May 27th, 2013
Commenter PK asked there why I don’t just buy the $200 Visa gift cards that are sold by the major office supply stores for all of my everday spending.
While store gift cards to places like Amazon, Marshall’s, or BP are free (and thus earn you some 9.5% back in Ultimate Rewards points), the Visa and Mastercard gift cards come with fees. The $200 Visa gift card for example has a $6.95 fee barring any weekly specials.
The reason that it’s worthwhile is that you earn 5 points per dollar for office supply store spending with an Ink Bold, Ink Plus, or Ink Cash card.
The math works like this, by buying a $200 Visa card for $206.95 you’ll earn 1,035 points (not including any points you are getting for meeting the $5,000 spend threshold)
If you value Ultimate Rewards points at:
-1.8 cents per point that’s $18.63 worth of points less the $6.95 fee=$11.68 or 5.84% back.
-1.9 cents per point that’s $19.67 worth of points less the $6.95 fee=$12.72 or 6.36% back.
-2 cents per point that’s $20.70 worth of points less the $6.95 fee=$13.75 or 6.88% back.
Those numbers mean that you’ll get the equivalent of somewhere between 3.24 and 3.44 points per dollar spent on Visa gift cards after accounting for the fee which is much higher than what you earn with everyday spending on other cards.
Of course “value” per point is all about how you use them. If you use them yourself you can get several times those numbers. If you redeem for business or first class tickets you can probably get anywhere from 5 to 50 cents value per point. If you redeem for short-haul flights via Avios you can probably get 3 to 15 cents per point. If you redeem for Park Hyatt hotels you can probably get 5 cents per point. If you flip them to a broker you can probably get 1.8 cents per point. Or transfer points instantly to Hyatt, United, British Airways, Southwest, Korean, Virgin Atlantic, and more.
Compare that to everyday purchases on other top cards where you’ll get perhaps 2% on Sapphire, 2.1% on Freedom Exclusives, 2.2% on Starwood or Barclays, or 2.7% back on United Club. Now bonus categories may change the math on Freedom and Sapphire, but you will do a lot better by using Visa gift cards for everyday purchases.
No matter how you slice it, those numbers via Visa gift cards are fantastic. You can be earning over 5% back on all of your purchases no matter where you shop.
The downside to this is that it will be hard to keep track of purchases and you won’t have dispute resolution and warranty protection that comes with credit cards. Still most of your daily purchases likely don’t need that, so this can be a great way to quickly rack up points on the cheap.
Of course this isn’t even accounting for signup bonuses which will bump those numbers way higher. Spend $10,000 between a new Ink Bold and Ink Plus card and you’ll have a whopping 150,000 points.
And the Visa cards aren’t only good for everyday spending. The last 4 digits of the cards are the pin numbers that you can use to load them onto Bluebird at WalMart (via the WalMart ATM or any cashier) or use for Money Orders or WalMart Bill Pay.
Yes, the Ink cards are business cards. But anyone can open a business (a little side income never hurts!) and there are several huge advantages that business cards have over consumer cards as you can read here.
For example if your name is Joe Smith and you want to sell or you do sell items on Ebay or on Amazon, or if you have any other side business/hobby and want a credit card to better keep track of business expenditures you can just open a business credit card for “Joe Smith Sole Proprietorship” as the business name. You don’t need to file any messy government paperwork to be allowed to do that.
Just be sure to select “Sole Proprietorship” as the business type and just use your social security number in the Tax Identification Number field as well as in the social security number field. People have been approved like that even for a brand new business.
Plus they come with other bennies like 5 points per dollar on cable and telecom, 2 points per dollar on gas and hotels, no foreign transaction fees, and 2 free lounge visits even on each free additional user card.
So, will you switch your spending habits to rack up points quicker by doing more everyday spending via Visa gift cards? Or is it too much hassle to start chasing down points like that? Will you just use it until you meet the $5,000 spend threshold to earn 75K points? Or will you use it to load to Bluebird but not for your everyday spending? Sound off in the comments!