Buying points intentionally through credit card spend


Yesterday I detailed how people (usually unknowingly) buy points whenever they choose to earn points instead of saving money (see “Buying points, unwittingly“).  That post was focused primarily on the types of everyday buying decisions people make regardless of whether their primary goal is to earn points.  Often, though, people very deliberately go out of their way to get points even if it means spending extra money to do so.  A common approach to buying points is a technique called “manufactured spend”.  This is where people people get points by running up spend on their credit cards in ways that result in getting most of their money back, or result in being able to pay bills not usually amenable to credit card payments (e.g. rent, mortgage, taxes, etc.).

Types of manufactured spend

There are many, many ways people have found to manufacture spend.  Here are some:

  • Reload cards: Buy reload cards, load card value to a product that can be used for bill pay or to easily cash out.  See “The reload game is on“.
  • Amazon payments: Discontinued.
  • Target Amex: Discontinued.
  • Amex Campus Edition: Discontinued.
  • Buy and sell: Find products (or gift cards) that you can buy at a low price and sell for a high price.  If you’re lucky you can make money or at least break even while running up credit card spend.  Note: there are many potential “gotchas” in this approach including: seller fees, customer returns, customer fraud, items not selling, etc.  Tread carefully.
  • Microloans: Services exist to help connect borrows with potential lenders of very small loans (microloans).  In some cases, it is possible to pay for loans with a credit card and receive cash back when the loan is eventually paid off.  A great example is, which I’ve written about many times before.  With Kiva, you do not earn interest on your loans, but in my experience, you will get most, if not all, of your money back over time (Kiva reports default rates under 1%).  For more information, see “How to maximize points and virtue through Kiva loans,” and “Minimum spend requirements? Kivalens to the rescue.”
  • Pay rent or mortgage: Services exist that will let you pay your rent or mortgage by credit card, for a fee.  Popular examples are WilliamPaid and ChargeSmart.  All of these services charge hefty fees that make this an expensive way to run up spend.
  • Pay taxes: The IRS keeps a list of services that allow you to pay your federal tax bill by credit card or debit card.  Credit card fees start at 1.88%, but debit card fees are as low as $2.99 for your entire payment.  See this IRS page for details.

Discount gift cards

Most of the techniques for manufacturing spend have fees associated with them.  To reduce or eliminate those fees, it is often possible to buy a gift card at a discount first, then use that gift card to manufacture spend.  For example:

  • Buy Amex gift cards, get cash back: As I’ve written about before, the portals BigCrumbs and TopCashBack offer cash back when you click through to American Express to buy gift cards (they offer 1.4% and 1.5% cash back, respectively).  By buying Amex gift cards this way and then using those gift cards to manufacture spend, it is possible to reduce fees as a % of spend significantly.  Note a couple of gotchas: 1) you may not be able to buy reload cards with Amex gift cards; and 2) Not all vendors and services accept Amex as a type of payment (ChargeSmart, for example).
  • Buy gift cards, get rebate: Every now and then a major retail store (Staples, for example) will offer a rebate for purchased Visa or MasterCard gift cards.  Save money by buying gift cards this way, then use those gift cards to manufacture spend.
  • Save money almost everywhere: If your goal is to run up spend by buying and selling, then you should start by taking advantage of every trick in the book to save money on the buying side.  These include buying discount gift cards, using cash back shopping portals, finding the best coupons, etc.  For details, see “Save money almost anywhere.”


Increased multiples

Another way to bring down costs of manufactured spend is to get more points in exchange for those costs.  The best way to do that is to fully leverage credit card category bonuses.  Here are a few examples:


Combining techniques

By combining techniques, it is possible to run up spend at extremely low costs or even for free.  For just one out of many examples, see “Pay federal taxes by credit card, almost for free.”

The cost to manufacture

A reader named Russell recently emailed me a spreadsheet he had put together that calculated the cost per point of various manufactured spend techniques.  Here is a shortened version:

Technique to run up $4K spend per month

Load fees

Card ATM fees

Bank ATM fees

Cents per point at 1X

Reload: Buy 8 $500 reload cards, cash out w/ Bluebird 8 * $3.95 = $31.60 .N/A N/A .79
Target Amex: Load 4 times, cash out at CostCo ATM 10 times 4 * $3 = $12 $3 x 9 = $27 $1.25 x 10 = $12.50 1.29
Amex Campus Edition: Load card 8 times, cash out at CostCo ATM 10 times 8 * $3.95 = $31.60 $2 x 9 = $18 $1.25 x 10 = $12.50 1.55


The table above shows the cost per point of a few spend manufacturing techniques based on the assumption of earning only 1 point per dollar with your credit card.  If you can earn more than 1X, the costs are easily calculated by dividing the cents per point listed above by the “X”.  For example, if you can get 1.5X when loading your Target Amex, divide the cost 1.29 cents by 1.5, to get to a cost of .86 cents per point.  Here, I’ve done some of these calculations, with the Target Amex technique:

Example credit card (and bonus considerations)

Points earned per dollar

Cost of points earned by loading and cashing out Target Amex

Basic airline card (US Airways, Delta, AA, etc.) 1 1.29
Chase Freedom (with 10% checking bonus) 1.1 1.17
SPG transfer to miles w/ 25% bonus 1.25 1.03
Delta Platinum (10K bonus after $25K spend) 1.4 .92
United Club Card 1.5 .86
Special ThankYou Preferred at Target (some Target stores are classified as groceries) 5 .26


This is far from an exhaustive set of tables.  They should be used just as a starting point before you take it further.  For example, suppose you were to load the Target Amex card with an Amex gift card bought through BigCrumbs.  Assuming you save 1% (after fees are accounted for), you can subtract a penny from each of the above rates.  The cost per point, then, would drop below zero in some cases!   Be sure not to buy Amex gift cards with Citibank credit cards, though, since Citi treats those purchases as cash advances.

Reasons to do it

The point of manufacturing spend isn’t always just to buy points based on spend.  Some people do it to reach the minimum spend requirements on new credit cards.  Some do it to earn elite status (see “Mileage running, from home“).  Some do it for other big spend bonuses such as companion passes, free hotel nights, etc. (see “Best Big Spend Bonuses“).

Is it worth it?

All of the above techniques and options take time and effort.  There are also risks: if you do too much you could be subject to financial review by your credit card company; your credit score could drop as your credit balances increase; you could end up paying fees if you are unable to pay your credit card bills on time; etc.  For me, I do many of these things because it is my hobby.  I do it both for the challenge and for the rewards (which include things like high level elite status with Delta, and fantastic trips).  How about you?  Are the costs and risks worth it?

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