There have been plenty of opportunities to generate lots of miles, ‘tricks’ if you will, over time — like buying savings bonus with a credit card from the federal government, buying travelers checks from AAA, and buying coins from the US mint (see among other posts here, here, and here).
But there have never been as many – or as complicated – tricks as you are today. People try to “buy money with money” and earn points in the process, which keeping costs as low as possible.
Thanks to the Durbin Amendment to Dodd-Frank financial reform, we’ve mostly seen the end of mileage-earning debit cards… but we’ve also seen:
- The costs to a bank to offer traditional accounts rise (and offsetting profit opportunities on those accounts fall)
- Which leaves more people outside of traditional banking
- And more non-banking products rise up to meet the new demand
- Especially ones which find a way around the price caps imposed by the Durbin amendment.
All a fascinating public policy process for those studying financial markets.
But with new products, and new complications, also come mileage opportunities. So lots of gift cards you buy, which you then turn into a negotiable financial instrument such as by purchasing money orders when those gift cards can be used as debit cards.
As with all of these things, policies change and things are easy until they aren’t. It certainly looks squirrely when you are buying a money order with a gift card that doesn’t have your name on it. And another trend — along with lower debit card interchange fees — is financial fraud and the government’s crackdown on that. Stores are worried about gift cards purchased either with stolen credit cards or for money laundering. Eventually they look askance. Walmart has been popular because they’ve had machines that will sell you financial instruments, though not all stores have them and they don’t take all debit cards.
The one places I would caveat PointChaser’s advice is that the US Postal Service seems to code money orders as cash advance transactions. Some cards, like when I used to use MyVanilla Debit, would allow for the purchase of money orders as a cash advance (just as they allowed cash advances). But many cards will not permit this.
This get easy, then they get hard, the world gets more complicated and that creates opportunities for arbitrage — and for miles. And that’s what keeps things interesting!
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