I literally cringe when the person in front of me in line at Kroger or Target pays with cash, a debit card or (god forbid) a CHECK. And not just because it takes so long for them to write the check because they waited until the last minute to even start. There are so many reward earning opportunities out there, why are people not taking advantage of them? I just don’t get it!
The obvious first step is to switch every penny of your everyday spending to a mileage earning credit card. Your weekly grocery trip, filling up your car, even buying a cup of coffee at Starbucks. No purchase is too small! Last week, Hubby charged a 35cent toll! Hey – it all adds up! I have been doing this for the past 15 years. If I go out to dinner with friends and someone wants to pay for their meal with cash (WHY?), I will take the cash and add their meal to my bill. Use your card(s) for everything. But please be careful! If you find yourself buying things you usually wouldn’t or you can’t stick to a budget, then don’t do this!
The next step is to pay for as many bills as you can with your credit card. Most cable and satellite companies and cell phone companies allow you to set up “auto-payments” on a credit card. Also don’t forget about things like Netflix, gym memberships, auto and home insurance. It is also usually pretty easy to change the form of payment on these accounts when it’s time for you to switch to a new credit card.
Here’s where it starts to get tricky and a little more involved. Manufactured Spending (MS) is purchasing something that is equivalent to cash (like gift cards or money orders) with a mileage earning credit card, and then liquidate them to pay back the credit card or to pay other bills like your mortgage, student loan or car payment.
The most common method, and my usual way of meeting spend requirements on new credit cards, is purchasing VISA gift cards. You have to make sure you are buying a VISA gift card that is a DEBIT card with PIN functionality.
I start at ebates.com. Ebates is a cash-back shopping portal. You will need to open an account with them and then go through Ebates to reach giftcardmall.com. Ebates will pay you back 1% of your purchase on giftcardmall.com. Even though the fine print says they do not give cash back on VISA gift card purchases, they do. Here is a snapshot of my account. The only thing I have ever purchased through Ebates is VISA gift cards.
VISA gift cards come with an activation fee that can range from $3.95 to $6.95, no matter how much you put on them. You can load them with anywhere from $25-$500 so you are getting the most value by purchasing the $500 gift card. After the activation fee and shipping, my $500 VISA gift card costs $507.94. Ebates pays me back 1% of the $500, which is $5. So I am only paying a $2.94 fee. I have to wait about a week to get the card in the mail, which is kind of annoying, but it’s easier (and less intimidating) than purchasing them in the store.
I have purchased gift cards at WalMart in the past. There was a certain one that worked for me. It was blue and had birthday candles on the front. I easily loaded it into my Bluebird account within 5 minutes of purchasing it. But there were a few times that the cashier refused to accept a credit card for the purchase of a gift card. I also got burned a couple times buying the wrong type of gift card. To this day I don’t know why they didn’t work with Bluebird. They both said “debit” and they both had PIN functionality. Live and learn. I was able to liquidate them in other ways, but it was still frustrating.
What to do with the gift card
Once you get your $500 gift card, you need to liquidate it. I use Bluebird. Bluebird is a prepaid American Express card that can be loaded with PIN based gift cards or Vanilla Reloads (see below). You can load them at any WalMart store using the Bluebird machine or through a cashier at the Money Center. There is no fee to do this but there is a daily limit of $1,000 and monthly max of $5,000. If you know me, you know I cannot stand going to Walmart, so I try to limit my trips there. You can also load VISA gift cards into your Bluebird account online. You are only allowed to load $100 a day, so it can be tedious, but it only takes a minute. And you don’t have to go to WalMart as often.
Once you have funds loaded into your Bluebird account it functions like a regular checking account with free online bill pay. You can set up your mortgage, car payment or other bills to be paid from your Bluebird account.
Amazon payments is another very simple way to manufacture spending. You sign up for an amazon payment account in your regular amazon account. You can then send up to $1,000 a month to another individual (that has their own amazon payment account) using a mileage earning credit card. Make sure you select “Goods/Services” rather than “Cash Advance” when sending the payment. This will post to your credit card as an amazon purchase and you will not be charged a fee. Once the funds have been deposited into the other person’s account they can withdraw them using ACH to their bank account. Obviously it is best to do this with your spouse or a very trusted friend. But make sure it is always one way! I would be afraid of getting shut down by amazon (or worse, your credit card) by sending money back and forth continually between 2 people. I send $1,000 to hubby every month through amazon payments and he deposits the $1,000 into our checking account which I then use to pay back the credit card bill.
Vanilla Reloads were the #1 choice for MS a few years back when they could easily be purchased at Office Depot using a Chase INK or Bold card that gave you 5% back for purchases at office supply stores. Office Depot has stopped carrying them and one of the few places I know of to purchase them is CVS. We do not have many CVS stores in my area and the one we do have is not very happy about taking credit cards to purchase Vanilla Reloads. Some clerks will, some clerks won’t. Hubby is starting to travel more for work and I send him to CVS stores in other cities to buy them. Vanilla Reloads have a fee of $3.95, which is pretty cheap. If you can find them.
You can add Vanilla Reloads to your Bluebird account the same as you do the VISA gift cards or you can do it through the Vanilla Reload webpage.
I have never done this, but you can purchase money orders with a PIN enabled VISA gift/debit card at grocery stores or WalMart for around 70 cents. You can then deposit those into your checking account or use them to pay bills. I don’t do this because it requires too much human interaction.
I am a somewhat reluctant participant in Manufactured Spending. I feel a bit like I am doing something wrong. Especially when getting hassled by CVS or Walmart clerks. But when I am faced with a spending requirement of $6,000-$10,000 in only 3 months, I do as much as I possibly can. Only you can decide if MS is right for you. If you are not comfortable doing it, then don’t. And always start out small and work your way up to a level you feel comfortable with. If you have any questions before starting, please do not hesitate to ask me.