The credit card companies frown upon manufactured spending. The banks are basically giving out free money in miles and points. You the consumer only have to pay the activation fee on each gift card you buy and you don’t have to go into debt collecting miles and points by spending money on real merchandise.
Whenever I get into a conversation with someone about what I do, they always become intrigued and want to know how they can get into the game. I always warn people that this isn’t something I just jumped into overnight. It took countless hours to learn about manufactured spending, travel hacking, credit cards, financial reviews, account closures, points revoked and so on. I like to be as transparent as possible when it comes to this game and let people know that it’s very possible they could have their accounts closed and points revoked if they’re not careful. I always say “everything in moderation!”
How I manufacture spend
I have a wallet full of credit cards and then I have another wallet that’s dedicated to my non-everyday credit cards. If I’m not busy trying to meet the minimum spending requirement for a new credit card that I was approved for, then I evaluate my accounts to see which ones are running low on points, and I also think about any upcoming trips that I might need miles for.
Once I narrow it down to a credit card, I start using that credit card for all my purchases. Why? Because if I’m going to be purchasing gift cards with this credit card, I don’t want the only transactions to be $3,000, $5,000 and so on. This is obviously a red flag and most credit card companies can probably guess what I’m purchasing. Therefore, if my credit card is declined due to fraud concerns, I won’t have to feel as anxious when reviewing my purchase history with the customer service representative.
What about manufactured spending in smaller amounts? That’s an option and your chances of your card being shutdown will be less likely. The only problem is that if you’re going to be manufactured spending $20k+ a month like I do, then you’re going to have a lot of repeat purchases at the same place. I’d rather make just a few large purchases and be done for the month. If you’re new to the game, you’ll eventually figure out what you’re comfortable with.
If possible, manufacture spend at multiple stores
Back when CVS allowed us to buy $5,000 in Vanilla Reloads every day, the banks were VERY aware what its customers were purchasing. The two banks who actually have a clue of what’s going on is Chase and American Express. I’ve read reports online where Chase customers either have their accounts closed down and all their points revoked, or Chase will not approve the customer for any further credit cards.
If you mix-up your manufactured spending habits and buy gift cards at a variety of stores over the course of the month, this becomes a little less suspicious in my opinion. On top of that, if you mix in all your legitimate spending, then you actually come across that you’re using your credit card as a regular customer and not to just collect points.
Change the purchase amount every time
If you’re buying 1 gift card at $500 and it comes with a $5.95 activate fee, then it becomes very obvious that you’re buying a gift card when the grand total comes to $505.95. In fact, this is a red flag for most banks and your card may even be declined for fear of fraud. Luckily I only did this once with my Citi card and they sent me a text alert right away. I replied that it was a legitimate purchase and I was able to swipe my credit card again.
No one knows exactly what triggers American Express’ internal system to perform a manual review on your account, but if they see multiple gift card purchase amounts, then you can probably expect a financial review on your account. When I first signed up for American Express I swore that I would never MS with Amex, but I soon broke that promise.
I try to change my total each time so it’s not the same amount appearing over and over on the credit card statement. For instance, I went to buy $3k in gift cards at my local grocery store and I also purchased a few groceries so the amount would be completely random.
Don’t go too crazy
American Express is known to flag your account if you’re charging over a certain percentage of your annual income. Example, say you list $50k as your annual income on the application, but you charge $75k a year to your credit cards. Something doesn’t add up and the Amex system would flag your account. Chances are you probably wouldn’t even make it to $75k in manufactured spending, as your accounts would be flagged long before this.
Change credit cards! I can’t stress this enough. Don’t do all your manufactured spending on just a couple cards. I like to mix things up and alter between all my credit cards to collect points. Since Chase is another bank that is known for shutting down accounts, you don’t want to have 15x $2,000 purchases on a single card. This rule applies especially if you’re buying gift cards from a store that is known nationwide for allowing credit card as a form of payment (i.e., CVS and Office Max).
My ranking of which credit cards are most friendly to MS
Based on knowledge, purchase history, how many times my card has been declined for fear of fraud, etc. this is my ranking of which banks are most friendly to manufactured spending.
- Capital One – My card has been shutdown numerous times, but the customer service rep just did a quick review of the last few purchases and then unfroze my account. When my credit limit used to be $5,000, I would easily push $20k t0 $25k a month through this account.
- Citi – Tied with Capital One, Citi has only shutdown my account a couple of times. What I like about Citi, is you can setup text alerts so you don’t have to actually talk with a customer service representative. I just respond to the text and I’m able to swipe my credit card again.
- Bank of America – Back when I was manufacture spending $12k in gift cards to collect my 90,000 Virgin Atlantic miles, my card was NEVER shutdown.
- Chase – I’ve never had our Chase cards shutdown for purchasing roughly $1,500 in gift cards per transaction, but based on knowledge and online reports from customer’s accounts being shutdown, I put Chase towards the bottom of my list.
- American Express – Amex is last; simply because they’re so trigger friendly to put your account under a financial review. Are you spending too much and too fast? Do you have large repeat purchases and you’re paying off your credit card too many times throughout the month? Yup, you might be setting yourself up for a financial review! You’ll have to fax in tax documentation, and if you don’t comply, your accounts will be shutdown.
Of course there’s other banks that I didn’t list in my ranking, but these are the accounts I manufacture spend most with.
Do you disagree with my list? Do you have other techniques for hiding manufactured spending? Let me know in the comments below!