Seeing this title in my Feedly app I was intrigued: “5 Reasons to Avoid Cash Back Rebate Cards”. I like cashback rebate cards just as much as rebate paper checks so how could anyone come up with 5 negative reasons and advise you to avoid them altogether? After reading the post I realized that if a leading personal finance blogger running Consumerism Commentary is not aware of how Amazon Payments can help in this situation surely there’re other people who can use this information. Plus, there are a couple of other situations where having a free Amazon Payments account can be beneficial. Let me explain.
What is Amazon Payments?
Amazon Payments is a platform for sending and receiving money/payments online. There are a couple of flavors – Personal and Business. I’ll be talking about a Personal account that I’ve been using since it was a pilot program a few years ago. It’s similar to PayPal but with one big difference – you can send and receive up to $1,000 per month charged to credit cards (including prepaid cards) per month for free. This is the key feature that makes having an Amazon Payment account attractive.
One the surface, there’s just one nice but relatively boring benefit of using Amazon Payments:
Pay for stuff and send money to people
Not much to add here and it is what it is – similar to PayPal you can pay for your internet purchases and transfer money to people. I will say that it will allow you to transfer up to $1,000 per month from your credit card to anyone with an email address for free, which would cost extra with PayPal.
Lesser Known Benefits of Amazon Payments
Convert prepaid card balance to cash
Reach spending levels on credit cards without spending
Avoid bank account fees
Earn $240 or more per year for a few minutes of work
This is what makes Amazon Payments a worthwhile addition to your financial hacking arsenal. You would actually need two Amazon Payments accounts to take advantage of these but it’s not an issue if you have a significant other who can open the second account.
Convert Prepaid Card Balance to Cash
The Consumerism Commentary post I mentioned lists 5 reasons why you should avoid prepaid cashback cards:
It forces you to spend the rebate money as opposed to a rebate check that can be deposited straight to your bank account.
Rebate cards often carry a fee, for example a $2 monthly fee after 6 months.
You’re likely to leave a balance on the card so you don’t get a full rebate. Rebate cards expire and charge monthly fees and it’s easy to forget that there’s money left on the card and lose it all in the end.
If you card is stolen you are SOL.
Cashiers don’t always know how to use them.
All are valid points but there are simple ways around them. If you got a $300 rebate card as mentioned in that post you can always use it to buy a gift card to your favorite grocery store and then use that card over a month or two for stuff that you would buy anyway. Or buy an Amazon gift card online. Or a buy a gift card to the gas station you use all the time – almost 3 tanks of gas for your Escalade! Just kidding.
However, it’s much easier to address all 5 “issues” at once by converting the rebate card to cash with a couple of mouse clicks immediately after opening the envelope that it came in. If I have a rebate card I head over to Amazon Payments, select “Send money”, type in my wife’s email address, select “Credit Card” as method of payment, type in the rebate card information and click “Submit”. Odd balance such as $27.35 doesn’t matter since I can type the exact amount to deplete the card to zero. My wife can then log into her account, see the new balance and transfer it to our joint checking. Or if you have your significant other’s login, password and permission you can do it all yourself.
Prepaid card is now cold hard cash in your bank account. None of the issues mentioned by Consumerism Commentary apply.
Bonus: I once sold a phone on Craigslist and the person offered to pay 30% more than the asking price if I took a Walmart prepaid card instead of cash. I verified the account balance by calling the number on the back of the card, then quickly rode my bicycle back to my house and immediately depleted the Walmart card down to zero using Amazon Payments. If the Craigslist guy thought about pulling a scam on me he did not see this one coming! I don’t think he did though because he let me record him on video explaining the deal we agreed on. His license plate was in the video too.
Reach Spending Levels on Credit Cards Without Spending
Have you ever opened a credit card to get bonus points or miles? Have you ever not opened one because to get those points or miles you had to spend $1,000-$2,000-$3,000 or more over a limited time period and you didn’t want to increase your actual spending just to get the bonus?
Amazon Payments can help you achieve the desired spending level by giving you a $1,000 head start each month without actually buying anything. Amazon Payments allows up to $1,000 to be charged to credit cards per month. All you have to do is send $1,000 to your significant other using the card which requires you to spend a certain amount to get the bonus. Then transfer that same $1,000 back to your bank account and pay down the card balance. You have now spent $1,000 without actually spending anything and probably even earned some additional points/miles in the process (more on that later). Rinse and repeat next month.
Avoid Bank Account Fees
Imagine you have a business checking account with Bank of America. There is a $15 monthly fee associated with this account but BOA does give you a couple of ways to avoid that fee. One way is to use your debit card just once per month. Spend a couple of dollars on some mail supplies for your small business and you get a free business checking account.
But recently BOA decided to change the rules on you. They now want you to spend $250 or more per month in order to avoid the $15 fee. Problem is you rarely spend that much on your business. What do you do?
Go ahead and add a recurring monthly appointment on your calendar to send $250 with your business card to your significant other via Amazon Payments. Then transfer the same $250 to your joint checking and pay off the business card. No more account maintenance fees. Even less work than before when you had to actually go somewhere to buy something.
Earn $240 or More per Year for a Few Minutes of Work
If you have a credit card that earns points or miles (why wouldn’t you?), each dollar you spend should be equivalent to at least 1 cent in cashback. Spend $100 get $1, spend $1,000 get $10.
Knowing what you now know about Amazon Payments you could charge $2,000 to 2 credit cards you own with your significant other. Send $1,000 – transfer to checking – send $1,000 – transfer to checking – pay down both cards. At the minimum 1% back you’d have $20 per month or $240 per year for a few minutes of your time.
It’s not much but consider what it can get you. How about free cell phone service for both you and your significant other? Airvoice Wireless has a great $10 per month plan on AT&T network. Use your cashback to pay for 2 lines and you’ve now reduced your cell phone bill to ZERO. And yes, you can use a fancy smart phone or iPhone with this plan – just get an Airvoice SIM card and port your number.
These are just some of the ideas on how one could use Amazon Payments besides treating it as a substitute for PayPal. I don’t know if these would be considered loopholes to be closed by Amazon at some point but until then it’s all out there. If you know of any other ones, comment below and I’ll add them to the list.