Manufactured Spending

Crunching the Numbers: Is Manufactured Spending Worth It?

It wasn’t that long ago that gift card churning was not only free but profitable. Cash back portals would offer upwards of 4% cash back on American Express gift card orders, which not only wiped away all the fees associated with buying and liquidating gift cards, it left us with a decent profit. Unfortunately, shopping portals stopped offering cash back on American Express gift cards two years ago and ever since, manufactured spending has ceased to be completely free…for the most part. Yet, people continue to manufacture spend, often without taking fees into account. 

Vanilla Reload cards on display at Dollar General
Vanilla Reload cards on display at Dollar General

I made this mistake when I first started manufactured spending. I was so caught up in the value proposition of earning and redeeming miles for premium travel that I completely disregarded the actual cost: $3.95 per $500 in spend doesn’t sound huge, but multiply that by 200 and the fees really add up. If you buy $100,000 worth of gift cards per year with a standard mile-earning credit card, that amounts to $790 worth of gift card fees. Factor in another $0.70 in money order fees per $1,000 and your total cost for buying and liquidating $100,000 worth of gift cards comes to $860. Some of you may redeem 100,000 miles for business class award flights to Europe and think $860 is a bargain. However, that’s where some people fail to consider what they can actually afford…

If you’re earning miles for yourself and a spouse, the cost increases to $1,720. Bring along two kids and your expenses increase to $3,440. Even if you manage to use the miles for business class travel to Europe, that’s a pretty hefty sum. Depending on the travel season, you could have paid less than $860 for a roundtrip economy flight and earned milest. Sure, you upgraded your seat, but can you actually afford the upgrade?

The same goes for hotel redemptions. I know people who get excited about redeeming 30,000 points per night at the Park Hyatt Paris Vendome because “I saved $1,000 per night by transferring 30,000 Ultimate Rewards points to Hyatt!” Unless you were going to spend $1,000 per night on this stay, you didn’t save anything. In fact, you may have spent $258 on gift card fees.

Yes, $258 per night for a 5-star hotel that usually goes for $1,000 is great. But is $258 per night for any hotel in your budget? If all you can really afford is $150 per night and spending an extra $100+ gets you a much nicer room, it may not be the best way to go. Too many people in this hobby get caught up in the “value” they get from spending money on miles without asking themselves whether that relatively minimal amount of cash spent on gift card fees is actually even in their budget. 

I’m not trying to discourage anyone from manufactured spending. Based on some emails I’ve gotten from readers recently, I wanted to make sure I conveyed the whole picture. Including the costs involved. Restrictions on credit card churning are pushing more people towards manufactured spending. However, you should really crunch the numbers to make sure earning points and miles this way makes sense for you. Ask yourself these questions: Is this worth the points and hassle? Am I getting enough value out of my points to justify the cost I’m incurring on gift card fees? Is the cost incurred from gift card churning what I can afford to pay for travel?

That’s my two cents on the subject. I’d love to get your feedback. Have you crunched the numbers on what manufactured spending is costing you? Is it worth your while?

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  1. Do your calculations include the 1.5% cash back offered by from

  2. Great post. So many bloggers posting about MS but not much about the actual costs.

  3. hollyatclubthrifty

    This is why I generally do not participate in manufactured spending. For me, the financial costs and the time I would spend would far outweigh any benefit. I have two kids and the last thing in the world I want to do is drive them from stores to banks to the Walmart Money Center every day or every few days. I can’t afford the time more than anything else.

  4. When it comes to meeting minimum spend requirement or to meet certain bonus spending, then there is no debate. Other than that, yes the hidden cost can make a big difference.

  5. Excellent post! Thanks!

  6. Good post. I don’t MS much but when I do, these costs are always staring in my face. So unless there is a cash back component involved, I don’t MS. I do MS for meeting the required minimum spend and that to me seems fine.

  7. Feroz Khan

    Hi Arianna,

    Loved your two cents on the subject. I don’t do MS mainly because I am scared of the big money involved and don’t want to get stuck with loads of gift cards. But in addition I am also not keen on spending the time on the activity and the organization. I would rather work on my art and create a new painting.

    So far, sign up bonuses on credit cards have been enough for me. I like to sit in economy and have someone to talk to instead of lying on a flat bed in business class. I can’t sleep on planes anyway and can do without the loads of calories on the food they serve. I have tried all of it once and now I am done with it. Stay at a Town and Country Inn for less than $100 is good enough.


  8. Using cards like Chase Ink or Chase Freedom Unlimited makes the cost significantly cheaper than the standard 1pt/$ calculations done here, but I agree with the premise that people need to do these calculations for themselves so they really understand the value proposition. Everyone has their own redemption values too.

  9. I haven’t been MSing as much since the death of my birds back in January. But it is still worth it for me to meet minimum spend, as others have already mentioned and if I use a 2% cash back card I can still clear $11.30 cash back per $1K. It costs me $3.95 per $500 VGC (Simon mall) and $0.70 for the $1K MO.
    But I don’t want to be depositing a whole bunch of MO’s into my bank account either because, I do’t want to risk my relationship with the bank and honestly, I don’t want to spend so much of my time MSing. Consequently, my family of 4 and I have only flown economy and we stay at 3-4 star hotels, which is basically what we would’ve been doing anyway. So we don’t travel in luxury but the frequency of our travels has increased. A lot!
    I haven’t joined this hobby with the illusion of traveling for free but with the understanding that it will allow me to offset about 80% of the total cost of my travels. So far I have done an OK job as far as that is concerned. As an example, the total value of my trips last year was $27,000 but my actual expense was $6,000.

  10. oops, there are only four of us, not five. duh!

  11. There are many more costs involved: Your time (could you be working and producing money in that time?), gas on your car, wear and tear of your car and miles used if you have a lease, etc.
    Its still worth it though, specially at 5X (Even if you use the points to pay the fees, you still have UR points left). If you combine that with the occasional rebate or money back, then the fees are much lower.

    • Totally worth taking into account. In my case, I look at this as a hobby, what I do to blow off steam, so I don’t think of the time spent doing this as giving up income because I don’t want to work all the time. But yes, some people would do well to factor these extra costs into their ms budget.

  12. Very worthwhile post. I can’t stand when I read other bloggers boasting about how much money they saved by using an award for international first class when the reality is that they never would have spent $5-10,000 on that ticket in the first place. I never MS if I’m only getting one point per dollar. I currently only do it for the signup bonus or when cards like the Aviator are running promotions. I would much rather spend 5,000 Hyatt points for a pretty decent hotel than 30,000 on a top hotel. However, there are times when I have splurged. I’m spending 25,000 Hyatt points per night at the Cancun Zilara this summer. But that’s all inclusive and there aren’t too many other worthwhile options. I recently did my first business class award trip to Hong Kong and Japan using AA miles. But I had a decent amount of miles saved from that Citi Executive 100K offer a couple of years back, and this was booked before AA’s recent devaluation. I felt that if I was going to splurge like that then it should be on a 15.5 hour flight on top rated airlines like Cathay Pacific and Japan Airlines. My wife and I loved the flights but agreed there was no way we’d pay the $5000 plus it was going for. So we didn’t “save” $10,000, but had a great time.

    • Those US – Hong Kong flights were a really good deal at 110k RT in business class (or 100k Alaska miles). I flew that route and absolutely loved it but as you said, I wouldn’t pay $5k+ out of pocket to fly it again.

  13. I haven’t purchased a Visa giftcard on yet through Yanzing. When you purchase, what is the amount that counts for the 1.5% cash back? Are fees included also or just the bulk number? Thanks

  14. I’m glad you wrote about this. So many new people starting out that don’t understand this.

  15. travelwithivan

    Totally agree:

    “Yes, $258 per night for a 5-star hotel that usually goes for $1,000 is great – but is $258 per night for any hotel in your budget? If all you can really afford is $150 per night, then even if spending an extra $100+ per night gets you a much nicer room, it may not be the best way to go.”

    Which is why I only MS to meet MSR nowadays.

    A bigger factor is the value of time to buy, liquidate, track, and maintain audit-able records. For most of us with full time jobs and families, the returns are not on par.

  16. I agree with you about MS and time spent on generating points are rarely accounted for. After the deaht of Redbird and Walmart shutting down adding to Bluebird with VGCs I stopped doing MS myself.

    But I differ with you on your view on traveling on points.

    Yes, Park Hyatt Paris Vendome can be $1000 a night and without the 30k Hyatt points to pay for it, Vendoming is probably out of the reach for most people. (I know it is for me)

    So yes if my cash budget only allows for hotel rooms at $150 per night but if I can spend a little more and experience the kind of vacation that others only dream of… and isn’t that why we collect miles and points?

    Why does someone have to be stuck at the Hampton Inn or Comfort Inn at $150 per night all the time? With little effort they can stay at the Grand “Enter your fancy hotel name” hotel in some fantastic resort and have a vacation of a lifetime.

    In my personal experience, my family is headed to Hilton Waikoloa on the Big Island in Hawaii to stay at their Dolphin Suite. This over the top room is $1800 per night or 250k HHonors points per night. Would I pay $5400 for a hotel room? that would be crazy… but I can put a little effort in and some time and collect 750k HHonor ponts and have a trip that my son will remember for a long time. He still talks about the hotel from our first visit two years ago.

    I think if Bora Bora.. Maldives, Seychelles.. or even Paris Vendome is on your wish list earn the miles and points to go for it. You can always stay at a Residence Inn on your next trip to Orlando.

    • How does one put a “little” effort and “some” time in and collect 750k HHonor points? Even with the most lucrative signs-ups and spend ratios, earning 750,000 HHonors points is not a small effort.

      • 2 years of spending on the AmEx Surpass.. and my wife’s new Surpass with 100k bonus.. still at only 650k… 100k more to go…

    • I agree – this hobby is all about experiencing things that would otherwise be out of reach. When you earn your points through credit card sign-up bonuses, by all means, splurge a little. But if you’re ms’ing and unaware of the cost, you might find yourself in a bit of trouble. It’s up to each person to decide what they can afford. Personally, I wouldn’t spend an extra $100 per night if I couldn’t afford it. If I can’t pay off my credit card at the end of the month, then it doesn’t matter how great my experience was. What I want people to take away from this post is to take cost into consideration and spend what they can afford.

  17. Tehsildaar

    Well put Ariana, quite a responsible post.

  18. Can you still buy mo’s at wallieworld with VGC’s?

  19. I tried buying $200 dollars of restaurant gift cards at Ralphs 3 days ago and they told me anything over $100 needed to be bought with cash. Has anyone had this experience. This kind of defeats my tactic of using my Chase Freedom to buy Visa Gift cards and get 5% back.

  20. Not to mention to put up with the attitude from the staff of Walmart!

  21. I am not in total agreement on comparing an outlandish award for a hotel to only what one can pay for. It is more about the experience. The experience of Bus. Class is much better on a long flight than economy. With the demise of portal cashbacks I now use Simon Mall. I use the Arrival Plus for purchases typically and find that for every $100 of hotel bill I can wipe out, the cost to me was actually $44 for the purchase of visa debit cards and money orders. I do the flushing of the cards, $2000/day, when making my errand runs. I rarely make a specific run to flush these cards. Back when Staples did the $200 cards I bought everyone in the store. At $200, it was now taking me 2.5x longer to flush these due to the 4 swipe limit by WM. My local regional bank closed my account. This was just excessive on my time. The next time Staples did the fee free visa debit cards, I never bought a single one. 3 things one needs to understand, a. If you cannot do this as part of your daily business, don’t do it. b. Visa debit cards are not free and there is a real cost to doing this. c. Be realistic on what you really want to wipe out in costs and what you do not, don’t sweat it.

    Finally, I like the experience of outsized awards.

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