American Express continues to plow into the prepaid market at full throttle.
-They have their own Serve product.
-They have a co-branded Serve card with Softcard (formerly known as ISIS) that is a super-charged version of Serve.
-They have a partnership with Walmart for the co-branded Bluebird card.
-And they now have a partnership with Target for the co-branded REDcard.
In 2012 I called Bluebird the next dollar coin burn. Indeed it proved highly effective as a method of creating spend for your credit cards. I had lots of fun with Bluebird but this past July I switched to Serve with ISIS.
Serve with ISIS allows $1,500 in credit card funding right from your computer in addition to $5,000 in gift card/debit card funding from WalMart and Family Dollar stores.
However that’s already starting to show cracks. Some banks like BOFA and Citi have caught on and now charge a cash advance for Serve loads. Though Chase and Barclaycard are still safe for now.
And now there’s REDcard. It’s currently only available in select Target stores, but it will be rolled out nationwide.
Stores in some regions charge $5 for a REDcard while other regions have them for free.
For now, Target allows you to fund REDcard from a credit card to the tune of $5,000 per month.
Additionally you get 5% off everything from Target, free shipping on everything from Target.com, and an additional 30 days to return items to Target.
Here’s my timeline:
10/14: On Tuesday I went to Target to buy a REDcard. In Cleveland there’s a $5 charge to purchase and load a REDcard. The card you get from Target is just temporary, you need to register it online after purchasing it to be sent a permanent card.
I purchased and loaded a temporary REDcard with $500 and the charge posted as a regular purchase. I tried loading it with more but the system didn’t allow that. The system also didn’t allow me to purchase another REDcard on the same day. You do need a license and SSN to buy a REDcard, though no credit check is done.
Of course I wasn’t able to register the REDcard under my SSN once I got home as I already have Serve with Softcard and AMEX only allows a person to have one flavor of their prepaid cards. I was able to register the card to someone else without any issue though.
10/15: On Wednesday I went back to Target and now that the temporary card was registered and had a pin I was able to load another $1,000 onto the card from my credit card. There was no fee. I tried to load more but it was rejected.
I then went to the Target ATM machine and was able to withdraw $200 twice with no fees before the system stopped allowing further withdrawals.
I was also able to buy another REDcard. You can buy one temporary REDcard per calendar day.
10/18: Of course then came the 3 day hiatus from all things electronic to finish off the Sukkos holiday, but the permanent card already came in the mail over the holiday!
So last night I went back to Target.
I tried loading $1,500 but the register said “amount too small.” The cashier and I got a kick out of that.
Then I went down to $1,000 and it worked fine. I loaded another $1,000 and then another $500 before the system cut me off.
Talk about making spend threshold spending easy!
Loads can be done with any cashier or at customer service.
Unfortunately the Target ATM machine was down. Not that it really matters as money can be transferred from REDcard to pay any bill or to transfer funds directly into your checking account.
10/19: Earlier today I decided to take the plunge and cancel my Serve card.
Of course there are several drawbacks to REDcard:
-You can’t load from a credit card online, while Serve allows me to do $1,500 per month from the comfort of my home. REDcard does allow $1,000 in monthly funding from a debit card (though not a gift card) online.
-I also have 4 free additional users on my Serve account and Serve cards qualify for Small Business Saturday. REDcard doesn’t appear to be eligible for AMEX Offers promotions.
That hurts, but I’ll just have to add some more additional users on my American Express credit cards to make up for it 😀
-Serve with Softcard gives $1 back on up to 50 purchases per month until the end of the year. Which hurts, but it’s a pain to break up your purchases that way anyway.
At any rate, $5,000 in easy credit card spend every month just seemed like something too good to pass up. And I can still use Softcard with other credit cards for promotions like this.
After cancelling Serve and waiting for the account cancellation email I was able to register the 2nd temporary REDcard that I bought last week.
So then it was back to Target today. The permanent REDcard had been funded with $500 initially, $1,000 on Wednesday after being registered, and $2,500 last night when the permanent version came. Today I was able to load it with another $1,500 in 2 transactions, bringing the total load to $5,500. The initial load didn’t count towards the $5K monthly limit, but now I’ll have to wait until November to load that card with another $5,000. It will take 2 trips on 2 different days, but I can easily load more than 1 REDcard at a time to make that less onerous.
After that I loaded the temporary card that I just registered to myself before going to the store with another $1,000.
And I bought a 3rd REDcard and loaded it with $500.
Every time with a smile. Without a line. And never being asked for ID (which made meeting my wife’s thresholds for a recent 3BM that muss less painful). Take that WalMart!
Of course Target can always disallow credit card funding, though when that happens I can always switch back to Serve with Softcard if that’s still around at that time. It’s not really a matter of if but a matter of when, as some things are just too good to be true.