Manufactured Spend - What Is It?

So one of the big things that's been out for a few years now is the concept of "manufactured spend".  Now, this is not going to be a dissertation or the end all, be all discussion of discussions.  If you want that, then there are plenty of other websites out there that go into massive detail.  This is just to explain the idea in a way that, I hope, makes sense to most of you.

Manufactured spend (I actually really dislike this term, but when the majority demographic decides on something, that's what the rest of us are stuck with ...) is when you use a points/miles/whatever-earning credit card to purchase something that you can very easily turn into cash or a cash-equivalent.

Why would people want to do this?  Let's assume, for example, that you got really excited about a credit card that came with 50 000 bonus points when you sign up.  The only caveat, however, is that you have to spend 5000 dollars within three months in order to qualify.

Now, I don't know about you, but most of us aren't going to spend 5000 dollars within three months, even if we try to use the card for as much as we can.  This is one reason that manufactured spend can come into play.

You know those MasterCard and Visa prepaid "gift" cards that you can buy?  Well, earlier this year most of the banks issuing those cards started including PINs on them.  This means that they function just like a PIN-based debit card.  The only difference is that you can't withdraw the money using an ATM.

A Visa prepaid "gift" card from Metabank.

You go to a store that sells these prepaid "gift" cards, and you buy one.  Usually there's a fee of $3.95 or $4.95 or something like that, so it makes sense to purchase one with a larger amount of funds on it.  Let's say that you buy a five hundred dollar one using the credit card that has that 50 000 points bonus if you spend 5000 dollars within three months.  One thing, though, is that sometimes merchants won't allow you to purchase these prepaid cards using a credit card.  This is against the MasterCard and Visa merchant agreements, but that's a whole other post (^_^).  So search around.  The worst a merchant can say is "cash only".

So you've spent five hundred dollars, and in actuality five hundred and some odd dollars because of that $4.95 fee or however much it was, towards your goal of 5000 dollars.  What do you do with the money now on that prepaid "gift" card!?

Well, the first thing is to check how to set a PIN in the first place.  Some of them you can set online, some of them you can set when you first use it as debit card at the merchant,  some of them you have to call the card issuer, and some use the last four digits of the card number as the PIN.  For example, I have two prepaid "reward" cards, and I was able to set PINs onto both of them by going to the card issuer website.

Now, onto getting those funds.  First, you can ask for cashback when you purchase something from a merchant.  This method is kind of annoying, in my opinion, because many merchant don't allow you to request a lot of cashback, and it'll take a while to drain the card.

A second method is to purchase a money order with the prepaid "gift" card.  Walmart stores will sell you a money order for seventy cents!  You can mail that to your credit card bank, and pay off most of your credit card.  I say most, because you didn't forget about that $4.95 fee or however much it was, did you!?  Also, I strongly suggest that you don't deposit money orders having relatively large sums into your bank account.  Even though you and I both know that you're on the up-and-up, it can look like money-laundering a la organized crime, unfortunately, and you really don't need that foolishness (^_^).

A third option involves opening a prepaid debit card, which is not the same as the prepaid "gift" cards we've been talking about, even though both act like PIN-based debit cards.  This will be in a possible future post.

There are many more options available, but I'll end this by saying that I've been using a method that not many people know about yet, and it's probably the easiest of all of these.  It's related to opening a certain prepaid debit card.  Also, keep in mind that the example of the credit card bonus that we've been discussing is just one of many reasons of why you'd want to manufacture spend.  I'll go into both of these in that future post that I mentioned above.