Updated on July 25, 2015
Manufactured spending. I guess the simplest way to explain MS is to say that it is spending money without spending money. It is a term used by many people who are in the points/miles hobby for charging things to their credit card that they can then liquidate back into cash to pay off that credit card. There are several methods by which people do this:
So lets look at these individually:
1. Buying and Selling
People will find great prices on a desirable item (whether it be in-store or online) and use their points earning credit card to purchase the item. They will then sell these items online to either make a small profit or at least minimize their loses. By doing this people can spend a large amount of money on their credit card and then recoup most, if not all of the money they spent to pay off their credit card.
To double up on this, you can also go through a shopping portal (most airlines have one) by which you would earn points through the portal and on your credit card.
This is not an avenue that I use due to the amount of time that it takes to find deals, buy the item, sell the item, go to the post office to mail the item and worry the whole time that I will not sell all the items.
2. Buy gift card to get money orders
You can buy gift cards (Visa/Mastercard) at the mall, grocery store, online, wherever they will sell them to you for a credit card and then use these gift cards to purchase money orders.
This is a method I use sometimes but certainly is not my main way to MS. I usually buy gift cards at the local mall (Simon Malls sell Visa gift cards at the help desk) because these are the cheapest in our area at $3.95 per $500 card (use to be $2.95, but they recently changed it). Once the cards are bought they can be used like a debit card. Because of this function you can go to Walmart or another place that sells money orders and purchase them just like you would with a debit card. Walmart would be my store of choice as it only cost $0.70 per $500 money order. These money orders can then be deposited into your checking account and used to pay off the credit card.
This method will incur the price of the gift card as well as the price of the money orders. So if you purchased 2 $500 gift cards for $3.95 each and then 2 $500 money orders for $0.70 each then you would have “manufactured” $1,000 (and 1,000 points) for a price of $9.30 plus your time.
3. Buy gift cards to load Bluebird/Serve cards
After buying gift cards at your location of choice you can also use their debit functionality to load the money on to American Express products: Bluebird or Serve. Both of these cards act as a checking account and debit card. They are meant to be used by people who do not have bank accounts and would still like a debit function. Those people can load these cards with cash, debit or direct deposits to these accounts and use the card as you would a debit card, or even write checks from it.
This has been my main MS option until recently. Gift cards can be purchased, and then loaded onto these cards at Walmart via a register, the money center or the money center machine. Once the money has been loaded it can be used via the bill pay function (directly pay credit card) or check to pay off your credit card. There are other useful functions to these cards as well as minor differences between BB and Serve that we will not cover here.
This method will incur only the price of the gift cards. So if you purchase 2 $500 gift cards for $3.95 each and loaded them (no charge) to you Bluebird card then you would have “manufactured” $1,000 (and 1,000 points) for $7.90 plus your time.
4. Load Target PrePaid Redcard
This is a fairly new product which functions similar to the Bluebird and Serve cards and is also an American Express product. Unlike the other methods this can be done at the lowest possible cost, $0. UPDATE: This can no longer be done for $0 as you now need to buy and load gifts cards just like the Bluebird.
Unlike the other methods, there is nothing to buy. You can load your RedCard directly with you credit card at the registers in Targets. However, this card is only sold in a few states and most of the stores have no clue how to load this card. I will be doing a separate post on this in the coming weeks.
—An individual can only have 1 of these cards registered to them at a time (BlueBird, Serve or RedCard)
5. There are many other methods that can be used and different avenues are always being found
What is the best use of MS?
Completing a sign up bonus. If you sign up for 3 different cards that each have a $3000 spend that needs to be completed in 3 months then you need to spend $9000 in 3 months! For some people that might not be a problem, but there is no way I could spend that much. However, with the methods listed above that would be completed in about a week. Although you can be constantly generating points/miles, this is the best use for this practice.
Is MS right for you?
Now this points earning method is certainly not right for everyone and most people get nervous, for ME when they hear me talk about it. If that is you then no big deal, you don’t need to do it. Everyone needs to do what they are comfortable with. That being said, here are what you really need to do this:
–Be organized: I have a book where I write down each credit card applied for, what the spend is, how long we have to spend, what the bonus is and if it has an annual fee. I also keep all receipts of gift cards, etc until the card is paid off. You are dealing with A LOT of money, you have to be organized and careful. When I add a card number to Bluebird or RedCard I usually check the number 5-6 times. I don’t want to mess up and send thousands of dollars to the wrong credit card.
–Be innovative: This is an ever changing hobby and you will need to roll with the punches. Don’t assume that just because something works that it will always work. Most of the methods that I used at the beginning don’t even exist anymore. Things are constantly changing and you need to be on the lookout for the next new thing.
-Be smart: As I said before, things are always changing, so leave yourself an out. Don’t buy $10K in gift cards with only 1 way to liquidate them. If the day you go to unload your gift cards is the same day that your method changes things up, then you are in deep trouble. Always leave yourself an out (the movie Rounders was right).
-Be EXCITED: You are doing this to do some AWESOME traveling. This should be somewhat exciting (and a bit stressful at first) and you have to like it in a sense. Now do I always find this fun and exciting? NOPE. But I do enjoy figuring out new ways to do it and I find it fun and fascinating most of the time? Absolutely!
As you can see MS can be a powerful tool in the miles and points game, but you need to have the right demeanor to play it correctly. There is much much more to learn about each of these avenues and before I dive into any of them I make sure I know all the ins and outs. This has just been an intro but I will be writing more on my specific methods later on. As always, feel free to ask questions!