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Manufactured Spending Overview: Is It Worth the Time?

Avatar of Kyle Kroeger Written By: Author Kyle Kroeger   | 12 min read

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Manufactured spending gets mixed reviews around the travel hacking community. Some travel hackers love it while others consider it to be a bit of a black eye.

Manufactured spending (MS) is a component of travel hacking that requires more time investment and risk but unlocks more opportunities for you to see the world for less.

Manufactured Spending Overview: Is It Worth the Time?

With artificial spending, you can earn more points and build a credit card portfolio faster. But is the risk worth the opportunity?

What is Manufactured Spending?

Closeup of Credit Cards

Manufactured spending is the act of artificially spending money solely for the purpose of generating reward points or to accelerate meeting your minimum spending requirement. You artificially spend by purchasing virtual gift cards, products, tools, or services at the lowest cost possible.

Think of manufactured spending as “spending arbitrage.” If you can earn 5% cash back for spending money at a store, but it only costs you less than 1% to transact, you are inherently making money on that purchase.

Previously, you could purchase virtual gift cards to convert to cash which would enable you to earn points for virtually no cost. That involved a bit of a run around the town. Now, manufactured spending continues to evolve.

Things to Consider with Manufactured Credit Card Spending

You should know a few things about spending money artificially before you start. I’ll highlight some of the more important considerations, rules, and facts below.

1. Play the Long Game

Don’t go all-in with one way of manufactured spending right away. You should think about your role with MS and what is truly comfortable for you.

Travel hacking as a whole is a marathon and not a sprint. Take a long-term point of view.

2. No Credit Card MS Opportunity is Safe

Using a Credit Card on an iPad

You can’t think that every opportunity will work for the foreseeable future. You should be aware of fastly changing times. If there is something that works for you, stick to it—no need to get cute or aggressive. Also, with certain credit cards, you should avoid MS.

I didn’t do any credit card manufactured spending with my American Express Platinum card. I have done it with lesser-known credit cards to hit the bonus faster and move on. Credit card companies know that manufactured spending cuts into their profits. Things like money orders and loopholes are likely a thing of the past.

3. Cut Your Losses if Something Fails

You might not always come out ahead. Things change quickly. With credit card MS, you should cut your losses if something changes. If you can still recoup some of your money, you should consider that. This will help you move on and keep a level head for future opportunities.

You don’t want to take a continued risk (if you don’t need to). People that have stretched beyond their limits have had complete shutdowns occur.

4. Be Considerate to Others

There are some retail stores, small businesses, restaurants, etc. that have different rules and policies across the nation. Even if you call a credit card hotline twice, you might not get the same answer twice.

If a customer service rep tells you nothing works, be considerate and thank them for their time. Then, consider trying again at a separate location.

5. Don’t Let Your Spending Interfere With Your Finances

Getting Money From a Wallet

Again with the whole comfortability thing. You can’t start doing artificial spending if you aren’t comfortable with it. Sometimes, you will carry thousands of dollars on your credit cards.

Don’t let this interfere or become a detriment to your financial situation. Stay creative and flexible. Always have enough in reserve to cover any of your manufactured spending. You can’t afford to dig yourself into a hole financially.

The single highest priority with manufacturing your spending is liquidity. Without it, you can end up being completely left in the dust. Imagine purchasing something and being left with little value for it over time.

See Related: Ways to Save Money for Travel

Risks of Credit Card MS

Closeup Image of a Credit Card

You may have caught on to some risks based on what I mentioned above. Here is a full list of what you need to know if you do consider participating in manufactured spending for travel hacking purposes:

  1. Time-consuming (you will find yourself in retail shops and speaking with customer reps at odd hours of the day)
  2. You could have your credit card account shut down or bonus points crawled back
  3. Risk of a full loss of money or non-profit generating opportunity
  4. Potential for personal finance damage if not done correctly

These risks are important for you to consider alongside the opportunity itself. Everyone is different and has different goals with travel.

If you want to build a rewards balance of millions of points, you might need to manufacture your spending to get there. Other people could get a million reward points solely from their work traveling. Consider your finances first. Not what someone else says.

Is Manufactured Spending Illegal?

Manufactured spending is not illegal by any means. Some people question the ethics behind it. I wouldn’t worry about that. It’s sort of like finding a loophole or an opportunity for profit. That is why I call it “spending arbitrage.”

You are simply generating a benefit that is more than the cost to do so. There’s nothing wrong with that. There are a few ways to manufacture spending to generate credit card reward points. Let’s get into the execution aspect of this part of travel hacking.

Are there any laws against manufactured spending?

Manufactured spending is dangerous if the store owners or management can misinterpret your work. Money laundering and manufactured spending use similar techniques that have been responsible for increasing government risk with each case when these activities occur, particularly when it involves a personal bank account.

A bank or credit union has triggers against these types of conduct. If you conduct a cash transaction exceeding $10,000 you must complete a dollar report required by the U.S. Treasury.

Although some credit card firms may have limitations on certain contracts, this may not be the case. You might even get arrested by police and entangled with the IRS, yet it isn’t something to dismiss lightly. So, that is the big question about whether doing this to earn credit card points is actually worth it.

See Related: Best Family Travel Hacks

Ways to Manufacture Your Spending

When you think about participating in manufactured spending, there are a few ideas and tricks. I’ll highlight some of the most effective ways to do MS below.

Convert Visa Gift Cards to Cash

With liquidating gift cards to cash, you aim to buy one of the Vanilla Gift Cards with Visa at a store of your choice. An example is when Walgreens is part of the 5% cashback category with Chase Ultimate Rewards, you can buy $500 increments of Vanilla Visa Gift Cards to convert them to cash.

You can turn the gift cards into cash by trying to purchase a money order (this has since become much tougher to do) or resell your gift card online for a slight discount on the cash value.

These are the most common since they can be used at any store if you can’t liquidate them… Manufactured spending started from one of the main loopholes of using your credit card to buy Visa gift cards to turn around and buy money orders to start liquidating gift cards.

Purchase Store Specific Visa Gift Cards

You can purchase specific gift cards for stores, retailers, and online shops. You will likely need to sell Visa gift cards to a friend or someone online to liquidate them into cash. Here are some ideas of retailers that have an extremely high demand for products:

Find opportunities to scale gift card purchases for some of the above stores. Many people are out there looking to buy gift cards at these locations. Use a platform like GiftCardMall or GiftCardGranny to sell your gift cards. I also like pairing these purchases with Capital One Shopping and Honey Cashback, so I stack more cashback on top of any purchases I make.

See Related: Best Credit Cards for Churning

Buy Highly Liquid Goods for Reselling

What items are as close to cash as possible? New TVs, iPhones, iPads, and other high-valued, high-demand electronics are scalable regarding manufactured credit card spending.

Sometimes, your credit card provider offers bonus points for spending money at certain stores. Places like Best Buy, Target, and Walmart are opportunities that you will want to jump all over. You can buy new iPhones at scale to resell them on Amazon.

Retail arbitrage has become a thing too. Amazon actually doesn’t offer the lowest prices. You can find goods in retail stores like Target.

ViaTravelers Tip: Buy items through shopping portals such as Southwest’s Rapid Rewards Shopping or United’s MileagePlus Shopping. This will help you stack your rewards earning rate.

See Related: Best Travel Credit Cards to Consider

Purchase Event Tickets for Reselling

This is a full-blown business if you ask me. It’s a bit different than simply spending money to convert it into cash. However, certain events have significant liquidity associated with them. Imagine a sold-out Metallica show?

Purchasing event tickets will be hard to earn massive bonus points, but it’s somewhat scalable. It’s one of the rare options with manufacturing your spending that can actually generate an income along the way.

See Related: Miles App Review

Open a Bank Account

Did you know that a handful of banks allow you to use a credit card to open them? You can open a bank account with Aspiration and get a $200 bonus for signing up.

This is a great way to manufacture spending to meet your minimum spending requirement. It’s not scalable because you can only do it with a handful number of banks and a handful number of times. Bank accounts are very sticky for a reason, meaning they are hard to close and come with the hassles of withdrawing and meeting certain deposit limits to avoid even more fees.

See Related: 18 Gift Ideas for Couples Who Travel

Use Bill Pay Services

A handful of bill pay services will let you pay your mortgage, student loans, car payment, and many other major expenses with a credit card… What’s the catch? They charge an additional fee for their services. With this strategy, you need to ensure that you are actually generating a profit by spending with your credit card relative to the cost. If not, why even do it?

Other opportunities are just or more efficient. You can pay the price and not generate a profit solely to meet your minimum spending requirement faster. That is one reason why people use bill-pay services like Plastiq.

See Related: Reasons Why Traveling is Important

Conclusion – Is It Worth the Time?

If you want to manufacture spending, you should consider how this fits into your priorities of travel hacking. Can you get the most bang for your time spent? I don’t do it anymore because there isn’t enough return on investment (ROI) for my time.

Even with 5% rewards earning rates for specific stores or even stacking at 10%, I don’t want to risk waiting for something not working out. Let’s do the math: if you spend $10,000 at a 5% earnings rate (that might be aggressive since you will likely be capped out), you will only earn $500 of rewards points.

Yes, that might even be a free flight to Amsterdam or a one-night stay at the luxurious Hotel Pulitzer. At the same time, it’s not worth spending over $10,000 and being held responsible for selling that much inventory. I’d rather stick to the other components of travel hacking, like booking award travel, finding cheap flights, making money while traveling, etc.

What do you think about manufactured spending? Is it worth your time and energy? Let me know if you think this is something other travel hacking pros should consider.

Frequently Asked Questions (FAQs)

What is manufactured spending?

Manufactured spending (also called manufactured transactions) allows savvy credit card users to earn points, keep their credit score up, and be rewarded with things like fake money.

Use a free service like CreditKarma to monitor your score. Manufactured spending is the process by which someone conducts chargeback or returns to make purchases to make it look like they paid cash and, in turn, collect points.

The thing about manufactured spending is that it’s not nearly as simple as swiping an item before returning it. Manufactured spending takes time, patience, and effort – but once mastered can produce huge rewards on frequent flyer programs!

To create the spend, you are hacking the rewards system by purchasing items at one store with your Chase Ultimate Rewards Credit Card to get cashback. Then you “manufacture” the purchase by returning those items to a different store that returns as a credit (for things like holidays or big sales). Once manufactured, all of these purchases will roll into your credit card bill and can be manufactured repeatedly.

What is manufactured spending at Walmart?

In a nutshell, manufactured spending is “the process of systematically buying and selling cards to generate ‘free money.'” It’s most often done by people that already have a high income. This was done at Walmart using Visa Gift Cards to purchase money orders with the cost of the Visa Gift Cards and the money orders being less than the number of points generated from the transaction.

Is credit card churning illegal?

Credit card churning is not illegal, but each credit card company has its policy regarding this practice. So, if you decide to pursue this strategy, you’ll need to understand what it takes to be within the guidelines of your bank accounts and credit card issuer’s terms of service.

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