Almost Perfect

Last Saturday I teased readers with the post titled “Found! The perfect perpetual point machine.”  I followed up that post with “One card to rule them all” in which I showed how to use American Express prepaid cards to earn nearly 5 points per dollar everywhere. 

I detailed the idea behind Perpetual Point Machines in the post “The Perfect Perpetual Point Machine, Part 1.”  There, I defined a Perpetual Point Machine (PPM) as a scheme in which, after a little push, points and/or miles are accrued over and over again, forever, with little or no additional work.  I also laid out a few rules of what makes a perfect PPM:

    1. It may take effort and money to setup initially, but must not take much effort or money to keep it going.
    2. It must be able to generate hundreds of thousands of points per year.
    3. It must do no harm.
    4. Ideally (but optionally) it would also do some good for the world.

The idea of a scheme like this going forever is obviously ridiculous, but it would be great to find one that lasts a few years at least.  The Amex prepaid card meets the basic requirements of a PPM.  It takes a little work to order and register your card.  After that, it takes just a little effort to fill it up regularly.  The points are earned, indirectly, through regular everyday spend. 

How long will it last?

If you read the comments of my previous posts on this subject, you’ll see a healthy debate about this.  Some argue with conviction that this deal will be dead within hours.  Others argue that it can last quite a while.  The truth is, we simply don’t know.  Earning points through credit card sign-up bonuses is currently the best PPM that exists, and while it has changed drastically over the years, it still lives on.  In this case, the deal can be shut down instantly if Office Depot stops allowing credit card purchases of reload packs.  Or, it can be shut down later by Chase if they change the bonus rules for the Ink Bold.  Feel free to make your predictions in the comments below (but please keep the debate civil!).

Judging Perfection

Let’s see how this PPM stacks up against the rules I laid out for “perfection”:

Not much effort: For people who live or work near an Office Depot that carries reload cards, this condition is met.  Simply walk in once a week, or once a month, and buy a few cards.  No problem.

Hundreds of thousands of points: Since the Amex Prepaid card is limited to $2500 per month, this PPM is capable of generating 150,000 points per year (2500 X 5 X 12).  Does that count as “hundreds of thousands”?  Close enough in my book.

It must do no harm: Uh, well…  OK, that’s where this falls down a bit.  Chase loses money on 5X transactions.  Just like big credit card sign-up bonuses, they do this in order to attract and keep customers.  So, if we abuse this perk, then yes you can argue we are harming Chase.  American Express does very well with this scheme unless people abuse the ATM option.  However, anyone who does that will get shut down by Amex, so Amex is fine.  As to Office Depot, I truly don’t know.  I’ve been told by an industry expert that they do make money with the sale of these reload packs.  So, until I learn otherwise, I’ll assume Office Depot earns a profit from these sales.

Do good in the world:  That really depends on how you use your prepaid card.  If you use it to make charitable contributions (and add a little bit to cover the charity’s credit card transaction fee), or you use it to make Kiva loans, then we’re doing good!  OK, that’s a stretch.  This was an optional requirement anyway.

Overall, I’d say this is a really good, but not perfect PPM.  What do you think?

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About Greg The Frequent Miler

Greg is the owner, founder, and primary author of the Frequent Miler. He earns millions of points and miles each year, mostly without flying, and dedicates this blog to teaching others how to do the same.

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  1. Good job Frequent Miler. However it has been a while since I heard any more of free staples rebates for online downloads. Looks like you are slightly lagging behind or may be my expectations from you have gone too high. Either way I am having some withdrawals and you are not helping here.

  2. I think anytime a blogger makes mention of doing something charitable with the bounty we receive from our hobby, the world is a better place. It is up to our readers to follow through on the opportunity to give something back

    I congratulate again on your find and more importantly on spreading the word that others need a helping hand up whenever we can.

  3. The $2500 is per card, if I read the rules correctly.

    If your spend is greater than that, get another card.

    So, yes, “hundreds of thousands” condition is met.

  4. I am a little new to this and maybe I am not looking at it the right way but won’t the fees that the reload card negate a large chunk of the points earned? Also, can the reload cards be purchased with a credit card? I thought, like the MoneyPak, they needed to be purchased with cash. I love this blog. Thanks for all the tips!!

    • Quigs: The fees are less than 1%, but the 5X benefit is worth at least 5% (and arguably more). Most people have had success in buying these with a credit card at Office Depot.

      THEsocalledfan: Good point. I’ll post something about this today

      Kevin: Congrats on the new baby! Yes, hopefully this will last. No doubt the biggest risk is not Chase, but that Office Depot may stop allowing credit cards for purchasing the reload packs. We’ll see.

  5. Quigs,

    You are right that the official T and C say those Vanilla reload cards are supposed to by paid with cash, but the old Miler seems to have found that Office Depot is neglecting that.

    I have no Office Depot in Sioux Falls, so I went to do my own experimenting with Amex Gold trying to get 2X on this. I tried both at Kum and Go and a Holiday Station store, who are both listed as Vanilla reload retailers. At Kum and Go, the transaction was immediately cancelled when I tried to pay with credit card for the reload pack, and at Holiday, they did not have the reload packs, so could not try it.

    So, I am heading to Fargo, ND this weekend to help my mother in law move, and they just happen to have an Office Depot. I have a feeling I’ll be making some purchases……

  6. Miler,

    After reading what I just wrote, I do think you should mention the official T and C stuff more about the reload cards and how it is supposed to be cash just so folks don’t get caught off guard if Office Depot ever starts cracking down.

  7. I have a new baby and a wife who is not working. I make enough money to get by but the extra money I will bring in from the Inc Bold will help make my financial burden easier.
    It would be easy for Chase Bold to cancel this promotion but I’m hopeful that they will not because not that many people will take advantage of it.

  8. Is it specifically written on reload packs that only cash has to be used? I haven’t visited OfficeDepot, but I’ve been yesterday in Wallgreens and local groccery store (Sweetbay). They both have reload packs for Visa, AMEX and on the cover it is specifically written “CASH ONLY”.

    • Sergey: I incorrectly stated before that it is not written on the pack at all. It actually does very clearly say “load cash”. Now, I took that to mean generically, “load money onto the card”, but others are correct in that the Vanilla website is pretty clear that cash is required. So, while it does not say “CASH ONLY”, this does appear to be a loophole that Office Depot hasn’t discovered yet. We’ll see.

      Simon: I agree with gregorygrady. You shouldn’t have been taxed so you should go back and demand the tax back or a full refund.

      rharrigill: That is a concern, but I think it is unlikely. Amex has had a 6% cash back at groceries card (Blue Cash Preferred) for a long time which many people exploit regularly. Amex hasn’t shut that down. More likely case is that they’ll shut down individuals.

      Mike: Since we may be exploiting a loophole here, I wouldn’t recommend trying to push it if the store won’t take credit. Try a different store instead.

  9. Hi,

    I got taxed 6% state sales tax on the load amount of these pre-paid cards. It makes no sense to me, as I expect to be taxed again when I use these to make purchases. This is a major bummer.

  10. @Simon: You got hosed if they charged you 6% sales tax on the prepaid card purchase. I would take it back immediately and demand a refund of the 6% and/or contact the regional/national management of the chain you got the gift card at, and if that fails then contact your local taxing authority as they should NOT be charging you tax on these!!!

  11. @Sergey: I too have only seen reload packs (GreenDot, etc) that say on the package that they must be bought with cash. However FM says that the Vanilla reload packs do NOT have that writing on them. The Amex/Vanilla website clearly says cash only, but if the actual packs don’t, then this loophole SHOULD live on until Office Depot realizes they are losing money on the sale of these and wisens up and sends a memo around to all clerks telling them NOT to allow the purchase of these with CCs.

  12. My major concern is that if everyone gets too greedy, this is going to cause Chase to decrease the 5 points per dollar bonus on office supply purchases which really kills more good deals other than just this PPM.

  13. Is it even allowed that OD rejects a credit card for the payment of reload packs? Isn’t there a MC and Visa agreement between merchants and MC or Visa that they must take a credit card for any purchase? I know the CARD ACT made it so they could reject credit cards for purchases of less than $10, but I still think they have to accept the credit card for any purchases above $10.

  14. @rharrigill: Well you can thank FrequentMiler for publicizing and pumping this loophole when Chase decreases the 5x at Office Supply Stores. Yeah great you can expose deals to everybody, but the fact of the matter is that people ARE greedy, thus will abuse the heck out of this, thus Chase will clamp down. Will they shut down individuals or will they simply make the 5x less generous? That’s the million dollar question.

  15. @Mike: Hmmmm, that’s a very interesting take on it and I can’t say I disagree with you. Which is the overriding factor though, the Visa/MC/Amex merchant agreement, or the fact that the wording on the Vanilla reload pack says you can only fund it with cash?

    Even so, merchants can and still do deny purchase with a CC sometimes. I have been denied purchase of a gift card at CVS in the past. I went all the way up the chain to the store manager but they wouldn’t budge. I took their info and was going to report them to the CC companies, but in the end decided it wasn’t worth my effort, so I let it slide.

  16. Is it really a PPM? I would expect a PPM to be closer to some of your other experiments where you buy a gift card, trade it for another gift card, use it for a purchase of a gift card on a shopping portal, and so on until you’ve squeezed as many points out of it as possible. Using those methods, you’ve been able to purchase points for under a penny in some cases (although a PPM, like a perpetual motion machine, should eventually reach a marginal cost of zero after the initial investment).

    What you’ve found here is a great deal to earn more points per dollar spent on everyday purchases, but I don’t think it’s really a PPM at all. It sounds more like you’ve just found a way to create your own rewards card that offers 5X on all purchases instead of 5X on one category. Is a really good rewards card the same thing as a PPM? I don’t think so. Understand I’m not diminishing your discovery, but I think you’ve confused two different goals (even though both are important).

  17. I you think this won’t be shut down, you are delusional. Chase is in the business of making profits, they aren’t a charity. They don’t give away points for the fun of it.

    First stage is denial, then….in a few weeks there will be posts filled with rage as to why this was shut down, and even worse why they lost their points and chase accounts. It happened before and will happen again.

  18. Is my understanding correct that the temporary version of the Amex pre-paid card is basically a one-dollar more expensive alternative to the Vanilla card (say I ordered a permanent card online)? That is, can I load multiple temporary Amex pre-paid cards to one permanent card?

    The temporary Amex pre-paid cards don’t say “Cash Only” and may be easier for places to allow CC payments.

    • Scottrick: I agree with you except that it is only one more step to a PPM: turn the prepaid amount into cash by any means that costs less than 5%, use that to pay your credit bill, repeat. While this can be done, I don’t recommend it. You/everyone gets more value by simply using the card for near 5X. Plus, if you do anything that gets Amex’s attention (like frequent ATM visits) you’ll be in trouble. So, while I originally planned to publish it that way, I decided against it. (that was just a long way of saying “you’re right”)

      Tbob: Time will tell. I won’t be surprised if OD closes it down. I’ll be extremely surprised if Chase does. They are aggressively luring customers away from Amex and would not want to piss them all off by lowering the benefit. It’s much easier for them to shut down individual customers.

      Simon: Interesting idea! I don’t know if there’s a way to load a second temp card to a permanent card. If so, this could be a fallback in case OD shuts down credit card payments for the Vanilla reload cards.

  19. The manager at my local Office Depot said that all stores received a memo to NOT accept credit cards for reload packs. Just a heads up.

  20. This makes more sense now how it could be turned into PPM, since many of your earlier endeavors cost had a cash return over 95%. Although since I value UR points at 2 cents, I could lower my cash return to 90% and still come out ahead. I agree it would be stupid for anyone to try to combine both approaches without many more layers of obfuscation. Smart move.

  21. This new card makes it much easier to facilitate credit card spending at 5X, rather than using multiple gift cards. And if you have a lot of recurring expenses its easy to drain this card. But if you don’t have a lot of expenses, then you still need to develop a strategy for getting the money back off this card through gift card churning or the purchase and sale of merchandise or something else. I assume FM understands this full well and will address this problem in upcoming posts as he has in past ones.

    • Piecerate: I’ll continue to write up options for increasing credit card spend, in general. If you choose to use these cards for that spend, that makes sense to me 🙂

  22. @Scottrick: The PPM FM had in mind was cashing the Amex out via an ATM, but FM chickened out from pumping that idea (and thus his PPM) once he realized he would likely cause mass Amex FRs to his readers if he suggested this approach.

  23. @Scottrick: Whoops, I commented too soon before reading all the comments. Looks like FM already confirmed my guess in his later comments.

  24. @James: Are you serious or are you just yanking our chains? I’m gonna guess the latter. While I fully believe a memo will go out this month, I’m guessing it takes Office Depot at least a week to realize this is happening and try to clamp down on it.

  25. Mike and gregorygrady: You can’t have your cake and eat it too. By purchasing gift cards/prepaid credit cards/reload packs in order to “extend” or “earn” cashback you are violating the terms and conditions you agreed to when you accepted the credit card.

  26. It looks to me as if OD is the one losing out here – especially so on the bigger purchases as the credit card processing fees have a percentage component, but the margin on the reload cards is fixed.

    Say, for example, that OD buys the reload packs for $1.00 each. For each sale they clear $2.95.

    Let’s assume that OD has processing fees of 1%, with no fixed component. On the $503.95 sale of a $500 card they will pay $5.04 in fees – more than their margin.

    Further, let’s assume that Chase gets $4.00 of the fees. That’s more than enough to cover the 2,500 UR points being cashed in for airfare at $0.0125 per point.

    So, I’d expect the pushback to come from OD – unless they are happy with using the $500 reloads as a loss leader to get people in. Or, unless most of the reload purchases are much smaller (I’m not sure why you would reload less than $500 though) so that they are making money overall.

    • Biggles209: I agree with your logic, but there are at least two other possibilities: 1) OD earns a % of the overall refill amount; or 2) this particular credit transaction is processed and paid for by InComm (the company behind Vanilla), not OD.

  27. FM, do you know if the Am Ex reloadable can be used as a debit card? If so it could be a great vehicle for paying taxes.

  28. FM, I appreciate you sharing the PPM. While it isn’t one I think I’ll use myself (mostly because it’s inconvenient for me location-wise), it’s good to know. I debated the issue vigorously in a previous thread, and I am glad you shared your discovery with your readers.

  29. I was trying to work it so that everyone made a buck (except OD!). The built-in assumption was that the $500 was sacred – you coughed up the $500 and then you got to spend it. But I missed a piece – InComm can get a chunk of the processing fee when you spend using the card. If I stick with 1%, then they will get $5 once you have spent all $500. They could easily use some of this to kick back to OD a % of the overall refill amount. If everyone can make a buck, then there is no reason to stop this from running indefinitely!

  30. I stopped by OD this afternoon (hoping to break in my shiny new ink bold #2), and before I could whip it out, was told that the my reloadable Amex prepaid card and the initial fill-up would have to be purchased “with a debit card or cash, like any gift card”–“OD policy”. Based on a scan of the comments, it looks like a few others may be seeing/hearing something along these lines, so wondering how much more effort to put into this play (we have another OD here in town, less conveniently located, I could try if others do better going forward).

  31. Thanks for the encouragement — another OD store sold me the temporary reloadable Amex prepaid card without questions or issues; after ordering the permanent card, I went back and bought a couple of reloads for when it arrives, and again no problem.

  32. Looks like I found one drawback of using this method for regular spending. Pay at pumps like to do a day to two hold just like when you check in a hotel and it puts a hold on some of the funds. This makes it difficult to spend a $100 card if $75 is tied up at the pump.

    Quite irritating!

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