Premise
Manufactured Spending comes in two main forms. It consists of purchasing goods with credit card for points, then converted or resold back into money, to pay off the aforementioned credit card. This article will talk about the two main ways of manufacturing spend: prepaid gift cards and cash-like assets, as well as reselling of tangibles.
Manufactured Spending: The Original VGC
When explaining this, I draw a circle of money and highlight each step.
- Use your selected credit card and buy Prepaid Visa Gift Cards (VGC) at your favorite retailer (CVS, Walgreens, etc.)
Cost $4.95 – $5.95 per $500 card. (Sometimes as low as $3.87, should you find a friendly Wal-Mart)
- Use the VGC at a US Post Office, Wal-Mart, or other grocery store money center to purchase a money order
Cost $0.60 – $1.20 per $500, depending where you go.
- Deposit Money Order in bank account, and pay off credit card.
Total Cost $6-7 per $500, about 1.1-1.2% Cost of Sale.
This repeatable, easy to execute process requires several factors for successful churning – the proximity to VGC and money order purchasing, and close by ATM/banks for depositing. Many high-performers that I see clear thousands or tens of thousands per month, with the highest players sometimes substantially beyond that. You are constrained by your purchase and daily limits.
Manufactured Spending with Reselling
However, I find reselling a much more interesting and fun way of manufacturing spend, although it is much more volatile (for me). I’ve personally bought and sold iPads, for example during a Staples Black Friday sale through gift cards and credit cards for points, and then reselling for a small profit. My lady did the same with large flat screen TVs, but you are constrained by the amount of storage space available. Quite funny to hear her tell of multiple TVs taking up the living room, waiting to be sold via Craigslist or one of the selling apps.
I have heard stories of successful resellers turning it into an actual dropshipping business, through Amazon Fulfillment. But, by that stage it’s more of a business than actual manufacturing spend – since your supplier will want payment via bank rather than absorbing the credit card fees.
Thinking about it critically, anyone could hypothetically buy/sell and manufacture spend, due to lenient return policies of unopened merchandise. If you spot a good sale and snap up product, and are able to sell it for the same or more than you paid, it’s a fun side-hustle.
Conclusion
Lastly, I would love to hear more about reselling as a churning tactic, because I have yet to find a solid and stable revenue source in reselling. Due to my travels and lack of space, it does not make sense to have large products. Most likely, I will be continuing my standard churning with Visa Gift Cards. Although I feel like I have slowed down, my spreadsheet tells me I am running 20-30% ahead of my last year’s monthly production.
Have you used reselling to manufacture spend? What are the tactics you use? Let me know in the comments!
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daniel it seems when i looked into this a year ago the webpages i looked at talked like all the places that sold prepaid gift cards were phasing out takeing credit cards as payments : did that actually happen ? Is CVS,walgreens and walmart still takeing them asof this year?
Daniel,
Do you have a set rule on how much MO you deposit in your bank per month? Do you usually just use one bank or multiples?
No set rule – whatever I feel like churning – dependent on proximity to CVS/Walgreens and post offices. Use one bank to deposit, although I used to deposit across several
Daniel,
Whats the maximum amount of MO you deposit a month at a bank? Do you recommend depositing only at one bank? I read an article about money laundering and this type of activity could be considered as one.
I am always happy to speak with banks/postmasters, etc. about what I’m doing – and be completely transparent. I think the most I’ve deposited before was upwards of $15K, and that’s only due to my constraints that I mentioned. If you’re doing significantly more, I’d spread it out, but I’m a small fry.
Wow…i thought the rule was keep it under 10k. I guess im safe than. The most ive deposited was 6k a month.
Should be fine. Any issues be upfront and honest.
Cool thanks for the advice. Now, i had a bank teller asking me who gave me the money order. I told her my busniess partner. What do you tell the bankers?
I don’t get questioned on it. It’s none of their business that I deposit my money into my own account.
Thanks. Thats actually a very smart answer. Its none of your business. It can end like that.
Can you share a sample spreadsheet that you use to track GC reselling. I am badly in need of something to tell me that I am in control of my surroundings
Unfortunately I don’t have any sample ones, but there are many available at r/churning and they should be able to help you there!
Also, Caveman, email me at the email above in my signature – I can make one for you. Thanks.