Now that you have a Bluebird card, don’t use it

Note: American Express is a Frequent Miler advertiser. Please see our Advertiser Disclosure.

Earn 6X (or more) everywhere by not using your Bluebird card.

A year ago we thought it was pretty cool to earn 2 points per dollar for travel and dining with our Chase Sapphire Preferred cards.  And, thanks to the card’s 7% annual dividend, we were really earning 2.14 points per dollar for those expenses.  That was way better than 1 point per dollar earned with most other cards.

Then, six months ago, I wrote “One card to rule them all.”  Suddenly, 2.14X was laughable compared to 5X everywhere.  By buying Vanilla Reload cards at Office Depot with our Ink Bold cards we were able to earn 5 points per dollar for essentially buying money.  And, then we would load the money onto our American Express Prepaid cards in order to indirectly earn 5 points per dollar everywhere.

Then Bluebird changed the game

On the surface, Bluebird looks like an incremental improvement over older American Express Prepaid cards.  It has higher Vanilla Reload limits ($5,000 vs. $2,500), it provides a way to have always free ATM use, and it has a built in Bill Pay feature.  So, most people rightly see this as a great way to extend “5X everywhere” beyond credit card charges to also include bill payments where payees don’t accept credit cards.

When it comes to credit card transactions, though, things have changed.  With the old prepaid cards, using them for regular credit card transactions was the easiest and cheapest way to cash them out.  With Bluebird, on the other hand, cashing out is trivially easy.  Not only can you pay bills, but you can link a bank account and withdraw money directly.  With either approach, you can use Bluebird (directly or indirectly) to pay your credit card bills.

When it comes to paying a merchant, using Bluebird is not an optimal strategy.  You’ve already earned 5X for money you’ve deposited to Bluebird, but you won’t earn more by swiping your Bluebird card.  The optimal strategy, is to use the best point earning card you have for the situation. It’s time to dust off those old cards.  Use your Sapphire Preferred for travel and dining.  Use your Ink Bold for 2X for gas.  Use a Blue Cash Preferred card or Hilton HHonors Amex for groceries. For any spend, use a new card with which you are working towards minimum spend requirements. You get the idea.  By paying the credit card bills directly or indirectly with your Bluebird card you will earn 6X or more, in total, for those purchases!  Plus, by using a real credit card you’ll get extended warrantees and other protections that many consumer credit cards offer.

Will Amex shut us down?

One reason you may want to disregard the advice I gave above is fear that American Express will shut down your Bluebird account if you are an unprofitable customer.  American Express surely counts on credit card transaction fees to make money from Bluebird.  If you don’t use the card as a credit card, they won’t make as much money and they could shut down your account for not using it as intended.  If you’re worried about this, then by all means continue to use Bluebird everywhere.  5X everywhere is still awesome!  Alternatively, use Bluebird for any purchase in which you would not get a category bonus from another card.  If half of your spend is within bonus categories and half with Bluebird, then you should still average 6X or more.

Personally, I believe that American Express will be happy with us as long as we maintain a balance in our Bluebird accounts.  They are marketing this as a checking account alternative, after all.  If you load up your account and completely cash it out, time after time, that will look suspicious.  But, if you load it up and then pay various bills, and use an ATM occasionally, and withdraw some money now and then to another bank account, I think you’ll be OK — as long as you maintain a reasonable sized balance.  Caution: This is just my educated guess!  We do not yet have enough experience to know if or when American Express would shut down accounts.  As I said before, 5X everywhere is still awesome.  So, if you’re more comfortable using Bluebird for credit transactions to keep Amex happy, then by all means do so.

But I can’t buy Vanilla Reload cards!

Many people have expressed frustration with not being able to buy Vanilla Reload cards.  Either they don’t have any nearby Office Depot stores or their local Office Depot store doesn’t carry Vanilla Reloads.  If you’re in that situation, look for Vanilla Reload cards in other places.  People have reported success buying reload cards at certain drug stores and gas stations.  You won’t earn 5X with your Chase Ink card at those locations, but you can earn 2X or more with various cards at gas stations; and you can earn 6X at certain drug stores with a Hilton HHonors American Express card.  Better yet, buy reload cards as a way to meet minimum spend requirements for new credit cards.

If you really can’t find any Vanilla Reload cards that can be purchased with a credit card, you’re not totally out of luck.  See “The 5X everywhere backup plan.”

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