Manufactured spending in this hobby is defined by buying prepaid money products and gift cards with the sole purpose of accruing points. Those cards are than liquidated and money taken out , so the only cost is fees on those products. I actually don’t participate in this activity for several reasons. But, I will save that for a different post. One of the cards that is touted as best to use for this activity, is Amex SPG card.
No doubt, those points are very valuable, but is it worth going through the trouble of accruing them in this manner for a family, like mine? Let’s ignore the miles conversion option with SPG card, since it would take forever to get enough for 4 people, and go with hotel option instead. Lets take a 500 dollar Vanilla reload card, with 3.95 fee (let’s round it to 4 dollars) and several redemptions, my family might be interested in:
1) Sheraton Sand Key resort in Clearwater , that runs 10000 SPG points per night. I would need to buy 20 Vanilla Reload cards, which would cost me 80 dollars. We would use it for an anniversary stay, for just me and my husband. Not bad at all for an oceanfront hotel.
2) Four Points by Sheraton Orlando Studio City, that runs 3000 starwood points per night on a weekend. We would need 2 rooms , because for us it’s too crazy sharing just 1 room with 2 kids at this time. So, we would have to get 6000 points for 1 night stay, costing us 48 dollars per night in Vanilla Reload fees. Again, not bad at all.
But things are not what they appear sometimes. What if we used a 2 percent cash back card instead? Option number 1 would give us 200 dollars. After deducting 80 dollars for Vanilla Reload fees, it would net us 120 dollars profit. So that is what Sheraton Sand Key resort night would really cost by that metric. It’s still not a bad price, but not spectacular by any means.
Similarly, option number 2 would net us 72 dollars in profit, by using a cash back card. That is a good price for 2 hotel rooms, no doubt. But since we are a family, I probably would pay a little more and just go with a condo that has a washer and a dryer. I am sure, there are situations, where it makes sense to use SPG card for manufactured spending, but for my family its not worth the time or the effort.
Leana is the founder of Miles For Family. She enjoys beach vacations and visiting her family in Europe. Originally from Belarus, Leana resides in central Florida with her husband and two children.
@ Hilde Yes, manufactured spending is not something, I am pursuing at the moment, since I have all the points for my modest needs. But it does make a lot of sense to do, what you described: maximizing Chase ink card 5 percent cash back at office supply store. I will suggest, that you look at http://www.cardpool.com to see, if you can do better on some gift cards,though.
I’m glad I’m not the only one who does not particiapate in the manufactured spending. There are just too many hoops to jump through.
I did however decide to make some extra ultimate reward points. We are doing a home improvement project. I put the $1,000.00 on my store credit card and will purchase a home improvement gift card at Office Depot using my chase ink card. The card gift card has no fee and can only be used at home improvement stores. The ink card earns 5 points /$1 at office Supply stores.
By the way, I too am from Europe. Germany to be exact.
@ chunxi I wasn’t referring to regular gift cards, tied to particular stores. This post is about buying prepaid money cards with fees attached, which is called manufactured spending. Which card you use for your regular spending, is up to you. It depends on lots of factors. I suggest you read my post “Best “keeper” credit cards for family right now”, for my perspective.
If one has regular spending enough for redeeming reward, it’s surely the best way. If not, buy gift cards. I bought some kroger gift cards and didn’t pay any fee. I still got 1 point for the gift card purchase. Did I miss anything in doing this?