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.

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