Unleash your manufactured spend: Part 4

This post was supposed to go up yesterday, but I'm moving apartments this week and yesterday got a little out of hand. So, my apologies for that. There'll be a wrap-up post this evening and then next week we'll return to our regularly scheduled programming.

In today's entry in my series on the ability to pay credit card bills using PIN-based debit and gift cards at Walmart (Part 1, Part 2, Part 3), we're leaving theory behind and I'm breaking down my own plans to maximize this technique in my own miles and points strategy.

First, a little background. As someone who constantly ridicules Walmart's model of "low prices, no training, starvation wages," immediately before discovering this technique I was running just 5,000 per month through Walmart, with just two trips per month (unless I had an urgent need to generate a lot of spending quickly, in which case I could buy additional money orders). On a typical visit, I would make 3 deposits to my Gobank account: a $1,000 US Bank Visa Buxx swipe, a $500 Nationwide Visa Buxx swipe, and a $1,000 MyVanilla Debit swipe. By loading my Buxx cards with my PayPal Debit MasterCard, which was funded with PayPal Cash cards, my net cost for $2,519.75 in manufactured spend (per visit) was $12.18, or 0.48 cents per dollar ($11.85 in PayPal Cash fees, $7.90 in Vanilla Reload Network fees, $7 in Visa Buxx load fees, one $0.50 MyVanilla transaction fee, and a $15.07 rebate for using my PayPal Debit MasterCard). Since I manufacture almost exclusively in bonus categories – the exception being the Barclaycard Arrival World MasterCard, which doesn't have bonus categories, but earns 2.22% cash back on all transactions – this put my cost per point in the low tens of a cent.

Meanwhile, I would load my Bluebird account online with $1,000 using Vanilla Reload Network reload cards on each of the first five days of the month.

As I suggested yesterday, PIN-based billpay at Walmart led me to rethink my entire miles and points strategy. The point isn't that it's cheaper than loading a Gobank account – on the contrary, it's more expensive. I I were going to manufacture the same amount each month as I have been, I'd be crazy to use billpay instead of Gobank. The point, rather, is that at a slightly higher cost per dollar of manufactured spend, it liberates my entire Gobank and Bluebird loading budget for use with gift cards.

Now, with the same Visa Buxx and MyVanilla Debit spending pattern I was using before, I can directly pay my credit card bills at the Walmart Customer Service center (see Tuesday's post for cost per dollar analysis). Then, I can load $3,500 in gift cards to my Bluebird and Gobank accounts at any register in the store. Using a card that bonuses grocery store spend, like the American Express Hilton HHonors no-annual-fee and Surpass cards (5 HHonors points and 6 HHonors points per dollar spent at grocery stores, respectively), the American Express Premier Rewards Gold card (2 flexible Membership Rewards points per dollar spent at grocery stores), or even the US Bank Flexperks Travel Rewards card (2 Flexpoints per dollar, worth up to 4 cents when redeemed for paid airline tickets), I can literally double my monthly manufactured spend while only slightly increasing my cost per point.

Of course, this does entail additional trips to Walmart and additional risks. Since Bluebird has a $1,000 daily load limit, I can't load $2,500 per visit as I do with Gobank. To use giftcards to max out my Bluebird load limit, I'd have to make 5 visits a month – not likely! But 4 visits per month, one per week, seems eminently reasonable.

Meanwhile, I'll incur additional risk by moving $4,000 in Vanilla Reload Network reload card loads from Bluebird over to my 3 MyVanilla Debit cards. Since Walmart Billpay is actually cheaper than bank teller cash advances, at least for some transactions ($1.50 for American Express and Discover bill payments, compared to $1.95 for cash advances), I'll stop doing large cash advances, which will hopefully protect me when I start making larger swipe transactions with the cards.

And that's how I'll be turning $10,000 in manufactured spend into $19,000 in manufactured spend on Walmart visits. I'll pay a slightly higher cost per point, but the value of the points I earn will outweigh the higher costs 5-10 times over.

Check back tonight, when I'll offer my concluding thoughts and provide some valuable data points so you know what to expect when you make a Walmart bill payment.

Unleash your manufactured spend with Walmart billpay: Part 1

First of all, I want to thank all of my readers for their patience for the last few days while I've been hinting at today's post. The reason I couldn't post earlier was not just to build buzz, but to make sure that I had personally tested every part of this technique. I've now done so, and I'm pleased to report that it's real, and it's spectacular.

Second, to the best of my knowledge the technique I'm about to describe has never been blogged about openly before, which I expect to change soon. However, it is not the result of my work alone, so before I begin I want to acknowledge the people who set me on the path to discovering it: Jerry in the comments to this New Girl in the Air post; Nathan at the very end of the comments to this post; this PointsChaser post; and of course above all this slow-burning FlyerTalk thread which was the first place to report a number of the indispensable elements that make the technique work. I'm deeply indebted to all those sources for the basic elements of this technique; any errors are of course mine alone.

Having said that, let's get started. 

Walmart allows you to pay credit card bills using any PIN-based debit card

How it Works

Walmart Money Center registers and, in locations without a separate Money Center, Customer Service registers are integrated with the CheckFreePay bill pay network. At any such register, you can ask to make a credit card bill payment and use any PIN-based debit card to pay the bill and the associated fee.

You can use up to 4 PIN-based debit cards per bill pay transaction, while paying a single transaction fee.

Credit and debit cards are issued by banks: Chase credit cards are issued by Chase, American Express credit cards are issued by American Express, Bank of America credit cards are issued by Bank of America. However, each card is also linked to a payment network: Visa, MasterCard, American Express, Discover.

The single most important thing you have to know in order to take advantage of this technique is that when you pay your credit card bills at Walmart, you must make the payment out to the payment network, not the issuing bank.

So even though your Chase Sapphire Preferred Visa Signature card and your Chase Ink Plus MasterCard are both issued by Chase, to pay your credit card bills at Walmart the payee for the Sapphire Preferred will be "Visa" and the payee for the Ink Plus will be "MasterCard."

What it Costs

This section is based only on my experiments at my local Walmart store locations: your experience may differ. 

There are two price points in the CheckFreePay system at Walmart: $1 "3 business day" payments and $1.88 "next business day" payments. Unfortunately, not every credit card payment network has both payment speeds enabled. Here are the results of my experiments:

• Visa: Next business day only ($1.88)
• MasterCard: Next business day only ($1.88)
• American Express: Next business day ($1.88) or 3 business day ($1)
• Discover: Next business day ($1.88) or 3 business day ($1)

So if you want to make a credit card payment to a Visa credit card at my local Walmart, you must pay $1.88: the $1 payment option is not available. This may vary by store location or employee. 

Why it Matters

Ever since the Federal Reserve issued new regulations forcing prepaid card issuers to allow their cards to be used as "true" PIN-based debit cards, we've been in a very exciting time for travel hacking. For example, Chase allows up to $2,600 in free gift card purchases per Chase credit card, per rolling 30-day period. Likewise, many grocery stores (a common bonus category) allow you to purchase $500 Visa and MasterCard gift cards at a typical cost of $5.95-$6.95.

Besides gift cards, in many parts of the country it's still possible to buy Vanilla Reload Network reload cards at drug stores like CVS, and PayPal Cash cards at 7-11 store locations that are processed as gas stations. 

The problem in this era of virtually unlimited manufactured spend is liquidating prepaid cards once you've purchased them.

Bluebird is a free option, loadable at all Walmart registers using PIN-based debit cards up to $1,000 per day and $5,000 per month, but those loads count against the same $5,000 calendar month limit as Vanilla Reload Network cards.

Gobank is another great option I've extensively covered, but while it's free to load Gobank accounts at Walmart up to $1,100 per transaction and $2,500 per day, it's a Green Dot product that's subject to shutdown if you exceed undisclosed monthly limits or if your loading pattern is deemed "unusual."

PayPal has a $4,000 rolling 30-day load limit using PayPal Cash cards, but unloading your account can cause problems since PayPal is notoriously sensitive to abusive behavior.

All of those problems have now gone away: you no longer need an intermediate product to liquidate your prepaid cards.  Instead, you can bring up to 4 PIN-based debit cards per bill pay transaction to your local Walmart and at a cost of $1 or $1.88 send the card balances directly to your credit card.

The Risks

There are 3 primary risks to this technique that I want to be perfectly clear about up front.

First, there's the risk of having an account shutdown. There are many reports of MyVanilla Debit cards being shutdown without warning, and it's still unclear what loading and unloading pattern is safest. I don't have an inside line on MyVanilla Debit's fraud prevention algorithms, but I believe cash advances are probably the riskiest method of unloading the cards, because of the high limits and fixed $1.95 fee. Large Walmart transactions are probably a close second. So while this is a great technique for liquidating MyVanilla Debit balances, you still should be careful about spacing your loads and unloads out over the course of the month. And of course, even being careful can't guarantee that your account won't be closed.

Second, there's the risk that Walmart will consider your payments suspicious activity. There are lots of reports in this thread of Walmart employees being prompted to record customers' Social Security numbers, home addresses, and other personal identifying details. Those requests seem to be triggered by credit card payments over $2,000, although the exact level that triggers scrutiny isn't clear. Many people are made uncomfortable by disclosing this sensitive information to Walmart tellers. It appears the best way to avoid doing so is to keep your bill payments below $2,000, although this will raise your cost per dollar of manufactured spend.

Finally, when it comes to Walmart there's always the risk of employee incompetence. This can take a number of different forms. Of course, an employee may simply not know how to make these bill payments. Alternatively, there are reports that some store locations demand that you physically bring your most recent credit card statement into the store. Further, some store locations refuse to allow bill pay transactions to be funded by gift cards (cards that don't have your name embossed on the front). Finally, some employees may feel uncomfortable with multiple, high-value transactions, and simply refuse to help you. Be aware that this is not corporate policy: you've just found an incompetent employee, or a store location with an over-vigilant store manager. Visit another location or return at a different time.

These are manageable risks, but they do exist and you should be aware of them before beginning to use this technique. As always, I recommend starting slowly, using money that you can afford to be temporarily without if something goes wrong, and watching your credit card statements carefully to make sure that each payment posts correctly.

Conclusion

This is a very basic overview of this technique. It works and it can increase your volume of manufactured spend while only slightly increasing your cost per point.

Tomorrow, I will provide my analysis of the volume and cost per dollar of manufactured spend that you can achieve using this technique, and I'll compare it to some other popular techniques.

Later in the week I'll discuss some of the most lucrative opportunities this technique unlocks and share my own plans to use it going forward.

If you've already been using this technique, please share your experiences in the comments. How long do your CheckFreePay payments take to post? Do they post at the beginning or end of the business day? What problems have you had dealing with Walmart employees, and how have you resolved them?

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American Express bonuses at 7-11 and using Bluebird internationally

Apologies for the light blogging this week, I've been on a cross-country train trip, at my brother's destination wedding, on board a transatlantic flight, and now struggling with Eastern European internet access. That and I'm dealing with a stubborn cold, which I'm sure everyone in BusinessElite was ecstatic about on the 10-hour flight here from Portland.

American Express Gas Station Bonuses

Enough about me. Since my American Express credit card statement closed I want to report on my experiment testing whether 7-11 store locations (where Vanilla Reload Network and PayPal Cash cards are sometimes available for purchase with credit cards) would earn bonus points with the American Express Hilton card, which gives 5 HHonors points per dollar spent "on gasoline at U.S. stand-alone gas stations." I had already confirmed that Visa cards issued by Chase and US Bank do bonus these purchases, but being able to buy Hilton HHonors points at 0.13 cents each (with the Surpass) or 0.16 cents (with the no-fee card) would bring back one of the most solid money-saving hacks out there.

Unfortunately, I did not earn bonus points on my 7-11 purchase. While my purchase was categorized correctly as a gas station:

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I earned only the standard 3 HHonors points, and no bonus points:

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Unfortunately, I suspect this means that other cards issued by American Express which bonus gas station spend will likewise only give bonus points for gas purchases (for example, for those transactions carried out at the pump).

Using Bluebird in Europe

Virtually all serious travel hackers have an American Express Bluebird card, which can be loaded using the above-mentioned Vanilla Reload cards ($1,000 per day, $5,000 per month). Until this trip, I had only used my Bluebird balance to pay credit cards bills and pay my monthly rent.

However, one of the most amazing features of Bluebird, which makes it superior to virtually every checking account, is that there are no foreign transaction fees, including on international ATM withdrawals (you will still pay a $2 out-of-network ATM fee).

Since I'm often stuck paying with cash in Europe, this can save huge amounts of money during a long stay overseas (I'm in the Czech Republic until mid-August, for example). Compare the following two ATM transactions.

First, I made a 3,000 Czech Koruna withdrawal from my Bank of America checking account. My BoA account shows a:

•  $152.15 ATM withdrawal;
• $5 out-of-network ATM fee;
• $1.52 international transaction fee.

The next day, I made a 5,000 Czech Koruna withdrawal from my American Express Bluebird account. That account shows a: 

• $254.83 ATM withdrawal;
• $2.00 ATM fee.

Even though the exchange rate used by the banks are almost identical (19.71 CZK per dollar vs. 19.62 CZK per dollar), Bank of America's fees are 250% higher, plus 1% of the transaction amount.

You may ask, why did I make an ATM withdrawal using my Bank of America account?  Good question, and it brings me to the drawback of relying on Bluebird for ATM withdrawals: while American Express compatible ATMs are virtually everywhere in the United States, they are much rarer here in the Czech Republic, and I suspect that's true in many parts of Europe. So while you're likely to get a competitive exchange rate and lower fees, you should still bring some cash and/or a backup ATM card.

As a reminder, if you have a monthly direct deposit to the account (all inbound ACH transfers appear to count, including withdrawals from a PayPal account in any amount) , then all ATM fees are waived at MoneyPass ATMs in the United States.

AccountNow can supplement Bluebird and Gobank

[edit 6/18/13: It looks like I have an affiliate link for the basic AccountNow card as well. If you are interested in using AccountNow, and want to support the site and the work I do here, feel free to use this link. See the comments below for some of the risks of the technique described here.]

Regular readers of this blog know that one of the simplest ways to manufacture spending on rewards-earning credit cards is by loading Vanilla Reload Network reload cards directly to a Bluebird account, which can then be used to pay bills, including credit cards. This has the advantage of being simple, predictable, and low cost - many rewards currencies are worth manufacturing at 0.78 cents each, and that's before taking bonuses into account. However, Bluebird loads are limited to $5,000 each month, which led travel hackers to seek out similar products.

A slightly more expensive technique that I discovered and reported out is loading a Gobank account with a reloadable debit card, like the MyVanilla Debit Card. This raises (but doesn't eliminate) the limit on the amount of manufactured spending you can do each month, but also raises the cost, since MVD cards charge $0.50 per swipe transaction. Still, at 0.84 cents (a $1,000 load, for simplicity's sake), this is still a great way to earn rewards.

A third, even more expensive version of the same technique uses AccountNow, a reloadable, prepaid debit product (not a checking account). Jason Steele over at The Points Guy reported on AccountNow in the context of Green Dot MoneyPaks – if you're able to buy those using a credit card, then AccountNow is only slightly more expensive than Bluebird (since MoneyPaks have a $4.95 load fee, rather than Vanilla's $3.95).

If you don't have access to MoneyPaks, you can still load your AccountNow account at Walmart using their Rapid Reload Network. However, there is a $3.74 load fee for swipe reloads of AccountNow. The maximum daily load is $1,500 and monthly maximum on total loads is $9,500.

Using my technique of loading MyVanilla Debit Cards with Vanilla Reload Network cards, then unloading them to AccountNow, your total out of pocket cost will be $16.09 ($11.85 in Vanilla Reload fees, $0.50 MyVanilla transaction fee, $3.74 in Rapid Reload Network load fees) for $1,511.85 in manufactured spending, or 1.06 cents per dollar.

On the one hand, that's much more expensive than other existing techniques to manufacture spending. Other than free techniques like Amazon Payments, my cheapest manufactured dollar is 0.185 cents (using the technique I pioneered here).  So the question isn't whether it's worth manufacturing every dollar at 1.06 cents each; the question is whether it's worth manufacturing your last dollar at 1.06 cents each.

That will depend on your specific situation, and especially on whether you have access to Vanilla Reload Network cards at merchants that are bonused categories for your rewards-earning credit cards. All that said, I think there are certainly situations that can make this technique worth using, and I wanted to make sure my readers were aware of it.

Gobank calls again

Yesterday I received a voicemail from a "Christie Smith" in Gobank's fraud department,  who left her direct phone number and asked me to call to talk about the activity on my Gobank account.

When I was finally able to reach her today, she explained that:

1. My level of account activity was "very unusual;"
2. She was not allowed to tell me the level of deposit and bill pay activity that was allowed, but;
3. I was exceeding it.

To her credit, she sounded apologetic about the absurdity of the situation. Still, she told me that unless I drastically reduced the amount of deposits I was making, my account would be closed (although she couldn't tell me what a "safe" level of activity would be).

The obvious explanation for this is that Green Dot, the prepaid card company which also operates Gobank, pays Walmart for each cash register load there. For most of their prepaid card products, Green Dot then charges the customer some amount (typically $3.74) that covers the fee they pay Walmart plus whatever their margin is.

In order to compete with American Express's groundbreaking Bluebird checking account alternative, which allows free cash register loads at Walmart, Green Dot decided not to charge Gobank customers for cash loads at Walmart. I suspect, however, that Green Dot still has to pay Walmart for those transactions, which means heavy users of that feature like myself are costing Gobank some serious money.

For now I don't think I'll change my usage pattern very much. Gobank is a remarkably valuable tool, but it's only valuable if you use it. I'll cut down my loads to less than $2,500 per week and less than $10,000 per month (I loaded considerably more than that last month).

And as always, I'll continue to report on every ongoing development with my Gobank account here on the blog.

Do this now: Order Bluebird checks

One of the three most straight-forward ways to manufacture spending using a rewards-earning credit card is through the American Express Bluebird checking alternative. ​After loading your Bluebird account with up to $5,000 per calendar month using a rewards-earning PIN-based debit card or Vanilla Reload Network reload cards, you can then use your balance to pay bills that wouldn't normally allow you to earn rewards: taxes, credit cards, mortgages, student loans, utility bills, and so on.

One problem people run into using Bluebird is that ​the built-in bill pay system doesn't recognize all potential bill issuers. Local property taxes are a common example, where you need to make your check payable to your city or county department of revenue, which may not be loaded into the Bluebird bill pay service.

To solve this problem, Bluebird began offering checks which are linked to your Bluebird account and allow you to pay anyone you wish, after first "pre-authorizing" the check through the Bluebird website or smartphone application.

As an introductory offer, Bluebird is offering users up to 100 checks at no cost, including free shipping and handling!

​This deal was supposed to end today, but according to Bluebird's website now

Checkbook order fees are waived until 08/13/2013.

​But since you're limited to one order of free checks, there's no reason to wait.

Order your completely free checks now, before you forget.

The Perpetual Points Machine is Real*

*If you have access to (1) Vanilla Reload Network reload cards you can buy using a credit card, (2) any Walmart location, and (3) a good enough credit score to be approved for a 2% cash back credit card.

The Quest for a Perpetual Points Machine

One of the first blog posts I read after I started travel hacking ​was the Frequent Miler's chronicle of his quest for a "perpetual points machine." That three part series described the ideal perpetual points machine as follows:

1. The Perpetual Point Machine (PPM) may take effort and money to setup initially, but must not take much effort or money to keep it going.

2. The PPM must be able to generate hundreds of thousands of points per year.

3. The PPM must do no harm. In my earlier post “Perpetual Point Machine… Not!” I described a failed scheme to buy gift cards with gift cards and earn miles each time, indefinitely. The problem with that scheme is that, if it had worked, it would clearly harm the retailer who would have been responsible for buying all of those miles.

4. The perfect PPM would also somehow do some good for the world, not just for the recipient of the points. Kiva loans are a great example of this, but the number of points that can be accrued annually is limited by the amount of money you have available to loan. For most people, this won’t come anywhere near the goal of achieving hundreds of thousands of points per year.

​This search eventually led Frequent Miler to his ground-breaking post on the American Express Bluebird checking account alternative, which is now one of the cornerstones of most miles- and points-earning strategies.

The problem Frequent Miler inevitably ran into was uncertainty. ​His early attempts relied either on continued, reliable shopping portal payouts, or outsmarting Google.

3 Simple Goals

My goals when designing a perpetual points machine were simpler:

1. Generate as many points as possible;
2. at as low a cost per point as possible;​
3. in as mechanical a method as possible.

​The third point is the most important for my purposes. Unlike Frequent Miler, I'm still just a struggling author (have you considered buying my e-book?), and I don't have the resources to risk lots of my own capital buying and reselling merchandise, one of Frequent Miler's (successful) recent schemes.

Since starting this blog in February, I've discussed the MyVanilla Debit card, which is reloadable using Vanilla Reload Network reload cards at a cost of $3.95 per $500 load. Then in a three part series (part 1, part 2, part 3), I broke the story of the features of the new Bluebird competitor, Gobank, before asking the question, "Does Gobank have a monthly swipe reload limit?" Finally I broke down the features of and differences between two credit cards which earn 2% cash back.

My Perpetual Points Machine

Today I want to describe a simple perpetual points machine that takes advantage of the features of each of these products. The premise of the PPM relies on just two numbers:

• $3.95: the cost of a $500 Vanilla Reload Network card.
• $6.13: the amount of net cash back earned on a $503.95 purchase made with a 2% cash back credit card, after subtracting the $3.95 load fee.​

​The ratio of these numbers is conveniently approximate to 2:3. Consequently, to manufacture spending at virtually no net cost, you can buy 2 Vanilla Reload Network reload cards with a 2% cash back card (netting $12.26, after paying the $3.95 fee for each card) for every three reload cards you purchase with your preferred points- or miles-earning credit card (at a cost of $11.85).

Of course, now you have $2,500 in Vanilla Reload Network reload cards.  To turn them back into cash, you can load them directly to a Bluebird card, up to $5,000 per month, per Bluebird.  From there, you can transfer the funds to a bank account or use them to pay off your credit cards.

Fortunately, you can also now liquidate Vanilla Reload Network reload cards in excess of $5,000 per month by loading them to a MyVanilla Debit card and using the MyVanilla Debit card to load your Gobank account at any Walmart register, up to $2,500 per day.  

The drawback: every transaction made with a MyVanilla Debit card incurs a fee of $0.50, which will very slightly increase your cost per point.

Does it Measure Up?

How does my perpetual points machine measure up to the 4 goals Frequent Miler set? ​

1. ​Does it require much money or effort to keep going? This largely depends on the geography of your area. If you have convenient access to Vanilla Reload Network reload cards and Walmart store locations, this strategy has no cost, except your time and gas. If you don't have access to them, this strategy won't help you get it!
2. Can it generate hundreds of thousands of points per year? ​To generate 100,000 of your preferred loyalty currency in 12 months at no net cost, you'd need to buy $12,500 in Vanilla Reload Network reload cards per month: $8,500 on the credit card that earns your preferred points, and $4,000 on a 2% cash back card (the net cost in this example would actually be about $18.12 per month).
   You could then load $5,000 to your Bluebird account and $7,500 to your Gobank account.
3. ​Does the PPM do no harm? ​This perpetual points machine only uses the advertised features of commercial products.
4. Does the PPM do any good for the world?​ Well, you can't have everything.

Next Up: Tips and Tricks for Maximizing the Perpetual Points Machine

Check back on Friday, when I'll discuss some of my thinking about how to maximize the value of this strategy, as well as some potential risks to avoid.

Does GoBank have a monthly swipe reload limit?

In the comments to my first post on GoBank​ and in this FlyerTalk thread, one recurring question is whether there is a monthly limit on free Walmart swipe reloads, which work exactly like reloads to the American Express Bluebird card, and if so, whether it's based on the calendar month or a rolling 30-day limit.

As a reminder, the Bluebird card has a $1,000 daily load limit and $5,000 calendar month load limit, which is shared between Vanilla Reload ​Network reload cards and reloads done at Walmart cash registers and MoneyCenter ATMs, which accept both cash and PIN-based debit cards.

GoBank, according to the product's Terms and Conditions, has a $2,500 daily load limit, but there is no specified monthly load limit.  It's possible that there is an unpublished calendar month or rolling 30-day load limit.

However, I can now report that the limit, if it exists, is definitely higher than $5,000 per month, whether it is based on the calendar month or a rolling 30-day period, since I've exceeded that threshold either way.

The next question I hope to answer is whether GoBank, like Bluebird, can be loaded using MoneyCenter ATMs, since like most people I find interacting with undertrained and rude Walmart employees a uniquely unpleasant chore.​

To be sure you don't miss a thing in the world of nearly free travel, subscribe to this blog's rss feed here.​

Maximizing Gobank and Bluebird

Over the weekend I reported on Gobank (part 1, part 2), the new banking product ​from Greendot.  Today I'll discuss what this means for your miles and points earning strategy.

Points-Earning Debit Loads

Just like the Bluebird, Gobank can be loaded at any Walmart register with a PIN-based debit card.  If you have a debit card that earns airline miles on PIN-based transactions, this is an easy way to generate spending on the card.  

Unfortunately, there aren't very many remaining debit products that earn rewards for PIN-based transactions.  One, the Bank of America Alaska Airlines debit card, earns 1 Alaska Airlines mile per $2 spent on the card.  However, the card is no longer being issued to new customers.  If you already have an Alaska Airlines debit card, this is a great way to earn valuable Alaska miles while paying your bills each month.

A second debit card product, the Suntrust Delta Skymiles debit card, earns 1 Delta Skymile per dollar spent on the card, including on PIN-based transactions.  While Suntrust representatives claim that Bluebird (and, similarly, Gobank) loads at Walmart won't earn Skymiles, there are lots of reports of success receiving miles for these transactions.

Since online Gobank debit loads are ​treated as signature purchases by the issuing bank, you can earn your usual rewards on signature purchases, for example 1% cash back using the PayPal debit MasterCard, a great way to unload PayPal My Cash cards, similar to the technique I described in this post.

Prepaid Debit Card Loads

A slightly more involved technique is to use reloadable PIN-based debit cards to load your Gobank account.  For example, as I reported on Saturday, I was able to load my Gobank account using a MyVanilla Debit card which I had loaded using Vanilla Reload Network cards I purchased at CVS using a rewards-earning credit card.  Similarly, you can load your Gobank account with a Nationwide Visa Buxx card you've loaded using a rewards-earning credit card.

If you dont have access to Vanilla Reload Network cards, or your local merchants won't allow you to use a credit card to purchase them, beginning this month another opportunity has become available: ​many, although still not all, prepaid gift cards sold at grocery stores, drug stores, and gas stations have begun to work as true PIN-based debit cards.  Since this is a rapidly developing situation, I strongly recommend you first buy a small-denomination gift card in order to see whether it can be used as a PIN-based debit card.  The fees can be somewhat higher than Vanilla Reload Network fees, but those fees can be offset if you're able to use a credit card that gives bonus points for that type of merchant.

Comparative Advantages of Gobank and Bluebird

If you're like me and have both a points-earning debit card and access to Vanilla Reload Network reload cards, then each month Bluebird posed a dilemma: every dollar of Vanilla Reloads I used to fund Bluebird was a dollar of points-earning debit load I couldn't do.  With the introduction of Gobank, that dilemma disappears: Bluebird can be funded directly with Vanilla Reloads, and Gobank can be funded with my points-earning debit card.

Meanwhile, instead of expensive money orders and cash advances, I can easily and cheaply ($0.50 per load) unload up to $2,500 per day from my MyVanilla Debit cards, which I've likewise loaded with ​Vanilla Reloads.

Gobank vs. Bluebird

[Updated 4/15/13: ​Since writing this post I have tested and confirmed that Gobank, unlike Bluebird, allows ACH pulls.  In other words, you don't need to initiate bill payments from Gobank, you can initiate the payment from your account with your bill payee.  However, Gobank account numbers are several digits longer than traditional checking account numbers, and some of my credit card companies were not able to accept the entire account number.  Nonetheless, this somewhat mitigates the shortcomings of Gobank's bill pay feature which I identified below.]

Yesterday I reported on the capabilities, fees, and limits of the new Gobank product from Greendot.  I compared it to the similar, groundbreaking Bluebird card from American Express.  Today I'll make that comparison in more detail, and in tomorrow's post I'll take a look at some of the opportunities created by this new product.

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• Direct Deposit: Both Gobank and Bluebird allow direct deposit of paychecks, and accept incoming ACH transfers from other banks and payment services like Paypal.
• Prepaid Reloads: Gobank is reloadable using Greendot Moneypaks, which can be purchased using cash at many drug and grocery stores.  Bluebird is reloadable using Vanilla Reload Networks prepaid reload cards, which can be purchased using rewards-earning credit cards at many, but far from all, drug stores, gas stations, and grocery stores.
• Walmart Register Reloads: Both Gobank and Bluebird can be reloaded at any Walmart register using cash or PIN-based debit cards.​  Gobank has a $2,500 daily reload limit, and it's unclear whether there is a monthly limit on these reloads.  Bluebird has a $1,000 daily limit and $5,000 monthly limit, which is shared with reloads done with Vanilla Reload Network cards.
• Online Debit Card Loads: both products allow $1,000 in monthly debit card loads online.  However, Bluebird charges $2 for online debit loads, with a daily $100 limit, while these loads are free using Gobank, with a daily load limit of $200.

Winner​: the two products are very evenly matched on the load side, with Bluebird having the advantage of accepting more flexible Vanilla Reload Network cards, while Gobank has higher daily Walmart load limits and free online deposits, which can save you trips to Walmart.  I call this a tie.

ATM Withdrawals

When it comes to ATM withdrawals, the two cards are very evenly matched since they both use the same third-party network of free MoneyPass ATMs.  However, Bluebird technically requires you to have a monthly direct deposit in order to use these ATMs for free, while Gobank doesn't have that requirement.​

Likewise, both products have a daily ATM withdrawal limit of $500, but Bluebird also imposes a monthly ATM withdrawal limit of $2,000, while Gobank doesn't have a published ATM withdrawal limit.

Winner: Gobank​ by a hair.

Bill Pay

One of the most obvious advantages of Bluebird over Gobank is that Bluebird's bill pay interface is so effective, while Gobank has a handsome but comparatively clunky bill pay tool.  Additionally, Bluebird allows multiple pay-to accounts per payee, while Gobank doesn't, a major limitation if you have multiple accounts with a single company: it essentially forces you to have a backup banking product with which you can pay your other accounts.​

Winner: Bluebird​

Fees

​Most users will never pay a fee for using either of these cards.  The exception is when using the cards abroad: Bluebird has no foreign transaction fee, while Gobank charges a 3% fee for foreign transactions (no matter what currency they're conducted in).  Since I use my Bluebird card as a safe alternative to carrying my credit and debit cards while traveling abroad, this is a major shortcoming of Gobank.

Winner: Bluebird​

Conclusion

As you can see, ​these products are very evenly matched.  Since Gobank is still in its beta testing stage, it's certainly possible that some of its problems, like foreign transaction fees and a clunky bill pay interface, will be fixed by the time the product is ready for open enrollment.  In the meantime, there's no reason not to have both, since the slightly different configuration of features allows them to be used in different ways to maximize your points and miles haul.  Come back tomorrow, when I'll discuss precisely that.​