More on Manufactured Spending and some examples

Manufactured Spending (MS): the act of buying something to generate credit card rewards in a way where you can quickly get the money back in your bank account.  

While this is not an absolute necessity, and you can still get a couple free vacations each year, bonus $5,000, etc, you CANNOT move the needle without MS.  If you’re using each card to hit your sign up bonus with everyday spending (groceries, eating out etc,) it’s not going to have a huge impact.  This is referred to as organic spend.  Not very meaningful and often leads to you spending more than your budget just to earn a few points.  Not smart.  

With MS, you can spend multiples of your W-2 income each year.  You can make $100K from your W-2, and it’s possible to spend $1M+ with business cards, and none of them would bat an eye.  

Two examples of MS:

A classic MS technique is to go to a store, buy a Visa or Amex prepaid gift card, and then go to a grocery store and purchase a money order with the prepaid gift card that runs as a debit card.  Believe it or not, the USPS used to sell these money orders for cheap, and you would make a nice spread on the return.  From there, you’d simply write the money order to yourself, do a mobile deposit to a bank/credit union (not the main one you do banking with), and rinse and repeat.  WIth this method you could easily hit sign up bonuses in a week, apply for a new card and earn some nice profits.  As USPS and grocery stores became more aware, many implemented policies to prevent this.  This method is still alive and well in many places in the US, but it is very regional specific.  It is much harder in major cities like NYC and LA as staff has less patience for shenanigans and is more skeptical of tricks like this.  

*Note* While manufactured spending is in no way shape or form illegal, structuring is.  Always make sure you are following the law.

Couch MS method.

Certain sites like RebateKey (no affiliation) will offer 100% rebates for certain products.  Why?  Amazon, Shopify sellers will partner with sites like RebateKey to give buyers a full rebate for buying certain products with hopes that they will leave a positive review.  Are you forced to leave a review?  No!  Sellers will send a polite message via the RebateKey portal asking for you to leave a review, but you are by no means obligated to.  Sellers will also do this to boost their sales numbers. 

You can buy up to 10 items a day on RebateKey.  You buy 10 items worth $25 that offer a 100% return, and that’s $250 a day towards your credit card minimum spend.  Once you buy an item from the RebateKey portal on Amazon,Shopify, etc, you simply follow the instructions and provide RebateKey with the order number, and you get reimbursed 35 days later (via PayPal account or physical check in the mail).  While many products are tax free, feel free to ship products with tax to a friend in Delaware, or a donation center in Delaware to avoid the tax.  Please note that it is against RebateKey’s policy to resell items that you’ve bought from them.   

See some of the items they sell below.  Note the item on the right.  Easy to tell the audience they are targeting!  Ironically, browsing RebateKey can also offer insight as to popular trends and you can get a good idea of what kind of products are hot on eCom.

The “Float” period:

    -The float period is the time from which you put the charge on your credit card, to the time you get your money back in your bank account so you can pay the credit card.  If you opted for PayPal account reimbursements with RebateKey, the float period would be 35 days.  To be clear, it would take 35 days from the time in which you buy the item, until the time in which the funds are deposited in your bank account and ready for withdrawal.  In the above gift card / money order example, the float period would be the time from which you bought the Visa/Mastercard Gift Card until the time you deposited the money order in a credit union/bank account.

Obviously it is absolutely critical that you have funds at hand to pay off your credit card on time, and your money isn’t stuck.  Part of having a good credit card/MS strategy is having good risk tolerance, having a solid system to MS, and making sure you can always pay off your credit card bill in full EVERY time.  

While these are two very basic MS techniques that can help, I’ll offer MUCH better MS tips/secrets in the paid substack in the next couple of weeks that will allow you to be able to spend more from home.

Will do a Q/A in the next few days as well.

Disclaimer: None of this is to be deemed legal or financial advice of any kind.