Friday, February 27, 2015

What is Manufactured Spending?

One of the hottest topics in the world of miles and points is Manufactured Spending or MS. In its simplest form, MS is the creation or manufacturing of spending amounts on a credit card resulting in loyalty miles and points with no negative net fiscal effect on the account holder. By example, if you could purchase cash with no fees using a credit card and that purchase were coded as a purchase by the credit card bank, you could then use that same cash to pay off your credit card balance, resulting in loyalty points with no fiscal impact on the user. 

Why do MS?

There are many reasons for doing MS. It is done by credit card holders in order to meet a spending threshold that triggers the bonus for a new credit card sign up. For my family of five, spending $2-3K/month for expenses is not unusual. But for those who are single or don’t yet have kids, meeting the spending requirement to trigger the sign-up bonus can be a stretch with their usual expenses.  Especially for some of the bigger thresholds such as the American Airlines Executive Platinum card 100K miles bonus from last year where the spending threshold was $10K in the first 90 days of account opening. Another reason to MS is just to earn loyalty points. It’s as simple as that. Whenever I use a credit card, it earns me some kind of points. So if one can increase how much they spend without actually spending it, and still earn points, sign me up. 

Use points to stay here. But I only put this picture in here because it's so pretty, and you really can use points to stay here.



These are the three big players in the game of MS. All three are American Express prepaid debit cards. This means that you load the cards with funding, then you can spend on that card up to your load amount and it gets treated as a debit purchase. The first two, Bluebird and Serve, are co-sponsored by Walmart. The RedCard is co-sponsored by Target. All three prepaid products are run on the same processing platform. What this means is that for each SSN, you can only have one of these products. The great thing is that these products are remarkably similar in function, so it’s only a matter of what is the most convenient method of loading for you. One great feature shared by all of these products is a bill pay type of function. 


Put It All Together

And here’s how you put all of this together to create your own MS. 
1.       Purchase one of the temporary prepaid products at either Walmart or Target
2.       Register your prepaid card so you can get your online prepaid account and…
3.       Wait for your permanent prepaid card  then complete your registration
4.       Figure out which credit card you want to use for loading your prepaid card
5.       Go to Walmart or Target, depending on your prepaid product, and reload with the credit card of your choice.
6.       Congrats, you have now joined the thousands of loyalty members who MS for miles

Yes, I do MS myself. It has been a lot of effort and hassle to put it all together, but it has been very profitable for me.

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