Manufactured Spend on the Credit Card the term given to increasing your monthly spend for the purpose of earning Points, Miles and Cash Back whilst not actually spending the money involved. In a previous post I explored the concept where many people are leveraging 5x Chase Ultimate Rewards at Staples using the Chase Ink Bold card, and cashing in Rebates from FAR items and Ink Recycling Rewards. It is worth noting that Staples have just announced a change to their Rewards program with a couple of key factors to consider:
- Ink Recycling Rewards will only be available to people who have spent at least $30 on Ink in the past 180 days
- 5% Staples Rewards will be added to all purchases from Staples
Ink Recycling is such a great deal, especially when you are a Premier Rewards customer at Staples. A regular Rewards account allows you to recycle 10 Empty Ink Cartridges per month, but once you have spent $1,000 in a year you gain Premier Status that doubles that. For each cartridge Staples gives you $2 in Rewards dollars, so as a Premier that is $40 per month for me.
It seems that these rewards last for 6 months before expiring, meaning that I could earn up to $240 to cash in, and my goal at one point was to get a Tablet for Free from Staples using Rewards and Rebates (my goals evolve and now I have raised the bar..)
Raising the Bar on the Free Tablet Challenge and Earning 5x Ultimate Rewards
Having already obtained a Tablet, I decided another one for my personal use isn’t exactly a necessity (not that the first was either, but it is certainly handy to have) I thought that the next step would be to start over and earn up the $240 in Ink Recycling Credits, purchase a new Tablet with them and resell it using eBay. However when I started thinking further on this I started to wonder whether it would be better to pay for one Tablet with 6 x $40 coupons, or buy 6 x Tablets using 1 x coupon each, and paying cash for the difference.
The advantage to spending on Credit Card rather than redeeming rewards is that you earn points and miles on the balance of the purchase. If I was to buy a Nexus 7 32gb for $250 from Staples, using 1 x $40 Ink Recycling Credit would leave me a balance of $210. By paying this balance with the Chase Ink Bold Card I would achieve the following things:
Earned 1050 Ultimate Rewards
Earned 5% Staples Rewards on the purchase (as this is a new program I don’t know whether I could earn Cash Back on the full $250 or just the $210) lets assume $210 to be conservative so $10.50 Staples Rewards
Achieved $210 that would apply towards the $1000 per year required to earn and maintain Staples Rewards Premier Status
If I then list the Nexus on eBay I would have to take into account the following factors:
- Cost of Goods $210
- Cost of Shipping $15
- Cost of Ebay Fees 9%
The trick now is to find a sales price point that will result in break even on the Credit Card spend so that all I am left with would be free points and free Staples Rewards (worth noting that from month 2 I can apply the rewards to the second tablet I buy also…)
Average Sale Price on eBay is $229 with free shipping for this product, which doesn’t leave a lot of wiggle room, in fact it leaves at a cash loss in Month 1 and a smaller loss in subsequent months:
1050 Ultimate Reward Points for $6.11, they won’t get you much, but if you multiply it out by 100 we get to usable points territory. As a Manufactured Spend you would be creating 100,500 Ultimate Rewards Points for $611. Personally, I find that a little expensive, but still great value – it will get you almost 5 nights in the Park Hyatt Tokyo, or 3 one ways from NYC to Japan in Coach on United. That’s not bad for $611. However, if we could just tweak those numbers slightly we can find opportunities to get the cost of miles to zero, or even actually a positive number. I’d give myself a C minus for this one, but the concept is sound, now to find the perfect price point for profit, and the product that sells at that price point.
Oops – I forgot all about the shopping portal bonus here! The standard Ultimate Rewards Shopping bonus is 2x per dollar, which sometimes bumps to 4x or 5x and sometimes on a rare occasion even higher.
At 2x it would now cost only $427.70 for 100,000 Ultimate Rewards Points
At 4x it would reduce even further to only $311 for 100,000 Ultimate Rewards Points!