Gift Card Churning with $0 Out of Pocket Cost

Update: I’ve corrected the post, as a reader has pointed out Paypal Business Debit transactions don’t qualify for 1% cash back. I misread the cash back amount on my recent PayPal statement and was under the impression debit transactions did in fact earn cash back, which is not true.

For a while now, many of you have been generating points and miles by purchasing American Express gift cards and liquidating them via PIN-enabled gift cards and Target Prepaid REDcard (aka Redbird) loads. Unfortunately, that has become increasingly difficult and expensive, with most shopping portals limiting cash back to gift cards purchased in $200 denominations. While Extrabux still offers 1% cash back on American Express gift card purchases, this method still involves spending $34.90 – $50 per $1,000 spent. Then there’s the added obstacle of liquidating these PIN-enabled gift cards via Redbird or money orders, since cashiers are becoming increasingly vigilant about enforcing the store policy of not accepting gift cards for such transactions.

With manufactured spending becoming increasingly difficult and expensive, some of you are already looking for alternatives. The next big thing hasn’t landed yet, but in the mean time if you’re stuck with excess Amex gift cards, you can liquidate them efficiently and eliminate most out of pocket costs with PayPal My Cash cards. For those who are unfamiliar with PayPal My Cash cards, they can be purchased, mainly at drug stores, in increments of up to $500. With a $3.95 fee, they’re cheaper than most PIN-enabled gift cards offered nowadays.

Paypal My Cash Reload Cards

Paypal My Cash Reload Cards

Of course PayPal My Cash cards aren’t PIN-enabled. Instead, you have to load them to your PayPal account. This has several advantages:

1. Now that more Target stores are checking the cards being used for Redbird loads and forbidding anything that doesn’t have a name on it, you can use the Paypal Business Debit card instead. The card has your name printed on it and comes with a PIN, so you’ll have no problem using it at Target.

2. Some Walmart associates will ask to see the card you’re using to pay for your money order. They will then inform you that PIN-enabled gift cards aren’t allowed. Additionally, the Vanilla Visa and MasterCard gift cards available at drug stores can’t be used at most stores for purchasing money orders. So you can use an American Express gift card or mile-earning credit card to purchase Paypal Reload cards instead of Vanilla gift cards, without worrying about unloading the funds via Walmart money orders.

3. You can eliminate all out of pocket costs while earning miles. On a $4,000 American Express gift card order you can earn 1% cash back through Extrabux, which comes to $40 (though be aware that some readers have reported issues with getting these transactions tracked). Currently, Extrabux has an offer code that eliminates either the purchase fee ($3.95 per card) or shipping costs ($5.95 – $8.95). Liquidating the Amex gift cards via Paypal Reload cards would incur an additional $31.60 in fees. Once the PayPal My Cash cards have been loaded onto your account, you would use the Paypal Business Debit Card to off-load the $4,000 balance onto your Redbird card. In all, you would earn $40 cash back and incur $37.55 – $40.55 worth of fees, covering pretty much all the fees while minimizing hassle. 

You can generate an additional 2% cash back by using the Fidelity Rewards American Express credit card for the initial Amex gift card purchase. Using the Barclay Arrival Plus World Elite MasterCard instead would generate 2.2% in travel rewards, an amount that drops down to 2.1% in November.


All of that being said, this isn’t a long-term manufactured spending strategy. Paypal is notorious for shutting accounts down and then holding onto the funds for months before releasing them back to the accountholder. I don’t recommend going this route unless you’re ok with the possibility of getting your Paypal account shut down and have a back-up plan for paying off that $4,000 credit card bill. 

I’ve been using PayPal My Cash cards sparsely over the past few months to liquidate Amex gift cards. It’s only this month that I’ve managed to hit the maximum $4,000 load limit. So far there have been no repercussions, but that could well change and I’m very quickly unloading my Paypal balance via money orders and regular spend to reduce any potential blowback.

There’s also the possibility of Extrabux not paying out the 1% cash back, but if you were to forego the shopping portal altogether, churning PayPal My Cash cards would still be a cheaper and easier alternative to other PIN-enabled gift cards.

Have you used Paypal Reload cards for manufactured spending? Please share any experiences with account shut downs in the comment section.

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Ariana Arghandewal


  1. “Once the PayPal My Cash cards have been loaded onto your account, you would use the Paypal Business Debit Card to off-load the $4,000 balance onto your Redbird card. This would generate an extra 1% cash back paid out by Paypal.”

    This is incorrect information. You have to select debit while loading redbird in-store now, and debit txns with pin do not generate 1% cash back. Only the online loads ($200 per day) would generate 1% back, but they are limited to $1k/month.

  2. i highly would not recommand using paypal , I have made a notorious rept getting all 4 of my paypal shut down and lock my money for couple months. it was terrible experience.

  3. I did exactly this for several months. Was loving it. Then all my PayPal accounts were shut down, just like everyone said on FT thread. Then I had to scramble to get a new PayPal account set up. They still have my money. I HIGHLY recommend only doing this if you understand this WILL happen to you. It is not fun. Life is too short. In hindsight for me personally I wish I did not do this.

    • It’s definitely not sustainable and only viable as a short-term option. I’m totally expecting a shutdown at the end of this month even though I’ve barely used it much.

      • I’m glad you are pointing out the risks. It might last three or four months but the way they hang onto your money for months after they close your account makes this not worth it to me. Pretty much everyone I know that has used it has been shutdown and had to fight to get the money back. Too stress inducing for me.

        • Yes, it’s definitely not a long-term strategy. For me, it was an easy way to off-load those last few thousand in Amex gift cards, since Redbird has become such a hassle.

  4. Until you get something like this: (which landed in my inbox 🙁


    We’re not sure you’re aware but it appears the MyCash has been used for deposits to your PayPal account, and those deposits have been withdrawn to a bank, online bank, ATM, or prepaid card.

    The MyCash feature is for making deposits to your PayPal account for retail purchases.

    If we continue to see this activity of using the MyCash with your PayPal account for cash withdrawals, we may have to limit or close your PayPal account.

    If you think we’ve made an error, here’s how to contact us.

    Log in to your PayPal account.
    Click Contact at the bottom of the page.
    Click Email us.
    Follow the instructions to complete the steps.
    We value your business and appreciate your attention to this matter.

    PayPal Account Review Department

  5. Where can you buy the MyCash card with a credit card, Amex GC or VGC? I’ve tried CVS and 7-11 and both told me that only cash is accepted. No credit or debit cards.

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