Description: The article below is mainly about capitalone login. The author is going to talk about five considerations about using the card, we may find a few ways of credit card manufactured spending and see the question on whether it is legal or not.
Crédit Shifu does not advocate manufactured spending, this video is for educational purposes, only if you do manufactured spending, you do so at your own risk here on credit Shifu here and yet from that introduction, I’m sure you know what we are going to be talking about today.
That is manufactured spending now, if you don’t know manufactured spending is a technique where you make purchases on your credit card, you buy certain things that can then be easily liquidated into cash, put into your bank account and that money used to pay off your credit card, so you’re basically sending your money round in a circle at no cost to you or very small cost to you.
You are accumulating large numbers of credit card points in the process, it’s not illegal, but it is against the tons of conditions of most credit cards, first of all, let’s look at a few ways of manufactured spending, one of the classic manufactured spending schemes was buying one dollar coins from the US Mint, so thanks to the presidential $1 coin Act of 2005.
This basically was that the government felt that people weren’t using enough one-dog coins, they wanted to promote the one dollar coins, since it was more durable than the one dollar bill cost the government less money, because they could be used for longer and they did this one dollar coin act and they got the US Mint to promote the one dollar coin and they gave various deals for promoting the one dollar coin.
You know who likes one dollar coins, the fact is that there should be no one who likes this. I don’t want heavy coins in my wallet, I’d prefer dollar bills, but dollar bills cost the government more money, because they have to reissue them more frequently.
So the US Mint was selling one dollar coins, you could pay with a credit card, with no fee and they offered free shipping, so basically think about it, use your credit card to go and buy five thousand dollars worth of $1 coins, they get shipped to your house free of charge.
Obviously, you sign for them on five thousand dollars sitting on your porch, they get shipped to your house, you take them to the bank and deposit them into your account and then you use that the cash in your account to pay your credit card bill and in that process, you would have got five thousand say Amex points or chase Ultimate Rewards points.
So whatever points are collected, lots of people did this with thousands of dollars worth of spending. I remember I was reading into some articles about this and one person, he had spent over 2.4 million dollars on one dollar coin, so obviously not in one, there was over the period of many years.
But obviously, the US Mint and the credit card companies they started getting wise to what people were doing and they’ve made it more and more restrictive, people had to have several accounts ship to different P of oxes etcetera, by 2011, the US Mint stopped allowing credit cards for purchases of one dollar coins.
Now in 2017 and 2018, those people who manufactured spend have been buying gift cards normally Visa gift cards, MasterCard gift cards can also work, but these gift cards are the ones that people use, so you buy a gift card with your credit card, you have to normally pay a small fee, five dollars for a $500 gift card, so cost you a little bit money, it’s a factor into the equation and you liquidate that gift card into another account.
That one people use often is an exert which is a prepaid card, that offers free bill pay and then you use that mx-server account to pay off your credit card bill, I’m not going to tell you exactly how it works with these, that was a little bit of a synopsis of it.
If you want to know the full way to do it, I’ll put links of some articles about all the different manufactured spend ways in the description for educational purposes, I don’t encourage you to do this, because it can bring you some problems and we’re going to talk about those in a little bit.
So first of all, what the credit card companies think of manufactured spending, some people would think that the credit card companies would be happy, because as long as you’re putting spending on your card, they’re getting, they’re raking in those merchant fees, they get maybe a 2% fee each time.
So if you spent ten thousand dollars, they get two hundred bucks on the opposite of that people are thinking, the airlines are giving you points, giving you miles and that probably cancels out the merchant fees and costs them money, so they’re going to end up paying money for it.
I don’t think it necessarily costs them a huge amount of money, because we’re the airline miles, they buy them at huge discounts, because they buy them in the millions with cash back cards, it probably would cost them money or at least they would only break even on your account.
So they’re not going to care about maintaining you as a customer which makes your account more likely to be shut down, the credit card companies do take initiative to shut down manufactured spend in a variety of ways, one is shutting down people’s accounts, another way is limiting bonus categories chase freedom discover it those 5% categories are limited to 1,500 dollars worth of spending per quarter.
So you can’t go and buy $10,000 worth of gift cards, using whatever you know, last category was mobile payments, so you can assure you can find a store that sells gift cards and accepts mobile payments, 5:24 rule also that combats churning, churning can be an aspect of manufacture spend, so you open a card, you bother to gift cards where they get the sign-up bonus, you close it down, you’re going to open up another card, do the same thing.
So if you’ve opened more than five credit cards in the last 24 months, chase doesn’t give you a card, some other companies also combat it in other ways, they monitor your accounts and look for this kind of activity, so for example, I was looking at the terms and conditions of the uber credit card which has some generous points categories.
This card is issued by Barca card and in the terms and conditions, I’m going to read it out for you now, it reads this in the event of any abusive gaming or fraudulent activity related to the account or violation of the rewards rules as determined by us in our sole discretion.
We reserve the right to make corresponding adjustments or to invalidate points accrued in the program through the use of the account to disqualify you from participating in the program through the use fee account and or close your account at any time.
Now the next sentence abusive or gaming activity includes, but is not limited to obtaining or using an account to maximize rewards earned in a manner that is not consistent with typical consumer activity, so that phrase is not consistent with typical consumer activity that basically describes Manion had spent which consumers are going to be buying $10,000 worth of gift cards.
I don’t do manufactured spam myself, I think it’s not worth it, I do not have a Kate for it personally, I don’t mind paying a little bit of money, if I don’t have enough points for something, I don’t mind paying a little extra money, like my stay at the Beverly Hilton.
I didn’t quite have enough points. I ended up paying about three hundred dollars, it would have cost me nine hundred dollars, if I didn’t have the points for a two-day stay there, it’s a nice hotel, so I saved 600 bucks. I don’t have to get everything 100% for free, because I also earn money, I have a job that earns money. I get incredible discounts with credit card points.
I know that some people who watch this are probably interested in the idea of manufactured spend and they’re going to try and do it even though I don’t reallocate for it, but lastly, I’m going to tell you my five considerations to think about.
When you are either doing manufactured spend or considering whether or not to do it, my first consideration is time, it often takes quite a lot of time, because some of these stores where you buy the gift cards, they limit to one or two per person, it’s very dependent on your local area, so stores that sell gift cards with a small fee may not be near your house.
You might have to travel a certain distance which takes time, once you get the gift cards, you may have to go to another place to do liquidation into your Amex account or to do money order, those are the two of the most popular methods, so you might have to go to one or two stores and then go to another store to liquidate them and then go home that takes time also doing the research takes time.
But how much is your time? You’re worth $15 an hour and you spent an hour a day doing it, that’s $15, you have to take out of your manufactured spend profits.
The next consideration is gas, so you have to travel to several different stores to get the gift cards and then liquidate them or whatever and you could be a few miles away, you have a 10 mile round trip, 5 miles each way, each day to do this and you are going to be doing it every day, because a lot of stores have limits on the amount of gift cards they can sell.
So you can’t necessarily go and buy 10 thousand dollars, get a worth of gift cards in one go, so you’re going to have to make quite a lot of trips, so gas money is definitely going to be something that has to be factored in to the equation of whether you’re manufactured spend is profitable or not.
Next considerations should be about number three getting robbed, you might laugh at this, but it’s a very serious consideration, because if you are a regular at a store, I’m a regular at the post office, I sell wallets, everyone down at the post office knows me.
I’d come in every day with five or ten little parcels exactly the same parcel, that’s the person with the little parcels, if you’ve ever worked in a store, you’ll probably know that the employees, the job is a little bit boring, so they’re definitely going to chat and gossip about the customers.
That’s the weird person with the dog or that’s the man with the beard who always comes in with his Iron Maiden t-shirt and buys ten crates of water, so if there’s a person who comes in every day or every other day and buys two gift cards worth $500.
The employees are definitely going to know, it only takes one employee who’s not honest, who has a couple of friends, who are willing to do a job with him and split the profits and you go there one day, you buy your gift cards, you come out, you walk around the corner and two masked men come out, beat the crap out of you in stealing your gift cards.
It would be hard for you to prove that it was an employee, that’s set it up, but it could happen so safety, the possibility that you can get robbed is a very real consideration.
The next consideration is suspicion by law enforcement now, the act of manufactured spend when you use a credit card buy gift cards, liquidate them or buy money orders and send it back to your accountant and pay your card.
It’s very similar to what people do when they launder money or what people do, when they steal credit cards and they need to turn that person’s credit limit into spendable cash in their account, because they can’t go and swipe a stolen credit card, because they’ll leave a trail.
But if they are able to buy gift cards and liquidate those into cash into their account, then they get the money, the only difference is that they don’t pay back the original credit card, so that’s the only difference, but basically, it’s the same thing, so this can arouse suspicion by not only law enforcement, because the bank will see it first.
Why is this person buying ten thousand dollars worth of gift cards? It’s very easy to get your accounts shut down by your credit card company and then get blacklisted as someone who doesn’t want to issue cards to you again now.
The last consideration which encompasses all of these is opportunity cost, opportunity cost is a concept, they introduced in economics 101 in college or high school or whatever, it’s very simple concept and that’s basically when you put your money or your time into something like a business venture or a savings account or a certain stock the amount of profit, you’re going to make doing that and versus the amount of profit.
You would make doing something else with your money and this is called opportunity cost, if you would make more money doing something else, then there’s a cost there, it’s called opportunity cost, so when you consider that you’re using your time, your gas money, you’re risking being robbed, that may be more of a problem in certain areas than other.
You’re also risking having your credit card shut down for all that, all that time, you spent driving around researching manufactures been, is there an opportunity cost there? You have made more profit doing something else, I don’t know whether I can start a business, take myself as an example on knowledge of what credit cards.
I got into credit cards as a hobby, but I didn’t go into manufactured spend, instead, I got into teaching other people how to increase their credit score and how to use the reward systems on this YouTube channel and this YouTube channel makes a decent amount of money advertisers are interested in putting their ads on this YouTube channel, because they have a targeted audience, there’s a solid business plan there, you don’t have me.
In addition, I also sell wallets, we’re very careful and we’ve put a lot of effort into it to get a nice product that people sell at a reasonable price. But we put all that effort in, we make profits selling wallets, what I’m trying to say to you is that the amount of effort, you’re going to put into doing manufactured spend, you could put a similar amount of effort into starting some online business or any any sort of business or studying or whatever.
You may be able to start a company and company will earn new money for years to come, because what you know credit cards and airline miles, these are currencies points currencies, what else is a currency? The US dollar and there comes a point, when you think I’m learning all these ways of how to accumulate, why don’t I teach myself how to accumulate the currency of the United States of America or whatever country.
You’re in the British Pound or whatever, it’s a similar thing, give people a product, I give you money, it’s no secret, so that’s my big problem with manufactured spend, oftentimes people put so much effort into it and they think they can get quite a good return for a few years like people with the US Mint think they were getting many dozens of free flights.
But then it stops and then after it stops, there’s nothing left, because it originally was a scam, it wasn’t like something that you could build into a business, that would go on and have value and give you passive income for years to come.
So I would suggest you’re better off putting your money, putting your effort and putting your time into developing a business for yourself, that’s not going to get shut down and it’s going to continue earning you money, it’s a lot more honest, a lot more aboveboard, people would think you’re a much better person for it.
Please leave your comments about manufactured spend in the comments section, obviously, if you’ve done manufactured spend, you might not want to publicly comment saying that you’ve done it, because it is a gray area, not technically illegal, but against terms of conditions.
So I totally understand if people don’t want to own up to it themselves, but if you have thoughts on it, please leave comments down below, I never do it, I believe in organic spending, sometimes I buy things for friends or whatever to help them out and I get some points in the process, that’s fine with the credit card companies, we will see you next time, please subscribe for more credit card tips.