Today we are going to talk about the most underrated and misunderstood method of earning points and miles there is.
A method that moves fast, is somewhat controversial, and is used by only a fraction of travel junkies world-wide.
What is this glorious, secretive method you ask?
It’s called Manufactured Spending, and it’s a game changer in the points/miles world.
Let’s take a look at how it works.
Manufactured Spending (MS) is the process of using a rewards credit card to purchase something that can easily be converted back to cash.
The goal of this process is to earn credit card points without spending money out of pocket.
Let me make a quick analogy to explain how this works.
The Grocery Store Analogy
Imagine that your local grocery store started selling cash.
Yup, stacks of cash. Neatly bundled in to blocks of $100, shrink wrapped, and stacked next to the eggs and milk. (In the freezer aisle. Cold, hard cash.)
And let’s say that on your next trip to the grocery store you decide to buy one of these bundles of cash. You load it in your cart, take it up front, and pay for it with your rewards credit card.
What would be the result?
- Your credit card would show a charge of $100 (the amount of cash in each bundle)
- You would earn 100 rewards points on your credit card (assuming you get 1 point per $1 spent)
- You would have $100 of cash in your hands
Now let’s say that you take that $100 of cash and use it to pay off your credit card bill. What would happen then?
- Your credit card balance would go back to $0
- You would no longer have your $100 of cash (obviously)
- You would still have the 100 points/miles that you earned from the transaction (Again, assuming 1 point/mile per $1 spent)
Meaning that this simple transaction would have helped you earn 100 credit card rewards points without “spending” any of your own money. It’s pure arbitrage.
And if you used a cash back card, you could redeem those points for…..you guessed it! Cold hard cash!
I know, 100 credit card points probably aren’t worth getting excited about. If you assume the industry standard of 1 cent per point/mile we are looking at a value of 1 penny.
But what if you manufacture $1,000, $10,000, or even $100,000 of spend per month?
That would allow you to earn a HUGE amount of points/miles rather quickly and use them to book tons of free travel!
This is the basic idea behind Manufactured Spending.
While it is not quite as simple as buying stacks of cash from the grocery store, there are a variety of methods to accomplish the same goal. We’ll cover a few examples later.
Why is Manufactured Spending Important?
There are 2 major benefits of using Manufactured Spending.
- The ability to earn a ton of points/miles on your current rewards credit card (No shit)
- The ability to meet minimum spending requirements faster on new rewards credit cards
Just a couple simple methods of MS allow you to cut through those $5,000 minimum spending requirements like a chainsaw through Jell-O.
As I mentioned earlier, methods of manufactured spending are almost always more complex than simply buying currency with a rewards credit card.
Let’s take a look at a 2 of the most well-known methods of Manufactured Spending.
US Mint Coins
In late 2005 Congress enacted the Presidential $1 Coin Program in an effort to encourage Americans to use dollar coins instead of bills. The idea was that coins had a longer circulation life than paper currency and would ultimately save the government money.
To promote the use of these new coins the United States Mint launched a “direct ship” program to sell the coins to the public. Shipping was free and you could use a credit card to pay for the coins.
Hopefully you can see where this is going.
People quickly realized that they could buy tons of these coins with a credit card, deposit the coins in the bank, and then use the balance to pay their credit card bill.
Like with our grocery store analogy, this allowed them to earn a boatload of credit card rewards without actually “spending” any money out of pocket.
The US Mint eventually caught on and shut down the program in 2011.
Amazon Payments is a service that allows you to send money to other individuals online with a credit card. It is very similar to PayPal and other online payment services with the exception that there were no fees if you used a credit card to transfer $1,000 or less per month.
People used this service to transfer $1,000 back and forth with their friends every month.
The $1,000 would show up as a credit card purchase and could be paid off with the $1,000 received from your partner.
This method became obsolete in 2014 when Amazon started charging a fee for all credit card transfers.
Now I know what you’re thinking.
“Bryce, why are you telling me about Manufactured Spending methods that no longer work? I want to know which methods I can start using right now!”
I wish it was that simple.
The truth is that methods of Manufactured Spending come and go all the time and it can be very difficult to keep up with them. Any methods that I post on my blog would be obsolete in a matter of weeks.
And let’s be honest, I don’t really want to tell just anyone about some of the best methods. The more popular a method of manufactured spending becomes, the faster it becomes obsolete.
So how do you keep up with the best methods available?
Well, you could do the research yourself. If you do enough digging on the internet and you’ll eventually come across a few of the more popular methods.
Or you could join my mailing list and have them sent straight to your inbox.
I share all my best tips with my insider’s, including my current favorite method of manufactured spending. I’m using it to the tune of $30,000 a month.
Even without taking advantage of credit card sign-up bonuses, $30,000 of MS allows me to earn a free flight every single month.
Pair that with a new credit card or two and we are talking a free flight every 2 weeks.
That kind of freedom is life-changing, and it requires absolutely no money out of your pocket.