Critics have come out against the MileagePlus Go Visa Prepaid Card early and often. But I think many of their criticisms are unfair and don’t accurately reflect the wider market for this product. This card is a great value for some and a terrible value for others, but since the rest of the world seems to be covering how bad this card is – I’d like to defend the product.
To be clear, I greatly respect the two writers that I reference in this post, Gary Leff and Seth Miller. We just disagree that the card is a bad value for most/all consumers.
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It’s Great On Merit
The card offers customers up to 2,500 United MileagePlus miles each month, 30,000 maximum per year. It doesn’t require a credit check and is open to absolutely everyone. There simply are not enough offers for clients with these minimal requirements and there are a lot of customers that fall into this category, customers that are not going to fit into the rest of the credit card/mileage earning space. While there has been American Airlines debit card accounts, Delta Sky[pesos] debit card accounts, and checking account sign up bonuses from just about all the carriers including Alaska and US Airways, they have all but abandoned this space.
This card helps the 7% of American households that are un banked (do not hold a bank account of any kind) and the 19.9% of American households that are underbanked (not fully utilizing banks to administer their financial needs). Those figures (19.9% of Americans in 2015) would have represented a minimum of 6.37 million Americans but probably more as those figures represent households (there is usually more than one person per household) and not individuals.
Here is what the FDIC had to say about prepaid cards following the financial results of 2015:
“Use of prepaid cards was most prevalent among un banked households. An estimated 27.1 percent of un banked households used a prepaid card in 2015, com pared to 15.4 percent of underbanked households and 6.9 percent of fully banked households.”
Households in these categories need products that serve their situations better than banks can. They need flexibility, predictable fee structures and accounts that do not require a minimum balance. It’s not just un banked and underbanked households that use prepaid cards though, the FDIC points out 6.9% of fully banked households also use prepaid cards.
The Claims Against the Card
Some of the criticism has been directed at the annual fee of $85/year. I will address that shortly, but other concerns revolve around the nature of earning the points, transactions must be made by signature and not PIN. I would agree that casual users of the card may have difficulty ensuring all of their transactions are made by signature and not PIN and therefore the earning potential could be misleading for those who do not read the finer points of the terms.
I am also disappointed that there is a limit on monthly earning of 2,500 points per month, but it does pay 5% interest on the first $1,000 held in deposit in the account. Some consumers could offset up to $50 of their $85 annual fee by holding just $1000 in their account.
Gary Leff does address that this may work for some customers but I sense a bit of sarcasm in his statement when he implies just how many people might be a good fit:
“I’m not prepared to say that “absolutely no one” should get the card and that it’s “a bad deal.” I think that’s wrong. But it’s useful only for a limited set of people.
This card is great for all six people in the country who are simultaneously un banked (the card pays interest that helps offset its fees), who cannot get a credit card (which is going to have stronger earning potential), but who still spends enough money to make the rewards on this card worth the cost.” (Emphasis mine)
Seth Miller goes further about exactly who should get the card:
“No one. Absolutely no one. The card is a bad deal. You should not get it.”
But what about me? For reasons below, I may add it to my wallet, deposit the $1,000 and carry out the signature purchase requirements for far cheaper than the Chase credit card option.
Every Account Has Caveats
More in the debit card space than for credit cards, every product has its quirks. Some customers were known to have utilized their credit cards to purchase money orders or coins from the US Mint using debit and credit cards and turn those funds back to their checking accounts. Others were purportedly running gift card loads and AMEX Bluebird top-ups through the SunTrust Delta debit to generate miles.
With each of these processes there were rules to follow. If you were to load funds via the SunTrust card for example, the charge had to appear a certain way on the payment system, Wal-mart loads at the register would facilitate this. If done incorrectly, SunTrust accounts were frozen or shuttered.
Banks often offer incentives for new customers in the form of either cash bonuses into their accounts or points in the bank’s proprietary reward system. Sometimes these are redeemed for gift cards, and in the old days bonuses might have amounted to a toaster. Usually, new accounts that offer bonuses require some form of action to engage and entrench the new customer. Those actions may include a certain number of transactions made on a monthly basis for an extended period or direct deposits of given amounts over several months. Failure to meet those thresholds will result in forfeiture of the bonus but will not refund monthly or annual maintenance fees for the account.
It’s Great For Those With Bad Credit
I get it – everyone has an 800 score so why waste our time on cards we don’t need or want? Don’t believe me? Just ask Seth who suggests, let them eat cake:
“The $85 annual fee [of the Mileage Plus Go Visa Prepaid Card] is only $10 less than the MileagePlus Explorer Credit Card. And for saving that $10 you get a significantly reduced earning potential and none of the other ancillary benefits that come with the credit card. No free checked bag. No priority boarding. No increased award availability, but that’s probably okay because the card also comes with strict caps on earning potential.”
That’s not everyone’s situation. While I find myself in the high credit score category now, a few years ago it was different. I had a ton of knowledge about miles and points from reading blogs like Gary’s, Seth’s and this one, but my poor choices when I was younger left me a credit score in the mid 500s.
It took a lot of work to rebuild and repair the damage I had done when I was barely 19. I knew that there was a penalty for my bad behavior (or youthful ignorance) and was paying it in every other aspect of my financial life. There are simply higher costs to people with bad credit, but despite my credit issues I wanted to participate in the miles and points hobby. I would gladly accept a higher cost or lower earnings rather than total exclusion. The products that offered me that opportunity are no longer an option. This is.
Seth’s assessment ignores the community of people with bad credit that may be attempting to rebuild it and states:
“Okay, so not everyone can get the premium card. That’s usually because of credit score issues. Consumers in that boat should be working on improving their credit score and doing so with products that carry a significantly lower set of fees than this does.” (Emphasis mine)
Rebuilding credit happens independently of debit and checking activities. Assume for a moment that you are such a person who made the same mistakes I did in my youth, realizes the mistakes and starts on a path of rectifying those errors. The best remedy for healing those credit wounds is improved credit behavior over time. While that process is taking place, it makes sense that consumers will want to start earning rewards for their transactions and this card makes that possible.
It’s Great For Those With No Credit
I counsel many friends and family members about credit who have been left in the dark by an educational system that simply doesn’t address credit, at least it didn’t for me. Some of these contact don’t yet have credit because they have been scared to apply or heard horror stories from their parents who may have made their own mistakes. This group, typically younger and in college or recently graduated, don’t have the payment history (positive or negative) to justify moving off of a starter score of about 650. But just because they don’t have bad credit doesn’t mean they can be approved for a card.
For those that simply can’t get approved due to lack of history or a low starting score, this product is an excellent option to start building a mileage balance. In truth, this might be the best behavioral way to introduce a newcomer to credit cards and how to use them. If they think of money loaded on the card as already out of their checking account, it will be easier to avoid getting into financial trouble later when credit lines are available.
It will also start to reinforce the notion that sometimes benefits cost money (in this case, $85/year) but that every transaction should yield you something back. Before you laugh and scoff at that notion, who here can raise their hand and say they don’t know someone who uses their debit card for everything despite having no real reason to avoid reward-earning credit card products?
I didn’t think so…
It’s Great For Those Limited By 5/24
Chase offers the United MileagePlus card and offers up to 50,000, no, wait, 60,000 miles on their current new applications! WOW – unless you are ineligible because you have more than five new credit accounts in the last 24 months. For those who may think that five new credit accounts in 24 months is a lot, keep in mind that if your spouse added you to their accounts, each one will go against your allotment of five in two years. It’s not hard for married couples to exceed 5/24 especially when store cards (Sears, Best Buy, Kohls, etc.) are factored in.
There are an awful lot of people who have been affected (afflicted) by Chase’s 5/24 rule. While I understand the reason for Chase’s rule and don’t necessarily disagree with their justification for implementing it, the rule still hurts. It prohibited me personally from starting new accounts with the bank for products I really wanted and if I were still outside of 5/24 eligibility, perhaps this would be the only way to accumulate United MileagePlus miles for purchases outside of shopping portals and the Dining program. Something even more important to me now that United status matched me to 1K.
Banks Don’t Make Money With Debit Accounts
Thanks to the Durbin Amendment there are now limitations on what banks can earn for debit card transactions as opposed to much higher fees for credit cards. Similarly, PIN transactions yield lower revenue for banks than do signatures because of their reduced liability. With debit cards, banks are not making money on high interest charged to consumers who choose to carry a balance like they would with credit card customers.
There are lots of costs for the banks (NetSpend in this instance) to offer these products. It costs money to make and market the physical cards. It costs money to service customers and their transactions. While this particular card is prepaid (the bank can make money by lending out balances and earn interest on that money) earnings from those balances are far lower than consumer credit lines.
Therefore, debit accounts that have earning benefits like this one require an annual fee of some kind to offset costs. Annual fees scare off casual users that are expensive for the bank to host but yield little revenue.
By comparison, these fees are quite low. Gary Leff has long discussed the benefits of BankDirect’s Mileage Checking account (American Airlines). BankDirect’s Mileage Checking Account offers consumers the chance to earn as much as 5,000 miles/month on their balances of $50,000 but comes with a hefty price tag of $12/month or $144/year. When factoring the loss of interest for this low yielding account (BankDirect offers .10% + miles) vs. higher earning checking and savings options 1-3.5%, the account really costs between $194-1,894/year for 60,000 miles. The MileagePlus Go Visa Prepaid Card cost of $85 for 30,000 miles/year is on par or cheaper than BankDirect’s option. But as Gary has noted, not everyone has $50,000 in savings to tie up for $144/year to earn the 60,000 miles.
SunTrust’s Delta Debit was not necessarily cheaper. It also charged $12/month ($144/year) but didn’t have an upper earning limit while it was available initially. They no longer offer this account but it goes to show that in the new reality of lower yields for debit account transactions, $85 is not entirely unreasonable for the category.
Doing Research, Pulling Trigger
Like any other mileage earning opportunity, it will be important to conduct some research. While I am eligible for a full United card from Chase, I am not sure that I want to burn a new credit account that will count against my 5/24 eligibility. If United offered me the chance to purchase 30,000 miles from them for $85, I would do it. In fact, I would do it for everyone in my family – the math just works. I think that’s really the point. For me, the juice is worth the squeeze, perhaps for critics of the card, it isn’t.
In the coming weeks I will seek out opportunities to run large single transactions at vendors that do not have chip functionality and require signature transactions. Then I intend to get the card for everyone in my family and maximize the benefit every single month.
Am I totally off base with this? Do you find that the offer is predatory and deceptive in nature or beneficial for a certain group of people?
You do miss one important point – it’s not $85 for 30,000 miles, it is $35 (net the $50) plus $30,000 in spend. If there are ways to easily MS the $30k in a way that couldn’t be done with a credit card, then it is a good deal. Otherwise, it needs to be compared to a 2% cashback card (as those are available with no annual fee and relatively easy to get) and it is $635 for 30k miles, a much worse proposition.
If you can get a 2% cash back card with bad to not very good credit, let me know.
@Eponymous – YES, YES, YES! That’s the heart of the matter for me! I’m not claiming it’s a bad offer for everyone, or a good offer for just six people, but I am also not saying it is a great offer for everyone. There simply aren’t enough options for those that find themselves outside of the instant-approval credit bubble. More products are better in my opinion, even if they are not a good fit for me personally.
@Ben – I did address it but phrased it slightly differently: “Some consumers could offset up to $50 of their $85 annual fee by holding just $1000 in their account.” And you are correct that it is a good deal as long as it can be done with signature purchases to equal the $2500/month in spend.
To your point regarding cash back cards, that is where we diverge. My point in the post is to demonstrate that there lots of people out there that might not qualify for credit cards or might not want take on a new one, and for them, if they don’t have a 2% cash back card in their wallet, the opportunity cost is untrue because they didn’t have the opportunity. I assume that some users may not have access to new credit cards (think even of those preparing to buy a house) but still want to generate points inexpensively and for them a cash back option isn’t a choice, so the valuation wouldn’t apply.
I wouldn’t call the card predatory and deceptive. I’m a little skeptical, though, of the size of the subset of people in the “unbanked” that actually care about miles & points, and are sophisticated enough to read through the fine print to maximize their mileage earnings. While I do know people who irrationally cling to debit cards, or that have bad/no credit, I can’t think of any who would know what to do with, or even care about, 30,000 MP miles. Seems like your target audience is limited to perhaps college students just starting out with points nuts in the family (my son in about 17 years maybe) and individuals with temporary credit issues that already play the game (i.e. small business owner whose venture went belly up).
Long way of saying, I don’t disagree with your point that the card can provide value to certain groups of people. I’m not sure, though, that there are enough of those people out there that would be willing to fork over the $85 fee to keep this product around very long.
@Meanmeosh – I guess that really is the true question for me too – how big is their market and what will uptake of the product look like? I do personally know people that are operating solely on debit cards and for them this might be something to consider. Though the signature purchase part of the deal makes it more likely that it will be MSers that make this card succeed or fail.
This product is not predatory. It is not deceptive. The use case is limited COMPARED TO ALTERNATIVE PRODUCTS that people can reasonably get.
1) Get Bluebird, save the $85. You give up United miles but you need meaningful spend to earn United miles worth more than the fee net of interest. And the card has plenty of other fees that Bluebird doesn’t.
2) It’s not an offer of 30k miles for $85, it’s 30k miles for $30k spend on the product parceled out evenly across each month [exactly $2500 per month, anything over that in a month in unrewarded and anything under that you don’t get 30k miles]. So you have to compare to the opportunity cost of that spend.
It’s not a terrible product, but in nearly every use case there’s a better product alternative. THAT is my point in saying that this card is best for about half a dozen people. You have to thread the story line very narrowly to come up with a scenario where this card beats all others.
@Gary – Thanks for your comments and for writing your post. I think contrasting and comparative analysis helps not hurts the community.
1) Bluebird doesn’t earn any miles or points so the point of getting something for your spend doesn’t really help with Bluebird. It solves only the unbanked issue, which I agree is a good solution for those without a financial institution.
2) I clearly laid out that the card earns 2,500/month for a total of 30,000 miles over the course of a year, but the opportunity cost only applies to people who have other credit available and could or would use another card. While it feels like everyone falls into that category, many don’t.
I am not suggesting that the card beats all others, I am suggesting that it is not a bad card for some people. Could you demonstrate a debit card option or checking account that provides the same value to the same market? If we value United and American miles equally for the purpose of this exchange (I’m sure there could be a whole new thread on which is worth more) then the BankDirect card and this card are on par with each other at a cost of $.0028/point. They are playing to different markets with essentially the same offer. BankDirect wants savers with $50,000 in the bank and at a cost of $144/year for the $50,000 in lieu of savings. This card wants people that may only be able to hold $1000 in the account, but will use the card all year and pays 30,000 points for $85.
Thanks for quoting my analysis. Bonus points for interpreting only half of what I wrote and then calling it misguided.
Points are great. But this approach to earning them is overpriced (you’ve ignored load and unload expenses and time required for such) and the net result for someone using this as their sole means to earn points is a tiny stash that isn’t really worth more much at the end of the year.
The unbanked or underbanked are unlikely to have $1000 lying around that can be left idle in the account to earn out the 5% interest. If they did have that spare cash available they’d be far better suited by finding a credit union or other small bank that would allow them to rejoin the financial markets rather than focusing in the short term on a handful of points.
Similarly, you mention those “afflicted” by 5/24 rather than acknowledging that the behavior of those applying for so many cards contributed to their current position. They chose an unsustainable approach based on the (very, very bad) advice of bloggers/advertisers who were looking to get paid, not help readers. At a minimum the loyalty/obligation there was split. And those who find themselves suddenly unable to obtain cards from one major issuer can still avail themselves of other programs/banks if they actually need credit. But surely you cannot believe that there is some sort of entitlement to earn points from Chase with no limits or repercussions.
Finally, your statement that it will simply be a $85 one-time transaction to earn 30,000 points is woefully misleading. In fact, I’ll go so far as to call it a lie. That is not the proposition at hand and you do a disservice to those reading this post to claim otherwise. By ignoring opportunity cost of that spend elsewhere, the fees associated with the card and the time involved in MS efforts you’re belittling readers, not helping them.
@Seth – I didn’t call you misguided, and I quoted your whole statement regarding who should get the card. I think if you re-read it you will find it comes off a bit Marie Antoinette given the context of to whom the card is directed.
You mention load fees but there are zero load fees on direct deposit so that doesn’t really apply. But again, you assume that a tiny stash of 30,000 miles doesn’t mean anything. To someone who can’t go out and get any card they want (don’t have credit yet, have bad credit, or really want Mileage Plus miles but are over 5/24) – it amounts to a lot.
Let’s clarify the 5/24 affliction comment. First, it was in parentheses to be cheeky, “affected” was my primary term. Secondly, the history of 5/24 is that the rule was unstated for so long before Chase finally came out with it. For many of their own cardholders they changed the rules but didn’t tell anyone. Is it cheating if the rule changes in the middle of the game and no one tells you about it?
Neither you (at last check) nor I make money off credit card referral links. And I agree that the tone from our peers has been to get every card because it is in the writer’s best financial interest. We don’t need to argue on that point. I think some of the behavior from other bloggers has become irresponsible, though having some mileage-earning credit cards is how many of us and our readers reap the rewards we do. We need the info about the offers, but not the endless encouragement.
To your point regarding entitlement to Chase. I do not believe that Chase owes me or anyone else anything at all. My point was more that Chase was/is continuing to send out card offers to customers that are ineligible and then denying them all the while knowing they will never be approved because of the rule. I think we can agree that it’s more likely a poor use of big data (or lack to use it at all) than nefarious, but all the same it remains annoying.
I never said that it would be one transaction. you have accused me of misquoting you, so let’s set the record straight about this: “If United offered me the chance to purchase 30,000 miles from them for $85, I would do it.” You are stating that this leads readers to believe that there is an offer for a single transaction despite me laying out that it is not “The card offers customers up to 2,500 United MileagePlus miles each month, 30,000 maximum per year.” That’s the first line of the text after the intro. I could amend it to state: “If United offered me the chance to purchase 2,500 miles per month for a cost of $7.08 every month for an aggregate of 30,000 miles per year and $85” but I won’t because that’s ridiculous. I have stated the facts, and I am not lying to anyone about anything.
And I will say it one more time but since you seem to be missing the point, I will put it in bold, not everyone has the same opportunity to manufacture spend, some need a non-credit product.
Can you name a single NON-CREDIT product that is better than this one?
I view it as $30k in spend should get you 2% cashback without a fee for a net of $600. Minus the $85 fee and add the $50 in interest back, $565/ 30k miles = 1.83 cents per mile.
That’s also assuming you hit the $2500 exactly every month without going over.
But at those prices, you’d probably just be better off buying miles during a sale.
Given all of the award miles lack of space shenanigans, part of me thinks it’s probably just easier to get cashback to use for flights and not have to deal with all of the hassle.
Sorry it should be 1.88 cents per mile.
@Danny – For those with cash back options, I agree. But for those with limited or no access to credit, or those shunned by Chase due to 5/24 this allows those people to earn miles in a way they couldn’t before. At your MS cash back calculation, I agree completely that they should either just buy the miles or more likely – just buy the ticket with cash.
But the assumption from some was that this was not a good deal for anyone, or for just 6 people, and my argument is that the pie is much larger than that, and MS for those folks isn’t really an option.
Purely on this offer, the cost per mile is $.0028 assuming $2500/month in spend and no $50 rebate due to $1000 balance. If we factor in that scenario, the cost per mile is $.0011 – that’s pretty hard to beat.
With debit cards, banks are not making money on high interest charged to consumers who *CHOOSE* to carry a balance like they would with credit card customers.
@Eric – We agree, no?
I also got the card to play around with — will see if it is worth the squeeze with certain transactions that aren’t good for credit cards. So far coming up against road blocks but hope to find something soon. The T&C state that you can cancel and prorate the $85 fee if you cancel within 3 months, so I plan on doing that if I can’t figure out easy ways to earn miles. I’d love to see what we’ve tried between the 2 of us.
@Amol – I hadn’t seen the proration (nice find). I am going to order one up when I get back from my current trip and I would be happy to update with options for hitting the $2500/month. It’s certainly worth the $20 to refund and cancel if it doesn’t work out.
How’s the mileage go plus card now have you tested it is it worth it
I am trying the card. Just got it yesterday. I’m not un banked, but I have a pretty close to debt-free life (paid off my mortgage, only have 2 real credit cards and one is in a different country). The purpose of this card: I travel to and from Australia/US a lot and for me and I’m a United Premier member. I’m using the card rather than my “real” bank account’s debit card to purchase long-haul United flights and hotel stays so that I can keep my “real” checking account safer and less exposed. I like the idea of a floating amount of cash to keep in it as well, so I can top up when I need to for additional purchases.
For me, you’ve made a great point: $85 buys me 30,000 miles because I’m using the card when I’d be using another debit card, or another card with an annual fee, instead for the same purchases…so I’m earning miles and spending the same money without paying interest. I wish it had a chip, and I’ll wait and see how it goes — but I’m hoping it works well.
Has anyone actually had success trying to get this card? I’ve been trying for 2 weeks and the website continues to say “we are unable to process the transaction at this time”. At first I thought it was my internet browser, so I tried I.E., Chrome, Safari and I even downloaded their app just to try there and all of them gave me the same error message. Am I the only one this is happening to?
I have used it quite frequently, but it doesn’t work with Apple Pay at present. However, the documentation and how to section is ridiculously bad.
Hi was wonder, is it possible to have several accounts, or more than one card?
I don’t know. Please report back if you find out.
Thaw card is good for people with no credit / bad credit !?!? It is a debit card like any other anyone can get one without all the stupid restrictions and incredibly crappy customer service that comes with this card. And banks DO MAKE MONEY OFF OF DEBIT CARDS OR THEY WOULD NOT HAVE THEM! This company holds you money, restricts withdrawals and a host of other things that allows them to make free interest on millions and millions of dollars. This card is supposed to be for United customers – that would seem to these Brainiac’s that these customers might be traveling overseas. But the card does not work in China, Vietnam, or Thailand because there software is so primitive that it can’t tell you are withdrawing a foreign currency and trips a “over your daily limit” block and then turns off your card. All major banks have debit cards and I have no idea why anyone would waste their time and money on this one. The amount of miles paid are negligible. Also anyone with NO credit or BAD credit can get a secured credit card and a debit card from a real bank and not deal with the terrible, horrible customer service of Net Spend / MileagePlus. Whoever at United approved this deal should be fired. If yo like staying on hold for 90 minutes with someone in Banglahore that knows nothing and can do nothing to help you than this is your card!!
Got the card for my husband who travels frequently (travels for a living so can’t earn the miles) and one for myself. Disappointed it doesn’t have a chip, but that may be a deliberate design to encourage signature transactions. I like the choice of annual or monthly fee although one mile per $2 is not a great deal at all if you choose the monthly. I wish the card would have a higher earnings limit greater than 2500/month, but two GO cards can solve that issue. Just have to remember not to use PIN for in person transactions and use GO card for all online transactions. We have a bank debit card we’ve linked to MileagePlus Dining to earn a few miles that way, but it’s limited to member restaurants. We otherwise have no way to earn miles, so earning a few miles a month is better than earning none at all. We shall see. Hope the card sticks around, but I am worried that the market is too small.
love the idea of two cards being used to get 5,000 miles a month. interesting idea