This post will extrapolate on a recent Twitter exchange that seemed to confuse several people, so I thought sharing this perspective might prove useful.
The premise is that by using a combination of the Amex Bluebird, Loaded with Vanilla Reloads purchased by a points earning credit card you can then earn points paying your rent by paying via an Amex Bluebird Check. I love the Amex/Vanilla combination and use it a lot these days, I started out using the Barclay Arrival Card, and now am using the old Amex Blue, you might want to check out my analysis of the best credit cards to pair with this here: The best card to use with your Bluebird and Vanilla Reload strategy if you haven’t yet.
Logically speaking, you can, of course earn points by paying your rent this way. The Bluebird loaded with Vanilla allows you to pay for all manner of things that wouldn’t accept a credit card for payment, so you do open the door to creating a points earning rent strategy. However, as much as I hate this term, the opportunity cost kills it.
The problem you face is that each Bluebird card can only be loaded with $5K of Vanilla each month. So, if your rent is say $1,000 per month, that means that you have used up $1,000 of your available $5,000 and can now only spend $4,000 on other things in order to earn your points. If you were using the Arrival Card your ROI would be as follows:
Outflows
10x $500 Vanilla Cards for $5,039.50 (each card costs $3.95 to purchase)
Inflows
- $5,000 of money to spend via Bluebird Billpay or Bluebird Checks
- $110.87 Earned Travel Related Cash back from the Arrival
So you could net a profit $71.37, with the caveat that it must be spent on travel, if you use the Arrival card for pure cash back it is worth half of that. Alternatively, if you were to use the Fidelity Amex you could earn 2% cashback (inflows of $100.79, net profit of $61.29) and if you can find a working link to the old school Amex Blue (I don’t have a link for that on my site, but if you have one please leave it in the comments section) you could be earning bunch more than that.
Opportunity Costs Explained
Because the Bluebird has both Online Billpay and Regular Checks available you have endless possibilities to spend your monthly $5,000. Paying rent with this method would only offer increased value to a person who is unable to liquidate $5,000 per month, if somehow their monthly costs were lower than $5.000. Now… if you consider that to load $5,000 onto the Bluebird itself requires greater than $5,000 outflows each month, I think it is easy to see that in such a situation a person would have, by definition, more than $5,000 in bills in a month prior to considering rent payments.
As such, rent cannot offer any additional value in earning points by paying with a Bluebird, as if person A used it to pay rent, and person B used it for regular monthly costs, both people would generate exactly the same number of points in a month.
H Matt,
Thanks for addressing this in more than 140 characters!
You wrote: “Paying rent with this method would only offer increased value to a person who is unable to liquidate $5,000 per month, if somehow their monthly costs were lower than $5.000.” I understand this to mean, more precisely, if the monthly costs that the renter could not put on a CC were lower than $5,000.
Currently, we pay virtually all of our bills by CC. The only monthly expenses we can’t put on a card are our HOAs and our cleaning person, so both are paid via BB check. We pay our property, estimated and income taxes via BB check when they come due. And of course there is the occasional instance when only a check or cash is accepted. I have been reluctant to regularly pay CC bills with BB checks, but do so periodically, if BB is flush. When I do it, I try to pay a bill that does not include the charges that came from feeding BB that month. Both my husband and I have BB accounts.
Not having ready access to VRs, I feed BB with other prepaid cards I can buy with a CC when I can find them, and the GCs that occasionally become available at grocery and office supply stores, which I can purchase with a CC and which have low or no minimum fees. The best are offers where you get some money off for buying them or something like a Staples gift card. Since these sales/offers are unpredictable, as are the clerks who may or may not accept a CC for a prepaid card, I either have a bunch in hand to load to BB when I next pass a WM, or BB remains hungry.
I finally opened an AP account for myself and will open my husband’s today. Ditto for my daughter. So the slow tiptoe into increased MS continues as I wait for the ice from last night’s freezing rain to melt, and the snow under the ice along with it. The other hidden lining to being snowed in: I started assembling the tax info for our accountant – oh – I can pay her with BB too! 😉
Hi Elaine,
Here:
You wrote: “Paying rent with this method would only offer increased value to a person who is unable to liquidate $5,000 per month, if somehow their monthly costs were lower than $5.000.” I understand this to mean, more precisely, if the monthly costs that the renter could not put on a CC were lower than $5,000.
I mean, more precisely, if the monthly amounts that could not be paid off from bluebird were less than $5,000, including all bills other than rent. Which, if you are putting $5K on the card in the first place, is impossible.
Good luck with the AP accounts, welcome to the big leagues!
Sorry Matt. I think you are splitting hairs here. Technically, yes you are correct – the rent/mortgage payer who sends a BB check will earn the same amount of points per month as the person who uses it for regular monthly costs. I think the real message here is that your monthly rent/mortgage ‘legitimizes’ BB bill pay. By legitimate, I mean car payments, utilities, and other various ‘normal’ monthly expenses. You could technically write a BB check to your spouse each month for $5K but how long do you think it will take before AMEX shuts you down? Not living in NYC, I would struggle to come up with $5K of legitimate expenses per month without including my mortgage. I think you need to mix in the legitimate expenses along with your credit card payments to keep AMEX off your butt. Using BB for only credit card payments or payments to one person will definitely send up a red flag. My wife and I both try to max out BB each month and we are split probably 40% on legitimate bills (including our mortgage) and 60% on cc payments.
Here’s that word ‘legitimate’ again 🙂 Tell me Mark, if BB has CC companies listed as Bill Pay options, why paying your CC bill via BB is not legitimate?
I’m not saying they aren’t. I’m just saying that if all you did was cycle payments to CC companies (load VR, pay CC company, load VR, etc…) without paying other non-CC bills, then AMEX would shut you down in a heartbeat. I have a mix of car payments, mortgage, utility payments, and CC payments each month. Some by bill pay and some by BB check.
Really? I hadn’t heard of any accounts shut down. But I don’t always follow these things enough. Could you show me where people have been shut down so I can re-evaluate my thinking?
There are various reports here: http://www.flyertalk.com/forum/manufactured-spending/1436654-how-avoid-bluebird-shut-downs-share-your-thoughts-here.html
Although most seem to involve some kind of bank transfer and not CC payments.
Regardless, I think you just put a target on your back if you don’t mix in non-MS spending. If (or when) AMEX cracks down then CC cyclers will be easy to find.
You may be right, or you may be wrong. You have to operate within your own comfort levels.
Look at AP – personally I never send exactly 1K in one transaction, but I don’t mix in real transactions, I just send 2 that add up to around $990 ish. I then opened up more accounts once I felt comfortable. I send A-B only, some say that is wrong, but it works for me – thus far.
You’d think it would be easier to slip in a little MS into regular spend (or vice versa) but until we get proof we don’t know what is the reality.
I think you hit on another key point – comfort level!
I’ve heard Amazon is cracking down on AP. I send A-B also to my wife and sometimes she sends B-A depending upon who did their AoR. I made sure to use different account numbers and login from different computer IP addresses for each.
Anyway – good topic today!
Thanks Mark, much appreciate your insights on this. Cheers.
@MarkD – not one person has mentioned that billpay to CC has resulted in a shut down on that thread. Your allegations that paying CC exclusively results in shut downs is unsupported nonsense.
I do almost exclusively billpay to CC, with an occasional check and have had no problems. That being said, I am only doing around $800 per month while I wait for a new round of applications and I never use Bluebird to pay an Amex bill.
Also, here is the link to the old Amex blue: https://www304.americanexpress.com/credit-card/blue-cash/25330 (may have to clear cookies, use incognito, or an alternate browser)
Great- thanks for the link! And time to ramp up 🙂
haha no problem 🙂 Unfortunately, I can’t find any local merchants that accept credit cards for Vanilla Reloads. I travel every so often to an area with a Walgreen’s that used to allow CCs, but that changed before Christmas. Most of what I have been doing lately is using a Citi AAdvantage Visa along with Shopkick to get $200 prepaid Visa cards from Best Buy.
Replying to my own post – bad form I know…
Maybe legitimate was the wrong word. How about non-MS expenses? Any bill that says “I’m not a money launderer!!!”
I sneaked in my reply just before you so it looks cool. It is easy to structure payments that make you appear like you are not a money launderer (though in doing so you are appearing to be more of a money launderer!)
The answer is actually simpler. The inflow into Bluebird is via a credit card. To make it a cycle, the outflow from your bluebird has to go to your credit. You can of course pay $1000 in rent; however you would have to then pay the credit card $1000 from your bank account which negates the purpose of paying rent with Bluebird.
No need to show off. 🙂
Thanks, guys, for this exchange. Now I get it – if one only uses BB to pay for CC charges from VRs or GCs, and you max out, no way to pay rent. And you can always liquidate BB to pay the CC bills. Light-bulb moment!
We just lost power for 20 minutes, courtesy of ice buildup on the power lines. Luckily the BB check I was pre-authorizing went through just seconds before. I am now charging every device I have to the max!
Crikey – stay safe out there! Glad that we had a breakthrough from the post and the comments!
Doesn’t this post contradict your post about funding your IRA via Bluebird. You were counting the points earned by Bluebird check in that post.
Matt,
Why do you cap your monthly Amazon Payments at $990 instead of the full $1000 that you are allowed?
I make random amounts from two transactions that sum up to something from $988-$998 simply to make it marginally harder to see I am sending $1k per month- again just personal comfort level, I lose little for this and feel like it’s harder to spot and stop. But that is without any real proof it helps.
That makes sense. Over the course of the year you really aren’t leaving much on the table in terms of miles or points earned by keeping it $12 to $2 under the limit per month. Thanks.
I was just planning on trying to pay my rent via VR and BB (I never have before), and am a little bit confused why you think it doesn’t work. If I normally pay my rent via check (and earn zero points), but now use my credit card to buy VRs (and earn 5k+ points) and transfer them to BB, then pay rent via BB – I just made and extra 5k points I otherwise would not have. Am I missing something here?
Scenario 1: $5k to rent =0 points
Scenario 2: CC to VR = 5k points, VR to BB then BB to rent then $5k to pay off CC.
In scenario 2 I’ve spent the same $5k (plus fees) but earned 5k points in the process. Am I wrong?
You are right. But because you could always CC>VR>BB>CC you don’t earn for the rent, opportunistically speaking you get your $5k anyway you slice it, and 1 BB = $5k VR regardless of method of unloading the BB.
Make sense?
You should totally pay your rent with VR as you think, the post is about concepts of opportunity costs.
Ok, thanks for clearing that up. Now I’m trying to figure out if the points are worth the fees to me. Would you pay $40 for 5k Chase Ultimate Rewards Points of Amex SPG points? Or more simply, how much would you be willing to pay for those points?
I’ve thought about getting a Barclays Arrival card to get 2x points, but I’ve seen those valued at about half UR and SPG points, so that seems to negate to benefit. Would you agree with that?
I’m new to the points game – thanks for the advice!
1x is your chase example, that is profitable (making 20% gain)
2x is my minimum (making around 100% gain) cards that work: fidelity Amex, Arrival, Amex gold (gas stations)
5x is the goal, I currently get that but the card I use isn’t around now I believe (old school version of Amex blue) a 6month 5x can be had with Wells Fargo and TD
Mind that any gift card you use attract 30% tax on and above 13000 a year. You are gifting to yourself using vanilla gift card. Dont invite troubles.
Thanks
That’s absolutely not true.