Using the Target Amex card to run up spend

UPDATE 1/12/2016: The American Express for Target card has been discontinued

The American Express for Target card that I wrote about yesterday is hardly revolutionary.  Compared to the generic American Express Prepaid cards, the Target Amex has higher ATM fees and much stricter limits (for example, the card may only be used within the U.S.).  Compared to the new Bluebird card, the Target Amex doesn’t compare at all.  It doesn’t have bill pay, you can’t move money out to your bank account, and there are no plans to allow check writing.  However, the Target Amex has one awesome feature that the others don’t have: you can load this card in-store with a credit card.

To get your own American Express for Target card, please see my post “How to get the American Express for Target card.”

Fees and Limits

The Target Amex card has the following fees and limits:

  • $3 per reload in-store
  • $3 per ATM withdrawal after the first free withdrawal each month.  Note that ATM owner fees apply as well.
  • Number of cards: Each person is allowed up to two cards.  Only one may be purchased in a day.
  • Maximum load: Per rolling 30 days, $2500 per card / $5K for two cards (can do $3K to one card and $2K to another, for example)
  • ATM withdrawals: Limited to $400 per day

Running up spend

There are many reasons you may want to run up spend on a credit card.  Here are a few examples:

  • Meet credit card minimum spend requirements.  Many credit card sign up offers require high spend to receive the full value of the offer.  For example, the Ink Bold and Ink Plus currently require $5K of spend in 3 months in order to get the full 50K bonus.
  • Achieve high-spend bonuses.  Some cards offer bonus points when you reach certain thresholds of spend.  Other cards offer airline or hotel elite status.  Personally, I use “manufactured spend” tricks with the Delta Reserve and Delta Platinum cards in order to achieve high level elite status on Delta each year (see “Mileage running, from home“).
  • Maximize promotions.  Some cards target cardholders with temporary incentives (such as extra points) to use their cards more.

Whatever your reason for wanting to run up spend, the Target Amex can be a nice addition to your tool chest.  It’s not free (like Amazon Payments), and it’s not a game changer (like Vanilla reload cards), but it’s pretty good.  Here are two approaches to using the card to run up spend…

Straight-Up Approach

The simplest way to use the Target Amex to run up spend is as follows:

  1. Use your credit card to pay for each reload.  Load the maximum allowed $1000 each time in order to make the $3 load fee as small of a percentage as possible.
  2. Find the lowest cost ATMs around and unload the card $400 at a time.  Some people have been lucky enough to find free ATMs at their local credit unions.  Some have reported finding 99 cent ATMs inside MacDonald’s.  Others have settled on the still inexpensive ATM’s in Costco ($1.25 per withdrawal).

If you load and withdraw $2000 per month, and use Costco ATMs at $1.25 per use, your total costs will come to $24.25, or 1.21%.  If you don’t count the value of your time into the equation, this can be a very reasonable price to pay to get points!

Indirect Approach

There are many variations of the indirect approach.  The basic idea is to get extra points or cash back when buying bank gift cards and then use those bank gift cards to load your Target Amex.  For this post, I’ll focus on a simple cash-back strategy for buying Amex gift cards at a discount:

Buying Amex gift cards at a discount

The idea is to go through the online portal BigCrumbs to buy American Express gift cards and receive 1.4% cash back.  Here’s how:

  1. Sign up for BigCrumbs.  (If you would like to contribute to Frequent Miler, please consider using this referral link — I’ll earn a small bonus each time you get cash back).
  2. Search BigCrumbs for “American Express”.  You’ll find two options: American Express Gift Cards – Business, and American Express Gift Cards – Personal.  Click through either one.
  3. Order gift cards for yourself.  Except when special promotions are going on, each card has a $3.95 fee, so your best value is to buy one $3000 card at a time.  You will also be charged $8.95 for 2nd Day shipping.
  4. Pay with your credit card.  Note: do not do this with Citibank cards since it has been reported that Citi treats these purchases as cash advances!  In my experience, both Chase and American Express treat these as regular purchases.  If you’re unsure about your bank, consider buying a small denomination card first to test the waters.

In total, your fees will come to $12.90 or .43%.  From BigCrumbs, you should get back 1.4% of $3000, which is $42.  After subtracting out the fees, you still gain $29.10 which is a .97% profit!

Liquidating Amex gift cards

Now that you have Amex gift cards that you effectively got at a discount, you can liquidate them by using them to load Target Amex cards and then withdraw the money from ATMs.  By going through this indirect approach, your total fees for running up spend will come down to a miniscule .24%!

Scale up

With the options shown above, you can easily “manufacture” $2000 spend per month.  Yes, you could go to $2500, but then you wouldn’t be perfectly optimizing the fees since you would have to do a $500 load each month.

One easy way to scale up beyond $2000, is to get a second card.  That way, you can go up to $5000 spend per month.  Further, if you have a partner you can work with, they could get two cards as well.  A couple could manufacture $10,000 in spend per month!

Warnings

I’ve cautioned heavily before against doing exactly what I wrote about above.  With either the regular Amex Prepaid cards or the Bluebird card, I think it would be a mistake to abuse them by using them just for loading and unloading.  Amex counts on you using these cards for real credit card transactions.  If you don’t, they have the ability to close your accounts.  Just as concerning, loading and unloading cards looks like money laundering.  So, you do run some risk of being investigated (even though there’s nothing illegal about the procedure I wrote about).

Everyone needs to use their own judgment about the level of risk they’re willing to incur.  In the case of Target Amex cards, my guess is that the fees are just high enough to put us in the clear.  What I mean is that Amex and Target probably don’t lose money (at least, not much) when we load and unload cards as described in this post.  If true, then they would have little or no incentive to spend resources on monitoring how we use these cards.  I can’t stress enough, though, that this is just my educated guess.  Use your own judgment about how (or whether) to proceed.

See also

Chase's 5/24 Rule: With most Chase credit cards, Chase will not approve your application if you have opened 5 or more cards with any bank in the past 24 months. Some exceptions that are NOT subject to the 5/24 rule include: British Airways, Hyatt, IHG, Marriott Business, and Ritz Carlton.

To determine your 5/24 status, see: 3 Easy Ways to Count Your 5/24 Status.
Chase 5/24 semantics ("Subject to" vs. "Count towards"): Most (but not all) Chase cards are subject to the 5/24 rule. That means the rule is enforced in making approval decisions. In other words, you probably won't get approved if your credit report shows that you opened 5 or more cards in the past 24 months. Meanwhile, most business cards (such as those from Chase, Amex, Barclaycard, BOA, Citi, US Bank, and Wells Fargo) are not reported on your personal credit report. These cards do not count towards 5/24.

Examples:

Chase IHG Card is not subject to 5/24 so it's easy to get. But after approval it will count towards your 5/24 total.

Chase Ink Business Preferred is subject to 5/24, so you likely won't get approved if over 5/24. If you do get approved, it won't count towards 5/24 since it won't appear as an account on your credit report.
Amex 5 credit card limit: If you apply for a new Amex credit card, you may get turned down if you already have 5 or more Amex credit cards. Both personal and business cards are counted towards this limit. Charge cards, though, are not counted. You can apparently get as many charge cards as you’d like, and the number of charge cards you have does not affect your ability to get up to 5 credit cards. Authorized user cards are also not counted towards the 5 credit card limit. See also: Which Amex Cards are Charge Cards vs. Credit Cards?
Applying for Business Credit Cards

Yes, you have a business: In order to sign up for a business credit card, you must have a business. That said, it's common for people to have businesses without realizing it. If you sell items on eBay, for example, then you have a business. Similar examples include: consulting, writing (e.g. blog authorship, planning your first novel, etc.), handyman services, owning rental property, etc. In any of these cases, your business is considered a Sole Proprietorship unless you form a corporation of some sort.

When you apply for a business credit card as a sole proprietor, you can use your own name as your business name, use your own address and phone as the business' address and phone, and your social security number as the business' Tax ID / EIN. Alternatively, you can get a proper Tax ID / EIN from the IRS for free, in about a minute, through this website.
Chase Ultimate Rewards points are super valuable and super flexible. At the most basic level, points can be redeemed for cash or merchandise, but you'll only get one cent per point value that way. A better option is to use points for travel. When points are used to book travel through the Ultimate Rewards portal, points are worth 1.25 cents each with premium cards (Sapphire Preferred or Ink Business Preferred, for example) or 1.5 cents each with the ultra-premium Sapphire Reserve card. Another great option is to transfer points from a premium or ultra-premium card to an airline or hotel program when high value awards are available (see this post for details). If your points are tied to a no-fee "cash back" Ultimate Rewards card, then first move those points to a premium or ultra-premium card before redeeming them in order to get better value.
Amex Membership Rewards points can be incredibly valuable if you know how to use them. In general, if you use Membership Rewards points to pay for merchandise or travel, you won't get good value from your points. One exception is with the Business Platinum card where you'll get a 35% point rebate when using points to book certain flights. This gives you approximately 1.5 cents per point value, which is pretty good. If you don't have the Business Platinum card, then your best bet is to transfer points to airline miles in order to book high value awards. More details can be found here: Amex Transfer Partners.
Editor’s Note: This guest post was written by the same guy who showed you how to fly round trip to Africa (DC to Senegal) for 50,000 points. You can find John’s website and award booking service here: theflyingmustache.com/awardbooking.
-Greg The Frequent Miler

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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132 Comments on "Using the Target Amex card to run up spend"

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SJCRussell
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Might want to add to the limits: Max load $5k across both cards / rolling 30 days.
To minimize load fees you can load $2k and $3k rather than $2.5k per card.

chuck
Guest

Did anyone have problems loading AFT with Amex card?
I tried numerous times in NJ and the POS denies it (after asking for the 4 digits on the front of the card)
I then tried with visa gc, and it got accepted (with PIN). Don’t know if the limitation is that it will only accept with PIN, or that it won’t accept Amex. I tried both Amex gc and regular Amex card (FIA).

Frank
Guest

@Chuck,
If you mean using an AMEX Prepaid Gift card I had the same problem. They would not accept it.

So, FrequentMiler, what’s up? You say above it can be done but it cannot, unless there is a trick to it.

Dino
Guest

Any more word on Target not accepting Amex gift cards as payment for reloading Amex for target?

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[…] the Target Amex card going away?  (My guess is that they’ll stop selling these old prepaid cards at Target or may […]

Daniel
Guest

I often have my first few transactions denied when using a new card. It has always been related to fraud alert on the card. I just call, have them clear it and it had worked when charged again. I have not used gift cards before so I cannot chime in on that.

Claudio
Guest

Is this card still available? Any body found it in the Fort Lauderdale area?

Frank
Guest

ATM at Costco just charged $2.25 – rather than $1.25 – making this less attractive. Anyone know where I can find a cheaper ATM for AFT card withdrawals?