There are several reasons why American Express are better manufactured spending tools than Vanilla Reloads and other reload/prepaid cards. First, not everyone has access to merchants that accept credit cards for Vanilla Reload purchases. This can make it difficult to meet large spending requirements and generate more miles and points outside of credit card churning.
Similar to Visa and Mastercard gift cards, American Express gift cards have a high purchase limit (up to $10,000 every 14 days), they are easy to unload, and you have the ability to not only eliminate purchase fees but earn a profit when ordering these through a cash back portal.
But first things first, here are the basics you should know about Amex gift cards:
Purchase Limit. You can purchase up to $10,000 worth of consumer American Express gift cards every 14 days. These gift cards come in increments of $25-$3,000 but shopping portals don’t pay out cash back on denominations over $2,000. When you make your purchase, you do have to provide your SSN, which is how they track your daily maximum.
Business gift cards come in the same increments, but purchases are capped at $100,000 every 14 days (try spending that without setting off a fraud alert). Instead of your SSN, you’ll have to provide your business tax ID number at check-out.
Fees. Amex gift cards have a low fee of $3.95 per card. You are also liable for a $8.95 shipping fee per order. Sometimes shopping portals like Big Crumbs and TopCashBack will offer promo codes that waive the shipping fee. Both portals are currently running this deal on Business gift cards. A quick google search may turn up codes that waive the fees and/or the shipping charge, but if you use these, you will forego any shopping portal points/cash back.
Where to buy. You can purchase American Express gift cards online or at most grocery stores. Online is best, since you can earn cash back from shopping portals.
H ow to Cash Out. The simplest way to unload Amex gift cards is through regular spend or by loading the balance to Amex for Target or Target Prepaid RED (aka Redbird). With Amex for Target, you can unload the balance through ATM withdrawals ($400 per day). Target Prepaid RED is much easier because they offer a
bill pay feature, so you can use the balance on the card to pay off your credit card. I wouldn’t unload the entire balance this way – mix in some regular spending, use it at ATM machines to make card use look as normal as possible.
Cashback Portals. There was a time when cash back portals offered upwards of 4% cash back on Amex gift card purchases. Most every shopping portal has since pulled Amex gift cards from the lineup. The remaining portals, Top Cash Back and BeFrugal. have held steady with 1.5% cash back on Amex gift cards.
If you purchase the maximum $10,000, you’ll have $19.75 in fees and a $8.95 shipping charge, bringing your total to $28.70. Through a shopping portal, you’ll earn $150 cash back (note: shipping and fees don’t qualify for cash back). Unloading these via Target Red Prepaid won’t incur any fees and you can get rid of $5,000 worth of cards this way. The remaining balance you can unload through Amex for Target, which also has a $5,000 limit every month. You will incur fees of $63.75 to load and unload $5,000 in Amex gift cards this way. Factoring in the 1.5% cash back earned from a shopping portal still leaves a profit you with a profit of $57.55.
Warnings. Keep in mind that several banks will code Amex gift card purchases as cash advances. If this happens, you will not only miss out on points, but you will be liable for cash advance fees. This Flyertalk thread is a good resource to keep track of which credit cards code these purchases as cash advances. Generally, it’s Citi that does this, but do take a look at the list first in case anything changes.
Also, don’t go overboard buying Amex gift cards. I generally keep my manufactured spending activities at or below $6,000 per card each month (though there are exceptions) and that has allowed me to stay under the radar. The last thing you want is for the bubble to burst because you got a little overzealous with gift card churning.
Questions about Amex gift cards? Feel free to comment below.
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