Almost too good to be true

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Last week, a reader who goes by Stealph on FlyerTalk (and Bringer on MilePoint) alerted me to a new discovery.  He had found $500 Visa cards for sale at Office Depot, each with only a $4.95 fee.  Later in the week, reader Steve K reported the same finding in the comments of my post titled “The best way to Ink Money (revised).” 

Why is this an amazing discovery?  Office Depot is an office supply store.  So, if you use a Chase Ink credit card which gives 5X for office supplies, you will get 5 Ultimate Rewards points per dollar when buying these gift cards.  Since the fee is only 1%, this means that you can buy these Visa cards and use them for day to day spend and earn the equivalent of over 4X on all of your purchases!

Let’s look at how this compares to previously reported options:

Analysis Table

The table shown here estimates the “X” for each option and each point value. For example, If you buy gift cards at Staples via the Ultimate Rewards Mall (for 2X) and you value points at 1.31 cents each, this table shows that buying $100 Visa gift cards online will give you the equivalent of 2.87X (points per dollar) for spend that you make with that Visa gift card. In other words, while you start with 7 points per dollar in that scenario, just over 4 points per dollar are used to “pay you back” for the card’s $5.95 fee so you are left with 2.87X overall.

 

Gift Card Value

Fee

Points Earned

Value points 1 cent

Value points 1.31 cents

Value points 2 cents

Buy online through UR Mall 2X

$100

$5.95

742

1.47X

2.87X

4.44X

Buy online through UR Mall 3X

$100

$5.95

848

2.53X

3.93X

5.50X

Buy in-store Staples / OfficeMax

$200

$6.95

1035

1.70X

2.52X

3.44X

Buy at Office Depot

$500

$4.95

2525

4.06X

4.29X

4.55X

 

An amazing deal

In the table shown above, you can see that buying $500 gift cards at Office Depot is almost always the best option.  You can then use those gift cards for purchases that would ordinarily only give you 1 point per dollar.  Imagine if, over the course of a year, you put $12K of spend on Visa gift cards that were bought with a Chase Ink credit card.  That’s just $1000 per month.  In that case, you would earn 60,600 Ultimate Rewards points by buying and using gift cards, instead of the 12,000 points you would normally earn (within 1X categories).  The extra cost to you over the year would be $4.95 * 24 = $118.80.  That’s a very small price to pay for almost 50,000 extra points!

Be cautious

Yesterday I wrote “Why Chase cancels accounts (and how to protect yourself).”  The key take away is that schemes like this should be done in moderation.  If you max out your credit card each month by buying Visa gift cards, Chase will eventually catch on and shut down all of your accounts.  No one knows exactly how much is too much so err on the side of caution.  See the Dos and Don’ts in yesterday’s post.

If you do not have a Chase Ink card, you can read more about those and other cards on the Preparing for Miles page which can be found as a menu item at the top of every page on the Frequent Miler blog.


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