First of all, I want to mention that this post is not about teaching people how to manufacture spend. It is more about explaining the concept. So if you already know what this is about, then you won’t need to keep reading.
But if this is your first time hearing this concept or you are trying to learn more, this post should give you a little more insight. This post is really more of an introductory post. If you want to learn more, I recommend that you do your own research to learn more tips and strategies.
Definition of Manufacture Spending
This is my quick definition of manufactured spending (MS):
- the process of using your credit card to make a purchase of something that is the equivalent of cash (e.g. gift cards, money orders), and then liquidating the funds to pay back the credit card balance with the goal of earning cash back, miles or points for these purchases
The idea is that you want to put some spending onto your credit card, to help you generate cash back, miles or points. The spending is put towards a purchasing that is pretty much equivalent to cash. Then you liquidate the purchase so that you can deposit the cash back into your bank account, so that you can use the funds to pay off your credit card balance. The end result, is that you do not have to spend any money to generate cash back, miles or points.
Ethics, Legality, Morality
Is this ethical, legal or moral? I definitely want to address these issues before going forward. In terms of ethics ad morality, it is more of a personal conscience thing. If you feel that you are taking advantage of the different companies involved, then you are better off not trying this out. MS is not for everybody, so never feel obligated to do it.
In terms of legal matters, if you abuse the system, your account can be suspended or terminated. Your account can also be flagged. There can be situations where it is considered money laundering. The point is, there is some work to be done to be familiar with any fine prints. If you step over the line, there can be consequences. So if you are not willing to do the proper research to ensure that you aren’t doing anything illegal, then I would avoid MS completely.
Example of Manufactured Spending
MS options are constantly changing. When an option is available, it usually closes very quickly when too many people jump on board. This is exactly why Bloggers have to juggle between sharing a secret or keeping it.
Here is a simple way to MS. You can purchase a gift card on Ebay for $40 with your credit card, for a gift card that is worth $50 ($10 rebated). Then you can resell the gift card for let’s say $45. Even though you may be paying a shipping fee, you would have made back the money by purchasing the gift card at a discount and reselling it for a small profit. This example actually doesn’t break any rules. The main risk is that you may be stuck with the gift card if no one wants to buy it back. Another risk is that you may be flagged by Ebay if it seems like you are abusing the system. So watch out for that.
Also in this example, look for multiplier bonuses through shopping portals to give yourself some added bonus miles or points.
Is Manufactured Spending Worth it?
Keeping in mind that the more you do, the more risk you are exposed to. My question back to you is, what is your goal with MS? Are you trying to top up a specific loyalty account to redeem for a specific reward within a certain time frame? Are you trying to rack up as many miles or points as possible while the option is still available? Are you just doing this for fun? What are you doing MS for?
Figure out your goal, and once you accomplish your goal, then I would say it’s worth it!
The process is going to be the same whether you do a large or small transaction. So I recommend that you start off small, just to give it a try to sell if you feel comfortable with the process. If you enjoyed the process, found the benefits valuable and willing to assume the risks, then you can slowly do more.
Be ready to do a lot of research to ensure that you stick to the fine prints so that you are not abusing any systems. The last thing you want is for your accounts to be terminated and lose all that hard work.
In closing, if you do want to give MS a try, my recommendation is to avoid being overly greedy. Do your research to avoid breaking any terms and conditions. Lastly, stick to an amount that you are comfortable with, as the amount will go up anyway as your knowledge and comfort levels go up.