Monday, June 23, 2014


One of my favorite blogs is Glenn Reynold's Instapundit.  Instapundit's habit of linking to interesting stories from lesser known bloggers has given rise to the term "Instalanche" to describe the spike in pageviews caused by one of his links.  Well, this humble blog gets around 30 pageviews a day, which isn't bad for a blog that was intended to be a reference for my friends and family.  But last week, Gary at Viewfromthewing was kind enough to link to my post advising caution to the folks active in Manufactured Spending.  That resulted in a massive (by my extremely humble standards) spike in my page traffic:
I think I'll call it a "Garylanche."

Saturday, June 21, 2014

Manufactured Spending- Emergency Exits

My last post got me to thinking about holding and liquidating prepaid Visa/Mastercard debit cards.  If you're reading this, you likely know that virtually all prepaid debit cards now come with (or can be assigned) PIN numbers.  Which means, or at least has meant, that one could easily liquidate them by purchasing money orders.  This week we saw the demise of one of the easiest and cheapest sources of manufactured spending when Walmart ceased accepting OneVanila Prepaid Debit Cards for the purchase of money orders.  Fortunately, most of us have alternative sources for liquidating the cards.

But what if those go away too?  (As could easily happen since Western Union is the source of virtually all money orders).  And what if you have a pile of debit cards on hand when that happens?  You could, of course, liquidate them at a rate of $2,000/mo via Amazon Payments. (Amazon Payments was shut down, effective Oct. 13, 2014).  Or you could use them for your everyday expenses.  Or you could take a small loss by purchasing giftcards for resale.  For example, most grocery stores have a pretty good gift card rack that includes gas cards.  Exxon gas cards can be sold to for 92% of face value.  Linking to Cardpool through will earn you an additional 4% on the sale price for your first $1,000.  So, for a hypothetical MSer holding $1K in gift cards that he absolutely had to liquidate the results would look like this:

$1K in Visa --> $1K Exxon
$1K Exxon sold to Cardpool- $920.00
4% from Topcashback -           $ 36.80
Total Recouped-                      $956.80

Ouch, that's nearly a 5% loss!  The rate gets worse after that first $1,000 because you lose the TCB bonus (Unless you signed up for multiple Cardpool accounts).

But wait, if your grocery store has a Fuel Rewards type program, you'll be earning some gas credit on the purchase too.  For instance, Winn-Dixie regularly offers 5cpg (up to 20 gallons) off for each $50 in gift card purchases.  So the numbers could look like this:

$1K in Visa --> $1K Exxon
$1K Exxon sold to Cardpool- $920.00
4% from Topcashback -           $ 36.80
$1 off 20 gallons-                     $ 20.00
Total Recouped-                      $976.80

Ugh, still a 2.5% loss.  There are other ways to liquidate cards (Amazon Payments, etc.) but almost all of them are going to entail some loss.  Once again, the lesson is: don't overextend.

P.S.:  Cardpool limits Topcashback commissions to the first $1K sold per Cardpool account.  (Hint).

Friday, June 20, 2014

Manufactured Spending- Another Disturbance in the Force

     There's been a great deal of distress over at Flyertalk lately due to the demise of one avenue for manufacturing spend.  Wally World (W**-Mart) has recently changed their POS software in such a way that prepaid Vanilla Visa Debit cards can no longer be used to purchase money orders or to load Bluebird cards.  This is a serious blow to folks whose source of prepaid debit cards is limited to CVS, since the only cards available on credit there are Vanilla cards.  There are (inflated, I hope) reports of people being stuck with many thousands of dollars in cards that they can no longer easily convert into cash equivalents.  There's a lesson here, of course.  Risk is an unavoidable part of life, but if you're smart, you'll limit your exposure.  If you decide to use any of the manufactured spending techniques, best practices call for you to liquidate the cards as fast as you accumulate them.  Don't get greedy and think that there'll always be a way to liquidate the cards later.

     As they said in Battlestar Galactica, "all of this has happened before and all of this will happen again."  Not long ago, there was a brief opportunity to use Home Improvement Gift Cards to purchase money orders.  It was clearly a glitch and not long for this world, but, nevertheless, some overenthusiastic folks loaded up on thousands of dollars worth of the cards and were caught short when the glitch was fixed.  If they were smart they only lost 5% on the deal, but then, if they were smart, they wouldn't have been holding $10K+ in HIGCs.  Remember: "If something can't go on forever, it won't."

Wednesday, June 18, 2014

Buying Points vs. Manufactured Spending

One of my favorite bloggers covered Club Carlson's current promotion for a "Flash Sale" on Club Carlson points.    With this Club Carlson deal you can (for a limited time) buy points at .4cpp, a substantial discount over the normal rate.  It got me thinking about the value proposition of purchasing points directly from hotels/airlines versus obtaining them by manufactured spending.

As an initial matter, its rarely a good idea to purchase points prospectively, i.e. without a specific use in mind.  There's always the possibility that the points could devalue before you get the chance to use them.  But when you have a specific purpose in mind, deals like this one can be worthwhile.  For instance:  Mrs. Pointsninja have an upcoming stay at the Radisson Blu at the Zurich Airport.  The non-cancellable Advanced Purchase rate is 260CHF, or about $290.  But an award stay (which is fully cancellable) runs 50,000 Club Carlson points.  Through the current promotion, I could purchase 50,750 points for $203.  I could then use those points to book the room and effectively save $87, plus get a cancellable rate to boot!  The key, of course, is that I'd be purchasing points at a cost of .4cpp, but redeeming them at a value of .58cpp.

Of course, through manufactured spending with the Club Carlson Visa, I can quite easily "purchase" points at a rate of .21cpp, meaning that I could actually get the room for $185 cheaper than the Advanced Purchase rate.

Thursday, June 5, 2014

Manufactured Spending- Earning Points and Making a Profit by Spending Money

     I've written about manufactured spending before.  Manufactured spending, or MSing, is a blanket term for a variety of techniques for generating credit card spending without actually incurring debt.  MSing even has its own forum on Flyertalk.  A basic MS cycle for purchasing Visa gift cards (one of several different techniques) looks like this:

In other words, you use your credit card of choice to purchase gift cards which you then turn into money orders that you use to pay off your credit card.  You'll incur some costs (approx. 1.1% of your generated spending), but so long as the points you earn are worth more than the fees you pay, you'll be in the black.  Ordinary MSing can be an effective way to greatly reduce the cost of travel.

    However, thanks to our good friends at American Express (otherwise know as America's most generous credit card company) you can actually generate a substantial amount of spending and earn a profit over and above the value of the points you earn.  That's because Amex has been selling gift cards through their site for the last several years.  And they pay referral fees to various shopping portals, who then pass part of that fee on to you.  As of the date of this post, you can earn 4% cashback on purchases of American Express gift cards.

     Here's a personal example.  Today, I purchased $5,000.00 worth of Amex Gift cards after linking through  As of today, BeFrugal is paying (after a waiting period of around 60 days) 4%.  So, I'll earn $200 cashback for purchasing the cards.  I payed for the cards with my American Express Hilton Honors card, so I'll earn 15,000 Hilton Honors points.  Amex had a fee-free promotion for Father's day, so I didn't incur any purchase fees.  When the cards arrive, I'll take them out and use them to purchase Visa (debit) gift cards, incurring a fee of around 1% or $50 total.  I'll then use the debit cards to purchase money orders for a total fee of around $3-5.  Then, the money orders go back into my checking account and I pay off the original $5K charge.

     So, subtracting the fees I'll pay from the rebate I'll receive, my net profit will be $145.  Plus 15,000 Hilton Honors points.  That's not free travel, that's better than free travel!

UPDATE:  Befrugal is now down to 2.5% cashback.  This THREAD on Flyertalk tracks this deal pretty thoroughly.