Manufactured Spending Techniques with Gift Cards

Hopefully by now, you’ve read a few of my previous articles and have gotten started in the process of travel hacking. If you haven’t, you can start here:

I’ve already discussed the low hanging fruit of manufactured spending, like Amex Serve. Serve allow you to “spend” $1,000 per month in your pajamas at home. A Very easy, very valuable way to meet minimum spend requirements for Amex credit card bonuses.

However, there are times when you will need to manufacture spend more than $1,000 per month. This would occur if the credit card has a high minimum spend requirement, or if you apply for multiple cards at once and are trying to meet multiple spend requirements. No worries, there are ways to “spend” more.

Most of these other techniques involve gift cards in some form. This is because it’s relatively easy to turn gift cards back into cash, which can be used to pay off the credit card balance. I won’t discuss every single option available, as there are many, but I will talk about a couple of the best methods that take the least amount of time.

American Express Gift Cards

Update: As of 8/26/15, portals are not paying cash back for cards over $200. That effectively renders Amex gift cards dead for manufactured spending. Skip this section and read below under Visa Gift Cards.

American Express (Amex) gift cards are the favorite manufactured spending method of many travel hackers. This is because you can actually make money during this manufactured spending process. Here is how that works:

  1. Liquidate Amex Gift CardApply for a credit card with a great signup bonus, and get approved.
  2. Use that credit card to buy American Express gift cards through an online shopping portal.
  3. Receive Amex gift cards and liquidate them as quickly as possible.

The shopping portals will pay you cash back or extra miles when you purchase the gift cards. This may seem insignificant at first, but it is not. It is a fantastic opportunity to earn lots of miles/points while getting paid.

Visa Gift Cards

Visa Gift Cards (VGCs)  are far more valuable than Amex gift cards because VGCs will have a pin, and can be used as debit (which allows many additional liquidation methods, see below).

Fees

VGCs are not free to purchase. However you buy them, you will pay an upfront fee. Most of the time, this falls right around the 1% mark. The cash value of the miles earned should far outweigh the cost of VGCs, depending on how you value the points/miles.

How to Purchase VGC

The easiest method of purchase is through CVS pharmacy (if you have them in your area). They sell a variety called the OneVanilla Visa Gift Card, and it looks like this:

vanilla visa gift card

 

As you can see, the maximum amount you can load on each card is $500. Each card carries a $4.95 upfront fee. Which is $9.90 in fees per $1,000 of VGC, which is very close to the 1% I mentioned above. The VGC purchase limit at CVS is $2,000 per 24 hour period, per person.

If you don’t have a CVS nearby, many grocery stores carry regular Visa Gift Cards that are pretty much identical. They still have a $500 max per card and a $4.95 – $5.95 purchase fee. Most people recommend only buying one at a time, because some stores have started being weird about the process and require manager approval for transactions exceeding $500. If you must, just go to another store and buy them one at a time. But don’t try to buy 10 at once, and then make a scene when they don’t allow it.

How to Liquidate VGCs

**First of all, when using the methods described below, never tell a cashier or store employee that you are using a “gift card” If asked, always say that you are using a debit card when liquidating VGCs. The employees don’t understand travel hacking, and it draws suspicion, which eventually leads to trouble when a bozo manager gets involved.

There are numerous ways to liquidate VGCs because they have a pin and can be used as debit. The pin number for Vanilla Visa cards from CVS is set upon first use. The first time you use the card, you set the 4-digit pin. Super easy. Many of the other Visa gift cards have the pin preset as the last 4 digits of the card. If a pin is not present, you will need to call the issuing company and set a pin. Also easy.

I’ll list the liquidation methods in order of attractiveness.

1) Load Your Serve Account

Walmart recently announced that you can use debit cards (read VGCs) to reload your Serve account in all stores. This is excellent news. All you have to do is walk up to a cashier and say “I need to load my prepaid card.” Then hand them your Serve card and tell them how much to load.

*Update February, 2016: At the start of 2016, many people got emails from American Express saying that their Serve account could no longer be loaded (online or in stores), and suggested that the card should be liquidated and closed. This event suggests that Amex is no longer happy about using Serve for manufactured spending, and while you can still signup for Serve, I expect more accounts to be shut down in the future.

Note that Vanilla VGC sold at CVS and Walgreens no longer work at Walmart, so do not try. The VGCs bought from grocery stores will still work at Walmart to load Serve.

The Serve limits are $500 per swipe, $2,500 per day, $5,000 per calendar month. Notice how perfect this works out if you have multiple $500 prepaid cards that you can use at Walmart.

Once you transfer the money from Visa GCs to Serve, use the Serve online bill pay function to directly pay off your credit card. (See my tutorial)

2) Use Walmart Bill Pay

Walmart Money Centers actually have a process that allows you to directly pay off your credit card in store with a debit card (VGC). Tell them you want to use CheckFreePay at the register. The price is usually $0.88 or $1.88, depending on the card. This method used to be gold, but many Walmart stores have stopped supporting many payments to credit card issuers. You have to check your local store to see if this is still viable.

I often choose $1998.12 as the amount of my Walmart bill payments for several logical reasons:

  1. VGCs and many other gift cards are $500 denominations. Walmart only allows a maximum of 4 swipes per transaction. So you can use the 4 swipes with (4) $500 VGCs for a maximum of $2,000.
  2. $2,000 minus the $1.88 charge equals a payment $1,998.12.

American Express cards cannot be paid through this method!

Just like above, Vanilla VGC from CVS or Walgreens will not work at Walmart!

Check this Flyertalk thread for more relevant data.

3) Buy Money Orders

You can easily purchase money orders at Walmart, grocery stores, or gas stations with a debit card (VGC). They usually cost between $0.50 and $1.00 per $1,000.

Make the money order out to yourself or your spouse, and deposit into your bank account(s). Be careful on the volume you are doing, and build a good relationship with your local bank, or this method might look suspicious. There are reports of banks shutting down accounts used for money orders, and there have been cases where government authorities have gotten involved and thrown around the term “money laundering.”

Just like above, Vanilla VGC from CVS or Walgreens will not work at Walmart!

Summary

To recap, here is what I do:

  1. Apply for several credit cards with big signup bonuses and get approved (Compare Cards Here)
  2. Use those cards to purchase American Express Gift Cards through an online portal (no longer working)
  3. Use my credit card to purchase Visa Gift Cards
  4. Liquidate VGC
    1. Load my Serve account(s) and use Serve to pay off the original credit card(s)
    2. Use Walmart Bill Pay to directly pay off the credit card(s)
    3. Occasionally buy money orders and deposit into my checking account(s)

I know there was a lot to chew on here, so take a minute break, then read it again. It will all start to make sense.

Travel hackers, did I miss anything?

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