Advertising Disclosure *Advertising Disclosure: SmartBalanceTransfers.com is an independent, advertising-supported comparison service. SmartBalanceTransfers.com receives compensation from the credit card issuers whose credit card offers appear on the website. The compensation may impact the order in which they appear within listing categories. SmartBalanceTransfers.com does not include the entire universe of available credit or financial offers.

About Editor's Picks: Our editor selects credit cards based on the features the credit card offers consumers, including introductory rates, fees, long term interest rates, and its relative value compared to competing offers. While this site receives remuneration from credit card companies, our rankings strive to objectively provide consumers with relevant, unique options.

Rewards Pro – What Is Manufactured Spending?

rewards150When people tell me the great lengths they have gone to in order to earn points or miles, I often ask them if they can think of the hardest way to earn miles. My answer, “Step on an airplane.” Airplanes travel at a mere 500 miles an hour, and passengers can only earn miles as fast as they can fly. In contrast, reward credit card users can earn thousands of miles an hour when they use a clever technique that has become known as manufactured spending.

The premise of manufactured spending is that credit card users make a purchase of a liquid-able product. That product is then cashed out and used to pay the credit card bill, but the cardholder continues to earn rewards. Examples of these easily products include gift cards, money orders, traveler’s checks, electronic payments, and reload packs for prepaid cards. In fact, some cardholders will even buy and resell actual merchandise, typically cutting edge electronics that are in high demand.

To be sure, many retailers will not sell money orders, traveler’s checks, and prepaid card reloads to buyers who use a credit card. And even when these products can be purchased with a credit card, most of them will have some sort of service fees attached to their purchase, sale, or both. To successfully manufacture reward points and miles, cardholders have to find products that can be bought with a credit card, and sold with the minimum of fees. The fees incurred need to be less than the value of the points or miles earned, and the time spent on this hobby. Credit cards that offer multiple points and miles at certain retailers make it a lot easier to profitably manufacture spending.

Easy ways to manufacture spending

Reward credit card enthusiasts have figured out several complex and risky ways to cash out their purchases, but it doesn’t have to be that difficult. Here are some simple ways to manufacture spending. First, always offer to use your credit card to pick up the bill for other people who can pay you back with cash. This can mean charging a meal for a group, or paying for travel arrangements for a friend. Next, always look for ways to leverage credit card bonuses. For example, Chase Freedom is offering 5% cash back at gas stations from July 1st through September 30th, 2013. Card holders can go to gas stations to purchase gift cards to use at other retailers, and still earn 5% rewards.

By understanding what manufactured spending is, credit card users can seek out opportunities to maximize the rewards they receive.

Editor's Note: This content is not provided by Citi. Any opinions, analyses, reviews or recommendations expressed here are those of the author's alone, and have not been reviewed, approved or otherwise endorsed by the Citi or any of the other companies whose products are featured in this content.

About the author

Jason Steele

Jason Steele is a freelance journalist specializing in personal finance and travel and is recognized as an expert in credit cards. He is a regular contributor to many of the top personal finance sites such as Wise Bread and Money Talks News. His work has been frequently carried on mainstream news outlets such as MSN Money, Yahoo, Finance, and Business insider.

Jason lives in Denver Colorado with his wife and two daughters.

– has written 323 posts.

Leave a Comment

These responses are not provided or commissioned by the bank advertiser. Responses have not been reviewed, approved or otherwise endorsed by the bank advertiser. It is not the bank advertiser's responsibility to ensure all posts and/or questions are answered.

Previous post:

Next post: