For a few weeks now, I’ve been sharing my manufactured spending activities, which have mainly consisted of unloading Amex gift cards onto Target Prepaid RED (aka Redbird) and Amex for Target cards. With the 1.5% cash back earned from shopping portals, this was not only an easy way to manufacture spend, but a profitable one as well. On Tuesday, word got out that Target would no longer accept credit cards as payment for Redbird loads, starting May 6. I had just returned from making the rounds at local stores when I got the news. We have since learned that the new policy has in fact been implemented, though debit card loads are still permitted.
When I visited the Davis Target store on Sunday, the cashier looked at the Amex gift card I was using to load my Redbird card and decided to ask a manager if it was an acceptable payment method. He responded that it was in fact acceptable, “though we may change that in the future.” I certainly didn’t think “in the future” meant three days later.
When I heard the news on Tuesday, I made a 45 minute drive out of town to load my remaining Redbird cards. In the past, I was always careful about not loading too many cards or using too many payment forms at once. This time I didn’t care. I needed to dump $6,000 worth of gift cards and I needed to do it right then and there. I explained to the cashier that I was loading more than one card and she said it was fine, though she stared long and hard at the second Redbird I handed her. I explained it was the last day to load these cards with a credit card and her face lit up, “Oh, that explains why you’re like the fourth person in a row to do this!”
She patiently loaded all of my cards and I told her I found the new policy strange because there will be very little difference between the Target Prepaid REDcard and the Target RED debit card – one will be linked to your bank-issued debit card and the other can be loaded with one. She explained that while she agreed it made no sense to have two products that are essentially the same, she understood why they were stopping credit card loads. Target is able to offer a 5% rebate on purchases made with the RED cards because they’re saving money on credit card transaction fees – passing those savings on to the customer. If customers are using credit cards for these loads, Target has to fork over 5% savings on Target purchases and pay transaction fees of up to 3%, which leaves them in the red (no pun intended). Of course most of us weren’t taking advantage of the 5% in-store rebate, but since we were unloading the funds through bill pay, it still wasn’t profitable for Target.
Regardless of why Target did away with credit card loads for Prepaid REDcards, if you have a mile-earning debit card or PIN-enabled gift cards, you can continue manufactured spending with Redbird. The downside, of course, is that it won’t be free and chances are you can’t buy PIN-enabled gift cards with Amex gift cards (at least not in my experience) – which would have cancelled out the gift card fees and resulted in a profit. Eventually, Target may go the way of Walmart and ban gift card loads as well.
For the time being, I’m done with manufactured spending. It’s going to be pretty time consuming and while my schedule as a freelance writer is much more flexible than when I had a full time job, it’s time to focus on more important things. I’ve got grad school on the brain along with a writing project I need to move forward. So the timing of this new roadblock is perfect, forcing me to focus my efforts on something more productive – at least until another easy manufactured spending scheme comes along.