Be Careful When Using Debit Cards to Buy Money Orders to Earn Miles

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I’ve written earlier about debit cards which earn Alaska Air miles and which earn Delta miles.

In my experience, both of these cards earned miles when I experimented with buying money orders from different institutions as a PIN-based transaction.

To be clear – I do NOT recommend buying money orders and depositing it back into your bank account to earn miles.  Such activity is easy to trace, and in large amounts will be reported to the government, and there are reports of folks getting their accounts closed for this abuse.  Bank of America has blacklisted some folks from ALL of their products (bank accounts, loans etc.) including their credit cards which you may be able to get again (…and again).

Some of you will disregard this, but do so at your own risk.

But this could be a way to earn miles for genuine payments such as mortgage payments, student loan payments, or any payments where you write a check, but don’t earn miles and points.  This isn’t a revolutionary idea and such thoughts have been around for years.  Over the years, buying money orders with a debit card have earned miles and points, and sometimes they have not earned miles and points.

Terms & Conditions of the Debit Cards

Both debit cards appear to have restrictions in their terms and conditions against earning miles.

The card which earns Delta miles says (bolding mine):

Only PIN Point of Sale [POS] and signature-based purchases (including small dollar purchases that do not require a signature), Internet purchases, phone or mail order purchases or automatic bill payments qualify for mileage earnings. Cash advances, cash portion of a PIN POS sale with cash back, ATM transactions, payments for stored-value cards, wire transfers, money transfers, quasi cash, and traveler’s cheques do not qualify.

The card which earns Alaska Airline miles says (bolding mine):

We take the total amount of POS [point of sale] purchases for a calendar month and subtract any (a) credits related to POS purchases, (b) other adjustments to your deposit account related to POS purchases, (c) cash back from a POS transaction, (d)  (d) quasicash transactions, which are transactions convertible to cash and include the purchase  of money orders, travelers checks, foreign currency, cashier’s checks, gaming chips, and other similar instruments and things of value.

But in my experience – and I’ve done this for only ~$200 on each debit card – I have earned miles when I bought money orders at these establishments.

However, this could stop anytime since the terms and conditions are written to prevent earning miles for buying money orders.  In addition, this is likely unprofitable for the banks involved, and I suspect the ability to earn miles for purchasing debit cards is on its way out.

Unfortunately, I haven’t been able to buy a money order with a credit card yet, but let us know in the comments if you’ve been able to.

Where Can You Buy Money Orders With a Debit Card?

In my experience, you can buy them at many places including:

The Worlds Largest Retailer.  I went to the Money Center and bought  money orders. Certain Grocery Stores.  I’ve personally verified this at the store below which is part of the largest grocery chain in the US.  Some grocery stores refused to sell me money orders with a debit card, but each store has its own rules, so ask around.

Post Offices:  Places where you send mail and buy stamps also sell money orders. Gas Stations.  Some gas stations refused to sell me money orders with a debit card, but each store has its own rules.

The gas station below is part of the same large grocery chain above and sold me a money order with a debit card.

I’m sure there are other places (drug stores, small grocery shops, etc.) where you can buy money orders with a debit card, so ask around.

Be Careful

Buying lots of money orders will arouse suspicion – at the banks and at the places you buy them from.  That’s because anyone can buy money orders and deposit them in banks and “launder” money.

If the banks get suspicious, they may file a Suspicious Activity Report to the Financial Crimes Enforcement Network.  Or they may shut down your account without allowing you to explain the transactions.

Standard Chartered just paid $340 million to settle a money laundering charge with regulators so the stakes are high with banks likely to shut down activity which they feel is too risky.

In addition, most sellers of money orders will ask for identification and take down your social security number, driver’s license and other identifying information if you usually attempt to buy more than $3,000 in money orders at a time, and most will not sell you more than $10,000 worth of money orders a day.  But you shouldn’t need such high limits if you use them for genuine transactions.

Bottom Line:  Using debit cards to buy money orders to pay your babysitter or to pay your mortgage or student loans could be worth it to earn miles.  But be careful and know that the repeated purchasing of money orders can be suspicious and that you could have your bank account closed.

Tomorrow, we’ll look at other ways to transfer money and earn miles with debit cards, without leaving the house.