Sunday, February 22, 2015

American Express for Target - Emergency Manufactured Spending, but Slightly Better

Image result for american express for target

Update: you can no longer use credit cards to load this product.

It's always good to have a few tricks up your sleeve for Manufactured Spending.  If you need to spend a few thousand dollars for a credit card sign up bonus and you don't have access to more lucrative Manufactured Spending options, how can you do it quickly and inexpensively?  What happens when RedBird no longer allows credit card loads and you were banking (haha, get it?) on using that?  This is where your Emergency Manufactured Spending comes in.

In addition, some techniques like Nationwide Visa Buxx and American Express Gift Cards are not useful with Citibank credit cards since they will code the transaction as a Cash Advance.

Introducing American Express for Target.  Well, not really introducing because it has been around for a few years, but I've never talked about it because it has always been less lucrative than other methods.  Now that I go to Target twice a month anyways to load RedBird, American Express for Target is more time efficient than it used to be so I am definitely using it more.

The Basics

American Express for Target is a prepaid card.  You can load funds at Target with a credit card and withdraw money via ATM or regular spending.  There are fees involved in both loading and unloading when you use an ATM unless you have access to a free ATM (Check out Doctor of Credit's Post on ATMs here).

Initial Purchase

You must purchase a temporary card at Target, which can be loaded with up to $500.  Then you register that card online to get a permanent card sent in the mail which can be loaded at Target.


Each social security number can have up to 2 American Express for Target cards.

- Load up to $1,000 in any 24 hour period.  $3 fee per load.
- Load up to $2,500 per card every 28 days.  $5,000 if you have 2 cards.


- Regular spending.  Not worth it.  You are losing out on other rewards when you do this.
- ATM Withdrawals - You are allowed one ATM withdrawal per month up to $400 free of fees from your card. The ATM you are using will still charge you.  After that, each ATM withdrawal is $3.

Math Time!

Ok, so here comes the math part.  It's time to figure out whether this is a useful method.

We'll start with a few assumptions:

1) Using a miles earning credit card
2) Loading $2,000
3) The ATM charges $3 for withdrawals of $400.

Loading - $2,006
Unloading - If you wait 5 months, you can withdraw for $15 in fees.  Withdraw all of it in one month for $27 in fees.

Total Fees - $21 if you wait over 5 months.  $33 if you do it in one month.  In addition, you are also getting 2,006 miles/points.

$21 is a very reasonable sum to pay to hit a spending threshold of $2,000, especially since you are getting the points for the original $2,000 of loading.   If you use a 1% cashback credit card, you will get $20.06 to offset the $21 in fees and your total out of pocket costs are negligible.

The actual calculations will change depending on the fee of the ATM machine you use. 

Is it ever worth it without a signup bonus?

Instead of using this to reach a spending threshold, is it ever worth it for standalone manufactured spending?

If you used a Fidelity American Express instead of a 1% or point card, you get 2% cashback on every purchase.

Instead of $20.06 in rewards, you will get $40.12.  Take away the $21 in fees and you actually make $19.  The problem is that it takes 5 months, 2 trips to Target and 5 trips to the ATM.  Not very lucrative.  If you are going to Target anyways and you are going to the ATM anyways, maybe it it is worth it, but probably not.  American Express for Target is a useful tool, but I only use it for sign up bonuses.

More information here:
Doctor of Credit
Point Chaser
Flyer Talk