Credit Cards

Using gift cards to amass rewards points

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Dear Cashing In,

I heard a story today from a lady who said that she uses her credit card to purchase gift cards, which she uses to pay her monthly bills such as utilities, house and car payments, gasoline, etc. She went on to say that by paying her bills in that fashion, she was able to rack up points just by paying her bills via those prepaid gift cards. It seemed too good to be true, but I can’t find any information on whether or not that is true. Is it?  – Ron

Dear Ron,

There are a lot of reasons to dabble in points and miles: You can earn free flights and hotel stays and make your vacations easier with perks. You can earn cash back with your charges. You can buy merchandise without spending any actual money.

Oh, and there’s this: You can tell people how wise you are for being able to do all this on the cheap. It’s nice to be able to tell people about that “free” trip you took on credit card points. Sometimes sharing that information springs from the genuine desire to spread the good word, but often it comes out of pride in one’s points savvy.

And, people being people, we are prone to exaggeration. Those “free” trips aren’t really free, of course, because you probably paid an annual fee or minimal airport or security charges, in addition to all the spending you did on your card to earn the points for the “free” trip.

My hunch is that this sort of exaggeration is what is at work here. It is true that buying prepaid cards can be a helpful strategy in amassing points and miles. However, it is not true that prepaid cards are some sort of magic elixir that easily covers every conceivable charge while you rack up tons of points or miles…Read more>>

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