On Flyertalk, RFDMinnesota set off a firestorm today by posting an email purportedly from American Express stating that they were closing RFDMinnesota’s REDcard account for using it in ways not intended (found here). The email describes as “suspicious activity” the behavior of loading the card in $500 and $1000 increments and then immediately unloading it through withdrawals or bill pay.
I find this surprising for a few reasons:
- People have been doing the exact same thing with Bluebird and Serve for a couple of years now yet there have been no reports of shut downs.
- Usually when something like this happens, there is an immediate flood of people reporting that the same thing happened to them. At the time I write this, I haven’t seen evidence of that yet.
I’m posting this information not with the intent of scaring anyone, but rather to try to collect information. Do you load and then immediately unload your account? Have you received an email like this one? I manage four accounts, but all are fine so far. That said, I always keep an odd balance on each card, and I pay bills in odd increments.
Regardless of whether or not the email is real, I think it is a good idea to do the following:
- Always keep a balance on your REDcard. After all, you never know when you’ll need it to buy stuff at Target (and get 5% off).
- Use the card regularly at Target and/or Target.com for regular purchases.
- Unload via a combination of bill pay, ATM withdrawals, and withdrawals to your bank account. Make bill pays in realistic amounts. How many bills really come to exactly $2,500 for example?
- Consider using the card for some regular spend outside of Target as well (I can’t bring myself to do this since it means losing out on credit card rewards from other cards, but its probably a good idea)
There is quite a bit of a debate about whether it helps to load the card in odd amounts too. For example, some people recommend loading something like $468.03 in one transaction and then $531.97 in another. My guess is that the load amounts don’t matter. I think they would expect people to load even amounts. It’s the unloading that is not expected to match exactly the load amounts.
Oh, and here is the image of the shutdown email that was posted on Flyertalk:
Read more about REDbird: