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Newbie Guide to Manufactured Spending: FAQ

When you’ve got a stash of shiny new credit cards in the mail, a moment of panic hits as you think of the $10,000 spending requirement you have to meet in the next 3 months. For a newbie, the sound of the phone ringing at dinner time come to mind. Breathe easy – this is where manufactured spending comes into play. Below are some of the most frequently asked questions about manufactured spending. This series will expand on these and other questions.

What is manufactured spending? 

Manufactured spending involves buying gift cards, prepaid cards, and money orders with rewards credit/debit cards, then liquidating them at minimal cost.

Why do people do it?

Manufactured spending is done to 1.) meet credit card spending requirements and 2.) generate frequent flyer miles and rewards points cheaply. Most people do this in order to secure business/first class travel for roughly the cost of coach.

What are the costs associated with manufactured spending? 

There are various costs involved: Time, fees for buying the gift and prepaid cards, expenses for liquidating them. However, the cost of generating points through manufactured spending is often less than the cost of paying for travel out of pocket.

The costs also vary based on the method of manufactured spending. Travel Summary has a great post on the cost of manufactured spending.

How much manufactured spending is possible? 

With so many gift and prepaid cards out there, one can generate hundreds of thousands of miles through manufactured spending. However, it’s important to be responsible in order to avoid account closures. I manage about $40,000 per month across various credit cards without setting off red flags.

What are the risks associated with manufactured spending? 

If done excessively, manufactured spending can result in account closures. If you’re not tracking all of your manufactured spending activities properly, you could be losing money, accruing late fees and interest charges on credit cards. I don’t recommend going past $5,000 per month if you’re not an organized person.

How can you avoid the risks associated with manufactured spending? 

You can avoid account closures by diversifying your manufactured spending across different credit cards and banks. For example, I put my $40,000 per month on various American Express, Chase, Citi, and Barclays credit cards.

You can avoid late fees and interest payments by keeping very close track of all of your billing cycles and ensuring that your credit cards are paid off on time.

Which credit cards will earn you the most points on manufactured spending? 

This will depend on where you are purchasing your gift and prepaid cards. Some cards offer category bonuses at select merchants, increasing your earning potential on manufactured spending. I will cover this in detail in the next few posts.

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Ariana Arghandewal

14 Comments

  1. “For example, I put my $40,000 per month on various Amex, Chase, Citi, and Barclays credit”cards.”

    How much is your actual out-of-pocket expense for the gift/prepaid card fees for the $40,000 monthly spend?

    • It depends. If all the charges are using 1x cards, then the cost per mile in 1 cent per mile. However most of us use 2x-5x cards and some of the CC’s used provide cash back (Barclays Arrival, Amex Blue, Citi Thankyou etc). I try to MS w/o any cost, offsetting GC fees and liquidation charges with cash back.

    • I’ll get into that in upcoming posts. Purely on Vanilla Reloads, this would cost $316. It can be cheaper, though, if you can buy ReloadIT cards at grocery stores (they come in $1,000 increments for $3.95 – halting your expenses to $158).

  2. I have never heard of ReloadIT cards. Can it be used like Bluebird and used to pay the credit card used? What would the total fees be?

    • Yes, they can be loaded onto PayPower cards. You can buy them in up to $950 denominations for a $3.95 fee.

  3. The ReloadIT site says “No, a REloadit Pack can only be purchased with Cash.” Have you been able to use credit cards?

    • It does say that, but I’ve been able to purchase them at my several grocery stores. They don’t seem to be hard coded and the clerk doesn’t pay attention to the “cash only” notice on the cards.

  4. How long did it take before you ramped up to $40K in MS/month? If you are looking for an idea for a future post, perhaps you could share some of the lessons you learned via mistakes/successes while on the way to $40K/month in MS.

    • Not sure, I kind of just jumped into it when Bluebird came around (it allowed me to unload $20k per month by utilizing family members’ accounts). I love your post idea, thanks for sharing that!

  5. Hi, Mr. pointchaser

    I saw flyertalk taking about some chase credit card charges CA so be careful

    and I wonder how about Amex credit card?. I heard I won’t get a point but

    still i am able to get the signup point since i will fill up the spending with serve load right?

    so there is no CA for the AMEX credit card to load serve?

    please answer

    thanks

    • It’s Miss Pointchaser. 🙂 That’s right: If you use an Amex card to load your Serve card, you won’t earn points but it will count towards minimum spend.

      • I am a teacher and am completely new to this concept. I am excited about trying it out though, as I love to travel, but a teacher’s salary isn’t all that helpful. Which card should I MS on first? Thanks so much for your patience.

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