Manufacturing spend for cash profit: Worth it?

Before I started a new job last year, I was pretty much blogging and churning gift cards for a living. Back then, I had access to several Barclay Arrival Plus Cards and 5% cash back gift cards that helped me earn a 3.5% profit on all of my spending. With the huge number of gift cards I was churning, this 3.5% cash back added up to a significant amount.

That deal died and then I focused on churning gift cards with 2% cash back cards for a while. Until that got really boring and I started to evaluate my life choices. However, I still occasionally MS with cash back cards and if you approach it the right way, it can be somewhat lucrative.

For manufactured spending to be lucrative (or just cheap, if you’re earning miles), you need to keep your costs down. You can do this by using apps like iBotta to get cash back on your Walmart receipt uploads, take advantage of discounted and $0 fee gift card promotions, and by taking advantage of credit card category bonuses.

To demonstrate how profitable manufactured spending for cash can be, I’ll use a few examples based on Visa gift cards priced at $3.95 since that’s the most common type.

Gift Card Churning with 2% Cash Back Cards

Manufacturing spend with 2% cash back can be somewhat lucrative, but I was primarily doing it because it was easy. When I had the Barclay Arrival Plus Card, it was convenient because rewards posted as soon as the transaction did and I was able to generate a lot of manufactured spending. Until Walmart Bill Pay came into the picture and I was shut down.

The 10% rebate I got from the card (now 5%) added up, and I had plenty of people who let me charge their travel to my credit card so that I could redeem my miles for those purchases. I used to go to my local mall almost daily, pick up $9,500 worth of Visa gift cards and after liquidation I came away with a profit of around $108.

$191.50 cash back
– $75.05 gift card fees
– $6.65 money order fees
= $109.80 profit

Nowadays, I occasionally use my Fidelity Rewards Visa. It’s tied to my Fidelity brokerage account and rewards are deposited monthly. I treat it like a secondary savings account, so whatever cash back I earn stays in there for a rainy day. At 2% cash back, my profit on standard gift card churning is now about $108. That’s not bad for a couple of hours worth of work…

$191.50 cash back
– $75.05 gift card fees
– $8.36 money order fees
= $108.09 profit

Full Disclosure: I do have an affiliate relationship with Barclay, so using the Arrival Plus link in this post to apply for the card gets me a commission.

Gift Card Churning with the Discover It Miles Card

The Discover It Miles Card offers 1.5% cash back, which is doubled the first year. You get the second half of your rewards deposited into your account at the end of your first year. Considering this card has no annual fee (or sign-up bonus), that’s a pretty generous offer.

I had a goal in mind to generate over $10,000 worth of cash back on a single card. But my credit limit wasn’t high enough and I kind of got lazy at one point, so I ended up with *just* $3,188.88 worth of cash back.

Somewhat disappointing, but it did cover a lot of my travel expenses that I wasn’t able to redeem miles for. I took a lot of Uber and Lyft rides, so it was nice to be able to credit rewards towards those purchases.

Plus, when I exhausted my travel redemptions, I was able to transfer the excess funds into my bank account. If you’re looking to pick up a Discover It Miles Card, your profit on a standard $9,500 gift card churn would be around $201.59:

$287.25 cash back
– $75.05 gift card fees
– $8.36 money order fees
= $201.59 profit

If you are thinking of applying for a Discover It Miles card, please consider using my referral link. Just shoot me an email and I’ll send you one.

Gift Card Churning with Cards That Earn 5% at Office Supply Stores

If you don’t have a Chase Ink Plus card, don’t beat yourself up. The American Express SimplyCash Plus Business Credit Card also earns 5% cash back at office supply stores. That amount is limited to the first $50,000 spent (in this and other categories), but that’s still plenty.

Office supply stores carry Visa gift cards in smaller denominations with higher fees, but you can still earn a good amount of cash back.

For example, on $9,600 worth of Visa gift card purchases your profit would be a little under $200:

$494.32 cash back
– $286.40 gift card fees
– $8.80 money order fees
= $199.12 profit

Gift Card Churning for Category Bonuses

There are various other cash back cards that offer category bonuses you can take advantage of in order to churn gift cards for a profit. Do a bit of research and figure out what works best for you.

Not everyone can churn gift cards in large volumes or at a profit. Factors that could affect this include having MS-friendly stores around, time, and the funds to cover any potential losses. Always be prepared for a shut-down and have a back-up in place in case your primary liquidation method goes away.