Manufactured Spending Complete Guide

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Manufactured Spending

Introduction to Manufactured Spending

Manufactured spending is the technique of maximizing credit card spend to earn rewards while minimizing the adverse affect on your bank account balance.

There are many reasons you may want to increase credit card spend. You may need to meet spend requirements on several new credit cards in order to earn huge signup bonuses. Or, perhaps you want to earn high level elite status or other big spend bonuses, as Greg does with Delta. Or, perhaps you simply want to earn extra rewards using cards with big category bonuses, or big rewards for everyday spend.

The key to increasing credit card spend is to find techniques that either let you use a credit card to pay for expenses that don’t normally allow credit card charges (e.g. mortgage, rent, taxes, contractor payments, …) or to find ways to spend money with your credit card and get the money back as cash. The latter is often referred to as “manufactured spending” or “MS” for short.

Manufactured spending techniques are legal, but the same techniques are often used by criminals to launder money or to convert stolen credit card numbers into cash. This leads many businesses to stop allowing those techniques to work. One way of looking at it is that criminals indirectly steal our points by killing easy manufactured spending options. Sidebar: While MS is legal, structuring is illegal. Read more here.

Another reason that manufactured spending options die is that the businesses involved realize that they’re losing money. For example, Citibank used to allow funding new bank accounts up to $100,000 by credit card, for free. In those cases, Citi was absorbing the credit card transaction fees. Suppose they had to pay 1.5% in fees: When a person used a credit card to deposit $100,000, Citi was on the hook for $1,500 in fees. It’s no wonder they stopped allowing this!

When you find viable options for manufacturing spend, it can be very rewarding. A newfound ability to greatly increase spend and earn more rewards can be exciting and it can be tempting to scale up rapidly to meet your rewards goals. But it is important to proceed with caution.

In some cases, the manufactured spending landscape can change very quickly. Those participating in risky techniques need to understand and be prepared to utilize multiple methods. You just never know when one door will close, as was recently the case when many Walmart stores and some grocery chains began severely limiting the use of prepaid gift cards for money order purchases. Imagine buying thousands of dollars in gift cards only to find that you have no way to liquidate them.

In other cases, there may be a risk of having accounts shut down. Note that some of the techniques listed below are not condoned by banks.  Specifically, the process of using credit cards to purchase and then liquidate gift cards is something banks don’t like to see.  Some will even shut down your accounts if they see this happening.  The same is true of large money order deposits: some banks will close your accounts for what they deem to be risky activity (i.e. depositing lots of money orders). Shut downs like these can often extend to all of your accounts with that institution (which can include checking/savings, credit cards, retirement accounts, etc) and sometimes even to others in your immediate orbit like authorized users on your accounts. We at Frequent Miler provide information about these techniques for completeness, but we do not condone them.

Of course, while some techniques inevitably die out, new techniques also pop up from time to time. Understanding what works or has worked in the past can help identify new opportunities. Many techniques are also highly regional. Making connections with others in your local area can help you identify what works where you live.

Many people are on the hunt for a perpetual point machine. Opportunities to manufacture spend at very low cost pop up now and then, though those who find them are likely to only share them in confidence with those they trust for fear of those techniques dying before their time. Again, making local connections can help. During more normal travel times, attending conferences like Frequent Traveler University, the Chicago Seminars, or our FM to Go sessions can help to make connections within the community and learn of opportunities before they are gone. Our Frequent Miler Insiders Facebook group offers yet another means to connect and stay up to date with what works and what does not work in various regions and situations and offers a way to stay attuned to the latest when changes develop.

Regardless of why techniques die out, keeping track of what works and what doesn’t can be a challenge.  On this page the Frequent Miler team keeps track of what works and what does not.

What’s new in manufactured spending

Direct spend techniques

This section lists opportunities to use your credit card to pay for things that can’t usually be paid by credit card.  This is in contrast to indirect techniques which require using your credit card to buy gift cards that can then be turned into cash or used to pay bills.  Direct spend techniques tend to be easier than gift card techniques, but also are often more limited or more expensive.

Fund bank accounts

Some banks will let you use a credit card to fund a newly opened account.  In most cases this is a one time opportunity per account and it is often limited to just a few hundred dollars.  There is usually no direct fee to use a credit card to fund a bank account, but there are times where the transaction will count as a cash advance and so your credit card company will then charge a fee.

  1. Read this Doctor of Credit post for details showing which banks allow this and how to avoid cash advance fees.
  2. A great option is to earn a bank account bonus at the same time.  See this Doctor of credit post for current bank account bonuses and see this post for examples in action.

Loan money

Loaning money via credit card can be risky, but it can also be a very nice and easy way to increase credit card spend if you know how to reduce your risk exposure.  At the time of this writing, there are two major options for loaning money via credit card: Kickfurther and Kiva.

Kickfurther

Use a credit card to fund short term business loans primarily to fund the production of items for sale.  There is no fee to pay for the loan by credit card, but there is a 1.5% fee to withdraw the money once it is paid back. If all goes well, you can get your money back, with interest.  Kickfurther only offers loans that are fully backed by verified purchase orders.  That is, to seek a loan from the Kickfurther community, a business must prove that it already has a buyer for its merchandise.  Still, things can and do sometimes go wrong.  You can lose your money, so tread carefully.

Kiva

Use a credit card to make micro-loans. Most loans pay back in 6 to 12 months, but with no interest.  There is no charge to use a credit card to fund loans.  Kiva provides filters which can be used to filter out risky loans.  As a result, in my experience it is easy to limit loan defaults to less than 2%.  For more details, see: Manufacture Spend (and do good) with Kiva and Kivalens, but also see the more recent update “My Kiva spend experiment” for the real-world results when applying those theories.

Recent posts about Kiva:

Pay bills

A number of services let you use a credit card to pay bills that can’t usually be paid by credit card.  Of course, they charge fees for this service.  It’s important to make sure that the rewards earned from your credit card outweigh these fees.  Otherwise, these services are not worth bothering with.

Pay Bills with Plastiq

Health Assessment: Healthy and easy.

Cost: 2.85% fee is standard for credit card payments, but they sometimes run special discounts or opportunities to earn fee-free dollars that effectively reduce the fee considerably.

Technique brief summary: Use credit card or gift cards to pay bills that can’t usually be paid by credit card. Given the fees involved, this mostly makes sense for meeting minimum spending requirements for new credit card bonuses or big spend bonuses (though the math can change considerably when they run promotions).

See: Complete guide to Plastiq credit card payments.

What’s new with Plastiq:

Pay Bills with Melio

Health Assessment: Healthy and easy.

Cost: 2.9% fee is standard for credit card payments, no fee for debit card payments

Technique brief summary: Similar to Plastiq, Melio is a service for businesses that enables them to pay any US-based vendor with a credit card.

This could be another good option for paying things like business rent or taxes, but make sure the rewards outweigh the 2.9% fee. One strength here is that Melio allows debit card payments with no fee, That said, reports indicate that gift card payments do not work as debit.

Those who signed up when the service charged 2.5% will continue with the 2.5% fee.

See: Melio bill payment service.

Pay Rent with Rentler

Health Assessment: Healthy and easy

Cost: 2.9% with debit or credit card.

Technique brief summary: Pay rent via credit card for a 2.9% fee.  I don’t see any advantages of this service over Plastiq, but it seemed worth listing. Unfortunately, it is necessary for your landlord to sign up with Rentler in order to pay your rent this way.

Pay federal taxes

Health Assessment: Healthy and easy.

Cost: As low as 1.87% for credit cards, $2.25 flat fee for debit cards.

Technique brief summary: Use credit card or gift cards to pay federal taxes.  If you don’t mind giving the US government a loan, you can use a credit card or Visa/MasterCard gift card to pay your year-end and/or quarterly estimated taxes. Fees start at 1.89% for credit cards, or flat $2.50 fees for debit cards. Over-payments, if any, will be refunded after you file your year end taxes.

For full details, please see: Complete guide to paying taxes via credit card, debit card, or gift card.

Pay friends

Health Assessment: Easy but watch out for cash advance fees

Cost: Venmo: 3% for credit cards, free for debit cards.  Paypal: 2.9% + 30 cents for credit or debit cards. Note that Amex has recently added the ability to send money to friends via Venmo with no credit card fee, but those transactions will not earn any rewards.

Technique brief summary: Use credit card to pay money owed to friends, for a fee.  Both Venmo and Paypal allow individuals to pay friends via credit card with approximately 3% in fees.  In general, 3% fees will more than wipe out any advantage of earning rewards from a credit card, but when trying to meet minimum spend requirements in order to get a new credit card signup bonus it may very well be worth it.

Unfortunately, in some cases you’ll be charged cash advance fees and won’t earn rewards.  See this post for details: Some peer-to-peer payments coding as cash advances.

Buy & liquidate gift cards for manufactured spending

This section lists opportunities to use your credit card to buy gift cards that can then be turned back into cash or used to pay bills.

Buy debit gift cards

Health Assessment: Healthy, but purchase and liquidation techniques are extremely location dependent. Note that liquidation has become very difficult in the latter half of 2020 (See: (Update: $99 Swipe Limit?) Many Walmarts Limiting MetaBank Cards To $400 Per Swipe). Even if you have options that are unaffected by recent changes, it is worth being aware that things can change quickly. Always have a backup plan (or two or three) and don’t get in over your head.

Cost: Varies. $500 gift cards typically cost $4.95 to $5.95 when purchased in-store (1% to 1.19%)

Technique brief summary: Buy gift card with credit card, use as debit card to pay bills, buy money orders, reload prepaid cards, etc. See our Current Visa and Mastercard Gift Card Deals page for current promotions to save on activation fees. For a detailed list of purchase options, please see: Best options for buying Visa and MasterCard gift cards.

What’s new:

Buy Money orders

Health Assessment: This is extremely location dependent. In some areas, buying money orders with debit gift cards is easy. In other areas it can be very difficult, especially now that Walmart has a policy against manufactured spending.  Plus, with Walmart and many grocery chains now limiting cards issued by Metabank to swipes of $99 or less, this technique has become significantly more difficult in recent times. On the other hand, there are still some places where this works, so it may be a matter of trial and error in your area to find out what works locally.

Costs: Varies by store. Walmart charges 88 cents per money order in most areas. Other stores may vary between about $0.50 to $1.25, with maximum denomination also varying.

Technique brief summary: Use credit card to buy Visa or MasterCard gift card (see: Best options for buying Visa and MasterCard gift cards). Use gift card as debit card to purchase money order. Deposit money order to bank, or use directly to pay bills.

Additional details:

Notes / Cautions:

  • Many people have had their bank accounts shut down after depositing large amounts of money orders. Keep in mind that this type of shut down may include the bank closing any credit cards you have with that institution, so consider depositing money orders in a bank or credit union that does not issue credit cards that matter to you.
  • Structuring is illegal. Don’t do it. More info here: Manufactured Spend & Money Orders: What You Need to Know to Stay Out of Legal Trouble
  • Techniques that work or don’t work are specific to different regions, stores, or even to individual cashiers.
  • Visa gift cards tend to have fewer problems than MasterCard gift cards.

Reload Prepaid cards

Health Assessment: Healthy, but reload techniques are highly dependent upon location.

Cost: Varies.

Technique brief summary: Use credit card to buy Visa or MasterCard gift card. Use gift card as debit card to reload prepaid card. Liquidate by paying bills (some offer free bill pay), ATM withdrawals, buy money orders, etc.

  • Walmart has instructed employees not to allow manufactured spending transactions as of 12/19/20. See: Walmart Manufactured Spending Policy Memo: “That activity should be stopped”
  • Techniques that work or don’t work are specific to different regions, stores, or even to individual cashiers.
  • Visa gift cards tend to have fewer problems than MasterCard gift cards.
  • Vanilla branded gift cards to not work at Walmart stores for transactions of $50 or greater.
  • Fees can add up quickly in some cases: It can cost up to $5.95 for each $500 Visa gift card and then another $5.95 to reload your prepaid card. In that worst case scenario, total fees = 2.38%! It is worth doing some research before diving in with any particular prepaid card.

See also: Connecting the dots: Prepaid cards that allow debit reloads

Reload Bluebird or Serve with debit gift cards

Technique brief summary: Reload Bluebird or Serve indirectly with credit card: use credit card to buy Visa gift card, then use Visa gift card as debit card to reload Bluebird or Serve at Walmart (or other supported stores with Serve).  Withdraw money to bank account, or pay bills for free online.

Costs: Varies depending upon cost to buy Visa gift cards. No fee to load or liquidate funds to/from Bluebird or Serve.  Some versions of Serve have monthly fees or reload fees.

Bluebird and Serve are prepaid reloadable Amex cards. To manufacture spend with Bluebird or Serve, the trick is to find a way to indirectly add funds via credit card. Once funds are loaded, there are easy options for getting your money back: withdraw cash to your linked bank account; use Bluebird or Serve’s bill pay feature to pay your credit card bill; or withdraw cash from ATMs.

Unfortunately, Amex has aggressively gone after those suspected of manufacturing spend with Bluebird or Serve by freezing the ability to load new funds. This effectively makes Bluebird dead to anyone in that situation.

Pay bills

Health Assessment: This is extremely location dependent.

Cost: Varies.

Technique brief summary: Use credit card to buy Visa or MasterCard gift card. Use gift card as debit card in-store to pay bills (including credit card bills)

  • Techniques that work or don’t work are specific to different regions, stores, or even to individual cashiers.
  • Visa gift cards tend to have fewer problems than MasterCard gift cards.

Notes / Cautions:

Buy & sell merchant gift cards

AKA “Gift Card Churning”

Health Assessment: Healthy but risky and much more difficult than in the past due to recent events (e.g. The Plastic Merchant went under; Amex stopped allowing loading the same Amex Offers to multiple cards; Best Buy stopped allowing gift cards to be used via guest checkout for some popular items; etc). Risks here are similar to merchandise resale. See Is a buyers club a good idea for you? for more on the general risks of resale.

Technique brief summary: Buy merchant gift card at discount with credit card, resell to break even or make profit.

Updates:

Gift card churning is the art of buying and liquidating gift cards for the purpose of saving money, earning money, earning extra points, and/or manufacturing credit card spend.

Please see:

Save for college or pay student loans

Health Assessment: Healthy, but difficult to find source for Gift of College gift cards

Costs: $5.95 per $500 (1.19%)

Technique brief summary: Use credit card to buy Gift of College gift cards. Use gift cards to fund student loans or college savings.  Gift of College gift cards are available regionally at H-E-B and at Cumberland Farms as well as select other chains. Each gift card can be bought with a credit card and each has a $5.95 fee. When loading each card to the maximum amount ($500), the fee is a very reasonable 1.19%. There is no fee to apply the value of the gift card to a student loan or 529 college savings plan. While saving for college may not immediately seem like a means of manufactured spending, note that rewards here can be significant given that some stores that carry Gift of College Gift Cards may trigger credit card bonus categories valued well beyond the fee. More details can be found here: Miles for College.

Recent posts about Gift of College:

Buy & sell merchandise as a means of manufactured spending

Health Assessment: Healthy, but difficult and risky.

Technique brief summary: Buy merchandise at discount with credit card, earn portal rewards, resell to break even, or make profit, or for a slight loss (this is often a cheap way to indirectly buy airline miles when portals offer big bonuses)

Updates: Amazon has made life more difficult, and in some cases, more expensive for resellers. See: A Dark Time for Amazon Sellers. For those who resell coins / bullion, keep in mind that Amex has announced that they may code coin purchases as cash advances and may not offer rewards on their purchase beginning in January 2021.

Manufacturing Spend through reselling has always been a tough but potentially very rewarding option. In some cases people start reselling for the purpose of manufacturing spend, but soon realize that it is a great way to earn money in general. That said, it takes effort and considerable risk to pull it off.

For an overview of manufacturing spend through reselling, please see: Increasing Spend through Reselling. For a post outlining some of the risks and rewards involved with product and gift card resale, see: Is a buyers club a good idea for you?


Manufactured spending graveyard

Pay Rent with RadPad

Health Assessment: Dead.  No rent payments accepted after 1/15/2021

Cost: Pay with credit card for 2.99% fee, or debit card for $4.95 (less than $5K rent), or $9.95 (move than $5K rent).

Technique brief summary: Pay rent via credit card.  RadPad is a rent payment service that had previously shuttered their service, but is now available again.

Pay Rent with Urbanr

Health Assessment: Dead.  Sometime on or before May 10th 2020, their website ceased to exist.

Cost: 1.5% credit card

Technique brief summary: Pay rent via credit card for a 1.5% fee.  Note that Urbanr only accepts Visa, Mastercard, or Discover (no Amex), but they allow you to split tender over 3 credit cards.  A 1.5% fee is an amazingly good deal.

Pay Rent with RoomiPay

Health Assessment: Dead.  As of Nov 8 2018 (or so) Roomipay no longer accepts credit card payments for rent.

PayPal My Cash Cards

PayPal Freeze Manufactured Spending

Health Assessment: Dead

Update: CVS is the one national chain known to sell these and allow credit cards to pay, but they recently stopped selling these cards.  See: CVS stops selling PayPal My Cash cards.

Cost: $3.95 per $500 to purchase (0.79% fee). You may incur additional costs to liquidate (when buying money orders, for example).

Technique brief summary: Buy PayPal My Cash cards with a credit card (some drug stores allow credit card payments); load the funds to your PayPal account (up to $4,000 per month); and then retrieve the funds in a number of ways: transfer to your bank account; send money to friends; spend the funds with a PayPal debit card (buy money orders, for example); etc.  For information about how to use these without getting shut down, see: PayPal Business Debit Card: A Great Backup Tool for Manufactured Spending.

REDbird — The Target Prepaid REDcard

Health Assessment: Dead

Technique brief summary: It used to be possible to load in-store with credit card and then withdraw money or pay bills.

Updates: Cash only loads kills REDbird for manufacturing spend.

Visa Buxx Cards

Health Assessment: On life support

Technique brief summary: Reload online with credit card, then withdraw money or pay bills

Updates:

  • Nationwide Visa Buxx: Dead as of February 28th 2017
  • TD Bank Visa Buxx: Alive, but only for loads with TD issued credit cards
  • US Bank Visa Buxx: Dead

Visa Buxx are prepaid reloadable Visa debit cards designed for teenagers. The great thing about these cards for manufacturing spend is that they can be loaded by a parent online, with a credit card for a small fee. Then, they can be unloaded either by using as a debit card to pay bills via debit card, buy cash equivalents, in stores that allow cash back for debit payments (many grocery stores, for example), or via ATM withdrawals.

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timothy B

any idea on liquidating a Metabank $2,555 Mastercard gift card. I tried the invoice with PayPal. Bluebird, the funding source must be connected to a bank.Walmart slides as credit. I cannot add card to PayPal either. You could sell to Payal2cash. They want at least 10 percent. Western Union or Money gram said, no to money orders.

Last edited 1 month ago by timothy B
Paul

Excellent. Just what I was looking for. I guess prepaying wireless and other recurring bills, three months in advance is not considered manufactured spending. A sure fire way to hit the bonus threshold.

[…] and maximize rewards from everyday spending to get a few free trips, to those who employ sometimes ridiculous strategies to jetset abroad multiple times a year. I consider us somewhere in the middle within this crazy […]

Marshall

I have been buying 500 visa gift cards at my grocery store using various Amex and Chase cards for initial spend and bonus spend. Neve had a problem with getting points credit for the spend, even if they T&C exclude gift cards. I ALWAYS buy them at stores with pharmacies since the level of info sent to the CC companies is not as detailed because there ARE pharmacies at the GS. Liquidate them at a GS that lets me use GCs to buy money orders. Funny, but not all the stores in this chain will let me liquidate this way, so YMMV.

erickson

love to know where and what GSs marshall that would be great I’m a newbie if you can shoot me a message

ssss

So, if I use the Paypal Debit card with Melio, I pay no fee and earn 1% back for things like rent that would usually charge a fee if I use Plastiq?

Greg The Frequent Miler

That might work but I haven’t tried it

[…] See also: Manufactured Spending Complete Guide […]

[…] Manufactured Spending Complete Guide […]

[…] I’m not an expert. If you want to take a deep dive into the subject, check out Nick’s Complete Guide to Manufactured Spending on Frequent Miler. It goes into almost every way you can use credit cards to earn points or […]

Sco

I have the AmEx +3 deal from a referral. Does this mean I can pay friends through Paypal for a 3% fee and earn 4pts/$?

I’m assuming that would likely be a fast track to shutdown/clawback?

Jim

I have the ability to float thousands of dollars and have the Amex Membership Rewards bonus of +3 points until the end of January through a referral. I was looking for an easy, cheap way to generate points. You’ll probably think this is crazy, but I was considering overpaying my taxes by 10s of thousands of dollars to manufacture Amex points. With interest rates so low (and me being risk averse, and also somewhat lazy), the way I figure it, the cost would be about a half cent per point after fees. My questions are – Do you think Amex would care? Do you think IRS would care sending me a refund check for $20,000 dollars or more when my usual refund is about $1,000?

Eric J

CPA Here.

Most of the IRS systems are all automated, and making a large Q4 estimate is probably the most common thing people do because a lot of tax planning is done q4 and people want to avoid penalties.

So no, this is 100% legal and very common (read: not going to trigger any red flags).

Let’s say it did trigger something (it won’t). They send you a letter, you respond “I was going to sell [insert cabin, any other capital asset you own], but decided against it, so I prepaid thinking I was going to owe.” Case closed.

Also, the IRS currently has 2 million pieces of unopened mail from being shut down for COVID, so they aren’t even looking for this at all or caring. You are giving THEM interest free money for 4 months, they will take it!

Ouch

This is called bank fraud.

LarryInNYC

I doubt that overpaying will trigger much of anything on the IRS side. We once accidentally paid five quarters in one year! It’s the actual taxes you owe that might make them suspicious but it doesn’t sound like that will change.

Jim

Thanks everybody!

Allan

My Bluebird was frozen for debit loads over 5 years ago back in the heydays. Is it possible to load funds now that so much time has passed?

Sam

No it is not. I tried re-opening a new one and they did not approve me for one.

THEsocalledfan

Many of us who got banned years ago, were able to get Dairy Queen cards. Give that a go. Go the one that has no upfront load fees. It will not be the one that defaults.

Last edited 11 months ago by THEsocalledfan