What is it?
It is essentially the process of purchasing something that is a cash equivalent, such as a gift card, prepaid debit card, or money order with a miles/points earning card, and then using said cash equivalent to liquidate the funds and pay off the credit card.
It is an ongoing and ever-changing game, and definitely involves some risks. The methods I use now are not the same as they were when I first started.
One of the most well known past methods was detailed in the New York Times a long time ago where a man purchased $1 Sacagawea coins from the US Mint. The Mint was trying to encourage people to get these coins into circulation, so they offered them for sale on their website and you could buy them by credit card by paying S&H fees. Guy bought over a million bucks worth and just paid off his credit cards by taking his dollar coins to the bank. Ended up getting million miler status with an airline, which comes with perks and first class upgrades for life.
Obviously, banks and retailers have cracked down on this practice, making it harder and harder to do, but it can be done. Most people tend to have a "don't ask, don't tell" policy on current ways to do it, because they don't want other people to catch on to their methods, and then spoil it.
These are the most common methods, more than enough for you to get started and get your feet wet, so you can start to experiment to find more methods that might work for you. However, before we dive into it, you must remember the first and only cardinal rule of manufacturing spending.
NEVER FLOAT MORE MONEY THAN YOU CAN AFFORD TO PAY BACK IF YOUR METHOD BECOMES UNUSABLE.
There are people out there who manufacture tens and even hundreds of thousands of dollars a month. I am not one of those people. I very rarely do it unless I'm trying to meet a minimum spend that I wouldn't otherwise clear.
So, with that said, here we go!
Vanilla Reloads
These were the drug of choice for many, because you could buy them at a place where you'd get 2-5 times points per purchase. These days have drastically diminished since Office Depot stopped carrying them and many stores (CVS) have hard-coded their cash registers to NOT accept a credit card for the purchase. But the opportunities are still there at other stores and with other cards for those who are willing to look hard enough.
They cost $3.95 to purchase and can be loaded with up to $500 at a time.
I will discuss how we liquidated them, further down.
Visa/MasterCard Gift Cards
The Vanilla days are now being lost to the gift card. We are seeing that Vanilla gift cards are increasingly more difficult to find at stores that give you bonus points on spending. However, you can find plenty of gift cards at retailers all around you. They come with PIN functionality, that allows them to be liquidated by other methods besides purchasing stuff with them. You can set the PIN for pretty much any card, and it can be used like a debit card.
They come with a purchase/activation fee ranging from $3.95 - 6.95 so you are getting the best value per point earned when you have a low activation fee, and are buying a high dollar amount, especially at a store that gives you more than 1x back on purchase. Generally, I don't recommend buying gift cards for less than $500.
Again, how do we liquidate them?
Bluebird from American Express
Bluebird is a prepaid AmEx card that can be loaded using Visa/MasterCard PIN based debit cards. I believe that Bluebird is now hard-coded to not accept Vanilla Reload cards anymore. Shame.
This can be done at any Wal-Mart with no fee and a daily limit of $1,000 and monthly max load of $5,000. Loading the card online costs $2 per load with lower limits and negates the points earned, therefore should not be done.
Bluebird in turn functions as a typical checking account with the ability to use free online bill pay to send payments to anyone at no cost including paying off credit cards, making mortgage or rent payments, etc. I think there is also the possibility of getting a checkbook with it too.
Money Orders
Money orders can be purchased at Wal-Mart Money Centers for a minimal cost of $0.70 per MO and can be purchased for up to $1,000 each via a PIN enabled debit card such as the Visa gift cards. You can use money orders to pay bills that could otherwise not be paid via a credit card and earn miles/points in the process. For example, buying a money order in the amount of your rent, and handing that to your landlord instead of a check from your personal bank account. Or, taking the money order and depositing it to your credit card for payment instead.
Cash Back at the Store
This can be another potential way to liquidate the money on a Visa or MasterCard debit/gift card. It's hit and miss and depends on a variety of factors including the bank issuing the card, and the store you are using it at. You simply go to the store and purchase something, run the card as debit and enter your PIN, then select the amount of cash back you want. I find this method too tedious and with the other methods available it seems unnecessary to me, but it can be beneficial to some.
Now for some other methods:
American Express Prepaid REDcard for Target
The vast majority of my personal manufactured spend relies on the Prepaid REDcard (also lovingly called Redbird, due to its similarity to WalMart's Bluebird). It can be loaded for free at any Target store using a credit card, and it can be used for spend anywhere AmEx is accepted. At Target, it offers 5% back on purchases, much like their Target debit and credit cards, and free shipping for online orders. It functions like a Bluebird where it has online banking capability and is like a pseudo checking account. FrequentMiler posts an AWESOME everything you need to know info-piece HERE.
You can load via a credit card up to $5,000 per month. Fee free!
Kiva
Kiva is a charity that provides micro loans to entrepreneurs in developing countries where their banking systems aren't as established and it's hard to get money to start businesses. Let me make it known, that I think this is not a good deal for points on its own. Unless you support the mission, you shouldn't be doing it for the points.
The idea is that the amount you give to Kiva and loan out will be returned to you (without interest) then you can withdraw that money again if you’d like. Payments to Kiva must be made via PayPal. You can make the payment with a credit card, and there are no fees at least on your end. Withdrawals of repaid loans are also via PayPal and can then be withdrawn to a bank account, again with no fees for you.
Loan terms are usually four months, but you can choose your duration. You essentially own miles at the cost of floating your money for a few months.
IN CONCLUSION...
This is a beginners’ series, so I want to make you aware of some ways that others (myself included) are using to put more of their spending on their credit cards that you might not have thought of on your own.
This is not an exhaustive explanation of any of these methods. All of them are complicated and carry lots of risk. Investigate them 100%. Start with Googling everything before deciding whether you want to do any of the things mentioned here.
You can earn millions of points without manufacturing any spend, and you can fly to exotic destinations in First Class without it too. But if you want to be creative, and take the time and effort, you can get even more bang for your buck than you expected.
Peace, love, and an extra pack of peanuts,
LC
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