student loan rebate checks, or travel through the ThankYou booking tool in order to get a full 1 cent per point in value, Blue Cash "reward dollars" can be redeemed directly for cash;
• 5% cash back is only awarded on gas purchases of up to $400;
• and in my experience American Express does not code 7-11 store locations as gas stations and does not award gas station bonus points for purchases there.

Here on the blog I tend not to make explicit recommendations, since every reader's travel goals and application timelines are different.

In this case I'm inclined to make an exception and say that if you are able to take advantage of these bonus categories, you should strongly consider applying for this card right now. This offer will not last forever, and you will regret not carrying this card when you start reading about how much cash back other members of the community are earning.

netSpend: easy come, easy go, easy $5,000 in manufactured spend

Today's post comes thanks to reader Tim, who convinced me to finally look into netSpend and shared with me his findings based on numerous conversations with their Customer Service department. While netSpend is no secret, I thought it would benefit all my readers to know what to expect if they decide to take advantage of it.

I had never bothered previously since, frankly, I didn't need to: I had MyVanilla Debit cards which could more than handle the volume of manufactured spend I was generating, and I knew netSpend had a bad reputation for account closures.

With my recent MVD shutdowns in hand, and the upcoming expiration of my 5% Citi ThankYou Preferred card offer, I decided to put netSpend through its paces.

Signing up for netSpend

The best way to sign up for netSpend is through a referral link, which gives both you and your referrer $20 after making your first deposit into the account (of $40 or more). There's a "conga" line set up for this purpose on Flyertalk.

Adding Money to the Account

Once you receive your permanent card in the mail, you can add money to the account using Vanilla Reload Network reload cards, subject to the following limits:

• $2,000 per rolling 24-hour period;
• $3,500 per rolling 168-hour (7-day) period;
• $5,000 per rolling 30-day period.

The point is, the time of day you load the Vanilla Reload Network reload cards to your account matters. If you load $2,000 at 5 PM on Monday, you can load another $1,500 at 5:01 PM on Tuesday, and another $2,000 at 5:01 PM the following Monday.

Withdrawing Money from the Account

Here's the best part of this card, and what hasn't been widely reported elsewhere: netSpend is set up to allow free ACH pulls out of the account, using the same routing and account information on the direct deposit form you can access from your online account. That means that there are no additional costs to manufacturing $5,000 in spend per month using this account, after you've bought your reload cards. That makes it in some ways superior to Bluebird, the mainspring of manufactured spend for those with access to CVS or Walmart store locations.

Getting Shut Down

Unfortunately, netSpend aggressively shuts down the accounts of customers who aren't generating the extortionate fees they charge for transactions made with the card. That means that there is only one safe way to use netSpend: immediately empty your account after loading it, and never leave money in the account. This does guarantee that you'll be shut down, but it also minimizes the amount of money netSpend will have to mail you by check (generally up to 20 days later).

Doing it Again

Interestingly, there's another almost identical product offered by netSpend, the PayPal Prepaid MasterCard. The PayPal Prepaid MasterCard is essentially the same as the "premium" netSpend account: it has a $5 monthly fee, no fees for purchases, and comes with a linked 5% APY savings account (5% APY paid on balances up to $5,000). It also has the same $2,000/$3,500/$5,000 load limits.

But there's a wrinkle: if you have both a netSpend account and PayPal Prepaid MasterCard, your load limits are shared between the two cards. That means there's no reason to have an active netSpend and PayPal Prepaid MasterCard at the same time: you can start with one, get shut down, then open the other.

Finally, while reader Tim reported that his netSpend and PayPal Prepaid MasterCard accounts were shut down simultaneously, that wasn't my experience: I haven't loaded or unloaded anything to my PayPal Prepaid MasterCard account, and it's still open, while my netSpend account was shut down a few days after finishing my first month's $5,000 in loads. That means I'll be able to put another $5,000 through the PayPal Prepaid account once my netSpend load transactions roll off my 30-day load history.

I'd love to hear from my readers: have you used netSpend? Have you already been shut down? If not, what's your strategy for avoiding unwanted attention to your account?

Rebate your manufactured spend (brand new hack)

As always, before I get started with today's news I have to get a few things out of the way.

First of all, the hack that I'm discussing today involves PayPal. I know everybody hates PayPal. Heck, I hate PayPal too. But they've also been very good to me. If you feel like ranting about PayPal, the comments, as always, are open.

Second, as always I want to give credit for this hack where credit is due. That's a pretty short list this time. I originally got the idea from a comment left here on the blog by Phil. If you read this, thanks Phil! Over the course of the day or two I spent researching this, I was only able to find one veiled reference (I think) left on a Frequent Miler post over the summer. So, thanks to DFW, too, I guess.

Finally, I haven't tried this personally. I'll be applying for new cards at the end of January or beginning of February, and will of course post an update then. In the meantime, I would love to hear about readers' experiences if they're able to make this work – or, especially, if not.

The PayPal Business Debit MasterCard

As my readers know, one of my favorite tools for manufactured spend is the PayPal Business Debit MasterCard. It has two amazing functions:

• It earns 1% cash back on all non-PIN transactions, including all online transactions;
• It's a PIN-enabled debit card that can be loaded using PayPal My Cash cards and emptied at Walmart.

This is an amazing combination of features. But unfortunately as it stands, you have to choose which benefit to take advantage of: access to debit features like money orders, Walmart Bill Pay, and prepaid card loads (Bluebird and Gobank), or 1% cash back.

Your New .83% Cash Back Debit Card

When you don't have enough funds in your PayPal account to cover a Debit MasterCard transaction, instead of having your transaction rejected, PayPal gives you the option of pulling the funds from a backup funding source. You can choose any bank account linked to your PayPal account, or you can use a PayPal Extras MasterCard.

The PayPal Extras MasterCard earns "points" which can be redeemed for cash into your PayPal account: you can redeem 6,000 points for $50 in cash, or 0.83 cents per point. You can only earn 50,000 points per year (8 $50 redemptions, plus some change).

According to Phil's comment, these backup funding transactions earn points on the Extras MasterCard.

Since I don't have an Extras MasterCard yet, I can't confirm the limits on these backup funding transactions or whether they earn points. The standard limit on backup funding transactions is $1,000 per day, but I don't know if the same limit applies when the backup funding source is a PayPal Extras MasterCard.

It Gets Better

As I mentioned, the backup funding source is only used when you don't have enough money in your PayPal account to cover a debit card transaction. That means that rather than loading your PayPal account with a PayPal My Cash card and then emptying the balance with your Debit MasterCard, you will want to use your Debit MasterCard when your account balance does not cover the transaction.

Amazingly your PayPal Extras MasterCard is managed from within your PayPal account and you can use your PayPal balance to pay off your Extras MasterCard. That means you can load a PayPal My Cash card to your account and move the money directly into your Extras MasterCard to pay off the balance you incurred using your Debit MasterCard.

What it Means

Let's take a look at a simple pass through this hack.

• Assume a PayPal balance of $0.70;
• Use your PayPal Business Debit MasterCard to purchase a $1,000 money order from Walmart;
• After using the $0.70 in your account (and covering the money order purchase fee), your PayPal Extras MasterCard will be charged $1,000;
• Buy 2 $500 PayPal My Cash cards at CVS for $7.90 and load them to your PayPal account;
• Move the money from your PayPal account to your Extras MasterCard;
• Redeem 1,000 points for $8.33 (when you have 6,000 points).

You'll have spent $8.60 for the money order fee and My Cash cards, and earned $8.33 worth of Extras points – and manufactured $1,007.90 in spend at CVS.

What do you think?

Does it work? Are you going to try it? Should I have kept my mouth shut? Inquiring minds want to know! See you in the comments.

Resolution of my MVD/FDIC complaint

Before I get to today's post, I want to invite all my readers to come back tomorrow when I'll be talking about a new hack that I've been exploring – because I need your help. Normally I only post about a new technique once I've had a chance to explore all the nuances and share my findings, but this one is a little bit different and I think it'll benefit from as much reader feedback as possible. And yes, it is going to upset some people that I'm writing about it publicly, so if nothing else you should come back to check out the fireworks in comments.

With that out of the way, on to today's news. When I got back from Wisconsin last night I found a letter from The Bancorp Bank in response to my FDIC complaint about my second frozen MyVanilla Debit Card account (the one with all the money in it). Then this morning I received another letter from the Federal Deposit Insurance Corporation, Bancorp's main federal regulator. I thought I'd share the details of those responses with my readers.

Bancorp's Response

There were several interesting sections in the Bancorp letter. First, the explanation of the initial account blockage on November 21:

Your account was blocked on November 21, 2013 due to activity that was considered suspicious. The account received several loads which mimic a fraudulent transaction pattern that InComm, the program manager, sees on a day-to-day basis during phone scams.

Presumably the phone scams they're talking about are when you're asked to buy a reload card and send in the PIN number in order to receive a prize.

Next, there was an explanation for the runaround I was given:

All of the requested information was received and on December 2, 2013 the card was reopened. We appreciate you sending in the requested information in such a timely matter [sic]. The turnaround time to review submitted documents is anywhere from 24-72 hours. In this case the documents you submitted were sent to the wrong folder which resulted in a delay in reopening the account. The documents were reviewed on December 2, 2013 and the account was reopened.

Then some commentary on their federal banking supervision:

Please understand that our ultimate goal is to protect the security of your account. We are obligated by federal banking regulations to follow a process known as the Customer Identification Program (CIP). The CIP regulations make it mandatory for a bank to take the proper steps to confirm the identity of its customers. The CIP process is necessarily stricter with accounts that are opened via the internet. While we must always comply with all banking regulations, we make every attempt to do so with as little impact to you as possible. We appreciate your patience and understanding while we assisted you with your concern.

Finally a little customer service boilerplate:

This issue has since been discussed with the customer service department to ensure the review requests and escalations are being sent to the correct individuals. We apologize for any inconvenience you experienced. We truly regret the delay that was caused by the mishandling of your request.

In other words, they seem to be saying there were two separate issues:

• Possibility of me being a phone scammer, getting Vanilla Reload PINs from unsuspecting victims and quickly loading and unloading the value;
• And federal banking regulations which require them to conduct identity verification for accounts opened over the internet.

That being the case, it's still impossible to say what "directly" led to my account being frozen.

The FDIC's Response

Besides including a copy of Bancorp's response, the FDIC also expanded a little on the regulations Bancorp was claiming to be following:

The USA Patriot Act rules require each financial institution to adopt a Customer Identification Program (CIP) to ensure the bank has a reasonable belief that it knows each customer's identity. That is why financial institutions engage in more rigorous customer identification procedures when opening new accounts, especially for accounts opened over the Internet. The FDIC and other regulatory agencies encourage banks to use the basic principles set forth in the rule (31 C.F.R Chapter X), which includes obtaining customer information, such as a name, date of birth, address, and for U.S. residents, a tax payer identification number. In addition, banks must verify the identity of customers, through the review of documents or through non-documentary methods, such as information obtained from consumer reporting agencies or checking references. The bank's CIP must also provide customers with adequate notice that the bank is requesting information to verify their identity.

So there you go. I don't think it will necessarily help keep anyone from being shut down, but it's good to know that if you file a complaint with the FDIC, they will listen and respond in a more or less timely manner. Your tax dollars at work!

Nationwide Visa Buxx offering $5 bonus in December

I'll be generous and assume that my readers already have a Nationwide Visa Buxx card, since it's an easy way to generate $1,000 in monthly spend on any Visa or MasterCard every month at a cost of $4.

That being the case, check your e-mail for an offer to receive $5 in extra cash when you load $50 to your Visa Buxx account by December 31, 2013. Unfortunately, the Terms and Conditions are too vague to tell clearly whether loading more than $50 will qualify for the $5 bonus, or if you need to load exactly $50.

This matters since if you only earn the bonus when you load exactly $50, you're barely coming out ahead (since you'll pay $2 for the $50 load and another $2 for the subsequent $450 load), while if you earn the bonus when you load any amount over $50, then the $5 will pay for 2 and a half $500 loads, a free month of manufactured spend!

The bonuses are supposed to post by the end of January, so presumably we'll find out for sure by then.

Round 2 of MyVanilla Debit shutdowns

Back on October 22, I laid out what I called "real talk" about MyVanilla Debit cards:

Since then the shutdown reports slowed down, and other opportunities opened up, so I decided to start using my MyVanilla Debit cards more aggressively. 

And my accounts are still alive and well.

...

MyVanilla Debit cards are still a very viable option for manufacturing relatively large amounts of spend each month. And if you've been shying away from them because of the shutdown reports, it might be time to start – carefully! – dipping your toes back in the water.

Just a few weeks later, I was sad to report that one of my 3 MyVanilla Debit cards had been shut down. It was closed after I had already emptied it down to $35, so it wasn't a big priority for me to get the account reopened or have the balance mailed to me.

My second MyVanilla shutdown is a different story entirely. On November 21, I loaded $2,000 in Vanilla Reload Network reload cards at home, then set off to Walmart to liquidate my balance using Walmart Bill Pay. By the time I got to the store about 30 minutes later, my account had already been frozen – with over $2,000 in it!

I called Incomm immediately, and was told that I needed to fax in a copy of my driver's license and Social Security card, and to call back the next day.

When I called back on November 22, I was told that they couldn't find my fax, and that instead I should email my documents to premium_fax@incomm.com, and call back an hour later to confirm they'd received them. I did, and they did. They told me the compliance department would get to my account within "72 business hours" (this is their idiotic way of saying 3 business days).

I took Thanksgiving week off, and didn't call in again until Saturday, November 30. Imagine my lack of surprise when the phone agent told me that my e-mail had been misfiled: someone had saved the file using my first and middle names, instead of my first and last names. Consequently, the compliance department had never gotten to it. After refiling my documents correctly, the agent promised that he would place it in a high priority queue and that my account would be resolved within "24 business hours."

Sure enough, by the afternoon of Monday, December 2 my account had been reopened, and I hurried to the bank to empty my account. So all told, I didn't have access to my money for about 11 days.

The Takeaway

Here are my preliminary conclusions based on my experience and everything I've read so far:

• Shutdowns can occur the same day as loads: you may not have time to empty your account before being shutdown;
• Some shutdowns are still being resolved without faxing in copies of the Vanilla Reload cards used to load the account. Others are not;
• I no longer believe there's a safe level or type of activity with MyVanilla Debit cards, at least not at the kind of volume that's worth risking shutdown;
• The staff at Incomm are excessively incompetent, and even if they are trying in good faith to help you, their incompetence could significantly delay the resolution of your shutdown.

My Activity

As in the case of my previous shutdown, I'm more than happy to provide the history of my loading and unloading activity on this account. As before "CA" designates a bank cash advance and "WM" means a Walmart bill payment:

• October 23: Load $1,000
• October 24: $1,000 WM
• October 27: Load $1,000
• October 29: $1,000 CA
• October 30: Load $2,000
• October 30: $2,000 WM
• November 5: Load $1,000
• November 6: $1,000 CA
• November 8: Load $1,000
• November 11: Load $1,000
• November 11: $2,000 WM
• November 18: Load $1,000
• November 19: Load $1,000
• November 19: $2,000 WM
• November 21: Load $2,000

So my total activity in the month leading up to my shutdown was:

• Loads: $11,000
• Cash advances: $2,000
• Walmart bill payments: $7,000
• Balance at account closure: $2,034.64

Tis the season: $5,000+ in free* spend

I mentioned last week before my trip to Chicago that I was planning on exploring the technique outlined in this Flyertalk thread. As a holiday promotion, the American Automobile Association is offering no-fee gift cards. While they sell both American Express and Visa prepaid gift cards, the Visa cards are most interesting because (like virtually all Visa and MasterCard gift cards) they are PIN-enabled. That means you can use them with any of our favorite liquidation techniques: Walmart and grocery store money orders, bill payments at Walmart, Gobank loads, Bluebird loads, and others. They probably will not work with postal money orders, since those purchases are coded differently.

The Deal

Here’s what you need to know:

• You need to have a AAA membership;
• AAA is regionally organized, and not all regional branches are participating in the no-fee promotion;
• Even among those that are participating, not all branches sell the Visa gift cards which can be PIN-enabled – some only sell the less useful Amex cards. These cards aren't useless, in case you want to front-load your spend in order to meet a minimum spending requirement or bonus spend threshold, but they can't be liquidated as easily or cheaply;
• There are many reports of people being unable to purchase additional gift cards after about $5,000 in purchases. Since the gift cards are registered to your AAA membership, it’s easy for the issuing bank (in this case Metabank) to know who is purchasing the cards. However, the more family members you have, the more you can take advantage of this promotion;
• To enable the PIN functionality, you need to call the number on the back of the card. You don't need to login to their website to register the card; it's already registered. You only need to call in, follow the prompts, and set your card's PIN number.

My Experience

While I was in Chicago, I went into the AAA location on North Michigan Ave. I asked if their location was participating in the no-fee gift card promotion. When she confirmed that they were, I asked to purchase 4 Visa gift cards for $500 each. She then took my AAA membership card and spent 4-6 minutes filling out a number of forms on her computer terminal. She then asked me for my form of payment, and I handed her my Barclaycard Arrival World MasterCard, since it's my most lucrative card for unbonused spend categories.

The purchase went through for exactly $2,000 (no purchase fees), and the points have since posted to my Barclaycard account. In fact, they've even been redeemed for a travel charge that was about to roll off my account.

I liquidated the 4 Visa gift cards by purchasing 2 Walmart money orders for $0.70 each (doing a split transaction to use 2 of my 4 gift cards for each money order), meaning I paid $1.40 for $44.44 in value.

I won't tell you that this is a once-in-a-lifetime opportunity: in fact, opportunities like this come up fairly regularly, as my readers know. However, it is a great opportunity to get closer to your travel goals (or just earn 2% cash back) at virtually no cost to you.

First MyVanilla Debit shutdown!

A few weeks ago I reported on my experience using MyVanilla Debit cards. A lot of people are concerned about having their cards shutdown, since it's so valuable to have a way to easily liquidate Vanilla Reload Network reload cards after reaching your $5,000 monthly Bluebird load limit.

I explained how I had gradually increased my MyVanilla Debit usage, loading and unloading about $2,000 per week to each of my 3 cards.

Well, one of my cards was finally shut down yesterday soon after I loaded $1,000 and did a bank cash advance in the same amount. 

What happens when you're shut down?

The most important thing to know is that a MVD shutdown only affects the closed account. While the folks at MyVanilla do have my Social Security number, so in principle they could link my three accounts (and in fact they do, since that's how they impose the 3-accounts-per-person limit), in fact they do not proactively close all your active accounts: only the one that triggers the shutdown.

When an account is shutdown, you will no longer be able to log into that account. That's why it's extremely helpful to have your MyVanilla Debit account loaded into Mint or a similar banking website so you still have access to your balance and transaction history (more on that in a second).

How do you get your money back?

If you call the phone number on the back of your closed card, most people seem to have success having their account temporarily reopened to allow the customer to get a bank cash advance or use an ATM to empty the account, which keeps MyVanilla from having to mail a check for the account balance.

Additionally, there are reports that while your account is in that temporary reopened status, it's still possible to load Vanilla Reload Network reload cards, giving you one last shot to push a large amount through the card before losing it. 

Finally, some but far from all shutdown users report that after their account is "temporarily" reopened, it in fact remains open and can be used normally. 

What triggers account closure?

This is a question I obviously don't have an exact answer for. I was loading and unloading much more money to my closed account than the vast majority of MyVanilla's users. On the other hand, there are definitely people who load and unload even more than me. 

Fortunately, I did have my MVD login credentials loaded into Mint, so I still have access to my transaction history, which I'm more than happy to share with my readers. This is for my closed card account, for roughly the last month. CA means a cash advance from a bank teller, WM means a Walmart bill payment: 

• October 5: Load $1,000
• October 7: CA $950
• October 14: Load $1,000
• October 14: WM $1,000
• October 17: Load $1,000
• October 18: CA $1,000
• October 22: Load $1,000
• October 24: CA $1,000
• October 27: Load $1,000
• October 28: CA $1,000
• October 31: Load $2,000
• October 31: WM $2,000
• November 5: Load $1,000
• November 6: CA $1,000
• November 8: Load $1,000
• November 8: CA $1,000 (shutdown)

In summary, my total amounts of the 3 transaction types are: 

• Loads: $9,000
• Cash advances: $5,950
• Walmart bill payments: $3,000
• Balance at account closure: $35.04

What Next?

These cards are incredibly lucrative, so of course I'm sad to see one go, but fortunately I still have 2 active card accounts. For now my plan is to stop doing bank cash advances and stick to Walmart bill payments, which I believe are somewhat safer since they're processed as ordinary purchases (i.e. MyVanilla makes money off them). That may be an overreaction, since there's certainly some safe level of monthly cash advances. With only two remaining cards, however, I'm not willing to play Guinea pig to find out just what that level is!