Free credit card spend. What’s left?

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The end of free credit card spend

One by one, most free and easy options for increasing credit card spend have fallen by the wayside.  The US Mint used to sell dollar coins with no fees or shipping charges, and they let you use a credit card to payThat incredible deal ended in 2011.  Amazon used to allow $1000 of free credit card spend per month through its Amazon Payments system.  They ended that option in October of last year.  Amex used to allow $1000 of free credit card loads per month to its Serve prepaid product.  In April, they began restricting these loads to Amex cards only (but… there are still good uses for this feature!).  And, Target used to allow in-store credit card loads to REDbird (the Target Prepaid REDcard).  That option ended on May 6th.

Free spend remains

Free spend isn’t completely gone, but it is harder to find.  Here are a few options that still exist:

  • Load Serve with an Amex card. If it is issued by American Express, you won’t earn points but the load should still count as spend towards your minimum spend requirements.  If it is an Amex card issued by a different bank (consider the Fidelity Investment Rewards 2% cash back card, for example), then you’ll earn rewards too.
  • Fund a new bank account. When setting up a new bank account, many banks allow you to fund the initial deposit with a credit card.  Doctor of Credit maintains a list of banks that allow this along with reports of which credit cards do or don’t charge cash advance fees for doing so.  There are limits to how often you can do this, though, without causing problems.  Some banks do a “hard pull” credit inquiry when opening new accounts, so that can have a negative effect on your credit score.  And, most banks will check your ChexSystems report to see if there are any negative mentions (see Doctor of Credit’s post on ChexSystems, here).  At a minimum, if you do this too often, you may be denied opening new accounts simply because you have too many recently opened accounts on your report.
  • Buy fee free Visa/MasterCard gift cards.  These are not easy to find, but they do exist.  Check local credit unions, for example, to see if they sell gift cards and ask how much they charge.  AAA often offers fee free gift cards as well, but they’re pretty strict about limiting the total amount they’ll let you buy.  Then there are the occasional sales.  OfficeMax, for example, often has deals on gift cards (such as this recent deal) where the discount more than offsets the gift card fees.  Once you have these Visa/MasterCard gift cards, you can use them as debit cards to reload REDbird at most, but not all, Target stores; or to reload Bluebird or Serve at Walmart (but Vanilla Visa gift cards won’t work there).
  • Start with Amex gift cards to cover your costs.  (UPDATE: This approach is no longer useful now that Amex doesn’t offer portal rewards for denominations over $200). Many remaining credit card spend techniques cost money.  For example, most Visa/MasterCard gift card purchases incur a fee: usually around 1% for $500 gift cards.  You can more than offset this fee by going through a cash back portal to buy Amex gift cards (usually for about 1.5% to 2% cash back), then use those gift cards to buy Visa/MasterCard gift cards.  The main problem with this approach is that many merchants that allow purchasing gift cards with credit cards do not allow Amex gift cards for payment.  For example, neither GiftCardMall nor Simon Malls will accept Amex gift cards as payment.  So, while this technique can result in free (or better than free) spend, it can also be a huge headache, or even a financial disaster if you find yourself unable to liquidate the cards.

Paying for spend

As free spend options dry up, the next step is to look towards low cost options for increasing spend.  For example, you’ll be charged a 1.87% fee to pay federal estimated taxes with a credit card.  Or, you can pay your mortgage with a credit card through a service like ChargeSmart.  Fees for that service vary depending upon how much you pay.  Or, pay about 3% through a variety of services to use your credit card to pay your rent.

Is it worth it to pay for spend?  Stay tuned for a follow up post where I’ll layout options for paying for spend and I’ll attempt to answer that key question: is it worth it?

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