Manufactured spending is the act of inflating the amount of purchases on your credit cards to earn more miles and points. There are two main reasons to do this. First is possibly the most important: to help meet minimum spends on lucrative credit card bonuses. Certain airline and hotel cards offer you a sign-up bonus after your first purchase on the card. However, these cards tend to be in the minority, and almost always offer lower payouts, usually to the tune of 25,000 miles or so. Conversely, there are periodic offers for certain credit cards such as the American Express Gold Card that offers a huge 75,000 Membership Rewards signup bonus. The rub is that you need to spend $10,000 on the card within the first three months to qualify for this stunning bonus.
Obviously, AMEX is targeting high net worth individuals to sign up for this card. I make a decent income and I put 90% of my monthly expenditures on my credit cards, but under normal circumstances, there's no way that I would make $10,000 worth of charges in three months. Yet, with some of the tactics I've learned through manufactured spending, these types of mega-offers are now a walk in the park. Additionally, manufactured spending has now allowed me to apply simultaneously for multiple cards that have attractive signup bonuses, but also several thousand dollars of minimum spends on each card. This is a great way to even the playing field, especially if you're not a high net worth individual that can easily spend five figures in three months.
The second reason to participate in manufactured spending is to steadily increase your balances in your mileage and points accounts. In a subsequent article, I'll show you how to very easily earn a minimum of 60,000 points per year, disregarding all sign-up bonuses using one manufactured spending tactic. When it comes to valuable interchangeable points such as Starwood points or Chase Ultimate Rewards points, this can be the difference between flying in a premium class cabin instead of coach or staying at a five star hotel instead of finding a two star motel on Priceline.
Hopefully this post has whetted your appetite to learn more about manufactured spending and in the next part of this series, I will go over what I think is the easiest, cheapest and most risk free way of manufacturing hundreds of thousands of points annually.