Yesterday, Manufactured Spending- a history we gave an overview of what manufactured spend is. Today, we give you a few tips on how to get going yourself.
Broadly speaking, there are four elements to a manufactured spending scenario, although it is not necessary to have all four. These elements are
- Credit card rewards
- Extra juice beyond the credit card rewards
- Buying cash-like instruments
- Getting your money back
Credit card rewards
Manufactured spend scenarios often involve costs (the U.S. Mint deal we discussed yesterday was an exception), so unless you’re merely trying to meet a minimum spend requirement you’ll want the rewards to at least offset the costs and ideally exceed them by quite a bit. The easiest way to get a good churn going is with a 5% rewards card, and that’s why the Chase Ink Bold products have been so helpful lately, as up until recently it’s been possible to buy Vanilla Reloads at office supply stores with a credit card, and the Chase Ink gives 5% back for office supply purchases.
There’s also the Citi Preferred card we’ve talked about recently–it’s 5% back on gas stations, groceries, and drugstores, all of which usually stock gift cards. Another candidate is the Amex Blue Cash Preferred and its 6% back on groceries, although the recently-added $6,000 cap prevents you from doing anything on a large scale. You can also consider cards such as the Chase Freedom with rotating 5% cashback categories.
Depending on how valuable the points are, you could also consider cards like the Hilton Amex Surpass or the Club Carlson card, both of which give you a fairly high number of points in some categories.
Extra juice
There are a couple of ways beyond credit card points to increase your credit card rewards and/or offset your expenses.
- Passive credit card income. The Amex OPEN program for its business card holders gets you 10% back at OfficeMax. Frequent Miler, among others, has written on how to make use of this discount. And here’s a FWF thread to give you some more ideas in this area.
- Store loyalty programs. Some stores give you points in addition to whatever you get from your credit card. At Best Buy, for example, you get 2% back on all your purchases, and they sometimes run promotions where you can get more than that. Sometimes grocery stores give you bonuses for buying a certain amount, and they don’t always exclude gift card purchases.
- Store sales. Sometimes stores have promotions where they’ll give you, for example, $10 off your order when you buy a $50 gift card. That’s much better than what you get with a 5% rewards card, and if this transaction is repeatable, you have the makings of a manufactured spend opportunity.
- Cash portals. There are lots of sites where you can click through to get credit card points or cash rewards. In fact, there are so many that now there are sites which compare all your options to help you find the best one. Probably the best known manufactured spend exploit involving this trick is the Amex gift card trick.
Buying cash or cash-like instruments
For this part of a manufactured spend, it doesn’t get any simpler than the U.S. Mint deal, where you’re literally buying cash. That’s the exception, though, as you’ll usually have to follow a more circuitous path to cash. In no particular order, here is some of what you might be dealing with:
- Money orders. It’s not possible to buy money orders with a credit card anymore (as far as we know, anyway), but it may be possible to get them with a debit card. Also, money orders may come into play if you’re trying to unload a prepaid debit card to get your money back.
- Gift cards. Credit cards have yet to stop people from buying gift cards, at least not in small quantities, so there are probably plenty of opportunities here. You can buy gift cards at the store, or get them at a discount from a reseller. Gift Card Granny will let you compare prices and get the best deal. A good question to ask yourself is: can I use a store gift card to buy another gift card? Frequent Miler explains why you’d want to do this, and Fatwallet Finance has a good discussion on which stores allow this.
- Funding bank accounts. A small number of banks let you do this with a credit card, though which ones will let you do so tends not to be discussed openly so as not to kill the deal, so you’d have to do some research and experimentation here. Savings accounts, checking accounts, and CDs are all fair game. Be careful: some issuers will code this as a purchase, but others will code it as a cash advance. If you want to try this angle, call your issuer and set your cash advance limit to zero.
Getting your money back
Very important, obviously, because while anybody can buy a $200 Visa gift card, how many people can turn that into $200 in cash? Broadly speaking, there are two ways to do this: payment services and prepaid debit cards.
- Payment services. Amazon Payments is the best-known example of this, and it’s pretty easy to send $1,000 to a friend (and vice versa) on your credit card every month. Read here and here for more discussion. Paydivvy lets you pay anyone with a credit card, but they charge 3.5%. Venmo charges 3% for credit cards and nothing for debit cards. Williampaid lets you pay rent by credit card, while Chargesmart lets you pay mortgages, auto loans, and student loans the same way. You could also try running payments through Square and Intuit, though they’ll probably shut you down pretty quickly if you start churning payments through them. And Doughroller’s got links to several more services I’ve never even heard of before.
- Prepaid debit cards. Amex’s Bluebird product is the best known on account of its Vanilla reload compatibility, but there are scores of prepaid products out there and we recommend paying attention any time you’re out at the grocery, drugstore, gas station, or anywhere else to see if there are any new products worth considering. We wrote recently about Kaiku, which will let you fund via credit card, and there may be others out there for all we know. In addition to Bluebird, Amex also has the Target Amex and the Campus Edition, both of which have their pluses and minuses. The manufactured spending subforum at flyertalk has discussion on other products such as the Wells Fargo prepaid.
That’s all we have to offer on this topic. Most manufactured spending efforts involve the combination of two or more of the four elements. Be warned that banks and retailers tend to frown upon this type of thing as it tends not to be profitable for them, so proceed at your own risk. Personally, we at pfdigest.com aren’t too into this game, as we prefer the low-hanging fruit of sign-up bonuses, though we do find it fascinating and amusing to find loopholes in our nation’s financial system. As we pointed out yesterday, though, some people find these activities to be very much worth their time. Happy hunting everyone!
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