Buying gift cards with the Altitude Reserve

The new US Bank Altitude Reserve Card has the distinction of being the first card ever to offer a standard category bonus for mobile wallet payments.  Specifically, the card offers 3 points per dollar for mobile wallet payments (Apple Pay, Android Pay, Samsung Pay, and Microsoft Wallet) and travel purchases.  Many readers undoubtedly wonder if they can use mobile wallet payments to buy and liquidate gift cards as a way of earning points cheaply.  I’ve previously warned people away from this because I believed that US Bank would be watching for that behavior and shutting down accounts when they see it.

I recently attended a US Bank promotional event for US Bank’s new Altitude Reserve card, and I had the chance to talk extensively with John Steward, president of Retail Payment Solutions.  During our conversation he proactively brought up the gift card topic.  He said that they were ready to handle situations where people abuse the mobile wallet perk by buying lots of gift cards.  I asked whether they planned to warn people first, or immediately shut down accounts, or…?  He declined to elaborate.

I then asked if it was OK to buy gift cards in the course of regular shopping.  I gave the example of someone doing their regular grocery shopping and throwing in a gift card with the purchase.  He made it very clear a purchase like that would be fine.  I pushed a bit and asked “what about $500 gift cards?”  And his answer was along the lines of “yes, that’s fine. No one’s going to get in trouble for doing that.”  He followed up with (I’m again paraphrasing here): “Now, if someone goes from one store to the next buying gift cards on the same day, we’re not going to allow that.”

I tried pushing a bit more to learn the boundaries of what’s OK and what isn’t, but he politely refused to go into more detail.  He explained that if they gave out too much information about what they’re looking for, then people can use that info to work around the limits.  I can’t argue with that.  That’s true.

My experience buying gift cards with mobile wallet and the Altitude Reserve

I applied for the Altitude Reserve last Tuesday but the decision was pending.  On Friday, the card appeared at my door.  That was quick!  After activating the card, I added it to my phone’s Apple Pay Wallet, and then I made it my default card within Apple Pay (instructions for doing so can be found here).  On Saturday I successfully used Apple Pay at a pay-at-the-register restaurant, but two local clothing stores I visited were not able to accept mobile payments.

Then, yesterday I visited Toys R Us.  Based on John Steward’s comments, I think I can get away with buying a $500 Gift of College gift card every now and then.  I hope so, because I did.  When I entered the store, I first checked a register to verify that Apple Pay was accepted.  Yep, the Apple Pay symbol was clearly (or, rather, blurrily) there:

I didn’t see an Android Pay symbol, but the Android Pay website lists Toys R Us as a supported merchant, so that should work too.

Checking out with my Gift of College gift card was a breeze.  I double-clicked my phone’s home button to bring up Wallet (that’s the name of the Apple Pay app) and it told me to hold the phone near the swipe terminal.  A second or two later I heard a friendly chime, and the phone vibrated to indicate that the payment was successful.  I signed the swipe terminal screen and that was it.  I walked out with an activated Gift of College gift card and, presumably, 1,518 Altitude Reserve points ($505.95 x 3 points/$) worth $22.77 towards travel.

This makes a world of difference

In my post “There is a reason to get and keep the Altitude Reserve card” I argued that heavy mobile wallet spenders who plan to use points toward travel should consider this card not just for the signup bonus, but to keep long term.  I calculated how much one would have to spend on mobile wallet payments per week in order to do significantly better than with a 2%, 2.5%, or 3% cash back card, even when considering the Altitude’s annual fee.  The results: you would have to spend $327, $409, or $545, respectively, on mobile wallet payments (or travel) to do significantly better than the aforementioned cash back cards.  That’s a lot.  However, if you can get away with throwing in a gift card now and then with your regular purchases, it suddenly seems doable.

Personally, I’ll see how it goes.  If you’re a frequent traveler, then this $400 card is undoubtedly worth getting for its first year 50K signup bonus (worth $750 towards travel) and $325 in travel credits.  Whether or not it’s worth keeping beyond the first year will depend upon how much you use it to earn 3X rewards.

Summary

It seems that it’s fine to buy gift cards now and then through mobile wallet with the Altitude Reserve card, but don’t plan to do it a lot.  Unfortunately, I wasn’t able to get a definition of “a lot”.  Instead, I got the impression that about $500 per week is fine.  If I hear otherwise, I’ll let you know!

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