Strategies For Maximizing Green Dot MoneyPaks

May 16, 2013

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All this week, TPG contributor Jason Steele will be covering Green Dot MoneyPaks and how you can maximize the points and miles you earn using them. In Part 1 of his series he introduced us to Green Dot and covered the basics of prepaid reloadable cards. In the second post, he compared Green Dot to Vanilla Reloads. In yesterday’s post, he took a look at the best Green Dot-compatible reloadable prepaid cards. Today he’ll discuss key strategies to maximizing Green Dot MoneyPaks including pitfalls to avoid, leveraging prepaid cards’ bill pay services and which credit cards to consider using to buy MoneyPaks.

Knowing the basics about how to manufacture spending with Green Dot Money Paks is essential, but you are bound to have a few issues along the way. Here are the main issues I have faced, and how I overcame them.

Sometimes it looks like your MoneyPak doesn't load properly - don't panic!
Sometimes it looks like your MoneyPak doesn’t load properly – don’t panic!

1. Activation failures. On occasion, Green Dots MoneyPaks will fail to activate. Worse, their website will indicate that the card has a $0 balance!  If this happens, don’t panic. Also, don’t bother calling the number of the back of the MoneyPak, as you will wait on hold for someone who has no authority to assist you. Instead, call Green Dot special services at 888-267-9413 to immediately speak with a supervisor. They somehow double check that the purchase was authorized, and your funds will be available within hours, 24 hours at the most. It took many calls to their regular number to finally get the direct line to special services, and I wish I had it the first time!

2. Bill payment technique. The bill pay system used by every one of the prepaid cards that offers it is from the same vendor used by Bluebird as well as the bank and a credit union I belong to. This company is called Fiserv (formely CheckFree) and it issues paper checks from a processing center in Hickory, NC to persons or businesses that do not accept electronic payments. I have held accounts with online banks since 1995, and all of them have used this company as their bill pay provider. And while some people like to utilize this service to pay their mortgage or other bills, it is possible that they are overthinking this issue. I usually just pay the credit card that I used to purchase the MoneyPak and this has not raised any red flags doing so.

Many prepaid cards offer bill pay services and even issue checks so you can pay off your bills including rent and utilities.
Many prepaid cards offer bill pay services and even issue checks so you can pay off your bills including rent and utilities.

I’m sure a lot of readers will raise the alarm over that statement, but the fact of the matter is, these prepaid cards are offered by third parties and the bill pay company is another third party (or a fourth party, I guess). I don’t think that they have the time or interest to care who or what I am paying, any more than my bank does. Fiserv processes millions of payments a day, and absent any illegal activity, the issuer of the prepaid card doesn’t care who you pay. Besides, the prepaid card issuer has no way of knowing that you are paying the credit card account that you used to purchase the reload.

Likewise, the credit card issuer doesn’t know what I am buying. Citi has issues with over-the-top spending at bonus category merchants, but anecdotal evidence appears to suggest that the people who have had issues are those charging six figures a month! I spend less than $10,000 a month using this method and have had no issues.

Payments take three to four business days before being credited to my accounts.

You can also issue checks directly to your bank account of the account of another person. Just find your bank’s address for accepting deposits, and make a small test deposit first. It works for me just fine when I sent money to my own account.

This is how you can "manufacture spend" to turn cash into points.
Because of how Bill Pay works, you can even use your prepaid card to pay off your credit card balance.

3. Best credit cards to use. Your first priority should be to use card that offers the largest bonus points or miles at the store you purchase MoneyPaks. I get mine at Rite Aid drugstores, so I have been using my Hilton Honors Card from American Express that offered 6x. But since the HHonors devaluation and American Express ended the 6x bonus at drugstores, I went with a Citi ThankYou Preferred that offered a 5x introductory offer. That particular offer is no longer available for that card, and the most aggressive spenders have seen their accounts closed by Citi according to anecdotal evidence , tens of thousands of dollars a month. I don’t come close to that, and I have not had any problems with my Citi card.

That leaves a few other options. If you can purchase Green Dot MoneyPaks from a supermarket (I have had mixed results, at best) such as Safeway or Kroger stores, then consider the Premier Rewards Gold Card from American Express that offers double Membership Rewards points on these purchases. Blue Cash Everyday® Card from American Express offers 3% cash back at US supermarkets; then 1% but only on up to $6,000 spent each year. Another option worth considering would be the US Bank FlexPerks Visa card. It offers double points on the category you spend the most at each month (from gas, grocery or airline purchases), and each point can be worth up to two cents each for airline tickets, so you are looking at as much as a 4% return on your spending.  In addition, the tickets you receive are in a revenue fare bucket, so you earn miles and credit towards elite status while being eligible for upgrades. That makes these rewards worth nearly 5x.

But Green Dot MoneyPaks can be worth purchasing even with a card that only earns 1 mile or point per dollar, such as the Starwood Preferred Guest® Credit Card from American Express. Sure, your costs will be about one cent per point, or .8 cents per mile after the 5,000-mile transfer bonus on 20,000-point transfers, but that is well below what most people value these points at. It is just that it would take considerable time and effort to earn points in quantity, so this method is best used to top off accounts not to try to earn hundreds of thousands of points.

But the best use of Green Dot MoneyPaks is probably for meeting minimum spending requirements for welcome bonuses and spending thresholds for additional perks. For example, I received HHonors Gold status from my no-fee Hilton American Express after I reached $20,000 spending on in a year, and I am hoping for Starwood Gold when I reach $30,000 of spending on my American Express Starwood Preferred Guest card. My spending isn’t entirely at Rite Aid, but it sure helps.  Furthermore, many cardholders are reluctant to apply for business credit cards with large minimum spending requirements. But if they are able to use Green Dots Money Packs to more easily meet these requirements, that can help them churn. With Green Dots, it is only a matter of spending $50 and making few trips to Rite Aid.

Tomorrow, I will wrap it all up and look at the fees it costs, the time it takes, and how many points can be generated by purchasing Green Dot MoneyPaks with various travel credit cards.

Editorial Disclaimer: Opinions expressed here are the author’s alone, not those of any bank, credit card issuer, airlines or hotel chain, and have not been reviewed, approved or otherwise endorsed by any of these entities.

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