From the desk of the Devil’s Advocate…
I attended the #WestCoastDO this past weekend where I met a lot of terrific folks and learned some great tips about points and miles. I also found out you’re not supposed to write “WestCoastDO” without a pound sign in front of it. The cool kids tell me a pound sign makes everything super awesome better. I’m not sure how that works but I definitely want to be one of the cool kids, so I’ll be using pound signs as much as I can from now on. Even when I’m at church on Sundays. #flexperks3Xcharity
We had lots of fun discussing manufactured spend, with excellent advice provided by some of the true experts in our community. That includes our very own Tahsir, who is that guy you wish you could go back and be when you were young because he seems to know what you know now, except he knows it then. Or now… you know… for him it’s now. He knows it now, not then. For me, it’s then. OK, I’ve confused myself. The point is he certainly knows more than I know, though after this paragraph, clearly that isn’t the highest of bars.
In any case, all this talk about racking up miles by manufacturing spend made me wonder if it’s worth all the effort. Yes, you can get yourself a ton of loyalty points through gift card churning, but are you paying attention to all the fees? How many people are keeping track of the details while they load and unload their Bluebirds and Redbirds and Servebirds? For all the time we spend hopping from CVS to Walmart, how many of us are truly calculating what we’re gaining?
I know we love the points, but I gotta ask… is manufacturing spend really worth it?
Fees + Time = Slow Death
They seem so small. $4.95. $5.95. Even at $6.95 it just doesn’t feel like that much in the grand scheme of things. But those fees, even the little ones, are killing most people because they’re not tracking them, even when they think they are.
Most folks reading this know that if you’re paying $4.95 for a $500 Visa gift at CVS and you’ve already had your Old AmEx Blue shutdown so all that’s left in your wallet are cards without a drug store bonus, you’re acquiring points for just under 1 cent per point. If you can redeem those points at 2 cents a point, you’re doubling your money. Sounds like a pretty great deal, right? #letsgiveitapoundsign
Except are you figuring in the time spent in scaling all that up to the point where you can actually get an airline ticket?
In theory, it only takes a few minutes to buy a few gift cards, and then a few more minutes to liquidate them. In real life, we’re talking about going to the store, finding a parking spot, waiting in line while that elderly woman searches her purse endlessly for the 5 cent coupon she wants to use, paying, then getting back in the car to drive to the next place where you have to do it all again to unload. You’ve got to assume that in reality it’ll take you at least 10 minutes at each of those stops, maybe more, and that’s assuming the stupid MoneyCenter Express is even working today.
Also, while you might be fortunate enough to have both CVS’s and Walmarts on the route between your home and your workplace, even then, odds are you’re adding at least 5-10 more minutes to your trip. So in the best case scenario, you’re taking at least 30 minutes each time you do a manufactured spend trip.
Now, what’s the largest number of gift cards you’re going to be able acquire and liquidate in those 30 minutes?
I realize that for people like Tahsir, the answer is around $25,000 worth, and that’s on a slow day. But most of us aren’t at that level and don’t have enough time to run around doing that amount of acquisition and liquidation. We’re picking up $2,000 worth of gift cards on a trip. Maybe we wait until we’ve accumulated $5,000 of gift cards before heading to Walmart, but we’re not picking up tens of thousands of points in a single day.
Even if we can acquire 3,000 points in an hour-long trek, after the fees, that’s equivalent to $30 worth of doubling our money. $30 for an hour’s work is pretty good, but we haven’t calculated in gas, wear and tear on our vehicle, lost opportunity cost, the sometimes-things-go-bad-on-you costs, and so forth. Add it all together and it’s likely much less than $30 per hour.
Maybe it’s even low enough that you could make more in cash doing something else…
Tahsir and other folks like Marathon Man (who is awesome, by the way! #seriouslyhesawesome) will tell you that’s why you need to keep fees to an absolute minimum and scale up as much as you can per trip. They’re absolutely right. But they’re also taking this game to a level that most of us either aren’t willing or just don’t have the time to do.
Manufactured Spend vs. Credit Card Signups
But we need manufactured spend because we want to pile up tons of points, right? Well, isn’t that what credit card signup bonuses are for?
OK, yes, the banks will tell you that’s not what they’re for. But they’re mistaken. We can pick up a lot more points with a lot less effort through credit card signups. That same $3,000 that will get you 3,000 or maybe 6,000 points at best via manufactured spend will score a walloping 40,000+ points via a single credit card signup.
Some may say that gathering up credit card signup bonuses isn’t sustainable, that not enough banks allow the possibility of churning nowadays to pull it off. I disagree, and I’m getting up on my soap box for this one. #ohboyherewego
For every American Express who decides to limit bonuses to one per lifetime per card (and that’s only for the personal cards), there’s a Chase who goes the opposite direction, adding the possibility of getting a new bonus on their cards every 24 months. This year Citibank rolled out new offerings like the Double Cash card, while smaller banks like Commenity jumped into the travel loyalty game (note I didn’t say every new offering was a home run). With the multitude of banks and credit cards out there, you can find plenty of options to keep applying for years without manufacturing a single point.
Speaking of which, we are in a golden age of credit card bonuses. In 2014 we saw the Citi Exec Advantage card pop up with a 100,000 mile bonus (and then stick around for months so that people could churn through 4 or 5 copies). Then the Chase Ink Plus decided to roll up and throw down its thang with a 70,000 point bonus. Ritz Carlton stopped by with a friendly offer of 140,000 points. Even Bank of America tried to get into the act with a 90,000 mile offer on the Virgin Atlantic card, which would have gotten more attention if Virgin Atlantic miles weren’t so useless. #fuelsurchargesblowchunks
Oh, and when you also consider the long list of already impressive bonuses, along with the fact that not one bank of significance reduced their standard bonus offers, then I think it’s fair to say that credit card churning for miles will be sticking around for the foreseeable future. The fact is there’s just too much money to be made in the American credit card market for banks to do anything but compete harder than ever for market share.
The Devil’s Advocate suggests manufacturing spend for fun… but not profit.
We do things in this hobby that may seem insane to others. Quite frankly, they are. What normal person considers how many stops they can add to a trip instead of skip? But that’s why it’s a hobby. Many hobbies involve activities that would seem intolerable to anyone who isn’t passionate about the same interest. If you ever wander into a renaissance fair, then I think you’ll get my point.
But when we manufacture spend, we’re not really doing it to save money. Instead, we’re replacing money with our time. For many people, especially those who have plenty of time, that’s a completely reasonable tradeoff. For others it isn’t, and manufacturing spend shouldn’t be for them. For a third group, in which I include myself, it’s probably not worth it but we still enjoy the fun of it.
Regardless, if you’re manufacturing spend and having a good time with the game, then by all means, onward and upward. But don’t think of it as free travel. Think of it as a mental challenge with travel at the end as a bonus. Then you won’t have to worry about the fact that you might have paid as much in time and fees as the ticket itself would have cost.
In the end, as long as you’re enjoying yourself, you’re enjoying life. That’s what it’s all about. #clichedending
Devil’s Advocate is a weekly series that deliberately argues a contrarian view on travel and loyalty programs. Sometimes the Devil’s Advocate truly believes in the counterargument. Other times he takes the opposing position just to see if the original argument holds water. But his main objective is to engage in friendly debate with the miles and points community to determine if today’s conventional wisdom is valid. You can suggest future topics by sending an email to firstname.lastname@example.org.
Recent Posts by the Devil’s Advocate:
- Is The Boss Right About Never Paying With Points?
- Just How Terrible Are Citi ThankYou Points? (Yes, It’s An Encore!)
- Are Avios Always The Best Option For Short Haul Flights?
Find the entire collection of Devil’s Advocate posts here.