Churnin’ and Burnin’ (The Great Credit Card Churn of 2012)

Back in the day, and by that I mean like 2012, I had a knack for finding ways to make lots of money off of credit cards. I’ve already outlined how to do it with prepaid single use gift cards. It used to be even easier, and this is a story of those beautiful days. I found a product made by Wildcard systems that credit unions offered. It was a prepaid debit card, and it was terrific for the following reasons:

1. It was reloadable
2. You could reload it with any Visa for five bucks. This step was the key.
3. It had a PIN so I could use it to buy money orders.
4. You could load it up for massive amounts; some credit unions allowed $3,500 some $5,000!

This process was amazing.

Step 1 – Acquire the Card and Load It

So I got a prepaid debit card from a Credit Union in Michigan. Their only requirement to become a member was to make a $25 donation to a foundation for Lou Gehrig disease. It didn’t matter that I lived a few states away. I read the fine print, and I could reload it seven times a month for a total of $35,000. Yahtzee.

I had a Citi ThankYou Visa card that was paying 5% on all purchases for one year with an introductory rate, so I went to work, by loading up $5,000 on the card, and in the process getting about 25,000 ThankYou points. Good for $250 cash back. (More on how to redeem that below)

Step 2 – Drain That Sucker (Buy Money Orders)

Since this card had a pin, I marched over to my local grocery store service counter and quickly learned what I could purchase in a day without getting a SAR filed on me… A SAR was a “Suspicious Activity Report, and these were tricky things, because you weren’t supposed to know when one was submitted on you, yet they needed to get information from you to fill it out. A strange exchange indeed. These weren’t necessarily a bad thing, it was just annoying, and I was trying to fly under the radar as much as possible. Plus I didn’t want these poor employees to do any more work than they had to help me. The magic number was to stay under $3,000 in money orders, and no single money order could be higher than $1,000.

So the exchange would go something like this:

Me: “Hi I need a few money orders.”

Cashier: “How many and what amounts?”

Me: (Knowing how much I had on the pre-paid debit card) “I’d like 1 for $987, another for $996, and a final one for $992.”

This transaction would look like this:

I would randomly choose three amounts every day all near the $1000 mark and relay them to the cashier. It became a game for them, and they always tried to guess what they were, sometimes I would let them think they were correct, even though the amounts were arbitrary. I just always had to make sure I had enough on the prepaid card. Over the years I got to know all these cashiers by name, I knew their kid’s names, I knew their schedules

Step 3 – Convert the Money Orders Into Cash

I would take my money orders to the car, and use my phone to deposit them in my bank account. I used an account that had mobile deposit so I could immediately get my money back.  Using that money, I then would pay down my Citi Thankyou card balance down.

Wash. Rinse. Repeat.

Now how could I scale this???

Time to Find All the Cards (Take it to Scale)

The weapons of choice (I was gracious enough to get my wife a card too)

While doing a little digging, I figured this product offered by this Credit Union was not unique. Some company was providing the service which included the website and the cards that then the Credit Union could offer.  So using my Google skills and advanced search awesomeness, I found over 15 Credit Unions across the country used these same cards. Jackpot! I went right to work opening accounts with each of them, and sometimes even got my wife a card. Here’s a pic of some of the cards from our efforts. Some of the Credit Unions required that you reload their cards with “their” branded Visa card which was unfortunate. Those cards were a no go.

With these cards then I had almost limitless amounts of money each month to churn through. I would sometimes do over 100k a month which would net me nearly $5,000 in credit card rewards.  This game was so much fun.

Turning ThankYou Points into Maximum Cash

ThankYou points are just like all reward points as their redemption value differs depending on for what you redeem them. At the time, Citi was giving maximum redemption if you used your ThankYou Points to “pay your mortgage.” I think Citi was trying to incentivize people into being responsible and paying down their mortgage, LOL. Well, this was an opportunity for The Stealthy Rich. The way it worked was to call Citi and tell them you wanted to redeem some points (in $25 increments) into a check made payable to your mortgage company. I told them my mortgage was with Chase (which was true) so I would receive large checks made out to “Chase”. I endorsed the checks and deposited in my Chase checking. It was magic.

How Long Could This Go On?

So much winning

I knew this was a very fragile system I had created and at any time a part of the process could fail. The credit unions could stop letting my load my prepaid debit with my credit cards, or the grocery stores could stop selling me insane amounts of money orders. Also, my credit card that was paying such sweet, sweet reward rates could go dry. Well, I knew the ThankYou Visa was only good for one year with the 5% offer. However, I called them at the end of 1 year, and they said I was such a good customer that they extended the offer another six months. I felt as if I was living in a dream world in which it was raining free money.  Then after those six months, the introductory offer was still good for new cardholders, so I opened a Citi ThankYou card for my wife, and got ANOTHER 18 months. All and all, I ran this thing for three years.  Finally, in the end, the prepaid debit peeps got wise and shut all my cards down. It was a sad day. Except for The Greater Nevada Credit Union, they never let me miss a beat. 🙂